401 k

[jmw5665]

just a question.. does anyone know My mom is 7 years away from retirement and she filed chapter 13.. The trustee wants her to stop paying into her 401k for the 5 years. Can the stop her from this? This will effect her retirement dramatically and she wont be able to retire

thanks for any info..

joey

[danas15146]

I guess it depends on the trustee. My husband and I were not told to stop our contributions. However, the money we contribute is not taken into account when figuring our disposable income. If we want to continue our contributions we have to make cuts elsewhere. Tried that for a couple of months and then decided to take our contributions down to 1% at least for now.

If you have loans on a 401k, it is considered an expense because you are required to pay it back.

[bkbiker]

I am sorry to say and tell you that the trustee can do that; life in chapter 13 can be harsh

In chapter 13, all your disposal income goes to paying back the creditors, and it gets worst, while your mom is in chapter 13, almost all financial win fall is to go to the creditors such as; life insurance proceeds, inheritance, lottery winnings, substantial wage increases. Personal injury awards you generally may keep.

Chapter 13 is complex, and we would need more information about your mom’s case in order to give you sound and accurate advice.

Good luck,
bkbiker

[aa06a47]

My attorney said the trustee/judge in my district allow up to 3% for retirement planning. However, with that said, they did not allow some expenses that I understand other posters have had with no issues.

I don't think the trustee can keep her from contributing, however he can not allow the expense. As others have said, if she wants to save, she will have to cut back in other areas to do so.

[Jenny]

I seriously doubt these last 7 years will make or break your mom's retirement. The maximum contribution for this year for someone over 50 is $20,000. Can she contribute that much every year for the next 7 years? The way retirement savings works is through compound interest. That means in order to maximize the retirement benefit, contributions must be large at an early age.

If she only contributes a few thousand a year, the compound interest for the next 5 years won't amount to much.

[aa06a47]

I seriously doubt these last 7 years will make or break your mom's retirement. The maximum contribution for this year for someone over 50 is $20,000. Can she contribute that much every year for the next 7 years? The way retirement savings works is through compound interest. That means in order to maximize the retirement benefit, contributions must be large at an early age.

If she only contributes a few thousand a year, the compound interest for the next 5 years won't amount to much.

I would probably disagree with you some on this. Investments in the stock market can pay back hugh gains and hugh losses. Let's say we are more realistic and she can save 5K a year x 7 =35K. If it is invested in a good company stock, that investment could be work 70-80K or more in that time period. Not nothing to sneeze about. (caution .... It could also be worth 5K as well).

Every little bit helps when your retired living on a fixed income. Even if it appreciated zero, it could provide a good cushion for retirement.

[bobby125]

my .02 cents...

I have to agree with Jenny here......it is not going to make much of a difference in the long run...

If she makes a $100,000 (???) and contributes 3% and they match 3% that is $6,000 over 7 years and lets say it makes some crazy gains, and is worth $80,000 then that would last her what? in retirement, maybe 2 years?

Plus, if she was going to get gains like that back, then she could just take what she has now and put it in that fund, and be fine...

either way, 7 years of 401k savings is not going to make a retirement, just cant happen

as chapter 13'ers, we can plead and complain about a lot of things, and I hate the system as much as anyone, but if we are going to fight, lets be realistic, 401k's are great, but it is not going to save or cost anyones retirement over 7 years

If anything, the younger the chapter 13, the more effect it is going to have, I am 28 and lets use the same example, that money will probably triple by 60-65 years old, so it will really cost be what (say $100k and 3/3%, thats $21,000 of my own money plus $21,000 match, times 3 is $125,000ish)

yeah, I would say that sucks!


BTW, I am in Georgia and they said no 401k contributions for me, which really blows, cause like I said, using $100k number, %3 is $3,000 a year and that could be worth 8times as mucn in 30 years given the match and growth

I think 3% should be the minimum allowed, but this is what sucks, there are no regularities across the states, heck even across trustees

my lawyer basically told me that if I got this certain trustee (and there are only 3 here) that my life would be absolute hell over the next 4 years

i didnt get him

anyways, i am done ranting......

[Minnymouth]

What your mom has already accommulated in her 401k plan is protected in bankruptcy.....

NOW she's in a position in a Chapter 13 that she cannot contribute to it until she is out of the Chapter 3 plan..... She is not allowed to "pay herself" thru a 401k plan..... she has to give all available monies to the creditors.......

[aa06a47]

my last 0.02 on this subject....

jennie and bobby, I understand what your saying, but your assuming that she will take all that money out when she retires....she probably won't. If she retires when she is 60, good chance these days she will live another 20 years...maybe more, unless she is in poor health. 42K (using bobby's example) in today's invesment money could have a good impact on her retirement.

I agree that it would have been better to have had the 42K invested already when she was 30. Good chance she will never be a 401k millionare starting this late in life....however, she isn't throwing her money away by any means investing it now.

[SinkingFast]

I seriously doubt these last 7 years will make or break your mom's retirement. The maximum contribution for this year for someone over 50 is $20,000. Can she contribute that much every year for the next 7 years? The way retirement savings works is through compound interest. That means in order to maximize the retirement benefit, contributions must be large at an early age.

If she only contributes a few thousand a year, the compound interest for the next 5 years won't amount to much.

my .02 cents...

I have to agree with Jenny here......it is not going to make much of a difference in the long run...

If she makes a $100,000 (???) and contributes 3% and they match 3% that is $6,000 over 7 years and lets say it makes some crazy gains, and is worth $80,000 then that would last her what? in retirement, maybe 2 years?

Plus, if she was going to get gains like that back, then she could just take what she has now and put it in that fund, and be fine...

either way, 7 years of 401k savings is not going to make a retirement, just cant happen

If anything, the younger the chapter 13, the more effect it is going to have, I am 28 and lets use the same example, that money will probably triple by 60-65 years old, so it will really cost be what (say $100k and 3/3%, thats $21,000 of my own money plus $21,000 match, times 3 is $125,000ish)

yeah, I would say that sucks!

Why did either of you even bother to post??!! Without telling your age, Bobby, I could tell you are both young and do not know the true costs associated with retirement. You also do not know the true added benefit of monies from a well invested 401K plan.

We put 5%/yr into Hubby's 401K. Hubby's company also contributed a matching $1/$1 up to 2%. So that was 7%/year. We're talking less than $5K/yr saved.

The funds were invested rather aggressively. Mostly stocks and high risk ventures over the safe mutual funds stuff. In 5 years time, the small investments of Hubby and the company grew to in excess of $100K. Then the company sold out to another company. But that's the savings we realized in that short amount of time.

So I know from personal experience that's potentially in excess of $100K more that JMW's Mom could have to tap on a per month basis to make ends meet.

That extra $100+K could be the difference between having a medigap insurance plan and paying major medical expenses out of pocket.

That extra $100+K could be the difference between having to decide, "Do I buy food or pay for my meds?"

That extra $100+K could be the difference between living on your own or living with adult children.

I'm not there yet. Retirement that is. But Mom is. She lives with us. Because she can't afford to live on her own. Medigap insurance, doctor's bills, prescription drugs all eat every penny of her Medicare money every month.

So you tell me,......... Could investing an additional 7 years make a significant difference??!!

HELL YEAH, it could!!

[FoolAndHisMoney]

just a question.. does anyone know My mom is 7 years away from retirement and she filed chapter 13.. The trustee wants her to stop paying into her 401k for the 5 years. Can the stop her from this? This will effect her retirement dramatically and she wont be able to retire

thanks for any info..

joey

Just curious. Would your mom qualify for a 7? Actually it's probably a little late unless she converts since she already filed. If she can qualify, but she's trying to keep an exempt asset she maybe better off letting it go (unless of course it's the roof over her head or the wheels that take her to work) and saving money after a 7 discharge.

[bobby125]

I dont think that I communicated what I was thinking...

I agree that the 401k is the best thing you can do, I was more or less trying to say that it may be a little much saying that not contributing to a 401k for 5 years would cost her retirement. I dont think retirement can be "gained or lost" in a 5 year period........

I wish we could contribute to ours, but I had to stop because of the lawyer. Kind of sucks, BUT, if I had to choose one or the other, I would choose the 23% plan I have and no 401k

I agree with most of what everyone said, think I went off on a tangent and some thoughts are hard to communicate on "the boards". I doubt 5 years of 3% will break her retirement, maybe she will have to work another 3 years or so.....but then again, if she is not in a 100% payback, then how much would she have to work

Either way, I hate no 401k for 5 years myself, but I will take it

[Jenny]

We put 5%/yr into Hubby's 401K. Hubby's company also contributed a matching $1/$1 up to 2%. So that was 7%/year. We're talking less than $5K/yr saved.

The funds were invested rather aggressively. Mostly stocks and high risk ventures over the safe mutual funds stuff. In 5 years time, the small investments of Hubby and the company grew to in excess of $100K.

So you invested $25,000 and ended up with a balance of $100,000 in just 5 short years? Please tell us the name of your broker or the name of the fund you invested in that quadrupled your money in 5 years.

You know a lot about bankruptcy, and you should keep posting your knowledge. You don't know jack about investing.

[Bobby'sGirl]

Sighhhhhh...

I dont think retirement can be "gained or lost" in a 5 year period........

Maybe not, but I sure lost a hunk with my broker investing my funds aggressively like SinkingFast said in her post in the late '90's. Then dot.coms and tech stocks crashed and I was too heavy in those areas...

[SinkingFast]

So you invested $25,000 and ended up with a balance of $100,000 in just 5 short years? Please tell us the name of your broker or the name of the fund you invested in that quadrupled your money in 5 years.

You know a lot about bankruptcy, and you should keep posting your knowledge. You don't know jack about investing.

It was less than $25K, Miss YOU CAN'T DO SIMPLE MATH.

The 401K was with Fidelity.

Have you heard of a little old company called Fidelty, Miss YOU DON'T KNOW JACK AND YOU SHOULDN'T BE HERE??!!

Just because you're a liar doesn't mean other people are.

Inverstors choose where the money goes in a 401K. You want more money faster, you choose stocks and riskier ventures for RAPID GROWTH. Anyone can do it if they're investing 100% very aggressively with a good 401K Plan.

And Fidelity is the best 401K plan we were ever with. T Rowe Price couldn't even come close to matching the growth we saw at Fidelity.