Experiance with Title 11 522 (4)(D)(ii) ??

[8itagain]

When I filed (Pro Se) I had $27,000 in my savings account. This was borrowed money from my 401K that was supposed to have transferred out of my account (prior to filing date) to payoff my 401K loan (the transfer was delayed, unknown to me). The Trustee told me he would claim the money and is requesting that I take a loan from my 401k and pay him ... just what I need as I have no assets and I will come out of this process with a 27k loan payment!!

Well ....... I just found Title 11 522 (4)(D)(ii)

As my money was distributed from my account (in the form of a loan) then returned to my account in less than 45 days it looks promising!!

Am I reading the law right?


Filed - 2/26/10
341 - 3/26/10
Discharged - 6/30/10

[gmk]

As I suggested in your earlier thread on this subject, I would read it that the monies are still exempt. The only question I would have is that the referenced section applies to Federal exemptions. I don't know how they apply to your case if you didn't use the federal exemptions. I hope the forum Gurus can help. Good find by the way.

[8itagain]

As I suggested in your earlier thread on this subject, I would read it that the monies are still exempt. The only question I would have is that the referenced section applies to Federal exemptions. I don't know how they apply to your case if you didn't use the federal exemptions. I hope the forum Gurus can help. Good find by the way.

What say ye Guru's ... I checked box 522(b)(3)

[justbroke]

I think you are in trouble.

A 401(k) loan is not a distribution. The key emphasis is on distribution. The IRS Code regarding Section 401 retirement plans was designed so that if you were moving your 401(k) from one place to another, you wouldn't be penalized. That's why the 60-day redeposit period is in the code.

If you had taken a withdrawal, also known as a distribution, then I think this part of 11 USC 522 would work for you. However, and unless I'm wrong, I don't see a loan as the same thing as a distribution. What you created was an unsecured loan and if the proceeds of that loan were in any of your non-exempt financial accounts on the day you filed... you are in trouble.

This is my personal opinion. I don't know why you filed Chapter 7 pro se with that much money in the bank. An attorney may have saved you at least $24,000 by having you put the money back into the 401(k) plan before filing.

Since I'm a full-service poster... IRS Publication 575 goes through Retirement Plans and Annuities.

Exception for qualified plan, 403(b) plan, and government plan loans. At least part of certain loans under a qualified employee plan, qualified employee annuity, tax-sheltered annuity (403(b) plan), or government plan is not treated as a distribution from the plan. This exception to the loan-as-distribution rule applies only to a loan that either:

• Is used to acquire your main home, or
• Must be repaid within 5 years.

Source: IRS http://www.irs.gov/pub/irs-pdf/p575.pdf

I'm thinking you had a non-taxable "loan" and that it was not considered a distribution from your plan.