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Will I Lose My Retirement Accounts if I File for Bankruptcy?

Vivona Pandurangi, PLC Jan. 27, 2022

Petition for Bankruptcy on an office tableWhen experiencing financial distress, filing for bankruptcy is among the promising options to achieve debt relief and restore your financial health. Depending on the bankruptcy chapter you are petitioning for, you might lose your unnecessary luxury items. However, for the most part, your retirement accounts – including 401(k) and other qualified retirement accounts – will be protected in the bankruptcy case. Therefore, if you are considering filing for bankruptcy, you should keep your retirement assets and funds where they are.

At Vivona Pandurangi, PLC, our attorneys have devoted their careers to offering outstanding legal services and knowledgeable guidance to clients in bankruptcy-related matters. Our experienced Virginia bankruptcy attorneys can help outline an effective strategy to protect your retirement accounts and assets, and help you build a better financial future. We’re proud to serve clients across Falls Church, Alexandria, Manassas, Arlington, Fairfax, and throughout the counties of Prince William and Loudon, Virginia.

Retirement Accounts That Are Protected in Bankruptcy

When you file for bankruptcy in Maryland, you may be concerned about creditors going after your retirement funds. Thankfully, the majority of retirement accounts – set up under ERISA – are protected from seizure by creditors. These include:

  • 401(k) plans

  • Pension plans

  • Some 403(b) plans

  • Other ERISA-qualified retirement accounts

  • Deferred compensation plans

  • Money purchase plans

  • Profit-sharing plans

  • Keogh plans

  • Individual retirement accounts (IRAs) up to $1.3 million

These protections allow you to file for bankruptcy without risking any assets or funds you’ve been putting away for retirement. Our experienced attorneys can help determine whether your retirement account is protected and enlighten you about situations where the account may not be protected.

Situations in Which Retirement Accounts May Not Be Protected

Unfortunately, your ERISA-qualified retirement accounts may not be protected – in extreme situations – when you file for bankruptcy. These include:

  • Your ex-spouse has interests in the retirement accounts during asset division in a divorce.

  • You recently withdrew funds from your retirement account

  • The amount in your IRA exceeds $1,362,800.

  • IRS to enforce a federal tax levy or collect unpaid taxes

  • The federal government for criminal fines and penalties

However, the laws and rules guiding qualified and non-qualified retirement accounts can be confusing. If your retirement accounts are at risk of attachment to your bankruptcy case, you need to speak to our experienced attorneys right away. Your lawyer can fight diligently to protect your nest egg and determine the best course of action.

Retirement Benefits Being Paid as Income

What’s more, if you’re already receiving income from your retirement accounts, you may need to consider such income when filing for Chapter 7 or Chapter 13 bankruptcy. The amount will determine your eligibility for Chapter 7 bankruptcy. Conversely, if you’re filing a petition for Chapter 13, you must calculate the retirement income into your repayment plan. A knowledgeable lawyer can review every aspect of your case and help you navigate key decisions.

Vivona Pandurangi, PLC: Guidance You Can Trust

Filing for bankruptcy in Virginia often involves a lot of complex procedures. Before you proceed, you must understand the various bankruptcy options, requirements for each chapter, as well as what will happen to your assets and property. Likewise, knowing what to expect with your retirement accounts can help you be better prepared. Our experienced attorneys can explore your available legal options and help you make informed decisions.

At Vivona Pandurangi, PLC, we are committed to guiding individuals and business owners through the complexities involved in filing for bankruptcy. Also, we can seek to protect your assets, finances, retirement accounts and help you build a more stable financial future.

Contact Vivona Pandurangi, PLC, to schedule a one-on-one consultation with our experienced bankruptcy lawyers. Our dedicated team has the detailed legal counsel and brilliant advocacy you need to navigate intelligent decisions in your bankruptcy proceedings. Our firm proudly serves clients across Falls Church, Alexandria, Manassas, Arlington, Fairfax, and throughout the counties of Prince William and Loudon, Virginia.