An individual retirement account (IRA) is protected under Florida law and federal law from your creditors. When many people file for bankruptcy, they look for the biggest source of income they have. Once they have exhausted their savings account, they look towards their retirement plans, either an IRA or 401k. If you have an IRA that money is protected from your creditor’s claims. When people take money out of their IRA and want to file for bankruptcy, they may be excluded because of how much money they took out of their IRA. Once you take money out of your IRA, it’s no longer protected, meaning creditors can seize it.
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Frequently Asked Questions
Is my IRA protected from creditors in Florida?
Yes. An individual retirement account (IRA) is protected under both Florida law and federal law from your creditors. When people file for bankruptcy, their IRA funds are generally shielded from creditor claims.
Can I lose my IRA protection if I withdraw money?
Yes. Once you take money out of your IRA, it's no longer protected. If you withdraw funds and later want to file for bankruptcy, you may be excluded from filing because of how much money you took out. Creditors can seize money that has been withdrawn from your IRA.
What should I do before filing bankruptcy if I have an IRA?
Consult with an attorney before making any decisions about your retirement accounts. Withdrawing from your IRA before filing bankruptcy can have serious consequences, including losing the protection that account provides and potentially disqualifying yourself from filing.
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