Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, your retirement plans should remain untouched by the process—usually speaking. Just as with any complex area of law, there are exceptions to this typical exemption as well. Keep reading to learn when you may not be able to claim an exemption for certain types of retirement plans.

Back in 2005, lawmakers revamped bankruptcy rules, and one of their new provisions was that retirement plans and pensions are almost entirely exempt. This means that creditors cannot access these funds to satisfy debts. These funds stay in your hands. This holds true for any ERISA-qualified pensions, and nearly 100 percent of the time, the exemption will cover the whole plan, regardless of its worth. Practically speaking, whatever amount you have stored in plans such as those below should pass safely through bankruptcy:

• 401(k)s
• 403(b)s
• Defined-Benefit Plans
• Keoghs
• Money Purchase Plans
• Profit-Sharing Plans
• Roth IRAs, SEP IRAs, and SIMPLE IRAs

So which retirement plans can fall through the cracks? If you have a traditional IRA or Roth IRA, there is a limit to how much can be exempted. A person going through bankruptcy is currently limited to exempting $1,245,475 (this amount is subject to change). This means that if the total amount saved in IRAs and Roth IRAs exceeds this amount, then whatever extra funds there are could be used to pay off creditors.

Finally, if you receive retirement benefits as income, then these funds are not exempted either. While you are entitled to enough income for your necessities, any disposable income, including those retirement funds, could go toward paying off debt.

To learn more about how to approach bankruptcy so that you will be prepared for your future, be sure to consult a bankruptcy attorney as soon as possible!