There is a saying that timing is everything in life.  And so it is true in the legal world as well.  I do not know who told you that it is a "non-issue" as you say but I would listen to the advice from your attorney and leave your 401K in tact until you have been discharged in the Chapter 7 bankruptcy.  If you cash it out now the trustee can indeed consider it as "income" for purposes of the bankruptcy, again depending on where you are in the game.  That is really not a position you want to be in I am sure. Speak again with your attorney about the law as it applies to you (if you filed under federal or state exemptions).  Good luck.