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Info needed re: retirement funds in an AZ Ch 13 >>

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    Info needed re: retirement funds in an AZ Ch 13 >>

    Am in AZ and have a question regarding retirement funds. I have filed my Ch 13 almost seven months ago, still waiting for the case to get approved. Question is this if I decide to leave my current job for a new job in a different state can I use my funds in my state retirement fund to help pay for moving costs if I wish? I just want to get different opinions on this. I assume if these funds were protected upon filing that they still would be protected if I were to decide and take the money out and relocate to another state? Please help...... Thanks

    #2
    Someone please leave information, I spoke to my atty but seem confused here. I was told that in AZ that I could withdrawal all my funds, pay the penalty and taxes and the money is untouchable as it is exempt, just doesn't seem right to me

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      #3
      Ok, I am not an expert in this but I am in Arizona, also in a 13 plan. I would take my attorneys advice on this. Just make sure you will be able to pay the tax penalty for early withdrawal. I don't know how the trustee will find out you took the money unless you have to submit annual tax returns.

      We did take an early withdrawal on my husbands 401k to try & pay off debt before we filed our 13.. BIG MISTAKE for us. Just caused a big tax debt which we are still paying!

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        #4
        Thanks for the info..... I am in the process of changing employers. I am going to withdrawal my retirement account, I understand that I will have to pay the penalty and taxes, that's ok, but I just want to have some extra on hand cash incase I want to relocate, take a much needed vacation. After tax ill end up with around $90k, my ch 13 has been paid up to date without problems. Am just sick of always being broke...

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          #5
          Originally posted by psa10 View Post
          Someone please leave information, I spoke to my atty but seem confused here. I was told that in AZ that I could withdrawal all my funds, pay the penalty and taxes and the money is untouchable as it is exempt, just doesn't seem right to me
          I changed your thead title to add your state to it in the hopes you will also get some Arizona-based help. Good luck!

          Hopefully Des will see this and offer his advice/opinion.
          ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
          Not an attorney - just an opinionated woman.

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            #6
            And how will you live in retirement? You, though of creating a budget?

            Originally posted by psa10 View Post
            Thanks for the info..... I am in the process of changing employers. I am going to withdrawal my retirement account, I understand that I will have to pay the penalty and taxes, that's ok, but I just want to have some extra on hand cash incase I want to relocate, take a much needed vacation. After tax ill end up with around $90k, my ch 13 has been paid up to date without problems. Am just sick of always being broke...

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              #7
              I am going to start a new career path, have around 20 years to work still here. I just read all this info on many of the threads about not touching the 401k's and I do understand the high penalty costs to me but at this point in my life I feel I am better to take out the funds now, going back and forth that is for sure.....

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                #8
                If you take ALL of the $$ you are looking at a possible $30k tax bill. Dumb. Withdraw what you need for moving expenses and roll the rest to either the 401(k) set up by your new employer or a "rollover IRA".

                As to the exemption. . . your attny may be correct. There is a split in thought process with this. Some will say that the funds are yours to do with as you please. But what you do with the funds is what makes the move either smart or not so smart. Others will say that since the funds are only exempt for so long as they are in a qualified retirement plan, once removed, the exemption is lost. I cannot tell you for sure what would happen however, I have had clients withdraw funds without issue - possibly because such was done AFTER the Plan was confirmed and no one was looking.

                Now, if you withdraw the funds and they are sitting in a non-IRA type account, should your case get dismissed and your creditors go after you, the funds remaining will be subject to garnishment if someone gets a judgment against you.

                Des.

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