What You Need to Know About Your Retirement Account and Bankruptcy
I'm Matt McArthur bankruptcy attorney at Clear Counsel Law Group. Today I want to address whether or not you're able to keep your retirement account and file for chapter 7 bankruptcy.
As you know chapter 7 bankruptcy is a liquidation bankruptcy, meaning the court has the power to sell your assets that the law doesn't allow you to protect.
I'm going to be addressing this from a Nevada law perspective, so if you're filing bankruptcy in the state of Nevada and Nevada exemptions apply, this video will hold true to your situation.
Certain Retirement Accounts are Exempt
Generally speaking, we do have protections to protect retirement accounts whether it be a 401K, whether it's an individual retirement accounts, or an IRA, or IRA, or 403B, or 457, or other types of qualified retirement account.
The law says that as long as it's a qualified tax exempt retirement account, which all of those are, it will be exempt in the state of Nevada up to $500,000 of value.
It gives you a lot of wiggle room there. It's with good reason that people are concerned about protecting their retirement account, this is your nest egg and you want to do everything in your power to protect.
You don't want to jeopardize it by filing a bankruptcy and potentially lose it.
The good news is is Nevada has very generous exemptions for retirement accounts and in nearly all circumstances we're able to protect that money that you've been so diligent in saving for your retirement in your golden years.
Your Retirement Account Needs to Keep its Tax Exempt Status
There are some circumstances where those types of accounts lose their tax exempt status, and if you've ever contributed more than the allowable amount per IRS standards and guidelines for your type of account in a given year then you may lose the tax exempt status for all of the money in the account and now the entire amount of the account is subject to liquidation.
This is a very bad scenario and something you want to avoid.
You would probably know if you've ever over contributed in a given year.
I'm sure the IRS would be asking for some tax dollars, so that would be a very good indication that you wouldn't have a qualified tax exempt retirement account currently in place.
This can get a little complicated so I would love to sit down with you if you have any questions.
Please come in, do a free consultation with us, get the free advice, and I'll give you very detailed, tailored information for your specific situation to help guide you through this very important issue.
I look forward to hearing from you soon. I'm Matt McArthur at Clear Counsel Law Group.