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posted May 31, 2019 5:35:02 PM

I am completing the insolvency worksheet, It asks for interest in a pension plan and interest in a 401K. What is it and how is it calculated?

The form is in the 4681 workbook on insolvency.

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1 Best answer
Level 7
May 31, 2019 5:35:03 PM

I think you are confused by the word "interest".  In this case, it means your ownership of the plan and the valuation of the plan.  So, if you have a 401(k) with $23,000 in it, the answer is $23,000 (unless you have a loan outstanding from the plan).  It is NOT using the word "interest" to mean the earnings on the plan assets, as in "it earned 2.75% interest during the year."

1 Replies
Level 7
May 31, 2019 5:35:03 PM

I think you are confused by the word "interest".  In this case, it means your ownership of the plan and the valuation of the plan.  So, if you have a 401(k) with $23,000 in it, the answer is $23,000 (unless you have a loan outstanding from the plan).  It is NOT using the word "interest" to mean the earnings on the plan assets, as in "it earned 2.75% interest during the year."