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Navigating Bankruptcy: Education Savings and ABLE Accounts

Filing for bankruptcy can be daunting. However, at Mack & Associates, LLC, we aim to clarify how bankruptcy affects education savings and ABLE accounts. Consequently, this guidance offers peace of mind to those in Topeka, KS, who are considering bankruptcy.

The Exemption of Education Savings Accounts

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act introduced significant changes to education savings. It excludes funds in an education IRA and Section 529 tuition savings program from the bankruptcy estate. As a result, this exclusion protects your educational investments from creditors. However, time-sensitive rules apply to deposits made one to two years before filing for bankruptcy, emphasizing the importance of strategic planning.

Limitations and Requirements

Not all contributions to these accounts are exempt from the bankruptcy estate. For instance, deposits made within 365 days before filing do not qualify for exclusion. Additionally, a cap exists on the exempt amount for contributions made between 365 and 720 days before filing. Furthermore, beneficiaries of the funds must be direct relatives, like children or grandchildren, to qualify for exemption. Excess contributions and funds not meeting these criteria may not receive protection, highlighting the need for careful financial management.

ABLE Accounts: A New Layer of Protection

Introduced in 2014, ABLE accounts protect assets for disabled individuals. Similarly to education savings accounts, ABLE accounts have specific exclusions and limitations. Therefore, they are essential for families planning for the long-term support of disabled members.

Legal Requirements for Disclosure

Bankruptcy law requires disclosing interests in education IRAs, qualified ABLE accounts, and Section 529 plans. This ensures transparency and proper asset treatment during bankruptcy. At Mack & Associates, LLC, we guide our clients through correctly listing these accounts, ensuring compliance and protection.


Understanding bankruptcy law’s impact on education savings and ABLE accounts can be complex. Nonetheless, at Mack & Associates, LLC, in Topeka, KS, we provide the knowledge and support needed for successful bankruptcy filings. Protecting your financial future and your beneficiaries is our priority. For more on how bankruptcy affects these accounts, visit www.kansasjustice.com.