Will I Lose My Retirement Fund if I File Bankruptcy?

Question:  Is my retirement account I have worked hard for all my life down the drain if I file bankruptcy?  Generally, retirement accounts are protected in bankruptcy and you get to keep them in Kansas.

KPERS, Kansas deferred compensation plan, Social Security, federal civil service, 401(k) plans, IRAs, Roth IRAs, 403(b) plans are types of retirement plans that are exempt from the reach of creditors and bankruptcy trustees.

As with all things bankruptcy, the answer to this question actually depends on the facts of your specific circumstances.  Take your retirement account statement to your attorney.  Your attorney must determine if your plan is exempt and may ask you to get a statement that your plan is a qualified plan from the plan administrator. There are “retirement” plans that are not qualified and are not exempt, which means you would lose them in bankruptcy.  You must prove to the trustee that your retirement funds have exempt status.  If you have made substantial additions to your account in the recent past or if you have more than a million dollars in your account, you and your attorney need to talk about any exceptions that might apply to you.   The key is to know whether your plan is exempt before the bankruptcy petition is filed.

The funds must be in the exempt retirement account to have protection in bankruptcy.  Withdrawn funds are not protected.

About Jill Michaux

Jill Michaux is a Kansas bankruptcy attorney. She can be found on Google+. She and her partner, Mark Neis, are Topeka's only board certified consumer bankruptcy law specialists.