401k Non Mandatory - will Trustee stop it?

[despritfreya]

I hope that it gets settled in the 9th Circuit. It's too bad that it's still so undetermined in that appellate circuit. In any event, the BAP isn't so binding across the appeals circuit, right... so that would only help Montana?

Whatever the 9th Cir BAP decides (I am going to assume it will be a published opinion) its decision will be binding on all bk court's within the 9th Cir (AK, AZ, CA, HI, ID, MT, NV, OR, WA and Guam). This will last if and until the 9th Circuit Court of Appeals hears the issue. If it is not a published opinion it will not have precedential value but may have persuasive value.


Des.

[justbroke]

I hope that it gets settled in the 9th Circuit. It's too bad that it's still so undetermined in that appellate circuit. In any event, the BAP isn't so binding across the appeals circuit, right... so that would only help Montana?

[despritfreya]

Also, I wonder if this will apply outside of the 9th Circuit? Do you think other BK courts will look to this for guidance?

Apparently there is a split in authority. The only reason I know about the BAP case is that I was dealing with this issue with a creditor and was trying to get the creditor to agree to litigate it up the chain. In searching for something for this forum I came across a Montana case that has just been appealed to the BAP. Someone beat me to the punch.

Des.

[IamOld]

Your ability to continue to contribute to a 401k on a voluntary basis will be decided by the 9th Circuit Bankruptcy Appellate Panel within the next 3 to 6 months. As it stands right now, LadyInTheRed is correct. It depends upon the Trustee. Once the BAP decides it will not be up to the Trustee, the creditor or the debtor. Either it will be allowed or it won't be.

Des.

For what it's worth, I think if they look at the greater public policy "good," they need to allow 401k/403b etc contribs.

Also, I wonder if this will apply outside of the 9th Circuit? Do you think other BK courts will look to this for guidance?

[justbroke]

If contributions to my 401k are not mandatory by the company I work for, will the trustee put a stop to contributions?

Unless the contribution is above the maximum point where your employer mnatches, or in excess of 10%, the Trustee won't say anything. Additionally, 401(k) and saving for retirement is ENCOURAGED by the Bankruptcy Code and is explicitly "not disposable income" for determining what you pay in your plan. The only excuse a Trustee could come up with, is that you filed in "bad faith". That's a tough burden if the loan repayment(s) and/or contributions don't exceed the employer match or the highest allowed by law (before you can't contribute pre-tax income).

[despritfreya]

If contributions to my 401k are not mandatory by the company I work for, will the trustee put a stop to contributions?

Your ability to continue to contribute to a 401k on a voluntary basis will be decided by the 9th Circuit Bankruptcy Appellate Panel within the next 3 to 6 months. As it stands right now, LadyInTheRed is correct. It depends upon the Trustee. Once the BAP decides it will not be up to the Trustee, the creditor or the debtor. Either it will be allowed or it won't be.

Des.

[LadyInTheRed]

It depends on the trustee and your overall plan. Your attorney should have an idea of what your trustee allows. The general consensus seems to be that a contribution equal to the maximum employer match will be allowed. My plan included a 401k contribution (no employer match) and 401k loan payment totalling about 5% of my income and neither was questioned.

Remember, the trustee doesn't have the power to put a stop to your contributions. He/she may object to confirmation of your plan based on a contribution included as an expenses on Schedule J. If (s)he does, your attorney should try to negotiate a compromise with the trustee, perhaps for a lower contribution. If no agreement is reached, the judge would make the final determination of whether your plan should be confirmed.

[RLOPE]

If contributions to my 401k are not mandatory by the company I work for, will the trustee put a stop to contributions?

I currently pay $700 into it per month. Company matches up to 6% of salary.