Do I need to amend to include cashed out IRA?

[SevenFilerCA]

I just realized I cashed out the without-penalty portion of my ROTH IRA (the principal) in March of last year in order to try to keep up with credit card bills. Do I need to amend my Statement of Financial Affairs to include this amount? This was all originally wages earned in the past and of course had tax already paid on it. All the interest is still in the IRA.

[Help!]

Yes - this is income.

[SevenFilerCA]

Wow, even though it was saved out of post-tax dollars, it's income again?

What about if I've taken money out of a saving account, is that income?

[Flamingo]

Wow, even though it was saved out of post-tax dollars, it's income again?

What about if I've taken money out of a saving account, is that income?

Think of what you are asking and how the money gets into that account and a general savings account as you also ask about that....It is "income" (asset) for other purposes but not taxable income on your tax returns but would be listed and indicated as such on your tax returns in the proper spacing/lines provided. The bank logs all this via your SS number and the IRS is sent information each year on the interest on any account with them that accrues interest and that would include savings accounts. The funds you save in a regular savings account are already taxed but are an asset to you also so if you take those funds out and use them, they are additional funds to you at that time and reportable for BK purposes.

[Help!]

The way it was explained to me is that cashed out stock, 401K, IRA money becomes income on the means test because it's cash that can be used to support the expenses on your means test. It's up to the debtor how they choose to use that money, and if it's not used for necessary living expenses it's a real problem. Income was defined by the UST in our case to mean "money received from all sources during the six months prior to filing". This is not what happens to everyone, but it's something that can happen if you're an above median debtor and/or the UST is pursuing a presumed abuse conversion/dismissal.

As far as emptying a savings account, it depends on the trustee, the amount of money and how it was spent. For example, if you emptied an account with $2000 in it and can show that it was used for necessary living expenses that's one thing. Emptying out an account with a $10K balance while your bank account statements show transactions from restaurants, hair salons, department stores, hotels, airlines, etc. is another.

[SevenFilerCA]

Thanks all, I am learning a lot.