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401K Plans Beyond the Reach of Bankruptcy
Cathleen Cooper Moran

Q. 

If I file bankruptcy, will they take my $10,000 401K? I'm 41 yrs old, and I'm not fully vested until next year.

-- Anonymous

A. 

A 401(k) plan is not "property of the estate" in a bankruptcy case. That means it is not part of the collection of assets available to the trustee to pay creditors.

Further there is now a $1M exemption in federal bankruptcy law to protect IRA's from the claims of creditors. The Congressional message is clear: retirement needs trump creditor rights.



-- Cathleen Cooper Moran

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