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Home > Ask The Get Out of Debt Experts > Long Term Disability Provider Wants Me to Repay Money I Needed to Avoid Foreclosure. – Mary

Long Term Disability Provider Wants Me to Repay Money I Needed to Avoid Foreclosure. – Mary

“Dear Steve,

I am 44 years old, permanently disabled from a brain tumor (5 surgeries and radiation). I receive SSD and private LTD in about equal amounts. My house went into foreclosure because last year, my medical expenses exceeded 19K, and for a while, I had to decide between paying for private health insurance (prior to medicare kicking in) or paying my mortgage. In order to get out of foreclosure, I cashed in my very small 401k ($15K) on a hardship basis. I received about $13K after withholding.

Now I am under re-review by my private LTD provider. On the form, it asks about other “income.” There is a specific question about “retirement or pension from…any former employer.” If I report my cashed-out 401k as “income,” and it is in fact counted as income, I will be forced to repay my LTD provider the entire amount since they were paying me and I received outside income (if I did). In other words, is my cashed-out 401k retirement income for the purposes of my LTD, and if so, is it the kind of income, which will be counted for offsetting?

Must I report to my long term private disability provider that I cashed out my 401k? Is my 401k money considered “retirement income,” which would offset my LTD?


Dear Mary,

I don’t have a clue.

But if you are a AARP member you might want to reach out to one of the experts there on these issues. Click here.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Eileen

    401k is not usually considered a form of retirement pay. On the questionnaire, usually they mean any pension benefits. Call your claim analyst and/or review your LTD policy. Under the definitions section, they usually outline “Other Income Benefits” and 401K proceeds are usually not included.

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