You work hard to live now and also to support yourself later in life. While most of us accomplish this with retirement funds, there are those who are fortunate to receive pension benefits which support them throughout their retirement. Pensions can be extremely valuable assets, so the possibility of losing them is terrifying to some people. It is for this reason that those who fall on hard times financially refuse to consider bankruptcy because of the belief that they might risk losing them. Let’s take a closer look at what Florida’s laws say about pensions and whether or not they could be taken away in bankruptcy.
Pension Exemptions in Florida Bankruptcy
Florida bankruptcy laws are extremely lenient when it comes to allowing workers to keep the retirement assets they have accumulated over time, including retirement accounts and 401(k)s. Pensions are similarly handled. The overwhelming majority of pensions are granted to public service employees, including State and County officers, municipal police, firefighters, public service officials, and some teachers. In all of these cases, all pensions and retirement benefits are automatically exempt from the bankruptcy process. You do not need to utilize a separate exemption for them.
In fact, Florida law allows anyone to exempt a good chunk of their retirement benefits, including all ERISA qualified retirement plans. The only plans which are not fully-exempt are traditional IRAs and Roth IRAs, which even then are exempted up to $1,171,650. Florida Statute 222.21(2)(a) states that any money or assets are part of a qualified retirement or profit-sharing plan are exempt any judgements creditors may try to seek against you.
What This Means for You
As a Florida resident, you should strongly consider investing as much as you feasibly can into your retirement account, including your pension or another IRA. Not only will this help protect your future and allow you to retire sooner and enjoy the life you want to lead, but it will also help protect your income in the event a sudden turn of fortune lands you in financial hardship.
However, that being said falling on financial hardship and then transferring everything you own into a pension plan or IRA in order to protect it from the bankruptcy process is against the law, and creditors will move to undo this transaction in court if they find that you’re hiding your assets to avoid the consequences of bankruptcy.
It’s strongly advised you have a Brevard County bankruptcy attorney on your side if you’re considering declaring bankruptcy. Seek the experienced counsel of The Buchalter Law Group today; dial (321) 320-6088 to schedule a consultation.