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Bankruptcy Attorney serving Akron, Canton, Massilin, Dover, New Philidalphia, and throughout Tuscarawas, Summit, and Stark County. 330-409-2876

Sheppard Law Offices


Canton, Ohio Bankruptcy Attorney Kenneth L. Sheppard, Jr.

 Bankruptcy attorney serving central Ohio and the Akron-Canton area and throughout Tuscarawas, Summit and Stark County , Sheppard Law Offices Co., L.P.A. BBB Business Review

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(330) 409-2876  or  (877) 505-9455


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Retirement Accounts and Ohio Bankruptcy Laws



Don't Withdraw Your Retirement Accounts Without First Talking to Canton, Ohio Bankruptcy Attorney Ken Sheppard


If you considering withdrawing retirement funds to pay debt, it is important to consider if you are just delaying bankruptcy or if the withdraw will put you on the correct financial path. Many retirement accounts are exempted when filing for Chapter 13 or Chapter 7 bankruptcy protection. In most bankruptcy filings in Ohio, the debtor can keep their 401(k), pension, IRA, or other retirement account.


Retirement Account Withdraws May Face Penalties & Tax Implications, & Loss of Bankruptcy Exemption

It can be tempting to utilize retirement accounts during times of financial hardship, however it is very important NOT to take a partial or full early distribution or hardship withdrawal from your retirement account without first discussing your financial situation with a qualified Canton, Ohio Bankruptcy Lawyer. Any portion of your retirement account that is withdrawn may face penalty and income tax consequences. Further, if after taking a withdrawal from your retirement account you still end up filing for bankruptcy, then the withdrawal from your retirement plan can be taken in the bankruptcy or may be required to be repaid to the bankruptcy trustee. Before you use your  retirement account monies to pay credit card bills or medical debt or any other debts, it is in your best interest to consult with experienced Ohio bankruptcy and national tax attorney Ken Sheppard for proper legal and tax advice.


Don't let Debt Cost You Your Hard Earned Retirement

As an Ohio bankruptcy law firm, we see far too many clients who waited until it was too late to consult with us, and have withdrawn tens of thousands of dollars or even emptied retirement accounts in order to pay off credit card debt, medical bills, or other debts only to file for bankruptcy several months after they have taken hardship or early withdrawal from their retirement account. The adverse income tax implications and penalties associated with withdrawals from qualified retirement accounts will further drain the money you have spent so long and hard to accumulate over the years.


Many Retirement Accounts Enjoy Exempt Status When Filing for Chapter 7 or 13 Bankruptcy

Bankruptcy Lawyer to help save financial retirement accounts including 401k, 403b, ira, governmental, profit sharing, and other qualified plans Although Congress made it more challenging to file for bankruptcy protection in 2005 when it enacted BAPCPA (the Bankruptcy Abuse Prevention and Consumer Protection Act), this piece of legislation also lightened the rules as they pertain to retirement accounts. This makes owning most types of retirement accounts a favorable investment for debtors. BAPCPA simplified some of the retirement account rules by eliminating how the states treated certain types of retirement plans differently from other types of retirement plans.


Retirement Plans Protected From Being Taken in Bankruptcy Filing

Under BAPCPA, ERISA (Employment Retirement Income Security Act) and non-ERISA qualified plans are protected from the Bankruptcy Trustee. The trustee is prevented from liquidating these plans to pay creditors of the debtor's bankruptcy estate.

Examples of types of ERISA Plans


    401(k) plans

    403(b) plans

    Profit sharing plans

    457(b) deferred compensation plans

    Governmental plans


Examples of types of Non-ERISA Qualified Plans



    Roth IRS's

    SEP IRA's for small business owners

    SIMPLE IRA's for self-employed individuals


An ERISA plan is typically  a plan that is established by an employer, which satisfies certain IRS guidelines, and is tax exempt. ERISA qualified retirement plans are not property of the bankruptcy estate. The bankruptcy trustee will have no control over your ERISA plan.


When is my retirement account not protected?

Removing Money From Retirement Accounts Also Removes its Exemption Status in Bankruptcy

Most retirement accounts are safe from creditors in chapter 7 and chapter 13 cases, however there are instances when those retirement account monies are not protected.


For example; if you take a withdrawal from your 401(k) or other retirement account, that money now loses its exempt status, thus becoming unprotected because it is cash in hand and no longer part of your ERISA plan. If you file for bankruptcy, you will be forced to look for other exemptions to protect any cash in hand.


If the IRS has filed a valid federal tax lien against you, the IRS may be able to assess your retirement assets.

During your bankruptcy case, the IRS will be prevented from collection actions against you, but as soon as your Chapter 7 case is concluded (which typically is about 4-5 months after the filing of your chapter 7 bankruptcy petition), the IRS may begin again its collection practices. In a Chapter 13 reorganization plan, your IRS tax debt will be included in your plan.


Your retirement account may not be protected if you are going through a divorce.

The other spouse may have been awarded a portion of your retirement account through a QDRO (Qualified Domestic Relations Order) or a property settlement.


It is important to discuss details of your specific situation at your free consultation with experienced Canton Ohio Bankruptcy Attorney, Kenneth Sheppard, Jr. in order to determine which exemptions you may qualify for and what your best debt relief option may be.


Email or call us at (614) 523-3106 today for a free initial bankruptcy consultation

(330) 409-2876

Tax Relief, Debt Relief, and Bankruptcy Filing office in Canton, Ohio

Sheppard Law Offices

Canton, Ohio Office

Belden Village Tower, 200

Canton, Ohio 44718

Tel: (330) 409-2876

Columbus Ohio Office

2600 Tiller Lane, Suite A

Columbus, Ohio 43231

Tel: (614) 523-3106

Newark, Ohio Office

843 N. 21st Street, Suite 108

Newark, Ohio 43055

Tel: (740) 345-7138

Mt. Vernon, Ohio Office

11 West Gambier Street

Mt. Vernon, Ohio 43050

Tel: (740) 392-0404

We are a debt relief agency. We help people file for protection under the U.S. Bankruptcy Code.

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Sheppard Law Offices, LPA is conveniently located and serving chapter 7 and chapter 13 bankruptcy clients in Canton, Ohio. Our office is a short drive from throughout Stark, Tuscarawas, and Summit Counties. We regularly provide debt relief solutions to clients from Akron, Canton, North Canton, Massillon, Dover, New Philadelphia, Alliance, Navarre, Strasburg, Ballivor, Jackson Township, Canal Fulton, Barberton, Greenlawn, Medina, Wooster, Orrville, Dalton, Minerva, Ashland, Wadsworth, Carrollton, Dundee, Millersburg, Hartville, Doylestown, Green, Uniontown, Salem, Columbiana, Uniontown, and throughout Ohio.