Is My Retirement or 401k Protected In Bankruptcy?

Yes. There are exceptions, but generally speaking your retirement funds are protected from creditors in a bankruptcy. This is why it’s so important to take action and consider bankruptcy before depleting retirement accounts to manage bills. A Charlotte bankruptcy attorney can assist in determining whether your funds are protected, but here are some general rules:

The Law

The Supreme Court has found that the anti-alienation clause protects your retirement accounts from creditors. What this means is that your retirement funds are not included in your bankruptcy estate so it is outside the reach of creditors and the bankruptcy trustee.

Qualified Plans

Provided the funds are held in a qualified plan under the federal pension savings act and have not been transferred into that account for the purpose of avoiding creditors, you will be able to protect them even when filing bankruptcy.


I represent a lot of clients who have their own businesses and do not contribute to employer 401k plans. Instead, they often have IRA contributions they need to protect.

IRAs represent a different type of retirement vehicle, owned by individuals. These are protected up to $1 million. Unfortunately, savings and checking accounts are not protected as retirement funds even if you label them as such or intend to use them for retirement purposes. There are exemptions in bankruptcy, however, which can be used to protect money in these accounts.

401k Loans

Lastly, it is not uncommon to have a 401k loan in place when filing bankruptcy. These loans are not dischargable in the bankruptcy but together with back taxes and other similar debt, they will not prevent you from a successful filing.

Call today to speak with me regarding your options—you’ll feel better knowing your rights and I’m happy to have the conversation. 704.749.7747.