What Happens to My Retirement Accounts in Bankruptcy?

The primary goal of retirement accounts is to help individuals live comfortably for the rest of the foreseeable future after they stop working. So, what happens to the money in your retirement accounts if you file for bankruptcy?

Facts and Potential Outcomes

Exemption Status

In many bankruptcy cases, retirement accounts are protected or exempt from being used to repay creditors. This means you can typically keep your retirement savings even after filing for bankruptcy.

Qualified Retirement Accounts

Qualified retirement accounts, such as 401(k) plans, 403(b) plans, and traditional IRAs, are often protected to a significant extent. These accounts are typically safeguarded by federal bankruptcy exemptions.

State Exemptions

Some states have their own bankruptcy exemptions that may offer additional protection for retirement accounts. In such cases, you can choose between federal and state exemptions, depending on which provides more favorable protection.

Non-Qualified Accounts

Non-qualified retirement accounts, like Roth IRAs or regular investment accounts, may not have the same level of protection as qualified accounts.

Contributions and Withdrawals

The timing and nature of contributions and withdrawals from retirement accounts can also impact their treatment in bankruptcy. Contributions made shortly before filing for bankruptcy may be subject to scrutiny, while funds withdrawn from retirement accounts are generally considered part of your assets.

US paper money filling up a jar labeled retirement

Securing Your Retirement Accounts in Bankruptcy

At Todd Cushner & Associates, our bankruptcy attorneys do everything in our power to help keep your retirement accounts whole. Contact us today to schedule your free consultation.

This entry was posted in Bankruptcy Protection. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.
  • © 2024 Todd Cushner & Associates. All rights reserved.