"Special Circumstances"

[kylinava]

Today in the mail, I received our 1099-R from dh 401k from the withdraw we took out in October. Its something I have simply overlooked when filing (OOPS!!!) , and had not added the income into the means test. I will do an amendment PDQ, our 341 is the 14th of this month. Anyhow, that "income" puts us about $300 over a month for the means test. Along with a big commission check I received in November (that I normally dont receive!), we are certain that the Trustee will dismiss. Has anyone had success with "special circumstances"? I am sure that we will be able to prove that this is not our normal income, but I dont know how judges normally view this kind of thing...

[kylinava]

Oh yeah...pro se BTW.

[kylinava]

Anybody!?

[butterflywings]

I think this is going to be one of those cases where it would have been cheaper to have used an attorney.

I wish you good luck.

[no_it_all]

Are you absolutely sure it was a 401(k) withdrawal? If it was, then you also have tax consequences. Typically you can only withdraw in <hardship> cases. Foreclosure, funeral expenses, and medical expenses, that is it. Hard to believe you met one of those cases and <forgot> about the withdrawal. At any rate, since the withdrawal was on pretax dollar income (effectively lowering your tax rate) you will have to file an amended return and will pay a 10 percent penalty in addition to more taxes. You will also not be able to contribute to the 401(k) for at least six months.

My guess is that you filled out the Means Test Calculation worksheet wrong to begin with. The money contributed to a voluntary 401k plan is part of your gross income, so if you did the worksheet correctly, withdrawing your own money does absolutely nothing to increasing your income. Make believe that instead of contributing to a 401(k) you contributed to a piggy bank on your dresser. Either way, the money came from your gross income right? If you make 20k a year and put 5k of it in your piggy bank (or 401k) and then took it out, you still only made 20k that year, not 25K...A qualified 401(k)s only affect is on your taxes, not your gross income (which is what the Means Test wants to know).

[PaKettle]

I would think that these special circumstances might be considered as indeed special by the Trustee. I hope so.
Good luck!
Is there any way you could still hire an attorney at this point? It might be worth it...

[kylinava]

We have "income" from various sources monthly. So when I was going through and pulling all of our pay stubs and pay advices, this was not in there, as I added the stub to all of the 401k paperwork (for eoy tax purposes!). This withdraw was done way prior to considering chapter 7. I did not pull the 401k file from our filing cabinet because I can simply look online to find the balances, the amount contributed each week and the balance of any outstanding LOANS. The withdraw we took 3 months ago does not show on the statement I look at every month, so yes, I simply overlooked it. I have amended it means test again, showing the amount, and attached a Statement of Circumstance along with it. We will also bring a copy to the 341, incase the Trustee hasnt received it yet. In any instance, I will absolutely attend the hearing and contest if the trustess see is as presumption of abuse. I know our financial stands, and have paperwork to back it up. I just hope that the judge agrees...

[no_it_all]

I don't think you quite got it yet (or maybe it is me!)..You are taking your OWN money out of the 401k...it isn't additonal income. Again, if I put 5 thousand dollars in the bank and two years later take out 5 thousand dollars, my income for the year didn't go up 5 thousand!

[kylinava]

I understand what you are stating, however, I am perplexed. Hypothetically, if I had 5 thousand dollars in any other bank account, the Trustee would snatch it up. The funds in the 401k are protected, as long as they remain in the 401k account. The means test states income from ALL sources. If the Trustee is auditing our account, and sees this deposit, I am 100% they will question this (it was a hardship withdraw of about $2300). I feel better being straight forward in stating that we had received this money, however I hope that the judge sees that it is not actual "income". I hope what you are stating is correct however. I would LOVE to not have to count that as income, and take the additional tax amount deduction.