The question of retirement and how it may or may not be affected by filing bankruptcy is a hot button issue in many bankruptcy cases. This is because most bankruptcies occur later in life after a 401k or other retirement plan has accrued a bit of value. If you think that bankruptcy could be your only way out and are worried about the retirement you’ve worked so hard for then don’t worry because federal laws have got your back.
Your retirement funds are by and large left unaffected by a bankruptcy because they are not technically property of your estate and they also can be claimed as exempt from creditors in most states. Furthermore, the Employee Retirement Income Security Act (ERISA) was enacted in 1974 to provide further protection for retirement funds.
Exceptions to Note
Of course this is not to say that every type of retirement plan is safe from creditors in every single bankruptcy case. If your retirement plan is part of your real estate and totals more than $1 million then you may have to fork it over to your creditors upon bankruptcy. However, if that value is less than $1 million then you could list it as exempt depending on the state in which you reside.
Keep Your Retirement Yours
Retirement plans come in all shapes and sizes but the one thing they all have in common is the hard work and determination that their holders put into getting them where they’re at. Everyone who’s lived an honest and hardworking life deserves to retire peaceful and free of monetary concerns. The federal government acknowledges this and has made it a priority to protect the retirement funds of its citizens.
