Before filing for bankruptcy, you will want to consider all of the ways that the process may affect your finances. One important subject to understand is how a bankruptcy claim may affect your pension, annuities, or retirement accounts.

In this blog we will discuss each of these areas in order to give you the opportunity for the best possible outcome for your case. If you are 50 years of age or above and are considering a bankruptcy filing, it is best to call a bankruptcy attorney to discuss how your retirement and savings will be impacted by the process.


We can give you some good news right away – your savings which are in a pension fund are not considered an asset when filing for bankruptcy. Therefore, in most circumstances your pension cannot be taken away from you. The same is not true for many other types of savings, stock shares or investments – which are all treated as assets during a bankruptcy proceeding. However, things are not always so simple, so if you are over the age of 50 and considering a bankruptcy, be sure to contact a bankruptcy attorney to discuss your specific situation.


When filing for bankruptcy, it is important to understand how each of your assets will be handled or leveraged to pay off creditors. With an annuity, how it was opened will determine how it will be treated during bankruptcy.

IRA Annuities

An IRA (individual retirement arrangement) annuity permits an individual to take earned income and place it in a tax-sheltered account. Bankruptcy courts consider IRA accounts as the way a person will support basic expenses during retirement. Because taking this annuity from a retired person may cause them to have to rely on the government for assistance, IRAs are not deemed an asset which can be assigned to pay off debt.

Non-IRA Annuities

Many alternate annuities are utilized as supplemental retirement plans, often funded by inheritance, gifts or even savings. Most will be sheltered from creditors as long as they are used functionally as a retirement account.

Non-IRAs as Non-Retirement Accounts

Some annuities provide tax-deferred growth on the funds within it, meaning that individuals use it as a tax shelter. If a bankruptcy court can prove the annuity is not being used in a retirement capacity, the court may be able to assign debt to the asset.

When a debt is assigned to the annuity, the annuity is not liquidated to pay off creditors. The bankruptcy court must instead establish if the income received from the annuity is adequate to support the individual so they do not become a burden to the state. If it is more than sufficient, the remainder of the annuity income realized monthly can be used to pay off liabilities and debts.

Other Retirement Accounts

Social Security

Social Security payments are safe in a bankruptcy case, although cash in bank accounts may not be. To ensure your Social Security check is protected, keep the money in a separate account.

401(K) Accounts

401(k) investment accounts are also exempt from bankruptcy proceedings.

As a state, Florida joins the United States Congress in exempting most retirement accounts from bankruptcy. However, not all retirement money is guaranteed protection by bankruptcy status.

If you are nearing retirement but feel a bankruptcy may be a possibility, call the Sarasota law firm of Richard V. Ellis. We are experts in bankruptcy law and can help you to protect your hard-earned retirement income.