Kim

I am getting 1/2 of my ex-husbands 401k amount. The QDRO has been filed by his lawyer. I want to use the money for a down payment on a house. I was wondering if my half automatically has to be rolled over into a seperate 401k plan. Does anyone know the answer, or a way I can avoid the early withdrawl penalty? Thanks!

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happyjack

Cubsfan

What the heck is that!? If it was a joke, it was not funny and tasteless. If it wasn't, man, you're an a$$!

AlpineJay

Agreed 100%. No need for that, joking or being serious. GAM please take note.

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Jenny

Wow... He left her because he suddenly decided he didn't want to be married anymore. He left her to raise their two children as a single parent. She stayed at home and kept up their house and stayed home with their 2 children while he worked. So she worked just as hard for that money.

Take your foot out of your mouth, apologize to Kim or get the hell off the board cause NO ONE wants that kind of attitude here.

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happyjack

Got Apex Moderator

AlpineJay

Like what GAM said, read the rules which clearly says no slanderous comments towards other members of the community. What you posted was clearly slanderous and baiting. If you have your own opinion, fine, but sharing it with this public community can get you in trouble.

Jenny

I wouldn't even say that, AlpineJay. If he has a problem with wives & exwives, which he CLEARLY does, he can start his own thread and say it. But to come into a thread like this bashing away is completely uncalled for and does nothing but promote hostility. I'd say he was a bitter ex-husband, but I don't know him, so...

AlpineJay

OK. Point taken. But having his opinion of this particular situation which clearly can get troublesome in this specific environment where the rules are very strict regarding personal attacks, I still say he's better off holding it to himself rather than to open a can of worms with it. If happyjack wants to talk about his own frustration without directing it at someone, fine, but this was slanderous, as you and I agree, and it's not accepted here.

Kevster

Well there are a few questions that have to go along with this Kim:

1) Are you a first-time home buyer?
2) Is the amount of 401k money in question more than $10,000?
3) Are you willing to lose approximately 30% of that money to taxes and penalties?

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My small adventures, my fears.
The small ones that seemed so big,
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And the light that fills the world.

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SecretIkon

dude get a grip. people here on g|a helps one another not bash on others. your ego of thinking men does everything in the household just makes me sick. i know alot of women out there who work hard and earn there money.

but if this is your opinion fine. but don't come into someone else thread and make stupid remarks. start your own thread and make those stupid comments.

Kim

I am a first time homebuyer, the amount is nearly $30,000, and I'd rather avoid tax penalties if possible.

SecretIkon

don't really know much about buying houses but have you tried askng an agent? don't know if that will help. but thats the firs tthing that poped in my mind.

MrGreg

The problem is, Uncle Sam hasn't gotten a cut on that money yet, and doesn't want to miss out. I imagine any scenerio where you end up with cash in hand (for a down payment) will require a big tax penalty.

There might be a way to "borrow" up to a certain amount (10k?) against it for a first time purchase, but you still have to pay it back. I think you can do that with an IRA, but I don't know about with a 401k.

I suspect Kevster knows the actual rules.

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Kevster

You can borrow from your 401k, but you cannot withdraw from it without a 10% early withdrawl penalty + federal income taxes. You could roll this money from your Ex into a Rollover IRA and withdraw $10,000 penalty-free as a first-time home buyer. You will still owe taxes on that money next April, though. The other $20,000 will be subject to the 10% early-withdrawl penalty + the income tax owed. I have a feeling you will probably be doing this if you do not want to put this money into your own 401k plan. With the taxes and penalties, you can expect about $22,000 of the original $30,000 that you can use for a down payment on a house.

As I said earlier, you can also just loan yourself the money from your 401k, but you still have to look at your retirement later on and what negative impact that will have on your retirement as you will have lost that earning power while you were repaying your 401k the money.

Agent Plissken

This is why Im putting most of mine in Roth IRA... I can withdrawl up to the amount put in at no penalty.

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VTGreg

True there is no withdrawl penalty, but you are also contributing about a quarter to a third less money to your plan since the money contributed to a Roth is after tax. Kim's case is a bit different, but if you are putting money away for retirement a 401k is the way to go as long as your company has a good plan (numerous options to invest your money and matching).

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attgig

in terms of borrowing against 401k, the APR% is significantly higher than mortgage rates. However, (correct me if i'm wrong) i believe that this goes back to your account as you pay it off.

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