I am under court order from a divorce complaint to not make any withdrawls from any 401K or incure any new debt such as loans. I have a debt that needs to be paid but I have no money except from a 401K. Will I go to jail or pay a heavey fine due to contempt of court order. The bank will close the account and take what money is left if I do not pay the debt that is owed.
2 Answers from Attorneys
Thank you for your question:
The 401k is a marital asset subject to division. The restraining Order means that you shall not encumber or spend this asset prior to the final disposition of this asset through the divorce process. However, that does not mean you cannot come to an agreement with your wife to allow you to use your 401k for this purpose. You would probably have to surrender a portion of your interest in another asset of yours or forgo an interest in a portion of an asset of your wife's equal to the amount you withdrew from your 401k. Please discuss this with your attorney. Do Not touch this 401k without such an agreement in writing. If you do you could be held in contempt of court. I hope this helps. Best of Luck.
You do not want to violate the court's automatic financial restraining order. You can divide the 401(k) in any manner you choose as part of your divorce, although I strongly recommend that you retain counsel for this aspect, if you do not already have one. If both parties agree that the debt should be paid, get permission from the court to use marital assets in order to satisfy the debt.