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Simpson, 23, is engaged to Fall Out Boy bassist Pete Wentz, 28, who initially blasted pregnancy rumors as a "witch hunt."
But on Tuesday, Simpson, sidestepped the rumors during an interview with MTV after taping TRL in New York, saying simply, "Some things you want to keep personal."
And now the source tells PEOPLE that not only is Simpson pregnant, but that she's planning to have her wedding in May at a friend's house in La Jolla, Calif., north of San Diego.
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JOSH & FERGIE: ROCKED BY SCANDAL
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