Will I Lose My Pension or Retirement Account if I File for Bankruptcy ?
One of the most important questions potential client’s have when they come in to see me is whether or not they are going to lose their pension or retirement account if they file for bankruptcy. Fortunately, Florida has some very strong exemptions to protect pensions and retirement accounts.
Pension and Retirement Accounts are Typically Exempt
When Congress amended the bankruptcy code in 2005, they provided stronger protections for retirement and pension accounts of debtors. Virtually all retirement and pension accounts are exempt from your creditors. There are some exceptions, but that is a discussion for another day.
Under the 2005 amendments to the bankruptcy code, ERISA-qualified pension plans, such as: 401(k)s, 403(b)s, IRAs (Roth, SEP, and SIMPLE), Keoghs, profit-sharing plans, money purchase plans, and defined-benefit plans are exempt in both Chapter 7 and Chapter 13 Bankruptcy cases. For more information see 11 U.S.C. Section 522.
Under Florida’s exemptions, there are even more retirement and pension protections. Florida Statutes specifically protect 100% of the following: Retired public employees health insurance subsidies – See Fla. Stat. Ann. § 112.359 & 112.363; Police retirement benefits – See Fla. Stat. Ann. § 185.25; Government employees deferred compensation benefits – See Fla. Stat. Ann. § 112.215(10)(a); Tax-qualified portions of retirement or profit-sharing plans qualified under I.R.C. – See Fla. Stat. Ann. § 222.21(2); State and county employees’ retirement benefits – See Fla. Stat. Ann. § 122.15; Public employees’ retirement benefits – See Fla. Stat. Ann. § 121.131; and Teacher’s retirement benefits – See Fla. Stat. Ann. § 238.15.
It is important to note that the funds in a retirement account may be exempt from creditors, however the retirement benefits that are paid out from that account as income are not exempt. That why it is important before you file for bankruptcy that you evaluate your situation to determine any potential issues that may impact your pension and retirement accounts and retirement payments flowing from those accounts.
Are you considering filing for bankruptcy?
If you are considering filing for bankruptcy, it is important that you speak with a bankruptcy attorney who can help you evaluate your potential homestead exemption and issues that may impact your exemption status in bankruptcy. Every bankruptcy case is different, so what has worked for one debtor may not necessarily work for another. If you are in Miami-Dade County or Broward County, Florida, please feel free to contact us to set up a FREE consultation to discuss your specific situation.
This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the current state of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.