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A few randon questions

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    Question A few randon questions

    1) Does the Trustee need to be informed of all salary increases or just anything over 10%.
    2) I often give money to my elderly parents, can I include that in the expenses section even if they do not live with me?
    3) My current 401K contribution is 3 percent, can increase it by 1 or 2 percent every year? Would the Trustee complain about it?
    4) I have a 401K loan that gets paid off in year number 3, will the Trustee want to create a step up plan on year 3 to get that money? I am not on a 100% plan.

    Sorry for so many questions. Thanks a lot!

    #2
    The answers are district dependent. My answers may be the opposite of yours.

    1) On my confirmation, I'm told to submit a tax return every year. Lawyer says a trustee initiated plan modification doesn't happen around here. Have seen many reports to the contrary in other districts.

    2) Yes if they're living elsewhere due to medical reasons like assisted living. No idea if it's allowed if they're living independent. You need to provide a good reason to support your parents instead of your creditors (eg. they're surviving only on Social Security and have higher than normal medical expenses). You need to provide proof that you've been making contributions. The trustee might want other proof like your parent's tax return.

    3 and 4) You cannot expense any 401k contribution due to the 401k loan. You'll be contributing that 3% to your plan since you cannot include the 401k contribution in your budget. You should have given that 3% to your church instead so that it will count. That's one of the benefits of hiring counsel well in advance so you can plan stuff like this. This single mistake on a less than 100% plan is a swing of $15k at $100k salary over 5 years while the retainer is usually $4k or $5k.

    You or your attorney needs to put in the step up in the initial plan after the 401k loan is paid off, not the trustee. The trustee will object if you don't do it and will be annoyed with you for not doing something that should have been included. Same thing applies to car loans and leases that are paid off during the 13.
    Last edited by flashoflight; 10-13-2022, 12:58 PM.

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