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Insolvency and retirement accounts

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    #1

    Insolvency and retirement accounts

    I've noticed from my clientele that some people are broke all the time, but have not touched their 401k
    or retirement account.

    Had a couple 1099-As, where the only difference between the debtor and total insolvency was their retirement account. Had it not been for their retirement assets, they would have registered as insolvent on the 982. Notwithstanding having to list their retirement as an asset, they still can't access the funds without incurring an IRS penalty.

    Should the retirement account be listed on the 982 worksheet if there is limited access to the funds?
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    #2
    I say ....It has to be listed...........
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

    Comment

      #3
      The 1099A is a report of foreclosure, etc. It would be reported as a sale. It is not a 1099C which is cancellation of the debt. The debt may not be cancelled at this point.
      You have the right to remain silent. Anything you say will be misquoted, then used against you.

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      This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

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