Is My Roth IRA Protected If I File for Chapter 7 Bankruptcy?

Do you currently have retirement money put aside in a Roth individual retirement account (IRA)? If you have a Roth IRA and you are considering a Chapter 7 bankruptcy filing, you may have concerns about whether these funds that you have saved during many working years will be protected for your future retirement, or whether they will become subject to liquidation in your bankruptcy filing. In general, most retirement assets are fully exempt when an individual debtor or married couple files for personal bankruptcy. You should be aware that Florida does not permit debtors to select federal exemptions, which means debtors must use state exemptions listed in the Florida Statutes. For purposes of retirement accounts, this is beneficial to debtors. Our Florida bankruptcy lawyers can explain.

What is a Roth IRA?

A Roth IRA is a specific type of individual retirement account that allows tax-free withdrawals during retirement and does not have required minimum distributions for most individuals. There are maximum contributions annually, which are set each year. For 2026, individuals under the age of 50 can contribute a maximum of $7,500, while the maximum is $8,600 for individuals aged 50 and older. An individual’s contributions cannot exceed their total taxable income for the year.

Roth IRAs are also only available for individuals who have an income below a certain amount. For 2026, single filers must have a modified adjusted gross income (MAGI) under $153,000, and joint filers must have a MAGI $242,000. Otherwise, you can consider a traditional IRA or another type of individual retirement account.

How Are Roth IRAs Treated in Bankruptcy Cases?

As long as you are eligible to file for bankruptcy in Florida and to use Florida’s bankruptcy exemptions, your Roth IRA funds will be fully exempt under Section 222.21 of the Florida Statutes.

For individuals who have recently relocated to Florida and must use another state’s exemptions or federal exemptions, it is important to know that there may be limits to the total amount of your Roth IRA that you can exempt.

Contact Our West Palm Beach Bankruptcy Attorneys Today for Help Exempting Your Roth IRA in Your Personal Bankruptcy Case

Whether your only retirement savings is in a Roth IRA, or you have a traditional IRA in addition to a Roth IRA and other types of retirement funds, it is essential to seek legal advice about your eligibility for exempting your retirement assets — especially if you are considering a Chapter 7 liquidation bankruptcy rather than a reorganization bankruptcy. Many debtors who file for Chapter 7 bankruptcy will be eligible to exempt the assets in their retirement account, but there are limits, depending on the details of your bankruptcy case, which are adjusted for inflation. To find out more about exemption limits for retirement benefits or to discuss your Roth IRA specifically in relation to your bankruptcy plans, you should get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC as soon as possible. We can begin working with you today on your bankruptcy filing and can answer any questions you have about the process.

Sources:

irs.gov/taxtopics/tc309

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html