Individual Retirement Accounts and Bankruptcy
Financial experts recommend saving for retirement as soon as possible so that you have all the funds that you need for a successful retirement. However, with the economy in the condition that it is, many people are being forced to dip into their retirement savings for today’s expenses. In some cases, however, declaring bankruptcy can sometimes protect your retirement assets.
In a landmark 2005 court case, the Supreme Court ruled that individual retirement accounts, or IRAs, can be reasonably protected from seizure when someone files for bankruptcy. If you are in difficult financial times and are interested in protecting your assets, you should contact a Milwaukee bankruptcy lawyer from the DeLadurantey Law Office, LLC today at 414-377-0518.
What is an IRA?
An IRA, or an individual retirement account, is a retirement plan account that has strict rules regarding the amount that you can place in them each year. Currently, you can deposit up to $5,000 in your IRA in a single year. This allows you to save money for retirement without stashing money outside of the government’s reach. Additionally, there are several IRA types that are each taxed differently.
Bankruptcy Protection
The Supreme Court case regarding IRAs and bankruptcy did not detail the amount that people could save from bankruptcy. However, legislation such as the Bankruptcy Abuse Prevention, Consumer Protection Act of 2005 has outlined several rules, such as:
- Contributory IRAs – can be exempt for up to $1 million during bankruptcy
- ERISA rollover IRAs – exempt no matter the amount
- Combination contributory/rollover IRAS – the $1 million exemption applies to contributory funds but not to rollover funds
Untangling the legal aspects of IRA protection can be difficult. To help you with your bankruptcy case, you should talk to a bankruptcy lawyer as soon as possible.
Contact Us
Bankruptcy is stressful enough without having to worry about potential loss of retirement money. For experienced legal advice in making this process as smooth and easy as possible, contact an experienced Milwaukee bankruptcy attorney from the DeLadurantey Law Office, LLC at 414-377-0518 today.