Two days before going into my meeting of the creditors I found out I was being laid off. I am not sure if I am eligible for unemployment so I would like to cash out my 401K and 403 B as a cushion until I can find something else or even go back to school. Can the trustee take this money from me??
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Two days before going into my meeting of the creditors I found out I was being laid off. I am not sure if I am eligible for unemployment so I would like to cash out my 401K and 403 B as a cushion until I can find something else or even go back to school. Can the trustee take this money from me??
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Cashing out makes has two independent exposures. (1) you'll loose alot in taxes as there is a 10% additional tax on the retirement withdrawl for earlier withdrawl and (2) any cash you have available is an open target for a trustee. As long as it's in the 401K for retirement it can't be touched. Some states like Florida also protect the home from judgments; aka alot of Enron's exec's immediately moved to Boca Raton and built big houses protecting their money from judgments. Don't know what state you live in but check you states laws; if only more were like Florida. I live in NC which doesn't protect the home. -
Being laid off should certainly make you eligible for unemployment. if your 341 is only a few days away, that means you BK only has 2-3 months left. If you can hold out, do so and do not convert your 401k, also, you shouldn't do it as waz pointed out, you don't want to take the tax hit if you can avoid it.Comment
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