Yes, for most people. Florida law protects money held in qualified retirement accounts, including 401(k), 403(b), 457(b), traditional IRA, Roth IRA, SEP, and SIMPLE accounts, along with most pension plans (Fla. Stat. 222.21). Federal bankruptcy law adds its own protection for the same kinds of accounts (11 U.S.C. 522(b)(3)(C)). In a typical Chapter 7 or Chapter 13 case, the money inside these accounts stays yours. The biggest risks usually come from what happens outside the account, such as cashing it out before you file.
For many people, a retirement account is the only real savings they have left. It may represent decades of paycheck deductions and employer matches. So when debt becomes overwhelming, one of the first questions people ask is whether filing bankruptcy means losing that nest egg. The fear is understandable, and it keeps some families paying down credit cards with money they may have been able to keep. This article explains how retirement accounts are treated in a Florida bankruptcy, which accounts are protected, and the situations that deserve a closer look.
Florida requires people who file bankruptcy here to use the state’s exemption system rather than the federal list (Fla. Stat. 222.20). Exemptions are the laws that decide what property you keep. Florida’s retirement exemption covers money in accounts that qualify for tax exempt treatment under the Internal Revenue Code sections for employer plans, IRAs, Roth IRAs, and government deferred compensation plans (Fla. Stat. 222.21(2)(a)). Federal bankruptcy law separately protects retirement funds held in those same types of tax exempt accounts, and that protection is available to Florida filers as well (11 U.S.C. 522(b)(3)(C)). Retirement savings are one piece of a larger picture, and our guide to Florida bankruptcy exemptions and what property you can keep covers the rest.
The key question is whether the account is a tax qualified retirement account, not what you call it. A savings account you think of as retirement money is not the same thing in the eyes of the law.
In Chapter 7 bankruptcy, a trustee reviews your property and can sell assets that are not protected by an exemption. Exempt retirement accounts are not available to the trustee for that purpose. You still list every account in your bankruptcy paperwork, including its approximate balance, because full disclosure is required. Listing an account is not the same as losing it. The exemption is what keeps it in your hands.
In Chapter 13 bankruptcy, you keep your property and repay a portion of your debts through a court approved plan, usually over three to five years. Your plan must pay unsecured creditors at least what they would have received in a Chapter 7 case (11 U.S.C. 1325(a)(4)). Because exempt retirement accounts would not be sold in Chapter 7, they generally do not increase that minimum amount.
Contributions are a related question. Federal law excludes amounts your employer withholds from your wages for contributions to qualified retirement plans from the bankruptcy estate (11 U.S.C. 541(b)(7)). Whether you can keep making voluntary contributions during a Chapter 13 plan is an area where courts have reached different conclusions, so it is a good question to raise with your attorney before you file.
Many people borrowed from their 401(k) when money got tight. Bankruptcy treats that loan differently from a credit card. The automatic stay does not stop your employer from withholding payments to repay a 401(k) loan (11 U.S.C. 362(b)(19)). The loan is also not discharged, meaning bankruptcy does not erase it (11 U.S.C. 523(a)(18)). In Chapter 13, the plan cannot change the terms of the loan, and the payroll deductions that repay it are not counted as disposable income (11 U.S.C. 1322(f)). In simple terms, you are repaying yourself, and the law lets that continue.
If you inherited an IRA from a parent or another relative, Florida law is especially helpful. In 2014 the U.S. Supreme Court held that inherited IRAs do not count as retirement funds under the federal bankruptcy exemption (Clark v. Rameker, 573 U.S. 122). Florida law, however, states that a retirement account does not lose its exempt status when it passes to a beneficiary through a direct transfer or eligible rollover after the owner’s death (Fla. Stat. 222.21(2)(c)). Because Florida filers use the state exemption system, that state rule matters a great deal for anyone holding an inherited account.
Federal bankruptcy law places a cap on the IRA protection it provides. The cap is currently $1,711,975, adjusted effective April 1, 2025 (11 U.S.C. 522(n)). Money rolled over from an employer plan such as a 401(k) does not count toward that cap, and SEP and SIMPLE IRAs are also treated separately. Most people considering bankruptcy hold balances far below this figure, but if yours is large, it is worth reviewing with an attorney.
The most common way people lose retirement protection is by withdrawing the money themselves. Once funds leave a protected account and land in your checking account, they are no longer sitting in a retirement account, and protecting them depends on different rules. Our article on what happens to your bank account when you file bankruptcy in Florida explains how cash is treated. Early withdrawals can also trigger income taxes and, in many cases, an additional 10 percent tax if you are under age 59 and a half (26 U.S.C. 72(t)).
There is an even harder outcome. Some people drain a protected account to pay credit cards or medical bills that bankruptcy could have eliminated, then file anyway. The debt is gone either way, but the retirement money is gone too. This is one of several common bankruptcy mistakes that are easier to prevent than to undo. Talking with a bankruptcy attorney before you touch retirement savings gives you the full picture first.
Social Security benefits have their own federal protection from creditors (42 U.S.C. 407). Social Security income is also excluded from the income figure used in the Chapter 7 means test (11 U.S.C. 101(10A)). That matters for retirees and older filers living on a fixed income. If you want to understand how income affects eligibility, our guide to the Chapter 7 means test in Florida walks through it step by step.
For most Florida filers, bankruptcy and retirement savings can coexist. The law is designed so that people can resolve overwhelming debt without giving up their future security. The details that matter most, such as inherited accounts, 401(k) loans, recent withdrawals, and contribution plans during Chapter 13, are exactly the details a consultation is meant to sort out before anything is filed.
You worked hard for your retirement savings, and you deserve clear answers about keeping them. The attorneys at Parker & DuFresne have helped Northeast Florida families through bankruptcy since 1994. Call 904-606-9069 for a free consultation.
Generally, no. Money in a qualified 401(k) plan is protected under Florida law (Fla. Stat. 222.21) and under federal bankruptcy law (11 U.S.C. 522(b)(3)(C)). A Chapter 7 trustee can only sell property that is not protected by an exemption.
In most cases, yes. Traditional and Roth IRAs are covered by Florida’s retirement exemption (Fla. Stat. 222.21). Federal law also protects IRAs, subject to a cap that is currently $1,711,975 (11 U.S.C. 522(n)). Most filers hold balances well below that amount.
Yes. Every account must be disclosed, even when it is fully protected. Listing the account and claiming the exemption is how the protection is applied. Leaving an account off your paperwork can create serious problems in your case.
Florida law states that a retirement account keeps its exempt status after the owner’s death when it passes by direct transfer or eligible rollover (Fla. Stat. 222.21(2)(c)). This matters because the U.S. Supreme Court held in 2014 that inherited IRAs are not covered by the federal exemption (Clark v. Rameker, 573 U.S. 122).
The loan stays in place. Bankruptcy does not discharge a 401(k) loan (11 U.S.C. 523(a)(18)), and the automatic stay does not stop payroll deductions that repay it (11 U.S.C. 362(b)(19)). In Chapter 13, the plan cannot change the loan terms (11 U.S.C. 1322(f)).
That is a decision to make only after talking with a bankruptcy attorney. Withdrawn money leaves the protected account, may trigger taxes and an additional 10 percent tax for early withdrawals (26 U.S.C. 72(t)), and may go toward debts that bankruptcy could have eliminated.
It depends. Federal law excludes wage withholdings for qualified retirement plan contributions from the bankruptcy estate (11 U.S.C. 541(b)(7)), but courts have reached different conclusions about voluntary contributions during a Chapter 13 plan. Your attorney can explain how this is handled in your case.
Qualified pension plans are covered by Florida’s retirement exemption, which reaches plans that qualify for tax exempt treatment under the Internal Revenue Code (Fla. Stat. 222.21(2)(a)). Many private and government pension plans fall into that category.
Yes. Federal law protects Social Security benefits from creditors (42 U.S.C. 407). Social Security income is also left out of the income figure used in the Chapter 7 means test (11 U.S.C. 101(10A)).
A direct transfer or eligible rollover between qualifying retirement accounts keeps its protected status under federal bankruptcy law (11 U.S.C. 522(b)(4)). Money rolled over from an employer plan also does not count toward the federal IRA cap (11 U.S.C. 522(n)).
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