E.D. Va. 2016) (adopting Johnson "for the simple reason that Section 541(b)(7) does not limit the debtor's ability to make contributions post-petition, nor is there any distinction between pre-petition contributions and post-petition contributions in the statute"); In re Vanlandingham , 516 B.R. 628, 635 (Bankr. D. Kan. 2014) ("I conclude that the Johnson view ... is the better reasoned rule excluding postpetition voluntary 401(k) or other qualified retirement contributions from the calculation of disposable income and adopt it here."); In re Drapeau , 485 B.R. 29, 38 (Bankr. D. Mass. 2013) (holding that " § 541(b)(7) excludes postpetition voluntary contributions to the retirement plans and annuities specified therein from the scope of disposable income under § 1325(b)(2), so long as made in good faith"); In re Egan , 458 B.R. 836, 848 (Bankr. E.D. Pa. 2011) ("Congress's omission from § 541(b)(7) of any reference to the petition date suggests that that [sic] Congress did not intend a debtor's petition date to be determinative of the amount of post-petition retirement contributions a debtor may offset from her projected disposable income.").
S.D. Tex. 2017) ; In re Cantu, 553 B.R. 565 (Bankr. E.D. Va. 2016), aff'd on other grounds sub nom. Gorman v. Cantu, 713 F. App'x 200 (4th Cir. 2017) ; In re Vanlandingham, 516 B.R. 628 (Bankr. D. Kan. 2014) ; In re Drapeau, 485 B.R. 29 (Bankr. D. Mass 2013) ; In re Paliev, 2012 WL 3564031 (Bankr. E.D. Va. Aug. 17, 2012) ; In re Egan, 458 B.R. 836 (Bankr.
In re Vanlandingham, 516 B.R. at 638.More recently, the Bankruptcy Court for the District of Massachusetts issued its opinion on post-petition retirement contributions in In re Drapeau, 485 B.R. 29 (Bankr.D.Mass.2013). The Drapeau opinion agreed with the Johnson view.
In re Egan, 458 B.R. 836, 843 (Bankr.E.D.Pa.2011).In re Drapeau, 485 B.R. 29, 34 (Bankr.D.Mass.2013).The majority view—often called the Johnson approach after an early decision to espouse this view—interprets § 541(b)(7) to permit voluntary retirement contributions pre- and post-petition to be deducted in the calculation of disposable income. Courts adopting this view tend to attach the greatest significance to the statement that “such amount ... shall not constitute disposable income,” while downplaying the meaning of the words “except that.
Section 541(b)(7) provides in part:In re Drapeau, 485 B.R. 29, 34 (Bankr.D.Mass.2013).Id . at 36.
Section 541(b)(7) has been described by courts as having "an oddly worded hanging paragraph" that references the concept of Chapter 13 disposable income within section 541, which defines "property of the estate" across the entire bankruptcy code. See In re Vanlandingham, 516 B.R. at 632 (citing In re Drapeau, 485 B.R. 29, 34 (Bankr. D. Mass. 2013) ). Section 541(b)(7) is found within Chapter 541 "Property of the Estate" and sets forth property that is excluded from the bankruptcy estate as follows:
Id. Applying a similar analysis, the bankruptcy court in In re Drapeau squarely addressed the minority view's reliance on the placement of the hanging paragraph within § 541, instead of Chapter 13. See In re Drapeau, 485 B.R. 29, 36 (Bankr. D. Mass. 2013). It stated: Section 1306 incorporates all of § 541 into the definition of estate property in the Chapter 13 case, including those exceptions detailed in subsection (b).
Such contributions, however, must be within permissible and legal limits and must be made in good faith. Johnson, 346 B.R. at 263; see also In re Drapeau, 485 B.R. 29, 38-39 (Bankr. D. Mass. 2013). Cases that allow a deduction for postpetition 401(k) contributions recognize the congressional intent to protect and encourage retirement savings.
"[W]here . . . there is a history of similar prepetition contributions, temporarily interrupted on account of a circumstance beyond a debtor's control (e.g., a limited period in which debtor could not contribute on account of a hardship withdrawal) . . . any good faith obstacle [is] overcome." In re Drapeau, 485 B.R. 29, 38-39 (Bankr. D. Mass. 2013). Moreover, as the bankruptcy court noted, the Debtor's proposed annual contribution of approximately $3,200 is well below the maximum allowable contribution of $18,000, and the Debtor has no other retirement benefits.
The "awkwardness of the language does not warrant a strained reading of an otherwise clear pronouncement that" post-petition 401(k) contributions are excluded from the debtors' disposable income. In re Drapeau, 485 B.R. 29, 37 (Bankr. D. Mass. 2013).