Congress protected your 401k from creditors, including banks or even the SBA. It is unavailable to the creditors, it cannot be reached. It’s safe, secure and untouchable.

You could have a seven-figure 401k with a negative net worth but still the bank can not touch it, so while reporting it on your forms is critical as one must not commit a fraud, I would not add it to your net worth when calculating the payoff to the bank. As stated, it is protected and cannot be reached so it is not part of your liquidated net worth. It is not fair workout game so do not include it in the negotiation. You must report its existence but it is appropriate to not include it in your liquidated net worth, the collection benchmark for personal guarantees.

IRAs are a little different, as each state has different rules determining how much is protected from creditors. It is important that you check your state laws regarding how much is protected. Many states protect it all, some have limited protection. Find out and act accordingly.

In a word, report it your 401k and/or IRA where asked, but do not include it in your workout computations. It is a non-negotiable asset, no matter what the banker may say. Any suggestion to liquidate it for the benefit of the bank must be ignored completely, unless you are convinced it is in your best interest, which means for a small investment out of your 401k the bank will release a large amount of debt. This may be a worthwhile consideration but be careful. Do not violate your retirement funds without an appropriate plan.