For the most part your retirement funds are protected in Bankruptcy. 401k, 403b and other retirement accounts qualified under ERISA (Employee Retirement Income Security Act) are generally not part of your bankrupt estate and thus safe. IRAs are not covered by ERISA and are property of the Bankrupt Estate. The good news is that you can use Federal or State Exemptions to protect your IRAs.
Connecticut General Statute Section 52-352b protects your IRA if you elect the Connecticut exemptions.
11 United States Code Section 522(b)(3)(C) protects Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
11 United States Code 522(b)(3)(C)(n) protects IRAs and Roth IRAs up to $1,245,475 plus the entire amount of any money rolled into the IRA from a qualified ERISA plan.
You can receive bankruptcy protection and save your future. Retirement accounts are also protected from creditors even if you do not file bankruptcy. Never take money from your retirement account without first obtaining expert professional advice as to the consequences and to determine if there are any alternatives.
More resources: Frequently Asked Questions about Bankruptcy
Bellenot & Boufford, LLC is able to help you determine which Chapter of bankruptcy you qualify for and possible alternatives.
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