My question involves bankruptcy in the state of: Massachusetts.
At this point filing bankruptcy is pretty much a certainty. I've sorted through a lot of the forms and it all seems pretty straight forward. One question I have though is how to handle money that is in flux. My wife left her job a several months ago and is entitled to her profit sharing. She has received a letter stating that she can either take the money or roll it into an IRA. If she takes the money she will be hit with a tax penalty, if she rolls it over I'm concerned the bankruptcy trustee will see it as trying to hide the funds.
My other concern is that, if we take the profit sharing, the tax penalty will be taken when we file our taxes. This would mean that the bankruptcy would have taken all of the money and we won't have the percentage to pay the tax.
She also has a 401k from the company (another profit sharing that was rolled over into the 401k when the current current company bought out the preceding company). She has received a letter stating that either she can transfer into a 401k of her choice or they can continue maintaining it for a fee. As I understand it, this money is already in a 401k program so it shouldn't be subject to any bankruptcy takings, however, she would like some conformation as to whether or not transferring the funds will cause a problem or should we just leave it where it is and allow them to continue maintaining it?
Thanks for any advice you can give.