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    #16
    I state my opposition in that I pulled 6K out when "things were tight" but by no means critical. It was near impossible to put it back. I ended up defaulting and probably lost an equivalent in interest not earned, interest paid, and tax penalties.
    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

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      #17
      Originally posted by HHM View Post
      From a BK perspective, you can take it out, but as others have said, it would almost certainly be a mistake to do so. Although the funds are not considered income, they would be considered an asset and the trustee can question where the money went and possibly pursue the parties to whom the funds were paid if appropriate.

      You are about to file chapter 7, the last thing you want to do is liquidate a protected asset.
      Ok, I'm getting conflicting advice. I took out a $1400 loan from my 403b (same as a 401k), in August. I've been told that this WILL be considered income on the 6 month look back. You are saying it won't be. This $1400 puts me over the median and unfortunately I do not pass the 2nd part of the means test.

      Is there a definitive answer to this somewhere? I'm meeting with an attorney next week but if I can't file until this falls off, I may cancel and set up an appointment again in a few months.
      Filed Ch. 7 (no asset): 12/30/2008
      341 Meeting: 01/26/2009
      Last Date for Objections: 03/27/2009
      Discharged & Closed: 03/30/2009

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        #18
        Originally posted by TEW View Post
        Then why put the money in there put it in a savings account and hopes for the best. Hell you can always live on that $200.00 a month SS check.
        One thing I can say is that rough patches tend to recur.

        Its much easier for some people to put money into a 401k. Its usually taken right out of your paycheck before its seen or touched.

        Most people do not put money into a 401k and then 'hope' that everything goes well in life. Most people put money in it and then assume that life will stay the same or work for improvement of their existing lifestyle.

        In the blink of an eye the rug can be pulled right out from under you. At that moment does a $200 social security check really matter? Not sure of your situation but when a person is completely down and out and is responsible for the life of others, retirement is really the last thing on their minds.

        I just saw on the news about a man who killed himself and his entire family because of finances. While this is an extreme example..I highly doubt he was worried about retirement.

        There is a difference between a rough patch and a complete change in your entire life.

        All I am saying is that every single time someone posts about money in a 401. The initial response should not be to shut down the idea entirely. Look into their situation. Find out exactly why they need money. Are they jobless? Do they have children? Everyones life may not be exactly like ones own.
        Last edited by momof5; 10-07-2008, 05:40 AM.
        5/29 Filed 7~ 341-on 6/24
        8/27-DISCHARGED
        11/2 - CLOSED
        EQ-604 EX-605 TU-560 ~4.5 months after discharge

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          #19
          It is not income. It is an asset.

          On the means test line #7, they are talking about retirement income from a pension plan, not a 403b loan. The $1400 should not even be included in the means test.

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            #20
            Originally posted by momof5 View Post
            I do not understand why every time someone posts something about 401k people SCREAM out that they should NEVER touch it without hearing the details as to why a person might absolutely need that money.

            This is a new day and age here folks. If we hadnt touched our 401k then we would be living on the streets with 5 children. To have someone tell me that we should NOT have touched that money is like telling us that its okay to starve and its okay to be homeless etc. Who cares what happens today but make sure that in 20 years you have money.

            While its okay to remind people that there are tax consequences (although that is clearly stated in all the legalease that comes along with a withdrawal) .
            I think most people who are in a position of desperation and have no other income or no other source of funds ,a little support on withdrawing 401k money would be better help.


            I do not know the OP's situation but a 401k loan is NOT a withdrawal and does not have the same tax issues unless they default.

            OP if you are in a position that you desperately need some funds to help you survive then by all means do a loan to get you through. Keep the amount to exactly what you need and can document. Such as groceries,heating bills,mortgage or medical. If you need a couple of thousand to pay for your attorney and these much needed monthly expenses to get you through a rough patch in the present time then you have to do what you have to do.

            I am a firm believer that if you can't survive today then retirement isnt going to much matter.

            Excellent points. Right now, with the market fluctuating, maybe it's not such a bad idea to take out some/most of your 401k. If you aren't in the middle of a BK, you can always add it back in if/when things stabilize. In the meantime, you can convert it to silver or gold, or just stash it in a fireproof safe. Call me paranoid, but I wouldn't put it in the bank right now.

            I can tell you that I wish we'd taken some out in a loan recently. My husband's 401k has lost up to 20% of its value in the past couple of weeks. Right now, the loss hovers around 10%, but who knows what tomorrow will bring? Our accrual wasn't huge, but that 10% loss hurts, and we're still young enough to make it back by retirement, in theory.
            Filed No Asset Ch. 7, pro se, 08/18/2008
            341 meeting is 09/25/2008
            Last day for objections is 11/24/2008
            Discharged: 11/28/2008

            Comment


              #21
              Originally posted by tunskit View Post
              Excellent points. Right now, with the market fluctuating, maybe it's not such a bad idea to take out some/most of your 401k. If you aren't in the middle of a BK, you can always add it back in if/when things stabilize. In the meantime, you can convert it to silver or gold, or just stash it in a fireproof safe. Call me paranoid, but I wouldn't put it in the bank right now.

              I can tell you that I wish we'd taken some out in a loan recently. My husband's 401k has lost up to 20% of its value in the past couple of weeks. Right now, the loss hovers around 10%, but who knows what tomorrow will bring? Our accrual wasn't huge, but that 10% loss hurts, and we're still young enough to make it back by retirement, in theory.
              Chapter 7 07/30/2008
              341 09/17/2008
              Discharge 11/21/2008

              Comment


                #22
                I must agree from my experience. Now here is what we did, we gave/sold about 260 acres of farm to the State. Worth about 10 mil. We were willing to give it away for the last 20 years as a park NEVER TO BE DEVELOPED and we did this as at that time we had money and no need. The farm is from 1860 and in our family continue use. 22 Acres are on the river. We hold a life estate and the State made a wonderful park. The State cannot take a gift so we got a million dollars. To avoid taxes, we putit into an irrevocable Charitable Trust. Merrill Lynch did a wonderful thing, they put it into an annuity account in which we get 7% payback per year. It does not matter if the stock market goes to zero, upon our deaths the Trust will pay out the face value we put into it or the highest amount it achieved since conception. The yearly payout will always be the same even if the principle is destroyed in a crash. I will forever be grateful for Merrill Lynch as I told them conservative. Also we went bust due to an enemy and our wealth went to lawyers and health expenses due to his eight years of harassment. We lost $190,000.00 and now fall below the means test, even with our stipend and SS.

                I would look into this for anyone. Merrill used Hartford Insurance.
                If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                Comment


                  #23
                  In this instance I agree with you 100%. The fear of losing money in a 401k right now is NOT a good reason to take the money out. Or for those that have already lost alot of money and are worried about losing more. Right now they are saying 2 to 3 years for recovery of funds lost but at least it will replenish to hopefully were it was to begin with. If you take it out for reasons other than being in dire need then your probably going to regret it.
                  5/29 Filed 7~ 341-on 6/24
                  8/27-DISCHARGED
                  11/2 - CLOSED
                  EQ-604 EX-605 TU-560 ~4.5 months after discharge

                  Comment


                    #24
                    Originally posted by momof5 View Post
                    In this instance I agree with you 100%. The fear of losing money in a 401k right now is NOT a good reason to take the money out. Or for those that have already lost alot of money and are worried about losing more. Right now they are saying 2 to 3 years for recovery of funds lost but at least it will replenish to hopefully were it was to begin with. If you take it out for reasons other than being in dire need then your probably going to regret it.
                    The unfortunate thing about our current stock market, is, it hasn't been this bad since '29. BUT when your account is down, there is only one way to go. It's long term and WILL recover. Look what happened to the oil, it too is down. That is good. It would be a double zinger if it went high.

                    I used to hear a saying: When the United States gets a cold, the rest of the World gets pneumonia. 'Hub
                    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

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                      #25
                      I pulled 7000 out of my simple IRA in Mar/April to stay alive when my husband was diagnosed w/ cancer. Is this going to bite me in the but when i file?

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                        #26
                        oops sorry
                        Last edited by stressedinmn; 10-21-2008, 06:04 PM. Reason: oops

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                          #27
                          While I agree with pretty much everyone here stating not to touch this there is one reason why it maybe a good idea. If you are borderline on your means test 401k loan repayments are an allowed expense and may keep you out of chapter 13 prison.

                          Other then that don't touch it.
                          The essence of freedom is the proper limitation of Government

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                            #28
                            The money in retirement is YOUR money -- yes, you pay interest, but you end up paying everything back to yourself. If you desperately need to borrow against it, just do what you have to do. Just do not close or cash out the retirement account - that would be huge mistake with big penalties.

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