Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

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401 Contributions & 401k Loan Repayments

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  • 401 Contributions & 401k Loan Repayments

    I have read that you should be able to claim your 401k contributions if it is up to the percentage matched by employer - which mine is. I have been participating for many years and have not increased it (in fact cut it from like 12 percent to 6 percent to match their contribution). Where can I list this at? On the B22C can you put this on line 31 even though it specifically in bold says to not include any voluntary contributions? If cannot list here, where can I? Also where can I list it on the Schedule J (B6J)? I am personally contributing about $150.00 a month.

    Also can loan re-payments be added to the above schedules, if so, where? My loan payments are about $70.00 a month. I have carried a loan for quite some time.

    *** Also I asked this as one of my questions on another post, but it was not answered so I will also ask here if anyone can chime in -- What DMI is used generally from the B22C or the B6J when it does not match? ***

    Thanks as always for your assistance everyone!
    Chapter 13 Filed November 10, 2010 Indiana - Southern District - United States Seventh Circuit
    Attended 341 hearing 12/15/2010

  • #2
    Your 401(k) deductions go on Form B22C Line 55 Qualified retirement deductions.. Most jurisdictions allow either a contribution or a loan repayment but not both. They consider both to be a "contribution" for purposes of allowance of the expense.

    Please be very aware that the repayment is absolutely allowed, but you're probably going to have a very tough time getting BOTH.

    Are you filing Pro Se?

    (Qualified retirement deductions. Enter the monthly average of (a) all contributions or wage deductions made to qualified retirement plans, as specified in § 541(b)(7) and (b) all repayments of loans from retirement plans, as specified in § 362(b)(19).)
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      Hi justbroke,

      I am not filing Pro Se but I want to be in control and ready with my own schedules as I have heard lots of attorneys think and put their own figures. I have concerns since I am using probably one of the biggest attorney firms that do B/K like candy (LegalHelpers) that they will rush through it.

      Luckily I can take most of the standard amounts and have nothing left for un-secured. This will pay my tax debts and Chrysler payment. Nothing else besides attorneys costs and trustee fee. I am estimating payment to be around $675-750 a month... not bad since my Jeep payment is already $599.00 now anyway and have about $15000 owed for taxes (my estimate since you advised that penalties and interest on penalties go to un-secured) because it was like $18000.00

      So justbroke can you answer what happens when the 22c and J don't match -- what should you normally do as which one actually counts as your DMI normally? Also where do you deduct the contribution (which I will pick contribution ILO loan repayment) on the J? Or do you list under Schedule I under other Payroll deductions?
      Chapter 13 Filed November 10, 2010 Indiana - Southern District - United States Seventh Circuit
      Attended 341 hearing 12/15/2010


      • #4
        Originally posted by FishersMike View Post
        So justbroke can you answer what happens when the 22c and J don't match -- what should you normally do as which one actually counts as your DMI normally? Also where do you deduct the contribution (which I will pick contribution ILO loan repayment) on the J? Or do you list under Schedule I under other Payroll deductions?
        First, most Districts use Form B22C's calculation of "disposable monthly income" (DMI) to calculate the Chapter 13 payment. Schedule J will always be different from B22C since you can't include certain installment payments (like car payments) on Schedule J if you're filing a Chapter 11 or Chapter 13.

        So, don't worry about it. (Note: however, I'd make sure that taking the Schedule J amount and adding the installment payments to that -- from Form B22C -- show little DMI.)
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        I am not an attorney. Any advice provided is not legal advice.


        • #5
          Here in NJ they didn't blink at both a 401k contribution and a loan repayment, just jammed us with a step plan when the 401k loan is paid off. I would kind of like to jam them back with an increased contribution when I turn 50 but somehow I'm not sure that's going to happen. Our property taxes are also going up "measurably". (200/month)
          filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!


          • #6
            I also have both a 401k loan and contribution. But, together they total only about 5% of my gross income. No step plan for me. When the loan is paid off 4 years into the plan, the contribution gets increased.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


            • #7
              My 401K loan payments were an allowable deduction from my calculated DMI, and they both will be paid off long before my plan is completed. There was no consideration given to this fact at all, and as such, no step plan was indicated. I wonder if the trustee will ever become aware of this? 401K transactions are usually transparent with regard to public financial data protocols.


              • #8
                I am in the same boat as catleg... My wife and I both contribute the max $16,500 per year to our 401k AND we both have 401k loans. Trustee didn't even blink at them. We ended up at about $31k per year for contributions and about $10k per year for loan payments. We are actually putting more into our 401k than we are paying our unsecured creditors. The trustee just wanted to know how long we have been contributing at that level (several years) and when the 401k loans ended so they could do a step up in our payment.

                Legally there is nothing in the BK code that puts any type of limit on how much you can contribute. While the trustee could possibly argue "reasonableness" or "totality of the circumstances" the law was written to specifically protect your ability to contribute to your retirement plan. If we had gotten an objection we would have fought it.


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