Retirement 401k

[mimi3311]

What is the name of your state (only U.S. law)? California

Divorce has not been finalized yet.
Division of assets/debt is just first stage of discussion.
How to file Tax Return for 2010 has been discussed between 2 of us now.
He owes about $6,000 my family.

STBX stated that " He will take out the money he owes my family from his portion of 401K. Approximately $120,000 in the account, 50% of $120,000 is $60,000. $20,000 plus penalty that come out of his portion of the $60,000. And when the time to split comes, I will still entitle my portion of $60,000.
STBX asked me my authorization for early withdraw his 401K to pay back $6,000 to my family.

He said if I give him my authorization for early withdraw, he will file tax return for 2010 as Married Joint and give me 18% of total of refund. But he would keep all of the rest.

What does it make sound to you ?
Doesn't it affect anything my portion/right I supposed to get or will/may affect later eventually as age of 59 1/2(65 ? sorry I am not sure)

Any of advice, opinion, your view, guessing will be great appreciation for me.

Thank you very much for your time and help.What is the name of your state (only U.S. law)?What is the name of your state (only U.S. law)?

 

[nextwife]

Was the $6000 a premarital debt? Was the 401K all accrued DURING the marriage? Are there other assets? What was the money borrowed for and why is it an individual debt?

 

[mistoffolees]

Was the $6000 a premarital debt? Was the 401K all accrued DURING the marriage? Are there other assets? What was the money borrowed for and why is it an individual debts

In addition, what are the relative incomes? Does OP have a 401k/ira/retirement fund?

 

[nextwife]

In addition, what are the relative incomes? Does OP have a 401k/ira/retirement fund?

And does her IRA, 401k and/or retirement account have marital accrual?

 

[mimi3311]

Thank you for immediate responses.

Was the $6000 a premarital debt? (A) No, during marriage.

Was the 401K all accrued DURING the marriage? (A) I am not sure, STBX doesn't provide the documents and is hiding.

Are there other assets? (A) We purchased a house during the marriage with both of our names on title. I know he has another retirement account but cash value is less (around 6,000) And some small saving like $5,000.

What was the money borrowed for and why is it an individual debt? (A) Misc, but mainly our living expenses included our children's during the marriage. My family demanded a 1/3 of the total sum to him(STBX) and 2/3 to me. $6,000 is 1/3 of the total sum which is his portion to repay to my family.

what are the relative incomes? Does OP have a 401k/ira/retirement fund?
(A) All of my family's income are salary from the company my family has been working for.(just tipical employee)
(A) Yes, STBX has a 401K/retirement fund. I don't have any.

I am sorry I am confused but I don't want to agree and sign on anything that I don't fully understand.
STBX has been controlling and all of kind of abuse financially, emotionally, physically. And he always play phycho game and manipulate. So marriage life had to be end.

Thank you very much for continuing your time and advices/opinion in advance.

 

[dmcc10880]

Thank you for immediate responses.

Was the $6000 a premarital debt? (A) No, during marriage.

Was the 401K all accrued DURING the marriage? (A) I am not sure, STBX doesn't provide the documents and is hiding.

Are there other assets? (A) We purchased a house during the marriage with both of our names on title. I know he has another retirement account but cash value is less (around 6,000) And some small saving like $5,000.

What was the money borrowed for and why is it an individual debt? (A) Misc, but mainly our living expenses included our children's during the marriage. My family demanded a 1/3 of the total sum to him(STBX) and 2/3 to me. $6,000 is 1/3 of the total sum which is his portion to repay to my family.

what are the relative incomes? Does OP have a 401k/ira/retirement fund?
(A) All of my family's income are salary from the company my family has been working for.(just tipical employee)
(A) Yes, STBX has a 401K/retirement fund. I don't have any.

I am sorry I am confused but I don't want to agree and sign on anything that I don't fully understand.
STBX has been controlling and all of kind of abuse financially, emotionally, physically. And he always play phycho game and manipulate. So marriage life had to be end.

Thank you very much for continuing your time and advices/opinion in advance.

You're confused? Whew!

1. Since you both incurred the 6k debt during the marriage, you owe half. Authorize a 401k distribution for 6k plus figure in the $600 penalty and tax implications as that 6k will be income to you and him equally.

From there, say the 401k is now worth about $112,000. In the division of assets, you each would get approx. $56,000. You would roll that into a 401k of your own at no additional cost to you.

2. STBX must disclose- he has a fiduciary duty to do so.

3. Why would you get 18% of any tax return? You should get 50%. And since you were married for all of 2010, you can file a joint return.

Final word: Do NOT sign anything you do not understand. Go seek the advice of an attorney.

Your STBX sounds more manipulative than financially savvy and you are in way over your head.

Again, see an attorney and let your STBX deal with him/her.

 

[ecmst12]

Actually they borrowed $18000 from her family during the marriage (read carefully). Regardless of what the family is demanding, it's likely the judge will find them each liable for half - $9k, not $6k.

And if he wants to take money out of his 401k to pay it off, he should take it from HIS portion after the division is complete - you shouldn't have to have either the money or the penalty deducted from the share that you are entitled to. Withdrawing money from a protected retirement account to pay off a debt is usually not a wise course of action.

 

[mistoffolees]

Actually they borrowed $1800 from her family during the marriage (read carefully). Regardless of what the family is demanding, it's likely the judge will find them each liable for half - $9k, not $6k.

I think that's $18 K.

The debt question is likely to get more complicated. First, the family apparently wanted $12 K from her and $6 K from him. One could argue that it's marital debt and they each owe $9 K, but one could also argue that unless she pays back her full $12 K, then that $12 K was a gift - and the amount to be paid back is really $6 K - which means they each owe $3 K. There are too many variables to be sure.

Then there's the matter of whether there really is a debt. Do they have a signed loan agreement? It's hard to enforce without something in writing.

And if he wants to take money out of his 401k to pay it off, he should take it from HIS portion after the division is complete - you shouldn't have to have either the money or the penalty deducted from the share that you are entitled to. Withdrawing money from a protected retirement account to pay off a debt is usually not a wise course of action.

The above only applies to HIS portion. She will be obligated to come up with her portion in any way she can. If she has to withdraw her portion from the retirement account, then she should also pay the penalties.

That, of course, assumes that she's actually going to pay her portion back. It may be considered a gift if it's not paid back - meaning that the $6 K is marital debt and they each pay 1/2.

 

[mimi3311]

Thank you to all for responses. I appreciate a lot.
I still can't make decision, however you guys help me to view a little better.

$18,000 is marital debt, legally split an half so $9,000 is my debt an $9,000 is his debt. However my family knows him and figure out to decrease his portion and add $3,000 on my portion. Because it is better to get back some rather than get nothing back.
It is almost impossible to get soluton with a person who loves manipulate, because his purpose is not solution, his purpose is controlling. whatever, how much I give him, he will never been satisfied.

The time is running toward the due date of filing Tax Return, I will think a little more and make decision fairly.
I am coming back to ask your opinions/advices later.
Thank you very much again.

 

[dmcc10880]

Actually they borrowed $18000 from her family during the marriage (read carefully).

My bad. I read the original post about 4 times before figuring that one out. Thanks for the clarification though.

Mimi... why would YOUR family place that additional burden on you? Unless as Misto said your family will consider it a "gift"and absolve you from paying them back.

If he wants to pay them back from his 401k, then let him, but that would be a charge to him on the division of the 401k. In other words, you're still entitled to $60k. He would get $54k.

As far as the tax return is concerned, file for an extension. He can't file a joint return without your signature.

Please listen. Go see a lawyer. Let him send your STBX interrogatories. Let him draft the judgment. Let him take control for you, deal with your STBX and protect your interests.

 

[nextwife]

Was the 401K all accrued DURING the marriage? (A) I am not sure, STBX doesn't provide the documents and is hiding.

Any 401K amount he brought to the marriage, plus accrual on it, if it is a seperate account, would more likely be considered nonmarital. The premarital 401k is deducted from any split.

 

[mistoffolees]

Thank you to all for responses. I appreciate a lot.
I still can't make decision, however you guys help me to view a little better.

$18,000 is marital debt, legally split an half so $9,000 is my debt an $9,000 is his debt. However my family knows him and figure out to decrease his portion and add $3,000 on my portion. Because it is better to get back some rather than get nothing back.
It is almost impossible to get soluton with a person who loves manipulate, because his purpose is not solution, his purpose is controlling. whatever, how much I give him, he will never been satisfied.

Sounds to me like you're the one manipulating things.

Is there a written loan agreement? If so, it should be followed. If not, your family is going to have a hard time enforcing it. It's possible, but may be more trouble than it's worth.