In almost every consumer Chapter 7 filed in Nevada, no. Money sitting inside a tax-qualified retirement account, whether that is a 401(k) at work or a traditional or Roth IRA, is protected by the Bankruptcy Code itself, and the trustee has no claim on it. The problems come from what happens around the account, not from the account.
The protection comes from federal law, not just Nevada's exemption list
Section 522(b)(3)(C) of the Bankruptcy Code exempts retirement funds to the extent they sit in an account that is exempt from taxation under sections 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code. In plain terms, that covers an ordinary workplace 401(k), a 403(b), most traditional pensions, a traditional IRA, a Roth IRA, and a government 457 plan.
Nevada opted out of the Bankruptcy Code's own menu of exemptions in section 522(d), which NRS 21.090(3) spells out. That opt-out does not reach the retirement protection, because the retirement protection lives in a different subsection. Nevada also has its own provision. NRS 21.090(1)(r) protects up to $1,000,000 in present value held in individual retirement arrangements, simplified employee pension plans, qualified cash or deferred arrangement plans, trusts forming part of a qualified stock bonus, pension or profit sharing plan, and Nevada college savings trusts.
There is one cap worth knowing about. For IRAs and Roth IRAs, section 522(n) limits the total you can exempt to a figure a little above $1.7 million. That number is set by statute and adjusted every few years. Money you rolled over from a 401(k), plus whatever it has earned since, does not count against the cap. Very few people filing a consumer case come anywhere near it.
Here is what a trustee actually does with a retirement account
Brian D. Shapiro has approximately 30 years of practice in the United States Bankruptcy Court and currently serves as one of only four Chapter 7 Bankruptcy Trustees in the District of Nevada, so he reads these schedules from the other side of the table. When a retirement account shows up, the trustee generally wants two things: a statement showing the balance on the day the case was filed, and confirmation that the plan is tax qualified. Section 522(b)(4)(A) helps here. If the plan had a favorable IRS determination in effect on the filing date, the funds are presumed exempt. For a normal employer 401(k) run through payroll, that presumption does the work and the inquiry usually ends there.
A trustee is not hunting for your 401(k). A trustee is looking for value that is not exempt.
The money stops being retirement money the day you take it out
This is where cases actually go wrong. Say you pull $18,000 out of your 401(k) in February to stay afloat, and you file in May with $9,000 of it still sitting in your checking account. On the filing date that is not retirement money anymore. It is cash, and cash gets measured against whatever Nevada exemptions you have left. Whether any of it can be protected depends on your other property and which exemptions are still available, so the answer varies from one person to the next.
If you are in the middle of a rollover, say so before anything gets filed. Section 522(b)(4)(D) protects an eligible rollover distribution and money redeposited into a qualifying account within 60 days. Timing is the whole ballgame on that one.
Inherited retirement accounts are the real exception
In Clark v. Rameker, decided in 2014, the Supreme Court held unanimously that money in an inherited IRA is not "retirement funds" under section 522(b)(3)(C). The federal protection most filers rely on does not reach it. Nevada's own statute, by its text, does include inherited individual retirement arrangements, which matters if you are filing here. How that plays out in a specific case depends on the facts, and it is exactly the kind of thing to raise before a petition goes in rather than after.
Cashing out to pay bills is usually the costliest move
People do it because the bills are real and the retirement account is the only money they have. The cost is income tax, usually an early withdrawal penalty, and turning protected money into unprotected cash. Sometimes there is still a reason to do it. The point is to know the price before you pay it, not after.
One phone call is cheaper than one wrong withdrawal
If you have a retirement account and you are weighing bankruptcy, talk it through before you touch the money. Consultations at the Law Office of Brian D. Shapiro are free, and they are handled by phone or video call, so you do not have to drive anywhere. Call 702-386-8600. Chapter 7 cases start with $0 down, with no attorney fees until after the petition is filed.