No one wants to lose their hard-earned savings in a bankruptcy case, especially retirement accounts. In fact, the fear of losing everything is one of the main reasons why consumers hold off on filing for bankruptcy. Most people work hard over the course of many years to build up a nest egg that they hope will carry them through retirement. The good news is retirement accounts are protected in bankruptcy. A law was issued in 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which gave protection to all types of individual retirement accounts, otherwise known as IRAs.
The type of protection depends on the type of IRA. Traditional IRAs and Roth IRAs are protected to a value of more than $1 million. However, SEP IRAs, SIMPLE IRAs, and most rollover IRAs receive full protection from bankruptcy creditors, no matter how much is in each account.