401k early withdrawal-count towards income?

[sprestige]

I quit my job to avoid being fired and have been living off of my 401k. Due to potential tax lien, I took everything out in January. It is almost gone (I was stupid, caught up bills, spent unwisely, loans to family etc). If I just use earnings, I can do a chapter 7 by June 1. But if the 401k is averaged in, I have to wait until August (and then hope they only want to see checking records for last six mos, ie only back till February.) My question is, does anyone know if 401k withdrawals to live on count as "income" for purposes of BK, and if so, do they deduct what you will have to pay for the early withdrawal and penalty or is it gross? If it is income, I can't qualify for a 7, but with no job, I have no income to do a 13! AGH
Thanks for any help.

[SinkingFast]

Yep. Early distributions from 401K's, retirement IRA's, and such, are treated as regular income. Those monies are counted into your 6 month CMI.

As far as the taxes go,............. The CMI is based on your gross earnings. Just like your paycheck. They don't consider after tax income only there either.

You probably had the option to have taxes withheld and opted not to. We did the same thing. Decided to worry about the taxes later. It cost us big time so be prepared. Next spring you're probably gonna owe the IRS a chunk of change.

[Walnut]

When I lost my job - I also cashed out my 401k. I had 20% withholding taken out but still had the 10% penalty the next year and then got annihilated in state and local taxes (Ohio - Thank God I now live in TEXAS!). SO be prepared for that - it won't be pretty. And SF is right - it will be considered income and you really need to wait six months for it to roll off.