Can I take a withdrawal from my 401(k) during a Chapter 13 bankruptcy? 16 Answers as of May 30, 2013

Can I take a withdrawal from my 401(k) during a chapter 13 bankruptcy? I am over 60. If I can, what kind of a motion would I need to file?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Kelly Nigohosian | Kelly Nigohosian
You can take loans out in chapter 13 without court approval, so long as it is under $1,000. If the loan is over $1,000, then you need to file a motion with the Bankruptcy Court for an approval order.
Answer Applies to: Michigan
Replied: 5/14/2012
R. Jason de Groot, P.A
R. Jason de Groot, P.A | R. Jason de Groot
These are things you need to ask the attorney who represents you in the bankruptcy. It would be best not to take a withdrawal from your 401K until after the bankruptcy case is over. The approximate 38% of taxes and early withdrawal fees should be prohibitive enough until you reach retirement age. The monies in the 401K are exempt from the claims of creditors, and in a chapter 7 case I would strongly advise that there should be no withdrawal at all. A chapter 13 is different because you are paying a portion of the debts you owe, over the course of 3 to 5 years, and it can probably be done, but you should consult with the attorney.
Answer Applies to: Florida
Replied: 5/11/2012
Alvin Lundgren | Alvin Lundgren
Not without approval of the trustee. You need to file a motion explaining why you want to take the money. If the circumstances are reasonable you may be able to get the money.
Answer Applies to: Utah
Replied: 5/11/2012
Burton Green, Attorney | Burton Green
Your 401 money is an exempt asset. The bankruptcy court generally has no control over it. I do not see why you would not be able to withdraw that money. If you have an attorney, then discuss it with the attorney. If you do not have an attorney, contact your chapter 13 trustee and ask. Trustees are usually quite helpful.
Answer Applies to: Florida
Replied: 5/11/2012
Bodow Law Firm PLLC | Ted Araujo
Yes, but it is treated as income.
Answer Applies to: New York
Replied: 5/30/2013
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    You need to obtain written permission from the chapter 13 trustee. This ordinarily does not require a motion to be filed.
    Answer Applies to: California
    Replied: 5/10/2012
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    I think the main issue here is that if you take a distribution prior to retirement this can be seen as additional income. While the money sits in the retirement account, it is protected but once you take it out the trustee can argue that it is income and should be paid into the plan. I would recommend that if you have an attorney that you consult with your attorney. Or, you can speak with your trustee before going to court and see their position.
    Answer Applies to: California
    Replied: 5/10/2012
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If it is not a loan you can take it. It represents "exempt" funds.
    Answer Applies to: California
    Replied: 5/10/2012
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Yes.
    Answer Applies to: Florida
    Replied: 5/30/2013
    Debt Relief Law Center | Roger J. Bus
    Yes, but you have to be careful. It is possible your 13 Trustee may say now you have extra disposable income to pay into your 13 at that point, thus increasing your Plan payments. So with any withdrawals, probably you should ask if the Trustee will Stipulate to you doing that if being used for a particular purpose first.
    Answer Applies to: Michigan
    Replied: 5/10/2012
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You would have to file a motion to consent to the withdrawal from your 401k. If you are at less than a 100% plan then it may be tough to get approved.
    Answer Applies to: New York
    Replied: 5/10/2012
    Hackett & Harris LLC
    Hackett & Harris LLC | Ryan Hackett
    This is a tricky question that can vary by jurisdiction and what your local Trustee's policies are. Some trustees will allow you to take a withdrawal if the funds are used for reasonable and necessary expenses. However, you should consult your attorney to discuss the specific details that would be involved according to your local standards to take the withdrawal. If you do not have an attorney you will want to contact an experienced chapter 13 attorney in your area.
    Answer Applies to: Oregon
    Replied: 5/10/2012
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    When your chapter 13 plan payment was finalized in the order confirming plan this payment was based on your income at that time. If you tap into a 401 k the court could view it as you having more income and therefore could make a larger plan payment. If you are an under median debtor ( that is you make less than the median income for your family size) then you may be able to do it as long as you are withdrawing from the 401k to pay maybe an unexpected expense. If you are an over median income debtor then you really need to be careful. If you have an attorney I would talk it over with him or her prior to doing anything.
    Answer Applies to: California
    Replied: 5/10/2012
    Dan Wilson Bankruptcy
    Dan Wilson Bankruptcy | Dan Wilson
    In Colorado debtor's property revests in debtor upon confirmation of the plan. You should be able to make withdrawals without court approval. Ask the lawyer who handled your case.
    Answer Applies to: Colorado
    Replied: 5/10/2012
    Law Office of Pho Ethan Tran PLLC
    Law Office of Pho Ethan Tran PLLC | Pho Ethan Tran
    401K's, if ERISA qualified, are not part of the bankruptcy estate. Thus, unless the court issued an order restricting your use of the 401k, you do not need a motion to make a withdrawal.
    Answer Applies to: Texas
    Replied: 5/10/2012
    Olson Law Firm | Edward M Olson
    There is not enough information here to make a recommendation. You should review this issue with the attorney who filed your Chapter 13 case. Your Chapter 13 Plan may have provisions that are triggered in you withdraw money from your 104(k) plan.
    Answer Applies to: Michigan
    Replied: 5/10/2012
Click to View More Answers:
12 3 Free Legal QuestionsConnect with a local attorney