Open a solo 401k plan online in under 10 minutes – The Carry Solo 401k Plan is a featured-packed self-directed account that lets you invest in both traditional and alternative assets, take out a loan, or do a mega backdoor Roth conversion with a few clicks.

Yes, solo 401k assets are protected from creditors during bankruptcy. If you were to file for bankruptcy, whether in Chapter 7 or 13, your solo 401k assets have unlimited protection under federal law. In 2005, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed that excluded tax-qualified retirement plans (like a 401k and solo 401k) from being included in bankruptcy proceedings. 

Under the Employment Retirement Income Security Act of 1974 (ERISA), the funds in your retirement plan legally belong to the plan administrator, and only belong to you once you withdraw them as income. Your plan administrator cannot release the funds in your account to anyone else but you.

Solo 401k funds in transit from a rollover are also protected

BAPCPA also protects funds in transit from your solo 401k to another retirement plan, like an IRA. If you had closed your solo 401k and your assets were withdrawn, the law protects funds in transit as long as they’re being rolled over to another retirement plan. 

What if I withdraw the funds?

If you withdraw the funds to your personal bank account, the funds would lose protection and become accessible by creditors.

Is there a limit on how much is protected?

There is generally no cap on the value of protected assets within your account. Even if you had millions of dollars in your solo 401k, and you owe money, creditors cannot access funds in your ERISA-qualifed plan.


There are some instances where your solo 401k funds may not be protected from creditors.

  • If you’re found guilty of a crime and go to prison, your solo 401k assets may be seized to pay the prison for costs.
  • If the creditor is a former spouse, your solo 401k assets can be seized if you owe child support, alimony, or if you are going through a divorce and they are entitled to a portion of the account assets.
  • If the creditor is the IRS, your solo 401k assets can be seized to settle a tax debt, if you’re eligible to take distributions from your plan in the first place. The IRS cannot override plan regulations if you’re not eligible for distributions due to age or other plan restrictions. Additionally, only the IRS can access your funds to settle a tax debt, state and local governments cannot access your solo 401k assets.