Should I suggest my husband keep his $200,000 401(k), so I can take our $360,000 house?

Dear Quentin,

I’m divorcing after much heartbreak and finally extricating myself from two decades of marriage that required me to put aside a very lucrative career to focus on children, and move across the country in between. The children are adults now, one just out of college and the other still two years old. I was going to try to wait, but I think I need to pursue divorce.

My early career 401(k) was used as a down payment on the house. I am happy to report that I am back to work full time with a decent salary and health benefits. Since I’ve only been in a solid job for a few years, my 401(k) has $15,000, while my husband’s has $200,000. I will receive a pension in 12 months and, if I can work another 15 years until I’m 72, I should be ready for a modest retirement.

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We have a home with $200,000 in equity and $160,000 remaining in the mortgage at a fixed rate of 4.5% for the next 20 years. (This would equate to $380,000 in total payments excluding taxes, maintenance, insurance, etc.). This is a solid but modest three-bedroom house on a large lot that can be subdivided. (For context, one bedroom rents in our area are higher than our $1,600 monthly mortgage.)

We have significant credit card debt and three monthly automatic payments – $60,000. I will seek alimony for the next 15 years until retirement – ​​for the years of lost income, career potential and standard of living while raising our children.

I plan to keep the house following the basic advice of “always own it”. I also like the idea of ​​possibly being able to place it in a trust for the children. Does it make long-term financial sense to let my husband keep his 401(k) intact while I take ownership?

Or does it make more sense to sell the house, pay off our debts, divide what’s left, including his 401(k), and possibly just rent for the remaining 30 years of life?

Soon to be divorced

Related: “My husband takes care of all our finances”: We have $200,000 in a high-yield savings account at 3.75%. Are we beating inflation?

The story continues

Dear Soon,

If the choice is yours, then choose home, sweet home.

If you don’t keep the house, you will have to make a down payment on a new house and, likely, you will downsize your house. Second, you’ll pay tax on your share of your husband’s 401(k). Some rough math: What if you ended up with $70,000 from his 401(k), not accounting for compound interest – principal and accumulated appreciation – and $150,000 from the sale of the house, minus fees real estate and attorney fees, taxes and other closing costs, you would free up $220,000. Your house is worth $360,000 and, I suspect, will continue to appreciate in…