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  1. #1
    srhng Guest

    Question 401k access after filing/discharge

    I filed chapter 7 in early february. In early march had my meeting of creditors. Everything went ok. But now in late march I am broke. Both myself and my wife are unemployed. My wife is not getting her unemployment due to being fired.

    I cant seem to land any job that pays more than the unemployment compensation that I am already getting. In fact. most jobs I can find pay less than unemployment compensation.

    Every job in my field (Information Systems) that pays well, I am either overqualified for (and they let me know that) or there are 1000 of us going for the same job. One person usually wins the job. It hasn't been me yet. The hiring managers are also very mean in the interview. Its like we need to kiss thier feet to get the one job they have avail.

    I have around 14k in a 401k plan that was protected in the BK as an exemption. Can I withdrawl it as a hardship and start living off of it? Can I move most of it into an IRA and say pay my rent with some of it? I am currently borrowing money from my relatives but they are pretty poor too. I dont want to get evicted since I have a wife and two small children.

    Thanks in advance.
    Last edited by srhng; 03-29-2002 at 06:27 PM.
  2. #2
    racer72 is offline Senior Member
    Join Date
    Jan 2001
    Yes you can withdraw your 401k. If it is a pre-tax 401k, you will have to pay regular income taxes plus a 10% penalty. Depending on your income for the year, that can mean up to 46% of it. If it is an after-tax 401k, you only have to pay the 10% penalty. Also, employer supplemented funds may not be available. You need to contact the administrator of the 401k.
  3. #3
    srhng Guest
    Wont the trustee want the money once it is not in the protected 401k anymore?

    If I take it out and spend it, and the trustee finds out, Wont that be considered bankruptcy fraud?

    I want to feed my family, not go to jail.
  4. #4
    racer72 is offline Senior Member
    Join Date
    Jan 2001
    The only time the trustee will have any more interest in your case would be if you were to come into a lot of money. But generally, once the bankruptcy is dismissed, the trustee will probably not look at your file again. The trustee could probably care less what you do with the money.
  5. #5
    srhng Guest
    It is alot of money 19k. Could I get it before discharge or should I wait till after discharge to withdrawl it. I can probably make it to discharge in may, but if I dont find work. I will be in dire need of it then.
  6. #6
    srhng Guest


    Has anyone withdrawn a 401k close to discharge for the purpose of living expenses? I would like to know how much you needed to surrender to the trustee? I have about 19k in a 401k and would like to start feeding the family with it. Maybe relocate to a better employment situation. But am afraid the trustee will take it if I withdrawl it. Right now we are letting grandma and her social security check help feed us.

    Any suggestions? By the way. We will get discharged in May.
    Last edited by srhng; 03-29-2002 at 06:26 PM.
  7. #7
    srhng Guest
    Just bumping this up. Anyone have any ideas?
  8. #8
    dorenephilpot Guest
    Retirement money is exempt. Cash over your state's exemption levels is not.

    Therefore, grit your teeth and don't cash in the 401K until you get your "Discharge of Debtor" order from the court, which means your case is over.

    Then cash in to your heart's content.
  9. #9
    TigerLily13 is offline Junior Member
    Join Date
    Apr 2010

    401k/Chapter 13

    How does 401k withdrawl work in a Chapter 13? I am moving out of state and need money for moving expenses...can I cash out or take part of my
    401k to help?
  10. #10
    racer72 is offline Senior Member
    Join Date
    Jan 2001
    This thead is 8 years old, please don't necropost. Start your own thread.
    If you feel my answer is rude, mean, snarky or in anyway not to your liking, I did my job. You don't need to tell me.

    No private messages, I do not reply to them.

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