Daimon William Jacobs, 662 B.R. 376

Daimon William Jacobs (“Debtor”) filed for Chapter 7 bankruptcy on June 8, 2021, listing a Solo 401(k) plan (the “Disputed Account”) with a balance of $198,306.44 as exempt under Oklahoma law.
The case centered on whether all or part of the assets in the Solo 401(k)—including funds traced to a Roth IRA rollover and a 401(k) loan—were property of the bankruptcy estate, and if so, whether they were exempt from collection/distribution by the Trustee.
Previous rulings held that the Roth IRA rollover funds and 401(k) loan proceeds in the account were not exempt and were property of the estate, but left open the status of the remaining funds.
An evidentiary hearing was held to determine if the Solo 401(k) qualified under I.R.C. § 401(a) as of the petition date—a key fact for exclusion/exemption under federal and Oklahoma law.
The Trustee challenged the legitimacy and operation of the Solo 401(k), arguing the plan and business were shams; the Debtor claimed proper qualification and exclusion.
The court’s final order resolved whether the remaining funds in the Solo 401(k) were excluded from the estate, and addressed attempted amendments to exemption claims.

Issue	Plaintiff's Argument (Trustee)	Defendant's Argument (Debtor)	Held
Whether the Solo 401(k) is property of the estate	Solo 401(k) was a sham; not qualified; thus, property of estate	Plan was properly formed, qualified under I.R.C. § 401(a)	Solo 401(k) was qualified and not property of the estate
Exemption of Roth IRA rollover and 401(k) Loan	Not entitled to exemption: improper rollover and loan not protected	Sought exemption under state/federal law; argued intent	Both Roth IRA rollover and loan proceeds are non-exempt, part of the estate
Post-petition withdrawals/distributions	Amounts withdrawn = self-dealing/prohibited transactions, disqualify plan	Withdrawals permitted under plan terms; taxable events only	Post-petition actions do not impact estate status as of filing
Right to claim federal exemptions	Debtor cannot use federal exemption scheme under Oklahoma law	Claimed exemptions under both federal and state law	Federal exemptions (§522(d)) unavailable; limited to state/fed under §522(b)(3)

Patterson v. Shumate, 504 U.S. 753 (1992) (confirmed ERISA-qualified plans with anti-alienation provisions are excluded from bankruptcy estates under § 541(c)(2))
Law v. Siegel, 571 U.S. 415 (2014) (court cannot deny exemptions absent valid statutory basis or on bad faith grounds)
Guidry v. Sheet Metal Workers Nat. Pension Fund, 493 U.S. 365 (1990) (ERISA’s anti-alienation provision strictly limits creditor access to pension benefits)
White v. Stump, 266 U.S. 310 (1924) (bankruptcy estate is fixed at petition filing, not affected by subsequent events)