Are retirement accounts protected from creditors? Mostly yes, but the strength of the shield depends on the account type, whether bankruptcy is involved, and the state where the owner lives.
Yes, in most cases. Employer plans covered by ERISA, such as most 401(k)s, are shielded from nearly all private creditors with no dollar cap. In bankruptcy, traditional and Roth IRAs are exempt up to $1,711,975 per person, while rollover, SEP and SIMPLE IRA money is uncapped. Outside bankruptcy, IRA protection from lawsuits depends on state law.
Key Takeaways
- ERISA-covered workplace plans carry a federal anti-alienation rule, 29 U.S.C. 1056(d)(1), that bars benefits from being assigned or alienated, with no dollar limit.
- For bankruptcy cases filed on or after April 1, 2025, contributory traditional and Roth IRA assets are exempt up to $1,711,975 per individual debtor (Judicial Conference notice, 90 FR 8941).
- Rollover money from employer plans, plus SEP and SIMPLE IRAs, does not count toward that cap under 11 U.S.C. 522(n).
- Outside bankruptcy, IRAs answer to state law: Florida (Stat. 222.21) and Texas (Prop. Code 42.0021) set no dollar cap, Nevada caps IRAs at $1,000,000 (NRS 21.090), and California protects IRAs only to the extent needed for retirement support (CCP 704.115(e)).
- An inherited IRA is not “retirement funds” under the federal bankruptcy exemption, per the unanimous Supreme Court decision in Clark v. Rameker (2014).
- A solo 401(k) that covers only the owner and spouse is not an ERISA plan under 29 CFR 2510.3-3, so its protection outside bankruptcy turns on state law.
Retirement Account Creditor Protection: Key Numbers
The $1,711,975 figure applies to bankruptcy cases commenced on or after April 1, 2025 and is adjusted every three years. State figures reflect statute text reviewed October 2026; state exemption laws change, so the current statute controls.
Are retirement accounts protected from creditors?
Are retirement accounts protected from creditors? Generally yes, but there is no single rule. Protection comes from three different sources: ERISA for most employer plans, the Bankruptcy Code for anyone who files, and state exemption statutes for IRAs facing a lawsuit or judgment outside bankruptcy.
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The table maps common account types against the two settings that matter.
| Account type | Lawsuit or judgment (no bankruptcy) | Bankruptcy |
|---|---|---|
| ERISA 401(k), 403(b) with employer involvement, pension | Protected by ERISA anti-alienation, no cap | Excluded from the estate, no cap |
| Traditional or Roth IRA (contributory) | Depends on state law | Exempt up to $1,711,975 combined |
| Rollover IRA funded from an employer plan | Depends on state law | Exempt, not counted toward the cap |
| SEP IRA or SIMPLE IRA | Depends on state law | Exempt, not counted toward the cap |
| Solo 401(k), owner and spouse only | Depends on state law (not an ERISA plan) | Exempt as a tax-qualified plan, no cap |
| Governmental 457(b) or church plan | Depends on state law (outside ERISA) | Exempt as a tax-exempt retirement fund |
| Inherited IRA | Depends on state law; some states name it expressly | Not covered by the federal retirement-funds exemption |
Summary of 29 U.S.C. 1056(d), 29 U.S.C. 1003(b), 29 CFR 2510.3-3, 11 U.S.C. 522(b)(3)(C) and 522(n), and Clark v. Rameker. The IRS, divorce orders and federal criminal restitution are separate exceptions covered below.
Why does it matter whether it is a lawsuit or a bankruptcy?
It matters because each setting runs on a different rulebook, and an account that is fully shielded in one can be partly exposed in the other.
Inside bankruptcy, the Bankruptcy Code at 11 U.S.C. 522 exempts “retirement funds” held in accounts that are tax-exempt under Internal Revenue Code sections 401, 403, 408, 408A, 414, 457 or 501(a). That language appears in both the federal and the state exemption paths.
Outside bankruptcy, there is no federal exemption for IRAs at all. ERISA’s anti-alienation rule protects employer plans, but Part 2 of ERISA, which contains that rule, expressly excludes individual retirement accounts under 29 U.S.C. 1051(6). A judgment creditor therefore faces whatever exemption the state has written.
Can a judgment creditor seize an IRA? It depends on the state
A judgment creditor can reach an IRA only to the extent the state’s exemption statute allows. Some states protect the full balance, some apply a dollar cap, and some protect only what a court decides the owner needs for retirement support.
The representative sample below (five states, not a 50-state survey) reflects statute text reviewed in October 2026.
| State | Statute | IRA and Roth IRA protection | Dollar cap | Inherited IRA in statute text |
|---|---|---|---|---|
| Florida | Fla. Stat. 222.21 | Full exemption for accounts under IRC 401(a), 403(b), 408, 408A and others | None | Yes, inherited IRAs expressly included |
| Texas | Tex. Prop. Code 42.0021 | Exempt from attachment, execution and seizure, vested or not | None | Yes, inherited IRAs and inherited Roth IRAs named |
| New York | CPLR 5205(c) | Section 408 and 408A accounts treated as exempt trusts | None, but additions within 90 days before the claim are not exempt | Not named expressly |
| Nevada | NRS 21.090 | IRAs under IRC 408 and 408A exempt from execution | $1,000,000 in present value | Yes, inherited IRAs included |
| California | CCP 704.115 | IRAs and self-employed plans exempt only to the extent necessary for retirement support; private employer plans fully exempt | No fixed number; a court applies a needs test | Not named expressly |
Two details are easy to miss. In California, a private employer plan is fully exempt, while an IRA is protected only after a court weighs all other resources likely to be available in retirement. In New York, a large contribution made shortly before a claim may not carry the exemption at all.
Retirees considering a move sometimes review a new state’s exemption statute alongside how it taxes retirement income and Roth conversions.
How much of an IRA is protected in bankruptcy in 2026?
In 2026, up to $1,711,975 of contributory traditional and Roth IRA assets is exempt per individual debtor. The Judicial Conference raised the figure from $1,512,350 for cases commenced on or after April 1, 2025, in a Federal Register notice published February 4, 2025, and the next adjustment is scheduled for April 2028.
Three features of the cap often get lost in summaries. First, it excludes amounts attributable to rollover contributions from employer plans under IRC 402(c), 402(e)(6), 403(a)(4), 403(a)(5) and 403(b)(8), plus earnings on that money. Second, it does not apply to SEP or SIMPLE IRAs at all. Third, the statute lets a court raise the cap “if the interests of justice so require.”
The cap also applies per debtor. In a joint case, the Bankruptcy Code applies the exemption separately to each spouse, so each spouse’s own IRAs are measured against their own limit.
Worked example: one household, five accounts (hypothetical, 2026 filing)
A hypothetical 58-year-old files a Chapter 7 case in 2026 using the federal retirement-funds exemption. Figures are illustrative.
| Account | Balance | Counts toward the $1,711,975 cap? | Result |
|---|---|---|---|
| Rollover IRA (from a former employer 401(k), kept separate) | $850,000 | No, rollover money | Exempt |
| Traditional IRA built from annual contributions | $1,450,000 | Yes | Measured against cap |
| Roth IRA built from annual contributions | $400,000 | Yes | Measured against cap |
| SEP IRA from a side business | $120,000 | No, SEP excluded | Exempt |
| Inherited IRA from a parent | $300,000 | Not retirement funds under Clark v. Rameker | Exposed unless a state exemption applies |
The contributory traditional and Roth balances total $1,850,000, which is $138,025 above the $1,711,975 cap. That excess could be available to the trustee unless the court raises the cap in the interests of justice. Everything in the rollover and SEP IRAs stays exempt, which is why the traceability of rollover dollars can matter. Keeping rollover money in a separate rollover IRA, rather than mixing it with annual contributions, can make that history easier to document.
Are solo 401(k), SEP and SIMPLE IRAs protected like a regular 401(k)?
Not outside bankruptcy. A 401(k) earns ERISA anti-alienation protection only when it is an ERISA “employee benefit plan,” and Department of Labor regulation 29 CFR 2510.3-3 says a plan with no employees is not one. A business owner and spouse are not treated as employees of a business they wholly own, and partners are not employees of their partnership.
That means a solo 401(k) covering only the owner, or the owner and spouse, relies on state law when a judgment creditor comes calling. Inside bankruptcy, a solo 401(k) is still a tax-qualified plan under IRC 401, so it is exempt with no dollar cap. The account mechanics are compared in SEP IRA vs. solo 401(k).
SEP and SIMPLE IRAs are IRAs under IRC 408, so ERISA’s anti-alienation rule does not reach them and state law governs outside bankruptcy. In bankruptcy they receive better treatment than ordinary IRAs: they are exempt and sit entirely outside the $1,711,975 cap. Governmental 457(b) and most church plans are excluded from ERISA under 29 U.S.C. 1003(b), so they also lean on state exemptions outside bankruptcy while remaining exempt retirement funds inside it.
Is an inherited IRA protected from creditors?
Not under the federal bankruptcy exemption. In Clark v. Rameker, 573 U.S. 122 (2014), a unanimous Supreme Court held that inherited IRA funds are not “retirement funds” because the beneficiary cannot add money, must take distributions regardless of age, and can withdraw the entire balance at any time without the 10% early-withdrawal penalty.
State law can fill part of that gap. Florida, Texas and Nevada name inherited IRAs in their exemption statutes, and a debtor who is eligible to claim state exemptions in bankruptcy under 11 U.S.C. 522(b)(3)(A) may be able to rely on them. In states whose statutes are silent, an inherited IRA is generally the most exposed retirement asset a family holds.
The distribution and tax side is covered in what to do with an inherited IRA and the inherited 401(k) rules.
What can cause a retirement account to lose its protection?
Protection can be lost through who the creditor is, how the money got into the account, or where the money sits when the creditor arrives. Three creditors override most shields: the IRS by levy, a former spouse through a qualified domestic relations order, and the federal government enforcing a criminal fine or restitution under 18 U.S.C. 3613(a), which applies “notwithstanding any other Federal law.” The levy and divorce mechanics are explained in the IRS levy guide.
The other common ways protection breaks down:
- Last-minute deposits. State voidable-transaction laws and lookbacks such as New York’s 90-day rule can strip protection from money moved into an IRA to dodge a known claim.
- Money that has left the account. Exemption statutes protect funds held in, or payable from, a qualifying plan. Once a distribution lands in an ordinary bank account, its protection depends on whether state law extends the exemption to distributed funds, and many statutes do not.
- Rolling out of ERISA. Moving a 401(k) into an IRA swaps uncapped federal ERISA protection for state IRA law outside bankruptcy, a trade-off covered in the disadvantages of rolling a 401(k) into an IRA.
- Commingled rollover money. In bankruptcy, rollover dollars are uncapped only if they can be identified as rollover dollars. Mixing them into a contributory IRA can make the record harder to reconstruct.
Does a rollover or Roth conversion change creditor protection?
A rollover can change it; a Roth conversion generally does not, because a Roth IRA is an IRC 408A account treated alongside traditional IRAs in both the bankruptcy cap and most state statutes. The more meaningful question is whether the money moves out of an ERISA plan along the way.
A direct rollover from a 401(k) to an IRA keeps its exempt status in bankruptcy under 11 U.S.C. 522(b)(4), but outside bankruptcy the account becomes subject to state IRA law. The process itself is covered in how to roll over a 401(k) to an IRA.
For people pursuing a Roth conversion strategy, the account location can be part of the analysis. An in-plan Roth conversion moves pre-tax 401(k) dollars into the designated Roth account inside the same ERISA plan, so the money stays under ERISA’s anti-alienation rule. Converting a rollover IRA to a Roth IRA keeps the money in an IRA, and whether those converted dollars retain their uncapped rollover character in bankruptcy is a tracing question for a bankruptcy attorney. A financial professional can model the tax side while counsel reviews the protection side.
Common misconceptions about retirement account creditor protection
The most common misconception is that every retirement account carries the same federal shield.
- “My IRA is protected by ERISA.” IRAs are excluded from ERISA’s anti-alienation rule by 29 U.S.C. 1051(6). Outside bankruptcy, state law governs.
- “Bankruptcy protects IRAs up to $1 million.” The $1,000,000 figure is the 2005 statutory base. The adjusted amount for 2026 filings is $1,711,975.
- “A solo 401(k) is as protected as a big-company 401(k).” In bankruptcy it is, but a plan with no employees is not an ERISA plan, so its protection from lawsuits depends on state law.
Frequently asked questions
Can retirement accounts be seized in a judgment?
Usually not in full. An ERISA 401(k) or pension cannot be assigned to a judgment creditor under 29 U.S.C. 1056(d)(1). An IRA can be reached only to the extent state law allows: Florida and Texas exempt IRAs without a dollar cap, Nevada caps the exemption at $1,000,000, and California protects IRAs only as needed for retirement support.
Is a Roth IRA protected from lawsuits?
A Roth IRA generally receives the same treatment as a traditional IRA. In bankruptcy, contributory Roth and traditional IRA balances share the $1,711,975 cap per debtor. Outside bankruptcy, protection depends on the state statute, and most statutes cover IRC 408A accounts alongside 408 accounts.
Is a 401(k) or an IRA better for creditor protection?
An ERISA 401(k) generally has broader protection: it is shielded from private creditors by federal law with no cap, while an IRA depends on state law outside bankruptcy and faces a $1,711,975 cap on contributory funds in bankruptcy. Rollover IRA money is uncapped in bankruptcy, which narrows the gap there.
Is a rollover IRA protected from creditors?
In bankruptcy, money rolled into an IRA from an employer plan is exempt and does not count toward the $1,711,975 cap, along with earnings on it. Outside bankruptcy, a rollover IRA is treated like any other IRA under the applicable state exemption statute.
Are retirement accounts protected from medical bills and credit card debt?
Medical providers and card issuers are ordinary private creditors, so they face the full shield. They cannot reach an ERISA 401(k), and they can reach an IRA only if they win a judgment and the state exemption statute leaves part of the balance unprotected.
Is a solo 401(k) protected from creditors?
In bankruptcy, a solo 401(k) is exempt as a tax-qualified retirement fund with no dollar cap. Outside bankruptcy, a plan covering only the owner and spouse is not an ERISA plan under 29 CFR 2510.3-3, so its protection from a judgment depends on state law.
Are retirement accounts protected in a divorce?
No. A court can divide a 401(k) through a qualified domestic relations order under ERISA 206(d)(3), and IRAs can be divided by a transfer incident to divorce. Divorce orders are one of the main exceptions to retirement account protection.
Methodology note: This article relies only on primary sources: the Bankruptcy Code, Judicial Conference notices in the Federal Register, ERISA and DOL regulations, 18 U.S.C. 3613, Clark v. Rameker, and five state exemption statutes. Because creditor protection is a Your-Money-Or-Your-Life topic, anonymous forum anecdotes and law-firm marketing summaries were excluded as sources. Statutes were reviewed in October 2026 and can change.
This article is for educational purposes only and is not individualized investment, tax, or legal advice. Consult a qualified professional about your specific situation.
