What would you like to do?
Can you borrow from your 401k?
your retirement fund It is a type of defined contribution retirement plan offered by many employers. The employee decides how much he wishes to contribute, a…nd the employer may or may not make a matching contribution.
WE borrowed on your 401k to try and save your home because we believed it was something you were permitted to do. We never attempted to hide anything and turned it into trustee at meeting.?
Well, taking a loan from your 401k IS something your permitted to do. It can be a great place to get a loan, as the nterest you pay is reasonable and when you pay it bac…k it is generally to your own account. (And certainly, you had to advise everyone of the asset you had available). But the way and time you did it was apparantly a VERY bad move Precious! Your 401k was/is exempt from BK---or just about any other seizure. (Just like even with all the lawsuits he lost, them coming and taking his trophies, etc., OJ Simpson got to keep his multi-million $ retirement plans). Understand, your 401k still exists, it's now just collateral for a loan. But, the money you borrowed isn't exempt. Now you essentially lost that to the creditors and will have to repay the 401k loan, or not only lose the retirement account, you will have to pay the tax on it as taxable income.... AND pay the penalty for the early withdrawal. If you have a lawyer giving you advice, and he allowed you to do this without warning, you should consider suing him. If you don't have one, you darn well should have.
If you were told by your attorney that your 401k was protected and exempt from bankruptcy and you borrowed on it to try and save your home now you are faced with paying taxes on it. can we sue?
Precious...you saw my last answer I should think....better read it again. What he told you is correct...and your 401k is still there and safe from BK.....if he told you it …was OK to borrow against it and that the borrowed money would be safe from BK just like the 401k is ...that would be wrong and you may want to take action against him..... If you thought touching the 401k (as in borrowing against it) was the same as keeping it protected and safe...it's just your fault for not understanding what your doing.
If you are turning a leased vehicle in as part of a Chapter 13 bankruptcy can you borrow from a 401k to purchase new vehicle?
NEWS ALERT: YOUR IN BANKRUPTCY...YOU HAVE TROUBLE HANDLING FINANCES, You have more debt than you can handle...COMMON SENSE: BORROWING MORE TO GET OUT OF DEBT DOESN'T WOR…K! Don't do it, don't do it, don't do it! Your 401k is exempt from seizure under virtually all circumstances...including bankruptcy. (Example...OJ Simpson, owed a lot to the browns after the won the wrongful death suit....they could take his Heisman trophy, his cars, his future income from autograph signings, etc, etc....and did and continue to. As a judgement, he can't even escape it through BK. But, they can not touch his multi million dollar 401k.) If you take a loan against the 401k, the money (or the car) is no longer protected...it can and will be taken by creditors...given the opportunity....and since your already in serious financial problems now...so it's highly possible that can come about. Then your left with a loan to pay off, that uses up your 401k....and nothing else. Well, you'll have a big new tax bill and debt, because not paying back the loan of the 401k is the same as withdrawing it...so you pay a penalty and everything becomes income! Don't do it, Don't do it, Don't do it! Read the News Alert Again: Making a new debt can only make your problems worse.
NEWS ALERT: YOUR IN BANKRUPTCY...YOU HAVE TROUBLE HANDLING FINANCES, You have more debt than you can handle...COMMON SENSE: BORROWING MORE TO GET OUT OF DEBT DOESN'T WOR…K! Don't do it, don't do it, don't do it! Your 401k is exempt from seizure under virtually all circumstances...including bankruptcy. (Example...OJ Simpson, owed a lot to the Browns after they won the wrongful death suit....they could take his Heisman trophy, his cars, his future income from autograph signings, etc, etc....and did and continue to. As a judgement, he can't even escape it through BK. But, they can not touch his multi million dollar 401k/IRA.) If you take a loan against the 401k, the money is no longer protected...it can and will be taken by creditors...given the opportunity....and since your already in serious financial problems now... it's highly possible that can come about. Then your left with a new debt to pay off, that uses up your 401k....and nothing else. Well, something else - you'll have a big new tax bill and debt, because not paying back the loan of the 401k is the same as withdrawing it...so you pay a penalty and everything becomes income! (Rule of thumb, depends on State, but when it becomes a withdrawal, which happens many, many ways, you should consider tax and penalty to be @40% of what you took out). Don't do it, Don't do it, Don't do it! Read the News Alert Again: Making a new debt can only make your problems worse. Now...as maybe a more direct answer: There probably isn't a law against your borrowing from the plan. However, depending on your BK, especially in a C13 though, you agreed to only make financial changes with the approval of the trustee. Failing to do so is almost always responded to first by the BK protection being ceased, and sometimes by fraud charges because not keeping your promises to the court falls under that. Finally, the trustee has a right to the funds when taken out and would want them to pay the creditors in the order required by law/the plan. That may or may not include the IRS. Your paying the IRS would be considered a preferential payment by the other creditors, and they would likely succeed in having the money returned to them.
Yes you can borrow on 401(k) loans, the rates will be comparable to other loans, but there are no regulations on what can be charged for loans, although federal rules do requi…re plans to charge a "reasonable" interest rate. Most companies usually make it easy to repay the loan, and will deduct the payments from your paycheck, and the money goes back into your account. The restrictions on how much you can borrow and on the length of time to repay the loan, it can't be larger than $50,000 or half the balance of your account, whichever is smaller, and it must be repaid within five years, unless used for a home purchase which will allows you to pay out in 10 to 30 years.
There is a lot of baggage borrowing from your 401k including that if you lose or change jobs the loan becomes due in full immediately. Personally, with interest rates as low a…s they are now I would do my best to avoid it unless it is absolutely the only way.
A 401k Plan generally is offered to employees by their employer. If you are self-employed, you may start a 401k or other retirement plan.
A 401(k) plan is a retirement account to which employee and employer contribute, on which taxes are deferred until withdrawal, and for which the employee selects the types of …investments.However,the 401(k) plan has many ups and downs and many regulations. Read more here http://401ksource.info and http://personalfinance401k.weebly.com
If you borrowed money from 401k after filing bankruptcy but not yet discharged could this hurt the discharge?
Oh boy....this can easily turn out to be one of the worst things you have ever done! The 401k is/was completely protected from seizure under the BK laws. The money …from the loan is NOT...and even though it all occured post petition, it may not be too hard for a creditor to get it included. In a C-13, your almost certainly screwed. That leaves you without the money, but with the debt to the 401K plan, that isn't part of the BK...and as you would likely soon forfit the assets of the plan to pay the loan debt, considered an early withdrawal -some terrible, even horrific - tax consequences as well.... Get professional help NOW, like today...BK lawyer(s) and either one able to provide financial counseling or get you some. No offense intended, but from here it would seem your a bankrupt (which indicates financial failure of some type) who then continues with ill advised actions. Simply, you absolutely need help if you didn't understand or even think about all the possible consequences of your actions before making them.
I submitted for my loan on Wednesday evening and it's now Sunday evening and I still don't have my money (and I need to pay my morgage back payments by tomorrow in order t…o keep my home) so I can tell you that it could take as long as 5 days and maybe longer. A coworker tells me that he got his money in 3 days but tht was a few years ago. From what I understand, it all depends on when they receive the money from selling fund(s) or something like that. It'd suggest calling ML before you request the loan and ask if they can give you a specific time - but I wouldn't count on getting a very good answer. Sorry I couldn't be of more help.
Yes, but it is one of the absolute stupidest things financially you can do. By the end of th BK you will lose the 401k money, which is only protected while it is IN the 401k,… and be left with the debt to the plan, which won't be discharged and will seize the money in the plan to be paid.
If u don not contribute to 410K plan..can i still borrow money from what the company puts i
If you quit, are laid off your job, or your company closes its doors before you repay your loan, the IRS will consider your unpaid 401(k) loan balance an "early distrib…ution" of retirement savings. If at all possible, repay the balance before the repayment deadline to avoid the taxes and penalty. The loan's outstanding balance will be treated as income to you and you will be required to pay taxes on it. If you have a loan balance of $20,000, you could owe federal income taxes ranging from $2,000 to $7,000 or more, depending on your tax bracket. For example, if you are in the 28 percent tax bracket, your taxes would be $5,600. State taxes could also apply. Distributions may be fully or partly taxable. If your plan includes nondeductible contributions that you made, that portion may not be taxed. However, it would still be subject to a penalty. TurboTax will ask questions to see if any of your distribution might be nondeductible. If you are under the age of 59 ½, You will also be charged a 10 percent early withdrawal penalty. Using the example of a $20,000 loan, the penalty would be $2,000 in addition to the income tax.
When I need something that I won't need often enough to warrant buying it, or when I cannot afford to buy something myself, or when I need something urgently and borrowing is …the quickest way to get it.
Once you turn 70½, you must begin withdrawals from your 401(k) unless you're still working. These required withdrawals are designed to ensure that you use the money in… your account for the purpose it was intended: to provide retirement income. You may not be required to put money into a 401(k) plan. In fact, only a few employers have mandatory plans. But if you do contribute, you must eventually take required minimum distributions (RMDs) from your plan if you haven't made arrangements for moving the accumulated assets out of your account. Check your minimum required distribution using our calculator. The reason the government requires withdrawals is that these tax-deferred savings plans were established to provide you with retirement income, not as a way for you to accumulate an estate to leave to your heirs-though if you die before you have withdrawn your assets you can pass them on to a beneficiary or beneficiaries you name. Of course, you're free to begin withdrawing sooner than the law requires-which is when you reach 70½-if you retire or leave your job. You can also take more than the required minimum each year if your plan offers a flexible withdrawal arrangement. But if you take less for any reason, or if the required annual withdrawal isn't made before the end of the year, you face a 50 percent federal penalty on the amount you should have taken but didn't.