Posted on
June 10, 2009
at
10:49 pm
Is my retirement plan going to be part of the bankruptcy estate?
Posted on
June 10, 2009
at
10:56 pm
It sounds like you are just about to file bankruptcy, I wonder if you have considered the alternatives to it...Anyway, the good news is 401K plans and ERISA-qualified retirement plans are not property of the estate.
Posted on
June 10, 2009
at
11:20 pm
Oh that's great, thanks, one more question, I borrowed from my 401k, would what I owe it be discharged with my case?
Posted on
June 10, 2009
at
11:39 pm
The answer is no, because bankruptcies discharge debts that you owe to other people or institutions. Borrowing from your 401(k) is borrowing from yourself. Loans from retirement plans that are under the IRS rules for tax-deferred status are nondischargeable in a Chapter 7 bankruptcy but is dischargeable in a Chapter 13.
Posted on
June 11, 2009
at
12:06 am
I filed Chapter 13 before and included repayment of my 401k loan in my plan, but the trustee objected to it. He ordered that I stop repayment of my retirement plan and pay it to him instead. I thought he was crazy because if I stop paying back what I owe my 401k then I'd have penalties and a high rate of taxes to deal with in the future. I had to amend my plan.
Posted on
June 11, 2009
at
12:11 am
Thank you for sharing that...although I'm a little confused now, I thought that 401k is not part of the estate...
Posted on
June 11, 2009
at
12:18 am
I suppose the logic behind it is - the money in the 401(k) is not part of the bankruptcy estate, but the money that is going to be used in the repayment of the loan that was taken off of it, is, and so everything that is in the bankruptcy estate is under the trustee's concern.
Posted on
June 11, 2009
at
12:30 am
I wonder if the trustee thought that repayment of your 401k loan was not under the "reasonable necessary living expense" clause in Chapter 13 plans, because technically how you owe your 401k is not how you owe a creditor.
Posted on
March 8, 2010
at
12:08 pm
So is it safe to say, when I retire my 457 plan will not go toward my bankruptcy Chapter 13?
Posted on
March 9, 2010
at
1:03 am
Let me rephrase your question to - can bankruptcy take my 457 plan?And then ask you - what type of 457 is this?(for government employees or for employees of a non-profit organization)
