Possible to begin funding Roth IRA just prior to filing?

[Chicago]

I don't have any retirement savings aside from a profit-sharing plan my temp agency instituted at the first of the year. I'd like to start funding a Roth IRA now that I'm planning to file in July or August. However, I read someplace that beginning to fund a Roth IRA within 120 days of filing will be disallowed. Anyone have any experience with that? It sure would help to increase my expenses since you can put $4000/year into the plan or the equivalent of $333/month.

I never had an leftover cash to use for retirement since my bills have always eaten that up.

[Minnymouth]

I'm sure the Trustee will not allow funding to a retirement (new one) right within that 120 period of filing. It would be like trying to hide that money in a savings account....... there for the Trustee's taking.

If the account had already been established, maybe, but not a new one.....

[lrprn]

As of Oct 2005, a Roth IRA is protected in bankruptcy like all the other forms of retirement accounts. However, as Minny notes, the problem is all in the timing.

If you aren't rolling over some large sum of non-exempt cash with the intent of hiding money from the trustee but are starting the account with a very small sum of cash (less than $100), then depending on your trustee and local court customs, it *might* be ok since you are doing it several months before filing and you have no other personal retirement account currently. This is something you need to run by your lawyer for sure before you do it.

[SinkingFast]

Part of what the Trustee considers is timing, as the others have mentioned.

Part is consistency. Have you been saving for retirement all along??

Part is personal circumstance. Did you have a traumatic event, beyond your control that caused you to spend your retirement savings?? And now you're an older person, with no retirement savings needing to save for retirement??

Lots of factors go into whether or not retirement savings look suspect. To all of the sudden stash a chunk of change into retirement within months of filing might raise a red flag for the Trustee.

[reallynervous]

We had stopped dh's 401-K deduction last fall when we were trying to continue to pay the bills. We asked our attorney if we would be allowed to start the deductions again, and he said that we could and that 6% would be allowable.

Dh's company had it set up that the deductions couldn't start again until an open period which started May 1st, so we just recently started having them taken out. He has had the account for years and regularly contributed to it before last Fall, so hopefully it will be okay.

Just sharing what we were told by our attorney. It would be worth asking your attorney how the trustees in your area would view this.

reallynervous

[SinkingFast]

We were told the same thing, Really.

Hubby had to be with his employer for a year before he could start participating in the 401K Plan. The year rolled around as we were Consulting with attnys to file BK. We asked our attny if Hubby could sign up. Attny said it would be OK as long as the level was kept to around 5% or below.

Hubby started saving in the 401K about or less than 6 months before we filed.