John Penfound v. David Ruskin, 7 F.4th 527

John Penfound had a long history of voluntary 401(k) contributions while employed until August 2017, when he moved to an employer (Protodesign) that had no 401(k) plan and thus made no contributions for a period.
Penfound later began working at Laird Technologies, which offered a 401(k), and at some point resumed contributions, but the record does not show exactly when.
John and Jill Penfound filed a Chapter 13 petition on June 22, 2018 and proposed excluding $1,375.01/month of John’s voluntary post-petition 401(k) contributions from “projected disposable income.”
The Chapter 13 Trustee objected; the bankruptcy court and the district court rejected the exclusion, relying on Seafort, and the Penfounds appealed to the Sixth Circuit.
The Sixth Circuit’s intervening decision in Davis held that recurring 401(k) contributions withheld for at least six months pre-petition may be excluded from disposable income; the Penfounds conceded John made no contributions during the six-month look-back but argued Davis should be expanded to account for his longer historical contribution record and circumstances beyond his control.
The Sixth Circuit affirmed: a debtor cannot rely on historical contributions older than the statutory look-back or on a generalized good-faith/totality-of-circumstances theory to shield voluntary post-petition contributions when there were no contributions in the six months before filing.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a debtor who historically contributed to a 401(k) but made no contributions in the six months pre-petition may exclude voluntary post-petition 401(k) contributions from projected disposable income	Penfound: long history of contributions and employer lack of a plan during the six-month period justify excluding voluntary post-petition contributions	Trustee: statute and Sixth Circuit precedent require the look-back (effectively six months or contributions “at the time” of filing); no exception for past history	Held: Affirmed — historic contributions beyond the statutory look-back do not permit excluding post-petition contributions; no exception for employer unavailability
Whether a debtor’s good faith or a totality-of-circumstances inquiry permits shielding post-petition 401(k) contributions despite statutory limits	Penfound: court should consider good faith and totality; contributions were made historically and inability to contribute was outside his control	Trustee: Good-faith analysis cannot override §1325(b)(1) and this court’s prior rejection of the Johnson approach	Held: Held that good faith does not overcome the statute or controlling precedent; the Johnson view is foreclosed

In re Davis, 960 F.3d 346 (6th Cir. 2020) (held recurring 401(k) contributions withheld for at least six months pre-petition may be excluded from disposable income)
In re Seafort, 669 F.3d 662 (6th Cir. 2012) (rejected the Johnson view; held post-petition 401(k) resumption may be projected disposable income)
Hamilton v. Lanning, 560 U.S. 505 (2010) (bankruptcy courts may adjust projected disposable income when future changes are known or virtually certain)
Harshbarger v. Pees (In re Harshbarger), 66 F.3d 775 (6th Cir. 1995) (pre-BAPCPA consensus that voluntary 401(k) wage withholdings were disposable income)
In re Johnson, 346 B.R. 256 (Bankr. S.D. Ga. 2006) (majority/J ohnson view permitting post-petition 401(k) funding in good faith; rejected by Seafort)
Soc’y Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588 (6th Cir. 1992) (good-faith plan confirmation requires totality-of-circumstances inquiry)