Generally speaking, no. However, there are always exceptions.

Most retirement plans are ERISA qualified, which stands for Employee Retirement Income Security Act of 1974.  This law was enacted to protect your retirement accounts from risky investments by your employer or plan administrator.  If the plan is ERISA qualified, then your bankruptcy Trustee cannot seize your retirement money to pay your creditors.  We recommend that you ask your employer for documentation showing that the plan is ERISA qualified.  This can usually be found in the plan summary in the packet of information that your retirement administrator will send. If you do not have the plan summary you will need to request something from your employer, however, this can take several weeks to receive so ask immediately.

The most common retirement plan is a 401k, which is a type of deferred compensation plan.  Normally, this is through your employer and can be matched by the employer.  You decide what set amount that you will contribute per month, such as $100 or 5% or your salary if you choose.  The majority of 401k retirement plans are through your employer, which are automatically ERISA qualified.  There is a federal bankruptcy exemption that is used to protect 100% of your money through the 401K.

Another common type of retirement plan is an Individual Retirement Plan (IRA), which is a savings or investment account for the employee.  Contributions are made pre-tax and are not taxed until they are withdrawn.  However, there are several IRA’s that are not considered ERISA qualified which include:

Plans in which your employer or employer organization does not contribute money to the plan

Voluntary Plans for yourself that is not connected to employment (such as opening one at a bank)

Deferred Compensation Plans

Again, generally the Trustee will not be able to take money from your retirement accounts.  An example of when a Trustee may have the ability to “attack” your retirement is if you have a 401K through your employer and right before bankruptcy, you make a large contribution to “hide” some of your money.  This is considered fraud, in which the court can allow creditors to attach to your funds in order to get paid, even though the plan is ERISA qualified.

Although your retirement plans will almost always be protected, make sure you consult your bankruptcy attorney about your specific situation.