Posted on
June 11, 2009
at
1:07 am
Can bankruptcy affect or take from my IRA?
Posted on
June 11, 2009
at
1:58 am
No, your 401k is protected from the creditors in bankruptcy but it might not be so if you are paying Domestic Support Obligations (alimony or child support) or taxes.
Posted on
June 11, 2009
at
1:59 am
What's an IRA? You said 401k.
Posted on
June 11, 2009
at
2:17 am
IRAs, like the 401(k), are retirement plans offered by the company/employer that the consumer is working for. In it, the contributions grow tax-free, until the consumer's retirement or when he/she withdraws them. The consumer makes regular tax-deferred contributions, depending on what plan the consumer is in, and the employer may sometimes match some or even all of his/her employees contribution.
Posted on
June 11, 2009
at
2:53 am
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or BAPCPA created laws to protect tax-favored funds like the 401(k) plans (a regular IRA) and also Roth IRAs. Those IRAs are also recognized by the the Employment Retirement Income Security Act or ERISA, and so they are exempt from bankruptcy proceedings, but not all IRAs are ERISA-qualified and thus, not always exempt.
Posted on
June 11, 2009
at
3:16 am
Thank you all for the replies, I have one more question: If I take out a loan from my 401k and filed bankruptcy, would the debt be discharged?
Posted on
June 11, 2009
at
3:38 am
No mrs.robinson, because when you borrowed from your 401k, you were borrowing from yourself. A bankruptcy discharges debts owed to a creditor. Also 401(k)s are not considered part of the bankruptcy estate, therefore the trustee cannot touch them to pay off the creditors.
