Yes, in certain circumstances. If you have claimed the I.R.A. as exempt under Texas law, and you take out a lump sum during a bankruptcy, and you do not reinvest it in another I.R.A. (a nontaxable rollover) within 60 days, then the money is no longer considered an I.R.A. and it may be seized by your bankruptcy trustee.

Recommendation: Don't take a lump sum distribution from your I.R.A. during a bankruptcy if you have claimed the funds as exempt under Texas law, unless you are doing a nontaxable rollover to another qualified plan. Check with your lawyer first. The safe bet is to wait until the bankruptcy case is not only discharged but closed (final decree has been issed by the court).


J Thomas Black
Connect with me
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization