Posted: March 24, 2020

      This is a good question and a reasonable concern. If you have been saving for your child’s college education since they were born, you certainly do not want those funds to be at risk with a bankruptcy filing and you need to know if those funds will be protected. 529 accounts were set up by the Internal Revenue Service (IRS) to offer substantial tax advantages for individuals saving for their child’s college education. The Bankruptcy Code specifically excludes 529 plans from your estate as long as certain criteria is met. Specifically, 529 college savings accounts are excluded as property of your bankruptcy estate and fully exempt as long as the money placed in the 529 account was deposited at least two years prior to the bankruptcy filing. This requirement is essential for the funds to be considered exempt. However, in New York, you may exempt up to the sum of $5,850.00 per child for funds that were put into the 529 account within 365 days and 720 days before the bankruptcy. So as long as the funds were deposited into the 529 account two years prior to the bankruptcy filing, they are fully exempt and are out of the reach of your trustee and your creditors. 

It is crucial to consult with experienced bankruptcy attorneys to discuss all of your options. Kirschenbaum & Kirschenbaum has a team of competent and qualified attorneys who are here to answer all of your questions and concerns and guide you appropriately.


For assistance with all Bankruptcy matters, please contact us:

Ken Kirschenbaum, Esq.    (516)-747-6700 Ext. 301 or


Stacy Spector, Esq.    (516)-747-6700 Ext. 304 or