# Paranoid about money... Help w/ 401K and IRA?



## hurtingbadly (Sep 14, 2011)

BS and I separated for a little over a month recently after he lost his job. He has a new job and is back home, but finances are extremely tight. He has to do something with his 401K soon... He has met with someone to roll the majority of it into an IRA as opposed to the 401K at his new job. He claims this is because he can take out money from the IRA, but the 401K he can't. We might need to dip into it, although hoping the small amount he's taking before the rollover will cover us until he gets business built back up. 

We've been in turmoil for almost two years now since I learned of an old betrayal back when our children were little. It has made the last half of our twenty years together feel like lies. I don't trust him now, I've become very paranoid. I thought I knew him, but I didn't. 

Could there be an alternative motive behind rolling his 401K over into an IRA instead? He likes to think his 401K is his money, he has made that comment several times, but I believe since it was all acquired during our marriage it would be up for division in a divorce. At this point I just want to make sure I'm protected as I've been a stay at home mom for many years and am now looking at extremely entry level pay. Can he remove the money from the IRA prior to a divorce to avoid me getting anything? He claims he put me down as beneficiary. How do I even know? 

Any advice would be extremely appreciated. I can't seem to find anything online that is specific to my situation. Thanks.


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## Pluto2 (Aug 17, 2011)

In most situations you can roll a 401K into an IRA with no tax consequences. Unless he fits into one of a few categories, taking money out of a 401K and NOT rolling it over carries a hefty penalty (10%), plus state and federal income taxes. Granted if you must, you must, but it will cost you. The same general rules apply to early withdrawal from an IRA, but the IRS lets you take money out for certain hardships: excessive meds, disability, death, or school-all with certain restrictions. Even if you can qualify for a penalty avoidance, you still have to pay taxes. You always have to pay the taxes.
And rolling it from a 401K to an IRA has nothing to do with whether or not the money is marital property.
Maybe you should find out some more before you and H incur additional tax liability, especially if money is tight.


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