Are my Retirement Savings Safe From Bankruptcy?

If you are considering bankruptcy, you may be concerned about the impact bankruptcy might have on your retirement savings. In many cases, however, your retirement savings may be protected in case of a bankruptcy. This depends on how your retirement funds are saved and whether you are considering chapter 7 or chapter 13 bankruptcy.


401Ks are safe from bankruptcy as are other less-used retirement-specific accounts. As a general rule, if your retirement account is tax exempt it is probably bankruptcy protected. 401(k)s, 403(b)s, 457(b)s, Keogh accounts, other profit-sharing and money purchase plans, and defined-benefit plans are all protected in case of either chapter 7 or chapter 13 bankruptcy.


IRAs are similarly protected in case of bankruptcy, but only to a certain limit. Today that limit is $1,283,025. It is set to increase in 2019. The limit applies to the combined value of all your IRA accounts.

Savings Accounts

Money in savings accounts is not exempt from bankruptcy even if you have personally earmarked those funds for future retirement. If you have kept all or some of your retirement savings in a savings account and are now considering bankruptcy, you may be tempted to move your savings into a protected account. Do not do this until you talk to an attorney. Moving significant funds into a protected account right before declaring for bankruptcy could put that entire account into jeopardy.


In general, property is safe in chapter 13 bankruptcy but not in a chapter 7 bankruptcy. There are, however, many property exemptions available for chapter 7 bankruptcy. These exemptions depend on your state. Consult with an attorney to determine how your property will be affected in your individual situation.

Retirement Savings Being Used

Once you start using your retirement savings, it is much more vulnerable to bankruptcy. In chapter 7 bankruptcy, any retirement savings beyond what you need to support yourself is vulnerable. In chapter 13 bankruptcy, your retirement income will be used to determine your payback schedule.

Social Security

Social security is safe from bankruptcy, but it could potentially be garnished once it is in a bank account. Keep social security funds safe by creating a bank account exclusively for social security. If your income is made up primarily from social security, however, bankruptcy may not be the best idea, since it’s not usually at risk to creditors even without bankruptcy.

The best thing you can do to make the most informed decision on how your retirement savings will be affected by bankruptcy is to consult with a bankruptcy attorney. The Packard Law Firm is committed to helping individuals who are considering bankruptcy make the best decisions for them and their families. Reach out to us today.