401k question

[Banker81]

Thanks everybody for responding. You are a huge help. I have a question about 401k's. I have stopped paying my bills including my mortgage. Which leaves me with about 3k extra every month (and I probably wont file for a few months). What happens if I up my 401k contributions to 20, 30, or even 50% until I file. Is that a big no-no?

[jribe]

Thanks everybody for responding. You are a huge help. I have a question about 401k's. I have stopped paying my bills including my mortgage. Which leaves me with about 3k extra every month (and I probably wont file for a few months). What happens if I up my 401k contributions to 20, 30, or even 50% until I file. Is that a big no-no?

it's not a "no no" but you have to remember that they take your gross income, not net... So 401k's are an exempt asset (yay) but if you're doing the means test- they'll go off of your gross income figures...

[Banker81]

I just meant as a way to put more money away that they cant take. Since I am going to have some extra income for the next few months and I really can't buy anything big with it. Might as well put it away, right?

[catleg]

Very smart thinking
Remember the limit is 16,500 this year, 22k if 50 or older in 2009 at any point
you can also put in after tax dollars

[Flamingo]

Be prepared to do some explaining if you carry this out; if I were you, I would consult first with an attorney before doing a payroll deduction increase that large before filing and then changing it just before filing. The paystubs and information you will have to provide to the attorney/trustee will show the change/big jump in the several months before you file.