Which accounts are protected from creditors in bankruptcy?


Q. My wife and I are 62 years old and have multiple retirement accounts. What are the exempt assets, that is to say protected from creditors, if one of us files for personal bankruptcy? Does it make a difference if we consolidate some retirement accounts and mix the funds?

– Planning

A. Do not make any transactions with these accounts yet.

Most retirement accounts are exempt from bankruptcy.

“So many people can file for bankruptcy, get rid of their debt and I still have money for my retirement, ”said Karra Kingston, a bankrupt lawyer in Union City.

She said that ERISA qualified plans can be exempt in case of bankruptcy, including 401 (k) s, 403 (b) s, traditional, Roth, SEP and SIMPLE IRAs, Keoghs, profit sharing plans, money purchase plans and defined benefit plans.

For traditional and Roth IRAs, the limit can be up to $ 1,362,800 per person, she said.

“I would advise not to mix money or start doing anything without first talking to a bankruptcy lawyer,” she said. “It may not be necessary to consolidate or mix money.”

Especially, said Kingston, once you withdraw funds from a retirement account, they are no longer protected.

Email your questions to [email protected].

Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly electronic newsletter.


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