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What Happens To My Retirement Savings When I File For Bankruptcy?

In most cases, ERISA-qualified pension plans like 401(k)s, IRA, 403(b)s, Keoghs, defined benefit plans, and profit sharing plans are protected from your creditors in bankruptcy, to any amount.

When you file for a Chapter 7 bankruptcy, you get to keep your retirement plan funds, and if you file Chapter 13 bankruptcy, the amount you have saved won’t affect the court’s calculations of your net worth, earnings, and how much ultimately you have to repay your creditors.

There are important exemptions to this rule. In Traditional and Roth IRAs, savings in excess of approximately $1.2 million (the exact amount is recalculated periodically to adjust for cost of living increases) are open to the purview of the courts, and the value of IRAs over $1,245,475 can be used to pay back creditors.

If you’re concerned about your retirement security while fighting debt today, call the bankruptcy lawyers at Zelenitz, Shapiro & D’Agostino at 718-599-1111 for a free consultation.