Is My 403(b) Protected If I File for Bankruptcy?
Are you currently considering a personal bankruptcy filing but concerned about how a bankruptcy case will affect your 403(b) retirement account funds? More specifically, are you concerned about whether or not your 403(b) money will be protected if you file for bankruptcy? Our Florida bankruptcy attorneys can assure you that employer-sponsored retirement accounts, including 403(b) accounts, are typically exempt if you are filing for Chapter 7 bankruptcy as an individual — whether yourself, or in a joint filing with your spouse. For Chapter 13 cases, no assets are liquidated, so your 403(b) will not be at risk. Consider the following information about how employer-sponsored retirement accounts are exempted in consumer bankruptcy cases in Florida.
ERISA Protects (and Exempts) Your 403(b) Plan in Chapter 7 Bankruptcy Cases
Under federal law, the Employee Retirement Income Security Act (ERISA) protects employer-sponsored retirement accounts in Chapter 7 bankruptcy (and other bankruptcy filings). A 403(b) account is a specific type of employer-sponsored retirement account that you may have if you currently work for a non-profit employer or ever worked for a non-profit employer.
In exempting employer-sponsored retirement accounts, ERISA makes sure that these assets cannot be liquidated in a Chapter 7 personal bankruptcy filing. They are considered “exempt,” which means you keep them and they are not subject to liquidation.
Assets Are Not Liquidated in Chapter 13 Bankruptcy Cases
If you are planning to file for Chapter 13 bankruptcy, the exemption for your 403(b) account and any other retirement accounts may still be relevant for determining the total amount of your monthly payments as part of your bankruptcy repayment plan, but none of your assets will be subject to liquidation since liquidation is not part of the process in a reorganization bankruptcy under Chapter 13.
To be clear, assets are not liquidated in Chapter 13 bankruptcy cases, so the issue of any 403(b) or other retirement assets being subject to liquidation will not arise. The same is true if you must file for Chapter 11 bankruptcy rather than Chapter 13 because of your total amount of debt and the Chapter 13 debt ceiling.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance with Your Personal Bankruptcy and Exempting Your 403(b) Funds
If you have worked previously for a non-profit employer or currently work for a non-profit employer and have a 403(b) retirement account, you should not have to be concerned that any of those assets will be subject to liquidation if you are considering a Chapter 7 bankruptcy filing for yourself or a joint filing with your spouse. As we discussed above, employer-sponsored retirement plans are typically exempt in individual bankruptcy cases, which means that those assets will be protected. To learn more about your 403(b) in your bankruptcy filing or the status of any other retirement funds, you should get in touch with one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC for assistance. Contact our firm today for more information.
Source:
dol.gov/general/topic/retirement/erisa
