Retirement Accounts And Bankruptcy: ERISA Accounts

Retirement Accounts And Bankruptcy: ERISA Accounts

Theron Morrison and the Morrison Law Group do not negatively judge any individual who is experiencing financial stress and turmoil. We view every person, Utah resident, and client with compassion and understanding. We want to help those who need help. Call today to schedule a FREE consultation. The Morrison Law Group provides exceptional service because it continues to assist clients post-bankruptcy to ensure their financial well-being. Not all Utah bankruptcy law firms can genuinely make this claim.

In most cases, bankruptcy debtors may keep their retirement accounts, such as IRAs and 401ks. However, Chapter 7 bankruptcy debtors may have the protected amount of benefits capped in some accounts. A qualified and experienced bankruptcy attorney can help any prospective bankruptcy debtor protect his or her hard-earned retirement benefits.

ERISA grants plan participants the right to sue for benefits and breaches of fiduciary duty. ERISA also guarantees the payment of specific benefits through a federally chartered corporation – the Pension Benefit Guaranty Corporation.

Bankruptcy law provides protection for ERISA (Employment Retirement Income Security Act) qualified plans and non-ERISA plans. An ERISA plan is established by an employer, meets certain IRS guidelines, and is tax exempt, whereas a non-ERISA plan includes IRAs (Individual Retirement Accounts).

The United States Supreme Court has ruled that ERISA-qualified retirement plans are not property includable in a bankruptcy estate and, therefore, cannot be seized by a bankruptcy trustee. Examples of ERISA-qualified retirement plans are as follows:

  • 401(k);
  • 403(b) or profit-sharing plans;
  • 457(b) deferred compensation plans
  • governmental plans, and
  • tax-exempt organizational retirement plans.

An important aspect of ERISA approved plans is that the amount protected is unlimited. However, once the funds in the account are withdrawn from a retirement plan, the protection of the exemption is no longer effective since it applies to money in an account.

The attorneys at the Morrison Law Group can help anyone considering bankruptcy maximize their Utah property exemptions and retain the greatest amount of property permitted by state and federal law. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

Retirement Accounts And Bankruptcy: ERISA Accounts

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Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.