QDRO rollover to an IRA then to a 401k
Husband is receiving a QDRO direct rollover into a new IRA from his former wife’s retirement plan. The retirement plan custodian said he is NOT allowed to take a partial distribution before the QDRO rollover is processed. If it WAS allowed that distribution would avoid the 10% penalty he will incur if he needs to tap his new IRA for money he needs short-term. Question is Can he roll some of his new IRA created by this QDRO into his existing 401K at his current employer (assuming his current 401k accepts rollovers form IRAs). And then take as a loan from his 401k the amount he needs short-term?
Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2025-01-21 14:22
Yes, he could do that if the current plan offers both loans and rollovers from IRAs.
There are other alternatives, depending on his age and predictability of his extra cash needs. If he looks at these funds as his share of retirement funds and he is currently working, does he really need to also tap retirement money at this time?
Permalink Submitted by Joe Messina on Tue, 2025-01-21 14:32
He is 58 years old and has nothing to his name except his small 401k at his current job, and this QDRO rollover he is receiving. Tapping this QDRO efficiently is his last hope. Unfortunately he is not earning enough at work to financially sustain himself at the present time.