No worries about pulling $ from IRA, right?

[moneytree]

I keep on reading about how people are worried when taking $ from 401K. My husband made a job transfer so his 401K went into an IRA. We've been drawing from that balance every so often in the past year (moving expenses, etc) not that I am proud of that. Our atty never saw an issue with it and knock on wood--neither did the trustee. This is okay, right?

I am also surprised that many worry about their tax refund being taken. Is that really the case? Or does it have to be over a certain amount? We'll probably end up paying in (even though we took our 20% hits on each IRA w/d) so not worried--plus should be discharged soon anyway.

thanks!

[HHM]

It kinda depends on your state's exemptions.

No one is saying that pulling from your 401K or IRA is a problem for BK, (some issues may arise if you pull pre BK, i.e. tax liability, income calculations, preferential payments depending on what you use it for) it is just not a good financial move in the long run.

But after you file, you can do what ever you want with your 401K and IRA. But again, the caveat is, unless your at retirement, it is usually a bad move to pull the money.

[nitramtsr]

We surrendered both vehicles ($875 month in notes) in our Chp 7. We have 2 kids and needed a vehicle terribly. Discussed things w/our atty and was given to ok to pull money from our 401K (able to do this w/no fees or penalties b/c we were also affected by Hurricanes Katrina & Rita). We did this in Dec & were discharged in Jan.

As far as our tax refunds, they have to go to the trustee. Very said b/c we did not adjust our withholdings & will probably get back around $7000.