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  Posted to group - Money matters    <<Previous    Next>>

401k-cash out question-QDRO

Hey, everybody is has been a long time since I have been on the board and I am looking for some advice. I am cashing out the sum I got from my ex's 401K because I need to desperately pay off debt. I know it isn't the wisest thing to do but I really need the money. A QDRO was completed so I am not worried about the early withdrawl fee. I know I need to pay taxes...but was wondering if anybody go give me some advice on an "in kind" distribution instead of "in cash". There is company stock involved and the cost basis is slightly higher then the fair market value right now. I have done some research online but am still a little confused. I really don't have the money to go to a tax/financial consultant. Thanks

by lost2009   133 Posts 
Posted on 8/25/2010 9:22 AM
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Answers for "401k-cash out question-QDRO"  (1) (You must be logged in to answer)

If I understand the situation properly, a portion of your ex's 401(k) is in company stock.  Most likely the company matching portion.  His plan probably requires that any QDRO distribution be made proportionally from each part of the fund, which means you get a chunk of stock.

So the question is, do you take the stock or the cash value of the stock?  Theoretically, you could take the stock and then wait for the price to peak and sell it at just the right moment to make a little more money.

Reality check:  this is what Wall Street does every day, all day long.  Practically speaking, you're not going to beat them on your first at-bat.  The market is in a slight dip right now, and probably isn't going up very far anytime soon.  You can't afford to wait and play the market while you continue paying interest on the debts.

Paying off your debts has a well-defined return.  It is equal to the interest you are paying.  No investment of stock is going to beat that in the next year.  Take the cash payout, pay off the debt.
by mike1493   3673 Posts
Posted on 8/25/2010 9:58 AM

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