Starting 401k right before 13 filing?

[bxpete]

We're considering filing a 13 in about 2-3 months, and I have a question about my 401K contributions. I currently don't have anything being deducted from my check for my 401k account, but I would like to start it. I currently do not have any balance in my 401k at all.

From what I've read here on this forum, it looks like the 401k account will be exempt, and contributions are still allowed after the 13 payments go into effect (please correct me if I'm wrong). My question is - will it look "fishy" if I start the payroll deductions for my 401k just a couple months before filing? And will I be allowed to continue the contributions during the plan?

I really want to get the 401k started, and I'd hate to wait 5 years for the 13 plan to be completed before starting it.

[NowImDownInIt]

I'm pretty sure that in most cases 401k contributions are not allowed, but this varies by district and trustee. Some trustees will allow people closer to retirement age to contribute. I don't think that it's a problem to start contributions now, but you may have to stop once you file. Someone will correct me if I'm wrong.

[chloe0724]

I was allowed to keep contributing. But with that said, I had been contributing for many years. It may look bad because it looks like you're only doing because of the BK. Depeds on the Trustee. Ask your attorney.

[Flamingo]

Ask your attorney. If you have the extra money to contribute to a 401(k) right before filing BK you may be told that money could go to creditors.

[qwertysue]

We had no problems keeping our 401k contributions going, but we've been contributing for years.

A lady right before us just started contributing a month before filing. The trustee objected to that. Especially when asked why she suddenly started contributing the lady had no real answer. The trustee was quite upset at her sneakiness (his words).

[AngelinaCatHub]

We're considering filing a 13 in about 2-3 months, and I have a question about my 401K contributions. I currently don't have anything being deducted from my check for my 401k account, but I would like to start it. I currently do not have any balance in my 401k at all.

From what I've read here on this forum, it looks like the 401k account will be exempt, and contributions are still allowed after the 13 payments go into effect (please correct me if I'm wrong). My question is - will it look "fishy" if I start the payroll deductions for my 401k just a couple months before filing? And will I be allowed to continue the contributions during the plan?

I really want to get the 401k started, and I'd hate to wait 5 years for the 13 plan to be completed before starting it.

[MOMof3]

I started my 401k in January and filed in February---no questions were asked.

[Sham11801]

Alot of attorneys will recommend just the minimum be contributed. I dont think they'd object if you were given a 100% match on up to 6% of your contributions since thats money lost out if you dont contribute.

[justbroke]

Personally, I don't understand why this area is still being questioned. The BAPCPA of 2005 added specific language to exclude "any amount... withheld by an employer from the wages of employees for payment as contributions... [to] an employee benefit plan that is subject to title I of the Employee Retirement Income Security Act of 1974 or under an employee benefit plan which is a governmental plan under section 414(d) of the Internal Revenue Code of 1986;"

It continues to read "except that such amount under this subparagraph shall not constitute disposable income as defined in section 1325(b)(2)"

Someone needs to stand up in every district. My district is fine with the provisions under BAPCPA (2005). Absolutely not questions about my contributions.

But, as others have written, Districts and especially Trustees are all different. They think and behave differently and sometimes contrary, at least I believe, to the Code.

I have a case to Cite in case you get dinged for "starting" to contribute. There's a great case from Massachusetts (Western District I believe) which addressed someone INCREASING their payments after filing and getting a job with MORE salary. The judge allowed it! (I'm looking for the Cite now on my computer.)

I particularly like this statement from Judge Feeney of Massachusetts...

Congress has implemented a policy of protecting and encouraging retirement savings.

The citation is In re KIMANZI MUSILI MATI, 07-13323-JNF, M.D. Massachusetts (Judge Feeney).

Having wrote all that, there is nothing precluding a Trustee, who doesn't like how much you contribute or when you started contributing, from asserting that you filed a Plan in Bad Faith.