Ex wants half of 401k contributions made post-divorce

[coda]

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

My ex was awarded 50% of my 401k in the divorce. Today I got the QDRO from her attorney stating that she gets 50% of the balance "valued as of the date the transfer is recorded." I know she is entitled to growth, but if she gets half of the current value she will be getting half of my post-divorce contributions, which have been substantial, as I have been trying to regain the hit to the account as quickly as possible. Can she do this? I can't afford a lawyer.

 

[cbg]

She is entitled to whatever the divorce settlement says she is entitled to. If that is not clear, then you'll need to have a judge decide. This is not a matter that is settled by law.

 

[stealth2]

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

My ex was awarded 50% of my 401k in the divorce. Today I got the QDRO from her attorney stating that she gets 50% of the balance "valued as of the date the transfer is recorded." I know she is entitled to growth, but if she gets half of the current value she will be getting half of my post-divorce contributions, which have been substantial, as I have been trying to regain the hit to the account as quickly as possible. Can she do this? I can't afford a lawyer.

Have you looked at your court order? That might be a place to start...

 

[coda]

It just says she gets half of my 401(k). Nothing else.

 

[single317dad]

Sounds like you would have been better off spending a few bucks asking an attorney before you made "substantial" contributions to a retirement account that you knew was going to be divided. That your ex would be entitled to half of your post-divorce contributions is ridiculous, and is analogous to you being able to make substantial withdrawals to shaft her out of her portion. If you don't proceed correctly, though, that's exactly what will happen. There's an old saying that I'll revise for application here:

The best time to get an attorney was before.
The second best time is now.

 

[cbg]

Once again; if the order is not clear and you cannot agree on what it means, this will have to be decided by a judge. There is no statute and no case law that either you or she can point to that defines what she is and is not entitled to. The law does not get as deeply involved in your personal finances as that.

 

[gator1]

It just says she gets half of my 401(k). Nothing else.

If that is ALL the Order says, you are almost surely screwed, and your ex's attorney was correct in drafting a QDRO stating that your ex gets 50% of the balance "valued as of the date the transfer is recorded".

Though you should ask an attorney to review the order, and see if you might be able to take a loan against your 401k, in the amount of any additional funds you added since the divorce. Prior to the "date transfer is recorded"

 

[Bali Hai]

If that is ALL the Order says, you are almost surely screwed, and your ex's attorney was correct in drafting a QDRO stating that your ex gets 50% of the balance "valued as of the date the transfer is recorded".

The ex should have waited longer to execute the QDRO to get more money that she wasn't entitled to.

The attorney is not correct, the attorney is a crook!

Even a judge would have more common sense than that.

Though you should ask an attorney to review the order, and see if you might be able to take a loan against your 401k, in the amount of any additional funds you added since the divorce. Prior to the "date transfer is recorded"

I'm not following the loan advice. If she convinces a stupid judge that she is entitled to 50% of funds added after the divorce, and, even AFTER a loan, she would still get it out of his portion that wasn't secured by the loan.

 

[gator1]

I'm not following the loan advice. If she convinces a stupid judge that she is entitled to 50% of funds added after the divorce, and, even AFTER a loan, she would still get it out of his portion that wasn't secured by the loan.

If he does not take out a loan in advance of the "date of transfer", he is GUARANTEED to lose half of his post divorce contributions.

He should be able to take out that amount of post divorce contributions in advance, and show the statement with the current (post loan) balance. IF they ask for details on any outstanding loans, he can provide that, along with his justification for doing so. If they have a problem with that, it is up to them to litigate that point if they wish.

Given the plain letter of the order, it could go either way, although presumably the intent of such an order would be the value of the plan at the time of divorce. Worst case he pays more, though he should not have to. Unless of course he did NOT take out his excess contribution BEFORE the date of transfer.

Along the same lines, some divorce decrees state ex-spouse is entitled to HALF of pension benefits, without qualifying that for the number of years the couple was married. Big surprise when wife who was married for only 10 years is found to be legally entitled to HALF of a 25 year pension. Because the "plain letter" of a court order overrides what the "intent" was, at least on appeal.

But in this case the plain letter of the order cuts both ways. And his withdrawing his post divorce contributions should not be seen as trying to pull a fast one, or even violating any part of the letter or intent of the QDRO

 

[LdiJ]

If he does not take out a loan in advance of the "date of transfer", he is GUARANTEED to lose half of his post divorce contributions.

He should be able to take out that amount of post divorce contributions in advance, and show the statement with the current (post loan) balance. IF they ask for details on any outstanding loans, he can provide that, along with his justification for doing so. If they have a problem with that, it is up to them to litigate that point if they wish.

Given the plain letter of the order, it could go either way, although presumably the intent of such an order would be the value of the plan at the time of divorce. Worst case he pays more, though he should not have to. Unless of course he did NOT take out his excess contribution BEFORE the date of transfer.

Along the same lines, some divorce decrees state ex-spouse is entitled to HALF of pension benefits, without qualifying that for the number of years the couple was married. Big surprise when wife who was married for only 10 years is found to be legally entitled to HALF of a 25 year pension. Because the "plain letter" of a court order overrides what the "intent" was, at least on appeal.

But in this case the plain letter of the order cuts both ways. And his withdrawing his post divorce contributions should not be seen as trying to pull a fast one, or even violating any part of the letter or intent of the QDRO

Unfortunately, a loan does NOT reduce the account balance. It just reflects a loan against the account balance. Therefore I do not think that idea would help at all.

 

[ShyCat]

Unfortunately, a loan does NOT reduce the account balance. It just reflects a loan against the account balance. Therefore I do not think that idea would help at all.

Maybe not in your plan, but it sure did in two of mine. Mutual fund shares were reduced by the number withdrawn, and increased as loan payments repurchased new shares, all of which were reflected in the security and account balances.

 

[Bali Hai]

Maybe not in your plan, but it sure did in two of mine. Mutual fund shares were reduced by the number withdrawn, and increased as loan payments repurchased new shares, all of which were reflected in the security and account balances.

In my plan the loan amount must be transferred from securities to an interest bearing account as collateral.

I really have a hard time understanding how ANYONE does not see that the ex and her attorney are trying to gouge money that they are not entitled to. The parties are DIVORCED and the longer they wait to execute the QDRO the more money they gain from OP's contributions. This is egregious. The stupidest judge in the world has to see that.

This situation gives rise to every unscrupulous person trying the same thing in a divorce. The law should prescribe that not only the amount of the retirement funds to be divided but also WHEN the division takes place. And I'm not so sure it doesn't.

 

[Bali Hai]

If he does not take out a loan in advance of the "date of transfer", he is GUARANTEED to lose half of his post divorce contributions.

He should be able to take out that amount of post divorce contributions in advance, and show the statement with the current (post loan) balance. IF they ask for details on any outstanding loans, he can provide that, along with his justification for doing so. If they have a problem with that, it is up to them to litigate that point if they wish.

Given the plain letter of the order, it could go either way, although presumably the intent of such an order would be the value of the plan at the time of divorce. Worst case he pays more, though he should not have to. Unless of course he did NOT take out his excess contribution BEFORE the date of transfer.

Along the same lines, some divorce decrees state ex-spouse is entitled to HALF of pension benefits, without qualifying that for the number of years the couple was married. Big surprise when wife who was married for only 10 years is found to be legally entitled to HALF of a 25 year pension. Because the "plain letter" of a court order overrides what the "intent" was, at least on appeal.

But in this case the plain letter of the order cuts both ways. And his withdrawing his post divorce contributions should not be seen as trying to pull a fast one, or even violating any part of the letter or intent of the QDRO

Why doesn't he take a loan for the entire amount of the 401k account? She would then get 50% of nothing. When the QDRO is executed you can bet she will determine what 50% of the account was worth BEFORE the loan.

I don't believe the loan trick is going to fly.

 

[cbg]

Actually, Bali, no one has said otherwise.

However, the fact remains that since this is not an issue addressed by statute or case law, either the OP and his ex will have to come to an agreement between them, or they will have to take it before a judge who will decide.

What that unknown judge will decide is obviously unknown, but it's just as likely that he will rule for the OP as otherwise.

So don't get your knickers in too much of a twist quite yet. You know perfectly well that if it were a female OP with the exact same complaint about her male ex, you'd be arguing that he WAS entitled to the money.

 

[Bali Hai]

Actually, Bali, no one has said otherwise.

However, the fact remains that since this is not an issue addressed by statute or case law, either the OP and his ex will have to come to an agreement between them, or they will have to take it before a judge who will decide.

What that unknown judge will decide is obviously unknown, but it's just as likely that he will rule for the OP as otherwise.

So don't get your knickers in too much of a twist quite yet. You know perfectly well that if it were a female OP with the exact same complaint about her male ex, you'd be arguing that he WAS entitled to the money.

I'm sorry you have such a low opinion of me, but I must say that it doesn't matter who is trying to steal money from someone who has worked hard for it, male or female, it is WRONG.