IRAs, 401Ks, Pensions and other Retirement Accounts in Bankruptcy in NYC

How a retirement savings account will be affected can factor heavily into a person’s decision to file for bankruptcy.  After all, retirement savings accounts can be the most significant asset a person has.  The good news is that in most bankruptcy cases in New York your retirement accounts including IRA’s, 401Ks and Pension plans are safe from your creditors when you file.  The changes to the bankruptcy code in 2005 with the Bankruptcy Abuse and Consumer Protection act made it quite clear that qualified ERISA accounts like 401ks and Pension plans are exempt from the bankruptcy trust. (11 USC § 522)  In New York we have additional protection for non-ERISA plans like IRAs, SEP and Keogh plans as well.

There are some exceptions or situations where your retirement account may be at risk however.  If you have been saving for retirement in a regular savings or checking account for example then a portion of the funds might be taken by the bankruptcy court.  However, since other exemptions exist that can be used to protect cash accounts your attorney may be able to help protect the savings you have in your regular bank accounts as well.  Also, ERISA accounts are not protected over $1,245,475.  If your 401k or Pension plan account is worth more than $1,245,475 the portion exceeding this will likely go to repay your creditors.  Any contributions made to an IRA within 90 days of filing could go be seized by the trustee as well, so it isn’t a good idea to dump money into a fund right before filing.  In fact it could be considered a fraudulent transfer which could result in a dismissal and maybe get you into trouble.  It’s important to talk to an attorney if you need to file for bankruptcy but have recently contributed to a retirement account.  It is also important to note that while retirement funds in New York are generally safe from your creditors in a bankruptcy, the accounts are not safe from IRS or New York state tax liens or wage garnishments.  Similarly, retirement accounts are also not exempted from judgments for child or spousal support.

If you are considering bankruptcy, but have questions about how your retirement accounts could be affected contact the Law offices of William Waldner.  If you live in New York City we can help protect all of your retirement accounts and much of your other property as well while discharging your toxic assets and bad credit card debt in the process.  Bankruptcy is designed to give you a fresh start.  It is not designed to strip you of your hard earned nest egg.   As of 11/25/2013 we have a 100% Chapter 7 Bankruptcy discharge record in New York City and we strive to provide affordable bankruptcy assistance for all New Yorkers.


This article is intended for educational purposes only.  By reading this article no attorney-client