Saving for your retirement over the course of your career can be an arduous process and the thought of it being taken from you can be absolutely crippling. A retirement account is something that is essential for you to maintain a quality of life especially when you can no longer work. You may be asking yourself “do I lose my retirement funds if I file for bankruptcy?” The answer is a little bit more than a straight forward yes or no.
A 401(k) account and 403B account are typically created by your employer. Your 401(k) is being protected at a federal level to prevent it from being garnished in the event that you file for bankruptcy. If you created your 401(k) account solo or as a self-employed individual these accounts can be much more vulnerable to the chance a creditor may want to get into this account. Solo 401(k)s are protected under some state laws but not in every state.
Individual retirement account for IRAs are protected up to $1 million under federal law. If your IRA has grown to an amount over $1 million some of these funds may be garnished after a bankruptcy by your creditors.
If you are considering the process of bankruptcy you should not transfer your retirement funds in order to pay off creditors. An IRA and 401(k) count remain safe from creditors but by placing this money into your bank account there is the chance that your creditor will instantly garnished these funds. Keep your money protected so that you can make sure your retirement dreams can stay safe too.
If you are experiencing difficulty with debts contact our bankruptcy attorneys today. We can advise you how you can protect your retirement funds before filing for bankruptcy.