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Protecting Retirement Accounts in Massachusetts Personal Bankruptcy

Massachusetts consumers who file for personal bankruptcy protection are fortunate when it comes to protecting retirement accounts. This is because whether they use the bankruptcy state exemptions (generally used when protecting a home with equity) or the federal exemptions (more generous for other assets), retirement assets can be protected if the Bankruptcy Petition and Schedules are properly prepared and filed.

Most retirement accounts that are employer sponsored, such as 401(k) accounts are protected under the Employee Retirement Income Security Act (ERISA). In fact, other than domestic (divorce) or tax (IRS) actions, those assets are generally fully protected from creditors.
 
Individual Retirement Accounts (IRAs) are not protected under ERISA, however, they are protected in both the state and federal exemptions with certain restrictions.
 
These are general rules, and consumers should not transfer assets into our out of what they perceive to be a protected vehicle without first talking with an attorney.