The Retirement Plan Exemption

According to federal bankruptcy laws, a debtor’s retirement plan is exempt from creditors. Small businesses have essentially the same ability to create retirement plans as large corporations and therefore should take advantage of them as an exemption.

When a retirement plan qualifies under the federal Employee Retirement Income Security Act, it is exempt from bankruptcy proceedings in its entirety. Many retirement plans qualify for ERISA and are therefore protected from federal bankruptcy and state court proceeding.

If an IRA is established privately or through SIMPLE or SEP plans they will not qualify for ERISA and therefore may not be exempt.