Originally posted by shipo
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Normally, you can't access the 401k funds while employed at the company. Hardship withdrawals are difficult and slow to get with a ton of documentation requirements and it is highly discouraged to ask the trustee/court to incur debt via a 401k loan when you don't have room in your budget for another loan payment. So normally if you can't afford your 401k contributions, you cut it because surviving the 13 is more important than your retirement. But times are different with COVID.
Until 12-30-2020, you might qualify for a Coronavirus Related Distribution (CRD) up to $100k. If you qualify, you can move the 401k money to an IRA with a CRD. In California, the IRA has VERY POOR protection from judgment creditors outside BK and you push the early withdrawal date to age 59.5 instead of 55. On the other hand, you now have access to funds for the entire duration of your 13 plan and not just 2020.
In my district, the 401k/IRA withdrawal was already recognized as income during the month you earned it pre-petition or it was already counted in schedule I. The funds were exempt as wages during your 13 or exempt on the date of filing as a retirement account. The 401k/IRA balance is just like your checking account balance on payday with a few extra hoops to jump to spend it on groceries weeks, months, or years after the original payday. The CRD makes the 401k accessible this year without the annoying hardship withdrawal request and you can make it accessible forever by rolling it over to a traditional IRA this year with a CRD.
Because it is stupid easy to take 401k money out until the end of 12-30-2020 with a CRD, it may be worthwhile to grab the match even if the match is unvested until December 2020 and then stop the 401k contributions and move the vested 401k money to a more accessible IRA assuming the CARES Act doesn't get extended.
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