SARSEP divorce withdraw

[Guest debtman]

I'm in the process of getting a divorce (we're being fairly amicable because we have two young children and are handling things in mediation) and, in order to buy my wife out of our house, I'm taking out a home equity loan. I'm a vet, so can take out 90% of the equity in the house as a cash out loan, so I'll be able to pay her off and have a few thousand on top of that. In order to afford to live in the house, I need to pay off my outstanding debt (around $10k). I have about $9k in a SARSEP and $3k in a 401k, and am trying to figure out the best way to cash one or both of those out with the least penalties.

I've heard that I can get a QDRO as part of the divorce which will offset some of the penalties as long as the cash goes to her? That will show up as part of her taxable income, so I'm guessing that I could pay the taxes on that if she's willing to let me do the cash out and then give me the $ to pay off the debt? Or, I'll "use" that $ as the house buyout and use the home equity loan to pay off my debt (as a matter of semantics).

Does anyone have any input/ideas on this? Does this seem like the best way to handle this?

Thanks!