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Should I Trade in My Half of Her 401K From the Divorce for a New Home Down Payment? – Ray

“Dear Steve,

Getting divorced after 25 years. I’m getting 1/2 of her 401k. Because of the home market we will be lucky to get what we owe on the home.

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I need a down payment for a new home can I cash out my 1/2 of her 401k to put down on a new house. I’m looking at a $25,000 share of the 401k or trade the 401k for the home. we have 60,000 tied up in the home,

Ray”

Dear Ray,

Honestly, I don’t know. Much of if this is a right move for you or not depends on the tax ramifications of the disbursement to you. I’d suggest you talk to a tax adviser about his important issue. I’m just not certain how a disbursement from a 401(k) is treated in this situation or if the money can be taken penalty free and how much you will lose to taxes. All of that is a big consideration in determining if this make sense.

Please update me on your progress by

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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