Current BK13 and future Deferred Comp (457b) contributions

[castor4072]

I live in AZ, hopefully someone can chime in and let me know if this is allowed.

Status:

1. Going to retire and draw pension.

2. Then RETURN back to the position I retired from (no longer can contribute to pension plan) and then contribute 25k to 457b plan.

Questions:

1. Can the "trustee" come after me if I contribute 25k a year in my Deferred Comp (457b) plan if that plan is protected?

2. My monthly income will be the same as when I started my BK 13 plan. (pension + working minus the 25k for the 457b) when I retire.

3. Since 457b is not considered as "income" even when doing taxes, so this should have no impact on my payment per month?

I hope all this makes sense....

Cas...

[FireMedic1]

You don’t need to worry about ERISA-qualified accounts in bankruptcy. The United States Supreme Court ruled that an ERISA-qualified retirement plan isn’t property that’s included in bankruptcy and can’t be taken from you by the bankruptcy trustee appointed to your case. Examples of ERISA-qualified retirement plans include:

• 401(k)s
• 403(b) or profit sharing plans
• 457(b) deferred compensation plans
• governmental plans, and
• tax-exempt organizational retirement plans.

Another major advantage of these types of plans is that they’re protected up to an unlimited amount. You don’t have to worry about losing any of these assets to your creditors.

https://www.thebankruptcysite.org/resources/bankruptcy/exemptions/keep-retirement-accounts-bankruptc... 

Consult with your BK lawyer for more advice. Especially on the moving of the money around.

[despritfreya]

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@castor4072 wrote:

I live in AZ and am currently in a Chapter 13. . .  I am going to retire and draw pension.  I am then going to return to the same job and begin contributing no less than $25K per year to 457b plan.

1. Can the "trustee" come after me if I contribute 25k a year in my Deferred Comp (457b) plan despite the fact that my monthly income will be exactly the same as when I started the Chapter 13

2. Since 457b is not considered as "income" even when doing taxes, so this should have no impact on my payment per month?

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Sorry for the re-write.  Even with the re-write there is not clarity.  You state you are "retiring" so that you can draw a pension payment.  You then state you will be going back to the same job and plan to contribute $25K to a deferred comp plan?

1.  Do you work for a governmental agency?  If "yes", state or federal?

2.  Are you taking a lump some distribution from the pension plan?  Or, will you be getting a monthly payment?

3.  If it is a lump sum, is the lump sum going directly to the deferred comp plan (plan to plan transfer) or going into your hands 1st?

4.   Is your Chapter 13 Plan Confirmed?

5.  If the Chapter 13 Plan is Confirmed does it require you to amended Schedule I and J on an annual basis?

6.  Are you represented by an attorney?

The answer to your inquiry may not be as simple as one might think and you really should be discussing this with your attny.

Des.

[castor4072]

despritfreya.....

1. Yes, State agency

2. Monly pension, no lump sum

3. N/A

4. Process of being confirmed in the next week or so, will be comfirmed by the retirement of April 2020 though...lol

5. I'm new to BK13, have to look into the ammended Schedule and speak to my attorney

6. Yes, I have an attorney.

Sorry for the confusion BUT THANK YOU for your input as well.

My only RED flag would be, if I put in 25k a year into a PROTECTED 457b plan, can the trustee come back and say that its considered income even though making my montly plan each and every month?

[despritfreya]

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@castor4072 wrote:

My only RED flag would be, if I put in 25k a year into a PROTECTED 457b plan, can the trustee come back and say that its considered income even though making my montly plan each and every month?

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Actually, your issue is whether or not your Trustee will "approve" a voluntary contribution to the 457 Plan.  Unlike the ASRS mandatory contribution, diversion of income to the deferred comp plan is voluntary.  In Arizona, such contributions, while normally allowed, can be disallowed either by the Trustee or your creditors.  You  need to sit down with your attny to go over all of the issues as it relates to the specific facts of your case.

Des.