Thinking about bankruptcy raises a scary question: “Will I lose my retirement?”
In most cases, no. Your retirement savings are strongly protected by federal law, and Utah adds even more protection.
Below, we’ll walk you through how the rules work for 401(k)s, pensions, IRAs, and inherited accounts, plus what’s different in Chapter 7 vs. Chapter 13.
If you’re in Utah, the details matter, and this is exactly where hiring an experienced bankruptcy attorney—like Blue Bee Bankruptcy in Salt Lake City—can protect every dollar the law allows.
Most workplace plans (401(k), 403(b), 457, and many pensions) contain ERISA “anti-alienation” clauses that keep creditors’ hands off. The U.S. Supreme Court confirmed that these plans are excluded from the bankruptcy estate—meaning the trustee can’t take them.
Bottom line: If your savings are in a tax-qualified employer plan, bankruptcy normally won’t touch them.
Federal bankruptcy law shields Traditional and Roth IRAs up to a nationwide cap. For cases filed April 1, 2025–March 31, 2028, that cap is $1,711,975 per person (combined across your Traditional + Roth balances).
This figure comes from the Judicial Conference’s triennial inflation update. Direct rollovers from employer plans (e.g., 401(k) → IRA) remain fully protected and don’t count toward the cap.
In 2014, the Supreme Court said inherited IRAs aren’t “retirement funds” for federal bankruptcy protection, so in many states they can be taken by creditors. Utah is different. Utah’s exemption statute explicitly protects inherited retirement accounts, including inherited IRAs, and confirms that a direct transfer/eligible rollover keeps that protection.
This applies regardless of when the account was created.
Utah advantage: An inherited IRA can stay safe in a Utah bankruptcy, a powerful protection not available everywhere.
Utah’s exemption for retirement funds has a couple of key carve-outs:
These are classic “gotchas” that we plan around before you file.
Chapter 7 (liquidation): Protected retirement accounts stay yours. The trustee can’t sell them if they’re exempt/excluded as described above. Income you actually withdraw before or after filing can be treated differently (more on that below).
Chapter 13 (repayment plan): You keep all assets, including retirement accounts. Your plan payment is based on “disposable income,” but Social Security is excluded by statute when calculating income, and courts scrutinize retirement contributions and 401(k) loan repayments under special rules.
401(k) loan repayments keep going; Congress carved them out of the automatic stay, so payroll withholding may continue. Plans also can’t be materially modified by a Chapter 13 plan.
Voluntary contributions to retirement during Chapter 13 are treated differently around the country. Courts look at good faith and local precedent.
In the Tenth Circuit (covering Utah), judges examine your budget, history of saving, and reasonableness. This is highly fact-specific. Talk to a Utah bankruptcy attorney to tailor your plan.
Avoid last-minute contributions right before filing (Utah’s 1-year look-back can knock out the exemption).
Use direct rollovers, not 60-day checks, when moving funds—direct transfers keep federal protection intact.
Keep Social Security in a separate account to make tracing easy.
Don’t cash out unless we’ve reviewed the bankruptcy and tax impact.
When you hire a bankruptcy attorney, you gain a guide through dozens of small rules that can collectively save your retirement.
A quick misstep—like a last-minute contribution or the wrong kind of rollover—can cost real money.
Ready to talk?
If you’re in or near Salt Lake City, Blue Bee Bankruptcy will review your accounts, your income, and your goals, then build a filing strategy that preserves your retirement and gets you a real fresh start. Reach out and we’ll get you clear answers fast.
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!
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