We are 3 years in a confirmed chapter 13 in California. Last April, my husband got a new job. After his 90 day probation they automatically enrolled him in a 401K plan. They take about $90.00 a month. Since this deduction started, we have had to cut down on other expenses to stay within the budget that was approved by the Trustee. We are not asking to have our payment lowered, but having to cut down on other expenses makes it hard. My husband is only 3 years from early retirement age and has little in the way of retirement savings. We were not paying any 401K when we were confirmed. Can the employer do this? Do we violate our plan by allowing this? We have never been late on any payments.
Answer
You should review your Chapter 13 plan with your attorney to determine whether you can modify your plan payments based on current expenses. If the employer makes their retirement plan mandatory then you should consult with your attorney to determine if modifying your plan payment is appropriate. Some employers do require a mandatory contribution into a retirement plan as part of their employment. IF the contribution is voluntary then modifying your Chapter 13 plan on the basis of this deduction will not be approved by the court. This link discusses retirement contributions in a Chapter 13 plan:
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