No. Under the American bankruptcy laws, qualified retirement funds will never be available to satisfy debts in a Chapter 7 bankruptcy filing.
To be protected as a qualified plan, a retirement account must meet the requirements of the Internal Revenue Code for tax deferment. Common examples of qualified retirement plans include 401k plans, 403b plans and most pension plans.
Creditors may not obtain access to any qualified plan to obtain repayment of a debt in bankruptcy. Qualified plans include any employer-sponsored retirement plans that meet the requirements of the Internal Revenue Code for deferment of income tax (until after retirement). Qualified plans include defined contribution plans and defined benefit plans. Examples of employer-sponsored retirement plans that will be exempt from bankruptcy include 401k plans, 403b plans, SEP IRAs, and SIMPLE plans. Any defined benefit or defined contribution plan will qualify, though, provided that it allows for the deferral income tax until after retirement.
A personal retirement account that defers income taxation will also constitute a qualified plan. As such, it will not be available to creditors in a bankruptcy filing.
Contributions to a retirement plan that does not defer taxes may, nonetheless, be exempt from your bankruptcy estate, based mostly on state laws. If you have investments or other funds in a non-qualified plan, you’ll want to seek the counsel of an experienced personal bankruptcy attorney.
At the Law Office of Howard N. Sobel, P.A., we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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