Cashing in 401K after discharge

[airbear85307]

I have not been able to get hold of my attorney and am confused by all the conflicting answers here. I need to take approximately $5,000 out of my 401K. I know I shouldn't but really have no choice.

I had my 341 meeting August 5th so it should be discharged any day now. I live in Arizona and need to know if the courts can come after the money. Some posts say if you take out large amounts of money the trustee can come after it, but I'm not sure what consistutes a large amount, $5000, $10,000, $50,000??

Thanks

[airbear85307]

I just spoke with my attorney. Thank goodness he stays late in his office and answers his own phones. He told me that I could take money out of my 401K. I should wait until the case is discharged (a few days, week at the most) and since this is a no asset case it will be closed in a couple of weeks, not the year that I have been reading about.

I's going to try to take the money as a loan but I'm not sure that is possible since my position was outsourced over a year ago at the company where the 401K was started.

[doomed]

Did you never transfer the 401k over to another account? If not, I believe you can cash it out, period, without taking out a loan, or transfer it into another 401k.

[apathetic]

Doomed is right, if your job no longer exists at the Company where the 401k started, you won't be able to take a loan, but you can take a full cash-out or rollover the money into another plan. If you cash out, you must pay federal and state taxes, in addition to about a 10% withholding penalty. In most cases expect about 65 cents to the dollar when withdrawing.

[bertchic]

I'm also in Arizona and have a similar question: what if we received a hardship check 6 days after filing Chapter 7? We had applied for it earlier and didn't know if we were going to be approved, but we couldn't wait to file any longer because of an eminent foreclosure? We have not deposited the check and our 341 meeting is next week. Would it be okay to deposit it after the meeting or do we need to wait until the discharge? We really need the money because we need a car and a place to live soon. Thanks for any help!

[tcreegan]

Hi bertchic,

What size of hardship check are we talking about? And where can I get one.......

My worry would be getting asked at the 341, under oath, about receiving or expecting to receive an asset/property.
Do you have an attorney to advise you about this? I think this could cause you some real problems....

Tom in Colo

[bertchic]

The amount is approx. 20K, but I was never asked about receiving an asset or property, ONLY an inheritance. I don't know whether we should try to have it returned back to the 401K (if that's even possible) or not...?

[espo1357]

Doomed is right, if your job no longer exists at the Company where the 401k started, you won't be able to take a loan, but you can take a full cash-out or rollover the money into another plan. If you cash out, you must pay federal and state taxes, in addition to about a 10% withholding penalty. In most cases expect about 65 cents to the dollar when withdrawing.

65%? Wrong.

Its 10 percent, and then you pay the taxes, based on your bracket. Its closer to 40 percent.