38-year old man finds himself in a major financial bind following his
divorce and would like to use the funds in his 401K plan to relieve his
debts. But the plan’s rules seem to prohibit this, so he is wondering if a lawyer specializing in this area could help dig through the plan’s red tape to access his funds.

At first glance he came out of the divorce pretty well. He was able to keep the house and he was also able to avoid any kind of alimony or child support payments. But keeping the house also meant having to make payments on both
the mortgage and second mortgage from just his income instead of the expense being shared with his wife. He also was forced to take on large credit card debt on which the wife had also helped with payments.

Bottom line is that after the divorce his monthly expenses now exceed his income by around $3000 largely due to the double mortgage and credit card payments. He has no savings and no sellable assets other than the house and car. He has taken as much equity out of his $600K home than would be
allowed by lenders, and he does not want to have to sell either. His only possible source of funds is his fully vested 401K account with a balance of nearly $600K in all pre-tax funds. He already has a small loan of under $30,000 from the plan so he can't do another loan until that loan is paid
off, which won't be for another five years. His hope was to simply withdraw enough money from this account (after allowing for required taxes and IRS penalty) and use the funds to pay off the second mortgage and the
outstanding credit card debt. But the plan administrator refuses to let him touch the funds except in certain specific cases, including:

• Payment of expenses to prevent foreclosure on, or eviction from, your primary residence

• The need to replace your or your Spouse’s lost wages (net of any other benefits received, such as unemployment and Workers’ Compensation) due to an absence of pay for a period of at least four consecutive weeks

In this case, his house is not in foreclosure but his position is that he doesn’t have enough funds to make his two mortgage payment along with his other expense items. Can he make the case that he needs the funds to
prevent the foreclosure that will inevitably happen if he stops making the payments because he is paying other bills instead?

Regarding the lost wages option, the wife is still employed but he no longer has access to that income. So can he make the case that he has literally
lost access to his wife’s income under the plan’s rules?

If anyone reading this is knowledgeable about this field, does he have a
case here against the 401K administrator?

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