If you have spent your whole life working hard and faithfully making contributions to your 401(k) or IRA, and now you are facing financial troubles, you don’t want to do anything that could put your nest egg into jeopardy. For many individuals, their retirement account is one of their most significant and valuable asset. Fortunately, most pension and retirement funds are exempted from the bankruptcy process.
Federal bankruptcy law (and most state bankruptcy laws) protects qualifed retirement accounts from being used to pay your creditors. As long as your retirement account is properly set up as “ERISA Qualified,” it should be protected. This includes a variety of different types of accounts such as 401(k), 403(b), profit sharing plans, IRAs, Keoghs, money purchase plans and defined benefit plans.
Your Social Security benefits are also protected from claims of creditors by federal law. It is important that you have the ability to “trace” the funds in your account back to Social Security payments. As a result, it is wise to avoid commingling or mixing your Social Security benefits in an account that also holds substantial sums of money from a variety of other sources. It is beneficial to create an account that is solely used to hold your Social Security benefits.
Filing bankruptcy can be a confusing process. When you have a significant asset such as a retirement account, it is especially important to confer with a local bankruptcy attorney who can review your individual circumstances. We can verify whether your retirment account is ERISA Qualified and confirm that it will be protected in your bankruptcy filing.
We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..