Fearful of a stock market crash, Laila withdrew $10,000 from her IRA and placed it in her checking account. After a few months where Laila realized there was no issues with the stock market, she redeposited $5,000 in her IRA account and transferred the remaining $5,000 to her savings account in case of an emergency. What issues, if any, exist if Laila files soon for bankruptcy?

Question

Quizplus · Accepted Answer

The Answer is Retirement accounts are exempt, whether Chapter 7 or 13, but if the funds are commingled or placed in a non-exempt account, then those funds may not be protected. Laila should deposit the remaining funds into the retirement account and have documentation regarding the withdraw and deposit amounts.

Fearful of a Stock Market Crash, Laila Withdrew $10,000 from Her