If I cash out a 401(k) retirement plan and have it in my bank account when I file chapter 7, can I claim it as exempt retirement?

No. You may be able to exempt the money under the "wild card" federal exemption, if you are claiming your exemptions under the federal exemptions. But under Texas law, once 401(k) retirement funds are cashed in, they are no longer exempt, and would have to be turned over to the chapter 7 trustee for distribution to creditors.

In the case of In re Stokesberry, Case No. 13-31714, there had also been Social Security money deposited into the account, in addition to a distribution from a 401(k) plan. The Court performed "tracing" and determined that part of the money was due to the 401(k) plan, and had to be paid to the Trustee, while the rest, proceeds from Social Security, was properly exempt and could be retained by the debtors.

Social Security proceeds are exempt under the Social Security Act, even after they are deposited in a bank account, so long as they can be traced or identified to the satisfaction of a court.

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