We are seeing more and more personal bankruptcy clients in Boston who have withdrawn monies from their 401k and IRA accounts prematurely and have paid the taxes and penalties. Unfortunately, many have used the monies to pay creditors and they still did not get a fresh start. Either the amount was insufficient or the creditors jacked up the interest rates anyways. They learn too late that the Bankruptcy code protects these retirement accounts. Yes, United States Code, Title 11, Chapter 5, Section 522(d) (10) (E) is a wonderful aid for those filing personal bankruptcy because it allows you to “exempt” all of those hard earned retirement savings.
What Massachusetts consumers also need to know is that even if they have a home they want to protect in bankruptcy, we can still use the Massachusetts bankruptcy exemptions and protect 401(k) and IRA accounts. Yes again, Massachusetts General Laws, Chapter 235, Section 34A and Chapter 246, Section 28 also exempts annuities, pensions and retirement plans.
The bankruptcy laws provide protection and entitle you to a “fresh start.” It may be wise to consult an experienced Massachusetts bankruptcy attorney for a consultation to protect your retirement assets.