Roth IRA and bankruptcy:
understand what may be protected

Your account-protection scorecard

Mark each question “documented” or “needs an answer.” This is a preparation checklist—not a protection grade or a promise that a court will allow an exemption.

01 · SettingBankruptcy or an ordinary creditor claim?

A lawsuit or collection judgment outside bankruptcy is not governed by the federal IRA bankruptcy cap. Start by identifying the proceeding and the claim. Separate the questions.

02 · OwnershipMy own IRA or an inherited account?

The Supreme Court rejected the federal retirement-funds exemption for a daughter’s inherited IRA. A surviving spouse’s completed own-account treatment is a different situation. Check the distinction.

03 · Money’s historyAnnual deposits, rollovers or conversions?

The statutory rollover exceptions depend on where the money came from. An account named “rollover IRA” is not proof that its entire balance qualifies. Follow the records.

04 · Combined valueHave I counted all covered IRAs?

The cap applies to the covered aggregate for one debtor, including growth—not separately to each Roth, Traditional IRA or institution. See the arithmetic.

05 · Applicable lawWhich state’s law and which route apply?

Your current address alone may not answer this after a move. Bankruptcy domicile rules, available exemptions and possible estate exclusions need separate review.

06 · Exceptions and evidenceWhat could change the result?

Account qualification, certain tax or support debts, liens and recent transactions can matter. Bring records and claim notices, not just a current balance. Use the checklist.

Three questions that sound alike—but are not

Federal retirement-funds exemptions appear in 11 U.S.C. §522(b)(3)(C) and (d)(12). The first is available within the state-law exemption route; the second belongs to the federal exemption package. A state’s decision not to allow that federal package does not, by itself, remove §522(b)(3)(C). Account-qualification conditions in §522(b)(4) still apply.

Exclusion is a separate question. Section 541(c)(2) addresses an enforceable restriction on transfer of a beneficial interest in a trust. In In re Hoffman (2022), the Eleventh Circuit held that the debtor’s Roth IRAs were excluded based on Georgia’s garnishment law. That is a Georgia-specific holding, not a nationwide rule that every state IRA exemption keeps the account out of the estate.

In Chapter 7, nonexempt property can be sold to pay creditors. Chapter 13 instead involves a court-approved repayment plan; asset values and exemptions can affect what creditors must receive. Keeping an existing IRA and making new contributions during a case are different questions. This guide does not determine plan payments or whether new deposits are allowed.

What the $1,711,975 IRA cap actually measures

The adjusted §522(n) cap applies to cases filed April 1, 2025 through March 31, 2028. It follows the bankruptcy filing date, not the year you opened the IRA. The court’s 2025 adjustment table gives $1,711,975; §104 provides the three-year adjustment cycle. The unadjusted $1 million still printed in §522(n) is not the current adjusted amount.

The cap concerns asset value, not just the total you originally contributed. It also is not your remaining tax-free withdrawal basis or your annual contribution limit.

Federal bankruptcy exemptions have exceptions. Section 522(c), for example, preserves specified tax debts, domestic-support obligations and qualifying surviving liens, including properly filed tax liens. “Exempt” does not mean “untouchable by every claimant.”

Two examples: count the value, then check its source

These are hypothetical filing-date balances. They illustrate §522(n) arithmetic only—not a court result, a tax bill or a recommendation to move money. Assume qualifying retirement funds, documented ownership and no intervening transactions.

A “rollover” label is not enough

Section 522(n) names amounts attributable to rollovers under Internal Revenue Code §§402(c), 402(e)(6), 403(a)(4), 403(a)(5) and 403(b)(8), plus their earnings. It does not name IRA-to-IRA rollovers under §408(d)(3) or Roth conversions under §408A(e) as independent exceptions to the cap.

That does not mean a later transfer automatically destroys an employer-origin exception. It means the original source and the later chain need to be traced. Do not assume either “every conversion is uncapped” or “every conversion loses all protection.” A separately titled account can make records easier to follow, but its name does not establish the legal result.

Section 522(b)(4)(C)–(D) separately preserves exemption eligibility for specified direct transfers and qualifying rollover distributions. Preserving exemption eligibility and being outside the dollar cap are different tests. The 401(k)-to-Roth guide covers the tax and transfer mechanics; it is not a substitute for reviewing creditor consequences before a move.

An inherited Roth needs a separate answer

In Clark v. Rameker, 573 U.S. 122 (2014), the Supreme Court held that funds in an inherited IRA were not “retirement funds” for §522(b)(3)(C). The case involved a daughter’s inherited Traditional IRA; the opinion discusses both Traditional and Roth inherited accounts. Do not assume that inheriting a Roth makes it qualify for the ordinary federal retirement-funds exemption.

That ruling does not decide every state-law exemption or other protection route. Nor should the opinion’s historical payout descriptions be used as today’s inherited-IRA timetable. Our inherited Roth guide handles beneficiary and distribution rules separately.

A surviving spouse who has validly made the inherited interest their own IRA is in a different account-status position. Merely being married to the deceased—or leaving the account titled as inherited—does not promise own-IRA protection. Have counsel check the completed treatment, applicable law and timing before relying on it.

Before moving money, separate tax access from legal protection

A withdrawal that avoids income tax or an early-distribution tax is not necessarily safe from creditors. Cash outside the IRA needs its own exemption and tracing analysis. Similarly, paying a tax on a Roth conversion does not buy bankruptcy immunity.

Do not transfer assets to hide them or assume a last-minute contribution shields them. Section 548 permits recovery of certain fraudulent transfers; other federal and state rules may also matter. Have a bankruptcy attorney review proposed withdrawals, deposits, conversions and transfers before acting. There is no universal waiting period in this guide after which a transaction becomes safe.

If you recently moved states, bring your address history. Section 522(b)(3)(A) generally looks to 730 days of domicile, with a preceding 180-day lookback rule when there was no single state for that whole period and a statutory fallback if the test leaves the debtor without an exemption. Do not pick a state’s exemption solely because you live there today.

Bring an account history, not just an account balance

Use your attorney’s secure channel for these records. Do not post account numbers, court papers or identifying information in a public discussion.

Ask: “Which legal route protects this account, what amount does it cover, and what records support that conclusion?” Those questions are more useful than asking only whether a Roth IRA is protected.

Disclosure still matters. Official Schedule C is used to claim exemptions. Give your attorney the full account inventory even if you believe an account is protected; do not omit it from the information used to prepare your filing.

Common questions