401k to pay bills.

[LSUTiger32]

I am pretty sure that money taken from a 401K is considered income. The good news is that I am also pretty sure that if you show you spend the money on household expenses and bills that you will be OK. It may delay your filing a bit though if you cannot show that you still spent more than you made. You will likely fail the first part of the test, but you may be able to get through under the expenses part.

[AngelinaCat]

Ken7carol: this is one of the most stupid things we did--to liquidate 'Hub's 401k to pay bills. We got a 10% penalty plus paying IRS back for it.

We are discharged now, but living only on 'Hub's Social Security, and my unemployment which will run out at any time. At 56, I cannot get another FT job and I don't know if I will get my PT job back in the Fall.

We sure could use that money...... I raided every single *d* penny bank in the house today trying to get get by until Wednesday, when 'Hub gets his SS check......

[AngelinaCatHub]

Ken7: Oh I wish you had not done this. You just gave up your future untouchable retirement funds to pay something you wish to bk on? I hate to make you feel uncomfortable, but the facts are, you get to pay a 10% penalty to IRS, as well as regular income taxes on it. As far as income, I don't know. It was a sheltered asset. It may not be now. If you pay this back under the terms of the loan (It was a loan I hope?) pay it back.

I sure wished you came here lurking a long time ago. You would see this is not good. I am known for my ability to be too "nice", but I must be quite candid here. This was not good.

As far as your second question, yes, you must ask your lawyer. After he says what I have said, take his advice. I wish you well and PLEASE tell us what your attorney suggests. 'Hub

P.S. if it were bills and not CC's yes account for it. But, none the less, to raid your sheltered savings is not a good practice.

[ken7carol]

401k income

And would this be income i should worry about? Does it make any different what i do with this money? Have not filed yet.

[ken7carol]

Question i took money out of my 401k in july to pay bills etc will i have to account for this money if i file chapter 7 in july i know the last 6 months is what counts on the means test which would be jan to june.