Extremely interesting dillemma regarding retirement plan and Ch. 13 disposable income

[NeedOptions]

We are definitely filing Ch. 13 in 6-8 months (holding off until we get sued by the creditors). We are current on everything but that will change in 2 weeks. My wife and I just started a Tax Sheltered Annuity (503b) which is exempt from creditors. My wife and I are taking out $500 each ($1k total) month and putting it in retirement. This will start at the end of April. This reduces are taxable gross income, which reduces our disposable income and payment to creditors. I just asked my lawyer if this was ok and he said it should not be a problem. However, he came back and told me that I should contribute more as the max is $16,500/year of contributions. If my wife and I contribute more every month to the TSA (tax sheltered annuity), my disposable income would work out to 0. He said to contribute more to the TSA. Will this work or will the trustee object? I asked him if the trustee would have a problem with this and he said that if he/she did, it would be because the creditors would object to it. I don't think I have anything to lose. Does this seem feasable? Btw, my lawyer is such a great guy. I haven't paid him a cent yet as I don't plan on filing for another 6 months and he is answering all my questions promptly and professionally. I am definitely hiring him when it comes time to file.

[debtinohio]

Do you contribute to a 401K also?

There seems to be mixed results in districts around the country. Some allow such retirement contributions others don't. Current funds already in retirement accounts are exempt but ongoing contributions are not.

$1000 is a lot and if that brings DMI to 0 and the dividend to 0% I can't see how that would not be questioned. No creditors objected to my expenses, but the trustee did and he did so on their behalf.

But, if it works - - rock on. If I had done that mine would have been 0 also. I was happy enough to get $500 in 401K contributions allowed, others had to stop all 401K contributions.

[NeedOptions]

I don't contribute to a 401k, however, I do contribute to a state pension plan. Money that is predetermined is taken out monthly out of my check. I have no input in the amount as it is taken out automatically.

[debtinohio]

I don't contribute to a 401k, however, I do contribute to a state pension plan. Money that is predetermined is taken out monthly out of my check. I have no input in the amount as it is taken out automatically.

That state pension plan is fine it might be a tough sell for the additional $1000 but I'd try it especially if your lawyer is willing to have a go at it.

[catleg]

Definitely do it. It's plainly allowed in the 2005 law.