Annuity Exemption Under Minnesota Bankruptcy Law

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Nicole Anderson

Forest Lake, MN

1650 11th Avenue SW Suite 203

Forest Lake, MN 55025


Minnesota law exempts certain annuities from bankruptcy. This means that if you file for bankruptcy, you may be able to keep your annuity without it going to creditors.

What is an annuity?

An annuity is a contract between an individual and an insurance company where the individual invests into the annuity and receives regular payments in return. Annuities are popular choices for investors interested in saving for their retirement or putting away money for a rainy day. In addition to its investment advantages, some annuities are viewed as assets which are essential to a debtor’s financial well-being and are therefore exempted from the claims of creditors—for instance, annuities established as retirement vessels under Internal Revenue Code (“IRC”) section 401(a), 403(b), 408, 408A, 457(b) and 501(c)(18).

Protection from creditors in Minnesota

The level of protection afforded to particular annuities varies widely from state-to-state and depends upon a number of oftentimes complicated factors. For instance, in Minnesota, proceeds earned from an annuity are generally exempt from the claims of creditors where the annuity is created for the benefit of another. Minn. Stat. § 61A.12, subd. 1. Where proceeds are payable to a surviving spouse or child, annuities are generally sheltered up to $20,000 and an additional $5,000 per dependent of the survivor or child. Minn. Stat. § 550.37, subd. 10. Conversely, in Arizona, annuities are only exempt where they specifically qualify under IRC §§ 401(a), 403(b), 408, or 409. Because of the variability of bankruptcy laws between states, it is important to consult a knowledgeable attorney in order to determine whether your annuity is exempt from the claims of creditors.