Roth IRA is exempt from chp 7 bankruptcy, but what if..

Asked over 2 years ago - Anaheim, CA

I make an early Roth IRA withdrawal, is all that money still exempt or fair game for creditors? I need money to live on and can no longer pay my debts.

Attorney answers (4)

  1. Gary D. Bollinger

    Contributor Level 19

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    Answered . It lost its protected status on conversion by your withdrawal.

  2. Alan D. Walton

    Pro

    Contributor Level 19

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    Answered . Not protected if withdrawn, but nothing to protect if it gets spent on necessities. On the other hand, you are facing some potential tax penalties if you withdraw. It is time for you to speak with a bankruptcy attorney before you do anything else.

  3. Bruce Allan Wilson

    Contributor Level 15

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    Answered . It is no longer exempt.

    However, you may be able to exempt it using the "wildcard" exemption under CA law CCP section 703.140(b)(5), which allows an general exemption of $23,250.

    You should file BK first and then withdraw the IRA funds.

    You should probably seek a BK attorney about what you are attempting to do.

    I have an office in Laguna Hills if you are interested and practice BK.

    BW
    877-497-0627

  4. Frank Wei-Hong Chen

    Contributor Level 20

    5

    Lawyers agree

    Answered . If you withdrew the funds, the funds would no longer be protected.

    The information presented here is general in nature and is not intended, nor should be construed, as legal advice.... more

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