Living on the South Shore offers a beautiful quality of life, but the cost of living in places like Plymouth can be unforgiving. I meet people every week who have worked hard for decades, saving diligently for their golden years, only to face sudden financial storms. Medical bills, job loss, or credit card debt can accumulate faster than anyone expects.

When debt becomes unmanageable, the biggest fear my clients face isn’t usually losing a car or even a house. It is the fear of losing their future. You might wonder whether filing for bankruptcy will wipe out your 401(k) or pension. You worked hard for that money. It represents your security when you stop working.

The good news is that Massachusetts law recognizes the importance of these funds. The Commonwealth has specific statutes that protect your retirement savings from creditors. My goal at Benner Law is to help you understand these protections so you can make informed decisions about your financial recovery.

This article discusses how bankruptcy impacts retirement accounts in Massachusetts.

Does Bankruptcy Affect Retirement Plans?

It is natural to assume that bankruptcy means “losing everything.” Creditors often fuel this anxiety. They want you to believe that if you don’t pay them immediately, they can seize your retirement assets, but this is rarely the case.

Bankruptcy is not a punishment. It is a legal tool designed to help honest people get a fresh start. Part of that fresh start involves ensuring you do not become a burden on the state in your old age. Consequently, state and federal lawmakers have erected high walls around retirement accounts to protect them from liquidation.

What Exemptions Exist For Retirement Funds in Massachusetts?

Massachusetts General Laws offer exemptions for retirement funds. When we file a bankruptcy case, we must list the property you own and then “exempt” it, which essentially tells the court and your creditors that this property is off-limits.

Protection for Pensions and Annuities

The primary shield for your retirement is found in Massachusetts General Laws Chapter 235, Section 34A. This statute is explicit. It states that your right or interest in any annuity, pension, profit-sharing plan, or other retirement plan—including those established under federal ERISA laws or Keogh plans—is exempt from seizure, execution, or attachment.

This means that a creditor generally cannot force you to cash out your retirement plan to pay a debt. Whether you have a 401(k) from a job in Boston or a smaller personal retirement annuity, this law stands as a barrier between your hard-earned savings and the bankruptcy trustee.

Protection for Wages and Pension Payments

We also look to Massachusetts General Laws Chapter 246, Section 28 for additional layers of safety. This law focuses on wages and pensions. It mandates that amounts held by a trustee in a pension plan are reserved and exempt from attachment.

This is critical because it protects the funds before they reach your hands. If you are receiving a pension, this statute helps ensure that those payments remain yours to live on, rather than being diverted to satisfy old debts.

Understanding the “Official Forms” and Process

Knowing the law is only half the battle. You must also follow the correct legal procedures to claim these protections. The United States Bankruptcy Court for the District of Massachusetts requires specific documentation.

According to the court’s debtor information guidelines, we must file “Official Forms” to begin a case. One of the most important documents we prepare is “Schedule C: The Property You Claim as Exempt.” This is where we explicitly cite the Massachusetts statutes mentioned above. If we do not list the exemption correctly on this form, you risk waiving your right to that protection.

The court takes these procedures seriously. The Local Rules of the United States Bankruptcy Court for the District of Massachusetts, specifically the set effective May 1, 2025, outline the strict frameworks attorneys and debtors must follow. Adhering to these local rules ensures that your claim of exemption is processed smoothly and that the bankruptcy trustee—the official overseeing your case—has all the information necessary to verify your assets are protected.

What Types of Accounts Are Protected By M.G.L. c. 235 § 34A?

Under the Massachusetts statutes I mentioned, coverage is broad. Most qualified retirement plans fall under the safety of M.G.L. c. 235 § 34A.

401(k)s and 403(b)s

These are the most common employer-sponsored plans. Whether you work for a private corporation or a non-profit, the funds sitting in these accounts are generally safe. The law recognizes these are essential for your long-term survival.

IRAs (Individual Retirement Accounts)

Traditional IRAs and Roth IRAs also enjoy protection. While federal bankruptcy exemptions have specific caps for IRAs, Massachusetts state law exemptions are often chosen because they offer broad protection for retirement plans necessary for the debtor’s support. We evaluate which set of exemptions, state or federal, offers the strongest shield for your specific portfolio.

Pensions

Defined benefit plans, often held by union workers or state employees, are fiercely protected. M.G.L. c. 246 § 28 specifically highlights the protection of pension funds held by a trustee.

The Mistake of Cashing Out Early

I often see clients who have already drained a portion of their 401(k) to pay credit card bills before they call me. They take a massive tax hit and pay early withdrawal penalties, only to find themselves still drowning in debt a few months later.

Please, do not do this without speaking to a lawyer first.

When you withdraw money from a protected retirement account, it loses its “exempt” status. Once that cash hits your checking account, it is no longer a “retirement plan.” It becomes cash on hand. Cash is much harder to protect in bankruptcy than a 401(k). By trying to pay off debt the “noble” way, you might actually be destroying the one asset that creditors could never have touched in the first place.

Why Local Representation Matters

Bankruptcy law involves a mix of federal code and state-specific statutes. While the Bankruptcy Code is federal, the exemptions we use to protect your property often come from Massachusetts law.

Practicing in Plymouth and the surrounding areas, I understand the local landscape. I know the procedures required by the District of Massachusetts bankruptcy court. I understand how the local trustees interpret the May 1, 2025, Local Rules. This familiarity allows me to build a strategy that fits your unique situation.

We are not a high-volume filing mill. At Benner Law, we are a small firm by design. I work one-on-one with you. We will sit down, look at your retirement statements, review your debts, and determine exactly which Massachusetts laws apply to your case.

Securing Your Financial Future

You worked hard for your retirement. Do not let debt rob you of the peace of mind you have earned. Bankruptcy is a powerful tool intended to preserve your dignity and your future; not strip you bare. If you are losing sleep over debt and worrying about your retirement savings, let’s talk. We can review your specific assets and discuss how M.G.L. c. 235 § 34A and other laws apply to you.

I am proud to assist clients in the communities of Plymouth, Braintree, New Bedford, Taunton, Hyannis, and across the state.

Contact us at (774) 228-7338 to find out how we can help you overcome financial struggles and move forward in your life.