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Protecting Your Retirement Accounts During Bankruptcy

 Posted on February 28, 2024 in Bankruptcy

Schertz bankruptcy lawyerFiling for bankruptcy can be a difficult decision. Retirement accounts represent safety nets that you have spent years building for your future well-being. Luckily, under Texas and federal bankruptcy laws, certain retirement funds are exempted. A Texas lawyer can help determine how you may or may not be impacted and what types of retirement accounts may be protected.

401(k) Plans and Other Workplace Retirement Accounts

401(k), 403(b), 457 plans, and other employer-sponsored retirement plans are fully exempt under Texas law. This means you can keep your entire 401(k) balance even if you file for Chapter 7 bankruptcy. These protections also apply to other workplace plans like pensions.


Texas exempts IRAs from creditor claims in bankruptcy up to $100,000 per person. This applies to both Roth and traditional IRAs. If your IRA balance exceeds $100,000, the amount over this limit may need to be turned over to pay creditors.


Annuities are protected under state law. These protections apply to both fixed and variable annuities. However, the extent of protection can vary based on the specific terms of the annuity contract and your total net worth.

Federal Exemptions

Texas has opted out of the federal bankruptcy exemptions. However, even if you use the Texas state exemptions, federal law still protects certain retirement accounts in bankruptcy. These include Social Security benefits, veteran’s benefits, disability benefits, and railroad retirement benefits. Federal law also provides unlimited protection for SEP and SIMPLE IRAs in bankruptcy.

Tips for Protecting Retirement Accounts

Here are some tips to help protect your retirement savings if you are considering filing for bankruptcy:

  • Avoid taking early withdrawals or loans from retirement accounts whenever possible before filing.
  • Consider contributing up to the maximum to employer retirement plans now, if possible, to build up assets.
  • Be aware of the full exemptions available in Texas, including federal protections that still apply.
  • Work with a qualified bankruptcy attorney to claim all applicable exemptions.
  • Look into converting non-exempt assets into exempt assets where appropriate.

Contact a Schertz, TX Bankruptcy Attorney

While bankruptcy can seem like the end of your financial story, in most cases, retirement accounts can and should live on past this challenging chapter. With proper exemptions and legal strategy, you can work toward keeping assets earmarked for future protection. A San Antonio, TX bankruptcy lawyer can help you on this path. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.

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