In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed, making filing for bankruptcy under Chapter 7 rather than Chapter 13 more difficult. BAPCPA also put in place protections for money held in qualified retirement plans.
According to the Benefit Financial Services Group, “Under BAPCPA, assets held in all qualified plans (such as 401(k), profit sharing, thrift, money purchase, ESOP, and defined benefit plans), 403(b) plans, and state and local government-sponsored 457 plans are expressly excluded from the bankruptcy estate… Assets in traditional and Roth IRAs are protected up to a $1 million limit, without regard to rollover amounts.”