401k loan

jimsmythee · 2021-05-21T15:34:35+00:00

I did a 401k loan about 5 months before I filed. I didn't tell my now exwife about it.

My now exwife and I were fresh out of a bankruptcy and my old car (our only car, she didn't drive due to DUI's) was crashed. The other guy's insurance paid us, but the car was worth barely $1500. So I took out a 401k loan to buy a much newer, bigger car. My kids were getting bigger and my old Sentra was too cramped in the back seats.

So technically, the car was paid for in full, as the 401k loan wasn't secured by the car. My exwife (and her parents) were pissed that I used the 401k loan to buy a car, versus paying off her recent DUI fines of $7500 or the $3000 her parents paid for a DUI atty. Then I filed for divorce, and they were left standing there, wondering who was going to pay the $10k in DUI fines and DUI atty? My name wasn't on either one and my exwife refused to work.

In divorce, my exwife tried to argue that the new car was a marital asset and she was entitled to 50% of the value, but the 401k loan to buy the car was "all on Jim." I argued, "Either the car and the 401k loan stay with me, or you get half the value of the car, and half the 401k loan. Pick one." The judge agreed with me. Car and 401k loan stay with me.

TL;DR version. If you're still married, you don't need her permission to do a 401k loan. But the 401k is a marital asset and the other spouse gets 50% of it. If your STBXW has a 401k, then you would get 50% of hers too.

47omek · 2021-05-21T16:25:43+00:00

A buddy of mine was able to sneak through his 401k loan as both a debt on his side of the ledger as well as a reduction of the 401k total balance reducing his payout to the ex. Since you're really only repaying the 401k loan back to yourself in the form of your 401k balance it's not a "true" debt where it's something you are upside-down on. It is a liability that's non-discretionary but it's not like owing a bank money.

sicrm · 2021-05-21T03:56:59+00:00

don’t do anything else without talking to a lawyer.

when you do talk to one, tell them everything, including the loan.

rockhoppernostopper · 2021-05-21T12:48:09+00:00

When is your divorce final? Look into a QODR (Qualified Domestic Relations Order)

ThrowAwayRAOoops · 2021-05-21T06:38:33+00:00

Well, it wasn’t good but I think the worst case is that your half of that 401k will be reduced by the amount you took.

It’s common to take on debt during a divorce. I’m resistant to it as well but there isn’t a lot of way around it.

HerbEverstanks · 2021-05-21T16:16:01+00:00

The STBX took out a 401k loan from her account and didn't tell me about it until I had to pay taxes on it. I never knew she did because I never saw a dollar of it.. She just decided she didn't want to work and she wouldn't pay it back so I was left for the Bill. Since it was taken out before I filed, it's all fair game and I loose half the amount she took out.

Title	401k loan
Author	p0ngping
Upvotes	2
Comments	19
Date	May 21, 2021 3:51 AM UTC (5 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/nhjdik/401k_loan/
Archive Link	https://theredarchive.com/r/Divorce_Men/401k-loan.816965 https://theredarchive.com/post/816965

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