Do 403b loan distributions count as income for your last 6 months?

[Leemiller37]

Hi,
Sorry, I'm new here. This is a double thread because I put it somewhere else less likely to be seen.

My question is this: I need to file chapter 7 but a few months ago received a 403b loan distribution. Does this count in my gross income since I borrowed the money from "myself'? I know each year for taxes I do not have to add it to my income tax as income received unless i were to default on my loan.

I live in Florida, btw, if that makes a difference.
Any advice and places where to look would be really appreciated.

[Leemiller37]

Well, I spoke to my annuity company, ING, today and they assured me that since it was a loan and not a withdrawal, per se, that it is not considered income in the case of bankruptcy. I want to jump for joy and made the assistant tell me about four times. The only thing that bothers me is that I cannot find this ANYWHERE on the internet. She recommended I go to IRS.gov, but I still did not see this anywhere.

I cannot be the only person who has had this concern. Does anyone know where to look to find this information in black and white so I can read it myself? I don't want to get prematurely happy.........

[Bandit]

There are some things in BK, quite a few things actually, that are not printed in black & white.

Now that you have asked annuity, get on the old horn & call a couple of BK attorneys in your county for that & other concerns/questions that are hard to find. You would be suprised how things are interpreted from one court to the next court in the same state, so, I dont blame you for wanting it written down & not getting prematurely happy>>>

You might get lucky searching through attorneys websites & other BK cases that have loan distributions in them.

[Leemiller37]

Yep, exactly. Thanks for the advice. I have searched and searched and can find absolutely nothing about it. All I can find is information about how 403b loans are not discharged in bankruptcy (which is fine by me, i am just paying myself back), but nothing at all about if that money counts toward your gross income for the six months. So I called the annuity directly and the representative seemed very knowledgeable, and when I asked her if she had received this question before she said "many times".

My attorney is getting back to me on it so I am trying not to be overly hopeful. I have been really let down about three times since right before Thanksgiving so now I look at everything with a wary eye. He has been really great so far. I just want him to tell me for sure before I move forward. If not, I am going to be stuck dealing with a credit agency like Nova Debt or someone else respectable for a year and then try filing again this time next year when my income is low again. It is very, very frustrating though and starts to wear on ya after a while.

[danas15146]

I work for a planner who deals almost exclusively with 403b plans (which makes my Chapter 13 all the more difficult for me to deal with mentally). Anyway - a loan from your plan is not considered as income UNLESS you default on the payments. Hope that helps you.

[Tbornetun]

A recent ruling in our district determined that it is not income because the money going into the 403b was income to begin with so it can't be double counted. Any distribution or loan from a 401k or 403b is not considered income.

[Leemiller37]

Thank you both very much. I am going ahead with my proceedings because that was the only thing that was in my way. Otherwise I am under the median income for my state. Thank you thank you!

It is amazing though how it seems IMPOSSIBLE to find this information on the web.