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Income from IRAs in 6 months prior to filing a Chapter 13
Nick:
This does help as to the SSI, but my Debtor has been rather profligate in using his IRA funds, (is it a surprise that a guy with $200,000 in credit card debt would be profligate?) and has been taking about 5K per month, which given the funds in it is clearly an unsustainable monthly draw.
So do I have him stop taking out IRA distributions for 6 months?
Steve
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Dear Steve,
Leaving aside the rhetorical and political fraud at the core of social security, there is a clear parallel: During the days of employment the Debtor contributed to social security and to his IRA. Both eventually pay out retirement distributions based on the amount that was contributed during the days of employment. However, 11 U.S.C. 101(10A)(B) does not exclude IRA distributions from current monthly income, but it does exclude social security. If Congress knows what it is doing when drafting statutory language - admittedly, a big assumption - it must have purposely left IRA distributions out of the 101(10A)(B) exclusions from income. Therefore, I don't see how you are going to exclude the IRA distribution income from either Form 22C or from plan payments.
You could, of course, use 101(10A)(B) to exclude the social security income from inclusion in plan payments. During an informal chat, Judge Jury told me that she felt this was a sound argument. When I told this to Rod Danielson, accepted it as legitimate in one of my Riverside Chapter 13s, so the Debtors did not have to devote any of their social security income to plan payments.
I hope this helps.
Nick
Nicholas Gebelt, Ph.D., J.D.
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I have a semi-retired 70 year old Chapter 13 Debtor who has multiple
sources of income: pension, SSI, part-time work and IRA distributions.
It seems to me that how much of one's IRA funds, (as exempt assets) are
contributed to the plan is a question of discretion with the Debtor.
However, if we need to contribute all income measured by income received
in the 6 months preceding the month that the case was filed, then these
distributions are income, at least for tax purposes. Or was it income
when he earned it years ago and saved it for retirement?
Anyway, the call of the question is "Do I need to count this Debtor's
IRA distributions from the last 6 months as his income, and if so, does
the Debtor need to continue to contribute that income throughout the
term of his plan?"
Law Offices of Steven B. Lever
>
> Steven B. Lever
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