Retirement accounts almost always exempt

Before spending a single dime from your IRA or 401k in an attempt to make ends meet, you should meet with an attorney. Most retirement plans are exempt from the reach of creditors in a bankruptcy, even those not subject to Employee Retirement Income Security Act (ERISA).

Many people I meet have used up or begun to use their retirement accounts before considering bankruptcy. The thought in mind is, “I’m going to lose it anyway, I might as well use it, even if in vain.” Unfortunately, some of these people are even assessed non-dischargeable tax penalties for early withdraw of funds.

Federally, 11 U.S.C. 522(d)(12) sets out retirement exemptions, but because Florida has opted out of the federal exemptions, so we must use Florida state law. The Florida state law provision protecting qualified retirement plans is Fla. Stat. Ann. § 222.21 (2) .

If you are at the point where you are considering withdrawing funds from a retirement account to make ends meet you should talk with us about the risks of doing so.