When you file for business bankruptcy, you might be worried about keeping your employer pension. Losing your retirement account has the potential to set your plans back by decades, and very few people can afford to do that.
In general, bankruptcy protects your pensions and retirement accounts—but not always. That’s why it’s crucial to contact an experienced attorney as soon as possible. Your plan needs to either be automatically exempt in the event of employer bankruptcy in Montgomery Count, TX, or you’ll need to find a state or federal exemption in order to keep it.
Automatically exempt pensions
These pensions aren’t considered part of the bankruptcy estate, so they’ll never come under control of the bankruptcy trustee. Since they’re automatically exempt, technically, you don’t even need to declare them. However, when you’re filling out your bankruptcy forms and schedules, you should declare the pensions in the spirit of full disclosure.
Automatically exempt pensions include educational Individual Retirement Accounts (IRA) under IRC 530(1)(b), qualified ERISA plans, IRC 414(d) government pension plans, IRC 567 deferred compensation plans and tax-deferred annuity plans under IRC 403(b). This can include any retirement plan presented to a “controlled group,” such as governments, churches, proprietorships and other special circumstances, or one established and maintained by a tax-exempt organization.
Bankruptcy pension state and federal exemptions
Bankruptcy proceedings don’t take all of your assets—you are allowed to keep a certain amount of money and property to live on as you get back on your feet. For retirement plans and pensions that are not automatically exempt, you’ll need to file for an exception. Depending on where you live, these exemptions can be under state or federal law.
Federal exemptions can give you the right to collect payments on the following: stock bonuses, pensions, profit sharing, annuities or similar plans and contracts on account of illness, disability, age or length of service. The latter is limited to “the extent reasonably necessary for your support or the support of your dependents.” As always, what you can keep will be determined by your individual assets and circumstances. Courts will also determine the nature of the fund—they may not look as favorably on plans established by close relatives or those which are underfunded. For the best results, you need a skilled attorney.
State law may provide additional protections, especially if you are a state government employee, but the laws vary by location. Since pensions are often among the biggest and most important assets a person owns, you should seek legal assistance.
Hire a business pension bankruptcy attorney in Montgomery County, TX
Filing for bankruptcy is a cumbersome process that requires legal guidance to protect your pension. If you need to protect your business pension when you file for bankruptcy in Montgomery County, TX, contact James R. Jones, Attorney at Law. We represent individuals and businesses seeking to release themselves from credit card debt, unsecured loans and other financial burdens. Call us today to find out how we can help you preserve your pension and secure your future.