Are Your Retirement Plans Part Of Your Bankruptcy?

Posted on: 1 November 2017

One of the concerns that bankruptcy filers have is whether their retirement plans will be safe from the trustee. The trustee has the responsibility of reviewing your assets and determining if any of them could be put towards paying your debts. Depending on the type of retirement plan you have, there is a possibility that it is not safe. If you are planning to file for bankruptcy, here is what you need to know to protect your retirement plan:

Are Your Social Security Benefits Safe?

Most retirees will receive benefits from Social Security. For the most part, the benefits are protected from a bankruptcy filing. However, there is a catch. Where you keep your monetary benefits could lead to your benefits being taken.

If your Social Security benefits are placed in a bank account with your funds from other sources, the trustee could attempt to take your benefits. He or she could argue that the benefits are mingled and determining which are from Social Security and which are from other sources could be difficult. If a judge agrees, you could lose some or all your funds stored in your account.

To prevent this, you will need to open a separate account for your benefits. If you can prove that the funds in the account are solely from your Social Security payments, the trustee will not be able to touch them.

Can Your Private Pension Be Taken?

Most private pensions are exempt from bankruptcy estates. To be exempt, your pension must meet certain requirements, including qualifying under the Employment Retirement Income Security Act, or ERISA.  

If you have an Employee Stock Purchase Plan, or ESPP, your plan is not protected. The same applies if you have a fund that was not properly funded.

If your pension is not ERISA-qualified or is an ESPP, you can possibly use an exemption to protect it. Each state has monetary exemptions that allow you to protect assets up to a certain dollar amount. For instance, if your state allows up to $25,000 in exemptions for financial accounts, you can use that to protect that amount in your pension plan.

Consult with a bankruptcy attorney to learn more about your options for protecting your retirement plans. The attorney can help determine if you need to use exemptions to protect your assets and help you determine what other assets you have that are not protected by the trustee.

Contact an attorney like Greg Dunn Bankruptcy Attorney for more information and assistance. 


The Journey to Success

Ever since I was in college, I’ve been extremely interested in business. I like to follow and study what famous individuals do well or do poorly in their businesses and how they fix their mistakes. Recently I've been following different individuals who've faced various bankruptcy issues. Thankfully, they learned from their many past business mistakes. If bankruptcy had not been an option for them, who knows where these corporate role models would be today and how their businesses would be doing. On this blog, I hope you will learn how a bankruptcy attorney can help you improve your current financial situation.

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