Does bankruptcy change my retirement plan's protection?
Recent bankruptcy law changes have expanded the lawsuit protection for
IRAs. The new rules protect IRA rollovers from tax-qualified plans, regardless
of where the IRA owner resides. The new bankruptcy law further exempts
from creditor claims IRAs up to one million dollars, as well as IRAs and
IRA earnings for larger amounts as may be determined by the bankruptcy
court as necessary for the debtor's support. Simple retirement accounts,
a simplified employee pension (SEPs) and 'rollovers' to the IRA
from a qualified plan or another IRA are disregarded under this million
dollar limit. Stated differently, the part of your IRA attributable to
assets 'rolled over' from a tax-qualified plan and earnings on
those rolled over assets – typically all or a large portion of the
IRA assets –
are protected, even if it exceeds one million dollars.