Cashing out my share of 401k

So, I am entitled to a share from my husband’s retirement plan. My question is… since now I’ll be starting over and would love to buy a small townhouse I will need to cash out my share of his 401k so I can have some cash in my back account. How much is the penalty for cashing out my share? And is it true I need to wait until the divorce is final to cash out my share or can I cash it out to while separated? Thank you.

The penalty to withdraw from your 401(k), assuming you are not of retirement age, is approximately 10%. You will also have to pay income taxes on your withdrawal.

You can withdraw the funds at any time. However, you may or may not be able to have the funds distributed/transferred to you from your husband’s 401(k) until the absolute divorce, depending on the financial institution.

Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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