401K Contributions - How Are They Looked Upon In Chapter 7

[LisaS1899]

Just curious on this..... I know that the actual 401K is untouchable but what about the 401K contributions when it comes to Chapter 7 or Chapter 13?

Thanks!

[AngelinaCatHub]

If your habits have not suddenly changed, and it looked like you attempt to divert assets to save them from the estate, you have no problem. Example if you had consistently put in 6% for the last two years, then bumped it to max right when you bk that would be questioned, but if the habit had not changed the Trustee would have no real problem.

This is a common asked question and do a search for further on the board and you will see the consensus. 'Hub

[HHM]

It is not an issue of chapter 7 vs 13 when it comes to 401(k) contributions, it is the Means Test

Chapter 7 Means tests (B22a), you CANNOT include 401(k) contributions as an expense.
HOWEVER
For the Chapter 13 Means (B22c), you CAN include 401(k) contributions as an expense.

If the ONLY thing pushing you into chapter 13 is because the 401(k) contribution could not be taken on the chapter 7 means test, you can stay in a chapter 7.

[LSUTiger32]

Every state is different but my TT told me that anything I contributed in the last 12 months was fair game to him. He decided not to go after it after he got a nice sum of money from my tax refund.

[HHM]

Every state is different but my TT told me that anything I contributed in the last 12 months was fair game to him. He decided not to go after it after he got a nice sum of money from my tax refund.

It may be different relative to the 401(k) exemption...but as for the means test and deducting the expense, that issue is well settled nationwide; the 401(k) contribution as an expense is an issue of BK law, not state law. Whether and to what extend a 401(k) is exempt or if recent contributions are exempt, is an issue of state exemption law. We are talking about 2 different issues.