Can I Keep My Retirement Accounts in Bankruptcy?
Yes — in nearly every Florida bankruptcy, you keep your retirement accounts. Tax-qualified accounts like 401(k)s, 403(b)s, pensions, and both traditional and Roth IRAs are fully exempt under Florida Statute 222.21, with no dollar cap. Filing bankruptcy is designed to give you a fresh start, not to take your retirement.
Why Retirement Accounts Are Protected
Retirement savings enjoy some of the strongest creditor protection in American law. Employer plans governed by ERISA — 401(k)s, 403(b)s, profit-sharing plans, and traditional pensions — are protected in bankruptcy no matter how much they hold. Congress and the courts have consistently treated these funds as off-limits because they exist to support you after your working years, not to pay today’s creditors.
IRAs get a layer of protection too. Federal bankruptcy law caps the IRA exemption at $1,711,975 for cases filed between April 1, 2025 and March 31, 2028 — but that cap rarely matters in Florida, as explained below.
Florida’s Exemption Is Even Stronger
Florida is an “opt-out” state: Florida residents who file bankruptcy use Florida’s exemptions rather than the federal list. That works in your favor here. Under Florida Statute 222.21, any money in a tax-qualified retirement plan — 401(k), 403(b), 457 deferred compensation, SEP-IRA, SIMPLE IRA, traditional IRA, or Roth IRA — is exempt from creditor claims with no dollar limit, as long as the plan meets the Internal Revenue Code’s requirements for tax-favored status.
In practical terms: whether your 401(k) holds $8,000 or $800,000, it stays yours in a Florida Chapter 7 or Chapter 13.
What About Inherited IRAs?
This is where Florida law stands out. In Clark v. Rameker (2014), the U.S. Supreme Court held that inherited IRAs are not protected “retirement funds” under the federal exemptions. But Florida amended Section 222.21 in 2011 to specifically protect accounts a person receives as a designated beneficiary — so an IRA you inherited from a parent or relative is generally still exempt for Florida filers. A spouse who rolls an inherited IRA into their own IRA is treated as the owner and keeps the standard protection.
The Exceptions to Watch
A few situations can put retirement money at risk. Funds you withdraw from a retirement account before or during bankruptcy lose their protection once they land in a regular bank account and mix with other money. Large, unusual contributions made shortly before filing to shield cash from creditors can be challenged by the trustee as fraudulent transfers. And ordinary investment or brokerage accounts that aren’t tax-qualified have no retirement exemption at all. The safest move: leave retirement funds where they are and talk to an attorney before moving anything.
One Important Warning
Many people drain a 401(k) or IRA trying to pay down credit cards or medical bills before finally filing bankruptcy. That is usually the worst possible order of operations — you spend protected money on debts that bankruptcy would have wiped out anyway. If you’re considering tapping retirement savings to stay afloat, speak with a bankruptcy attorney first.
Retirement Accounts in a Miami-Dade Bankruptcy
If you file in the Southern District of Florida’s bankruptcy court in downtown Miami, your Florida exemptions — including the unlimited Section 222.21 retirement exemption — apply from day one, and the automatic stay stops garnishments and collection calls immediately. Arturo R. Alfonso P.A. has guided Miami-Dade families through Chapter 7 and Chapter 13 in English and Spanish for over 35 years, from Kendall to Hialeah to Cutler Bay. If you’ve been searching for a bankruptcy attorney near me in Miami who can confirm your retirement savings are safe before you file, we offer consultations to review your accounts and your options.
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