So I’m in a tough spot right now. I need to find a place to live, but I don’t have the money for it. The only option I can think of is pulling from my 401b account early. But here’s the issue—my ex is claiming he wants half of it. If I do that, will I get penalized? Anyone know how this works?
Yeah, withdrawing early from your 401b can trigger penalties. Usually, there’s a 10% early withdrawal penalty, plus you have to pay taxes on it. You might want to talk to a tax pro about this.
Emily said:
Yeah, withdrawing early from your 401b can trigger penalties. Usually, there’s a 10% early withdrawal penalty, plus you have to pay taxes on it. You might want to talk to a tax pro about this.
Wait, what do you mean by ‘10% penalty’? Is that on top of the taxes?
Emily said:
Yeah, withdrawing early from your 401b can trigger penalties. Usually, there’s a 10% early withdrawal penalty, plus you have to pay taxes on it. You might want to talk to a tax pro about this.
Yeah, the penalty is separate from the taxes. So it’s like a double hit. That’s why it’s usually a last resort.
If this is related to a divorce, you might be able to avoid penalties by rolling the funds into a new retirement account for your ex. It’s called an in-kind transfer, and it could save you from extra costs.
@Pax
That sounds complicated. Do you need a lawyer for that?
@Pax
Yeah, you’d need to talk to a lawyer or a financial advisor. They can guide you through the process and make sure it’s done right.
Another thing to consider is negotiating with your ex. In some cases, you can work out a deal in the marital settlement to split the taxes or penalties fairly.
Shane said:
Another thing to consider is negotiating with your ex. In some cases, you can work out a deal in the marital settlement to split the taxes or penalties fairly.
How does that even work? Like, do you just ask them to pay part of it?
Shane said:
Another thing to consider is negotiating with your ex. In some cases, you can work out a deal in the marital settlement to split the taxes or penalties fairly.
Pretty much, yeah. The settlement can specify how the taxes and penalties are handled. A local attorney can help you with that.
Honestly, pulling from your 401b should be your last resort. Maybe there are other ways to get short-term funds? Loans or assistance programs?
Aki said:
Honestly, pulling from your 401b should be your last resort. Maybe there are other ways to get short-term funds? Loans or assistance programs?
Good point. Have you looked into housing assistance programs in your area?
Aki said:
Honestly, pulling from your 401b should be your last resort. Maybe there are other ways to get short-term funds? Loans or assistance programs?
Not yet, but I’ll look into it. Thanks for the suggestion!