A 401(k) is a personal retirement savings plan that an employee usually receives from the company for which they work. Typically, they involve an employee making contributions to their retirement savings plan, which are matched by the company up to a certain point. A 401(k) has a number of distinct benefits, including being largely tax-exempt and giving an individual a source to take loans out on. An additional benefit is that most 401(k)s are exempt from bankruptcy proceedings.
In some bankruptcy proceedings, an individual must liquidate some assets in order to repay creditors. However, many important items, such as cars and homes, are exempt from liquidation. In most cases, the same is true of 401(k) plans. The following are the types of 401(k) which are exempt from bankruptcy proceedings:
- ERISA qualified 401(k) plans
- Non-ERISA qualified 401(k) plans, which are necessary to support dependents
If your 401(k) plan does not meet either of these requirements, it may be vulnerable to creditors in bankruptcy proceedings.
If you or someone you know is considering going through bankruptcy and wants to learn more about how your 401(k) may be affected, a qualified legal professional may be able to help you understand your options. Contact the Milwaukee bankruptcy lawyers of the DeLadurantey Law Office, LLC, today at 414-377-0518 to discuss your situation with a knowledgeable member of our legal team.