Loan Balances and Repayment
401(k) plans like the Aggressive Appliances 401(k) Plan may allow participants to borrow from their account. Loan balances are a big issue in divorce. Should the loan reduce the total balance before the QDRO transfer? Should the alternate payee share the loan? These are crucial decisions to make in the QDRO.
In most cases, the loan remains the participant’s sole responsibility, and the alternate payee’s share is determined based on the account value ignoring any loans. But mistakes here are common—and costly. We’ve seen QDROs rejected because the drafters didn’t factor in the loan at all.

