Sometimes financial difficulties arise when least expected, and tackling the burdens of debt can prove more and more trying as time passes. Even with the relief that the U.S. Bankruptcy Code can provide to households and individuals in need of debt alleviation, the stripping of assets with debt liquidation or the reorganization of debts with repayment plans does not solve all problems. If you’re considering filing for bankruptcy in Pipestone, MN, Behm Law Group, Ltd. can provide assistance with your petition so you can make the best out of a sticky situation.
For the majority of bankruptcy cases, pensions and retirement plans are left untouched. The U.S. Bankruptcy Code was designed to protect the filer as much as possible during and after the bankruptcy process, including shielding all pension funds and retirement plans with only a few exceptions.
The few pensions that do not qualify for an exemption from bankruptcy filings include the following:
- Employee Stock Purchase Plans (ESPP)
- Plans that are not considered legitimate retirement plans under sections of tax code indicated in the bankruptcy process
- Plans that are not fully funded or that are incorrectly funded
- Plans that are not in compliance with tax code in any other way, including roll-overs or transfers and plans without approval from the Internal Revenue Service
- An Individual Retirement Account (IRA) inherited from anyone not your spouse
There are many types of pensions that are untouchable during the bankruptcy process because they are considered excluded from your asset stockpile (your estate). As such, you do not need to claim them as exempt, but you should still offer information about these accounts to your trustee and attorney.
Automatically-excluded pensions include the following:
- Plans under IRC 414(d) (most government retirement plans)
- Plans under IRC 567 (most deferred compensation plans)
- Plans under IRC 530(1)(b) (most educational IRAs)
- Plans under IRC 403(b) (most tax deferred annuity plans)
- Plans that qualify under the Employee Retirement Income Security Act of 1974 (ERISA)
There are also several forms of non-excluded retirement funds and pensions that you can claim as exemptions in your bankruptcy case; however, these codes change between state exemption laws and federal exemption laws. You can elect to choose either state or federal exemptions when you file for bankruptcy in Pipestone, MN, depending on which will benefit you most in the long term. Behm Law Group, Ltd. can provide the legal advice you need to make these kinds of decisions throughout the bankruptcy process. Contact us today at (507) 387-7200 for more information.