{"id":286969,"date":"2021-02-21T09:08:54","date_gmt":"2021-02-21T14:08:54","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/what-is-bankruptcy\/is-your-401-k-or-ira-protected-in-bankruptcy.html"},"modified":"2024-06-24T14:06:37","modified_gmt":"2024-06-24T19:06:37","slug":"is-your-401-k-or-ira-protected-in-bankruptcy","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/what-is-bankruptcy\/is-your-401-k-or-ira-protected-in-bankruptcy.html","title":{"rendered":"Is My 401(k) or IRA Protected in Bankruptcy?"},"content":{"rendered":"\n
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Is My 401(k) or IRA Protected in Bankruptcy?<\/h1>\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Many people work hard for decades to build up their retirement accounts, 401(k)s, and IRAs. If you’re considering a Chapter 7 bankruptcy, you may wonder what happens to these assets. The same is true if you’re filing a Chapter 13 bankruptcy case.<\/p>\r\n

Generally, the courts protect your 401(k) or IRA retirement accounts from bankruptcy. Unless there are unusual or extreme circumstances, your retirement funds are not part of your bankruptcy estate<\/a>. Generally, the U.S. Bankruptcy Courts will not expect or force you to drain your retirement funds in your efforts toward debt relief.<\/p>\r\n

Here, we’ll explain what happens to your retirement savings if you file for bankruptcy. We will also briefly explain how bankruptcy can impact your retirement accounts, such as IRAs, pensions, and 401(k)s.<\/p>\r\n

The Downside to Using Retirement Funds in Bankruptcy<\/h2>\r\n

Some think it’s worth using their retirement money to pay down their debt rather than file bankruptcy. The problem is that you may still be in debt even after draining your retirement accounts.<\/p>\r\n

You must also consider that withdrawing retirement money may carry penalties, such as:<\/p>\r\n