401K and QDRO


#1

For a separation/divorce how does a QDRO work?
I’ve got about 115k currently in my 401K
28K of it is in loans.

I’m planning to separate in the next few months. I’m looking for a new place to live now.
What are the options for the 401K?
I plan to move out and leave her the home once the streamline is completed. This will reduce the monthly payment about 300
I need to find a roommate to split an apartment with, otherwise I can not afford it
For my 401K, I heard I need a QDRO. So if I take the 115K and divide it by 2. That’s 57500 she will recieve.
This QDRO stops the penalty for her correct?
Can I give her the 57500, and state she needs to give me 14K of it for 1/2 of the loans?
Can I disburse my 401K 100%, and make her give me 1/2 of that. This would allow me to obtain a place of resident’s and remove any financial burdens with the divorce
And she can also do the same with her half.

I know wiping one’s 401K plan is not a good option. But if it is possible it will relieve the financial burden associated with a divorce.


#2
  • Not an attorney

This QDRO stops the penalty for her correct?

  • Yes, but a QDRO splits the 401k into another account, it doesn’t “cash it out”. There are still penalties for cashing it out.

Can I give her the 57500, and state she needs to give me 14K of it for 1/2 of the loans?

  • I believe if the loans were marital in nature than she would liable for half.

Can I disburse my 401K 100%, and make her give me 1/2 of that.
-I think you’re going to get slapped with some heavy heavy fees for taking out of your 401k early.

There are a lot of options for asset distribution. It’s all up to whatever you two agree on and if you are unable to agree, whatever a judge decides. Assets or debts that are marital are split equally and property that is separate is separate.


#3

If you do a QDRO, and then she withdraws the money, the penalty for early withdrawal is waived, but she still has to pay taxes on the money. Either of those withdrawal options are possible.


#4

So I could do 100%? Which would help financially with the divorce.

When is this done? Legal Separation or after 1 year at time of divorce?


#5

Yes, you can do 100%. You can do it at any point in time after separation.