My name is Ron Drescher. I’m attorney practicing bankruptcy and creditor’s rights in Maryland, Delaware, Pennsylvania and Virginia. Today I want to answer the question “I’ve got some money problems, should I invade my IRA or my 401k?”

Now before you decide to do that you should consult an attorney because in every State of this country, creditors except for the IRS can never reach your IRA or your 401k to satisfy their claims against you. So even if they get a judgment and they start seizing wages or bank accounts or other assets, they can never get your IRA or your 401k. So before you decide to invade that asset that could make all the difference in your retirement or in your post-bankruptcy financial life, you should really consider whether or not you want to pay those bills with that money cause when you pull the money out of the IRA or the 401k, you’re likely going to have to pay a penalty on it that’s about 10 percent and that moneys going to go into your taxable income so you’re going to have to pay taxes on it. So there’s a very big price to pay for invading those funds to pay creditors who could otherwise be discharged in your bankruptcy case. So before you decide to do that, you should definitely consult a bankruptcy attorney to make sure that you don’t dissipate that valuable asset.

My name is Ron Drescher. I’m an attorney practicing bankruptcy and creditor’s rights. If you have a question about whether you should invade your IRA or 401k, please pick up the phone and call me. I would love to hear from you.