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401k Withfraw Prior to Filing Divorce

Houston, TX |

If I were to withdraw my 401k prior to filing for a divorce to pay off a loan, would this be problematic? I will be filing in Texas. I would liek to pay off as much debt owed as possible to be able to position myself to better afford coming expenses.

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Attorney answers 3


This all would depend on what type of debts you are paying down. Is it joint debt? If it was debt you both incurred for items you both took benefit from during the marriage, should be no problem. If you furnsihed your man-cave with all of this debt and you are keeping the man-cave intact, may be a problem



Thank you for your response. I was avtually looking to help pay down my wifes car in an attempt to assist her in getting into a more affordable payment as she is currently upside down on her car. I would have also liked to pay off the remainder of my student loan.


Withdrawing 401(k) funds can be exceedingly expensive if done early. You could be triggering a huge tax bill. Anything done without consulting and reaching agreement with your spouse is subject to allegations that you acted in bad faith. I would follow the advice of experienced divorce counsel rather than concoct a plan on my own.

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Thank you for your response. I appriciate the feedback.


You need to hire an experienced divorce attorney. Depending on your age, withdrawing the funds from the 401k can generate income tax penalties as well as income tax liability. Besides the tax ramnifications, there are the divorce ramnifications by doing as you proposed so you need advice to prevent from creating problems other than just tax problems. It is easy to imagine scenerio of tax penalties, income tax liability, and that you are ordered to pay spouse at least one-half of balance before you pay off debt.

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