My wife is filing for Chapter 7 bankruptcy, and I have about $3,500 in a CalSavers Roth IRA. I’m wondering if this money is protected. Also, if I deposit more money into the Roth IRA before she files, will it be protected as well?
Roth IRAs are generally protected in bankruptcy under federal law, as long as the contributions comply with tax rules. In California, it’s important to check whether you’re using federal or state exemptions.
@Tan
That’s correct. Under federal law, retirement accounts, including Roth IRAs, are typically exempt up to around $1.5 million. Consult with a bankruptcy attorney to confirm the rules in your situation.
@Tan
Also, make sure any new contributions are within the annual IRS limits and are done well before the filing date to avoid any appearance of trying to shield assets.
Deposits made right before filing can raise red flags. Even though Roth IRAs are usually exempt, the trustee might scrutinize recent contributions, so timing matters.
Jai said:
Deposits made right before filing can raise red flags. Even though Roth IRAs are usually exempt, the trustee might scrutinize recent contributions, so timing matters.
Exactly. Talk to a bankruptcy attorney before making additional contributions to avoid potential complications.
The money in your Roth IRA should be safe as long as it was deposited in accordance with tax laws and wasn’t done to hide assets. California’s exemption rules might apply differently, so get legal advice.
@Fay
Good point. California has its own set of exemptions, and you’ll need to decide whether to use state or federal exemptions. A local bankruptcy attorney can guide you.
It’s worth noting that exemptions for retirement accounts are one of the strongest protections in bankruptcy. Your Roth IRA is likely safe, but timing and documentation are crucial.
Meet with a bankruptcy attorney to discuss your situation in detail. They’ll help ensure your assets are protected and that there are no issues with recent contributions.
Reilly said:
Meet with a bankruptcy attorney to discuss your situation in detail. They’ll help ensure your assets are protected and that there are no issues with recent contributions.
Agreed. It’s better to get professional advice now than risk complications during the bankruptcy process.