What Happens To My Retirement Benefits In Bankruptcy? | Tom Orr Law

What Happens To My Retirement Benefits In Bankruptcy?

What Happens To My Retirement Benefits In Bankruptcy?

Most types of retirement plans are protected from any type of bankruptcy you file. For example, if your retirement plan is completely protected and you file for a Chapter 7 petition, this means that the trustee will have no right to use any of it to pay your creditors. (However, there are few exceptions to this, so make sure to double check.)

What’s Protected

Practically all forms of retirement are protected. Except for a few specific situations, there are unlimited amounts that are protected.

All forms of retirement under the Employee Retirement Income Security Act (ERISA) are covered:

  • 401(k)s
  • 403(b)s
  • IRAs (Roth, SEP, and SIMPLE)
  • Keoghs
  • Profit-sharing plans
  • Money purchase plans
  • Defined-benefits plans

Retirement forms recognized by the Internal Revenue Service are also protected:

  • Stock bonus and employee stock ownership plans under 401 of the Internal Revenue Code (IRC)
  • Qualified annuity plans under IRC 403
  • Church, partnership, proprietorship and government retirement plans under IRC 414
  • Deferred compensation plans under IRC 457
  • Retirement plans by tax-exempt organizations under IRC 501(a)

What’s NOT Protected

What is not protected is the money that is not in your retirement accounts. Any money that is bank accounts meant for retirement later on, but do not meet the legal requirements can be seized to pay back your creditors.

Retirement plans can also lose their protection if they are transferred.

Limitations to Exemptions for Traditional and Roth IRAs

The only type of limitations to this rule involve traditional and Roth IRAs.  For IRAs and Roth IRAs, the amount the bankruptcy court cannot touch is limited to $1,283,025 per person. This amount is reevaluated every three years to keep up with the standards of living. However, if your IRA plan exceeds the limit, the excess amount may be taken to pay your creditors.

If you have a retirement plan and are thinking about bankruptcy, it is especially important to review all your options of bankruptcy with an experienced bankruptcy attorney. Contact me today so I can answer all your questions and help you make the right decision.


Hundreds of thousands of Americans, including consumers and business owners, file for bankruptcy each year. While many think this situation is the result of overspending, most cases are due to financial hardship such as job loss, costly medical bills, divorce, or a poor economy.


I’ve been practicing bankruptcy law in Burlington, New Jersey for over 33 years. With just one location, I can focus exclusively on helping my clients make their way not only through bankruptcy, but well past it. We will work together to explore all of your options and determine if bankruptcy is the right choice for you. The goal is to get you on the path to a new beginning.


If you’re losing sleep, feeling scared or even embarrassed, let’s talk. There is life after bankruptcy and it starts here. My offices are located in downtown Burlington, near the Riverline train stop. I provide Saturday and evening hours as needed. I offer payment arrangements to fit your budget. Contact my office today at ​​609-386-8700.


Start your path towards a new financial beginning. Contact our offices today!
Scroll to Top