Retirement accounts

[Lac2925]

Are you able to keep depositing into a 401k while in chapter 13?

[justbroke]

Welcome to BKForum.

Yes, you are allowed to keep up your regular, sensible 401K contributions in a Chapter 13. By sensible, I believe that some Trustees go by the highest match from your employer. For example, if you're employer matches up to 6%, then the Trustee would not fight over a 6% contribution. If you contribute a significant amount (or exceed any catchup allowance), the Trustee may balk. They like to see that you have consistently made a payroll contribution to the 401K prior to filing.

Now, if you have outstanding 401K loans, they may argue that you can't do both at the same time. So if you have an outstanding loan, the Trustee may only allow contributions after the loan is paid off. It will depend on the Trustee and your plan.

At least that has been my experience here in Florida.

[despritfreya]

It will depend upon your District. Some say "yes", some say "yes with qualifications", some say "no". You are in the 3rd Circuit. I do not know what that Circuit says. Here in the 9th, contributions are allowed and the Trustee or creditor has little to no say in the matter. See this very recent decision:

https://cdn.ca9.uscourts.gov/datastore/opinions/2024/11/22/23-15860.pdf

Bottom line - discuss this with a local bk attny.

Des.

[shipo]

Before I filed my attorney said as long as I could show a history of 401(k) contributions, I could keep contributing. During my Chapter 13 I got five pay raises, one promotion with a significant bump in pay, and seven bonuses; for the first three years, each time I got a raise I increased my contributions until I got to the IRS max. My Trustee never said a word.