creditor protection | Ed Slott and Company, LLC

creditor protection


With the recent economic downturn, you may be more concerned than ever about keeping retirement plan funds safe from creditors. If you participate in a plan covered by the federal Employee Retirement Income Security Act (ERISA), you can sleep well at night. Your plan accounts are completely shielded from creditors – whether or not you’ve declared bankruptcy. (Not surprisingly, there is an exception allowing the IRS to recoup unpaid taxes.)

Creditor Protection for IRAs

One of the greatest benefits offered under ERISA are the anti-alienation provisions, which provide that benefits under a pension plan cannot be assigned or alienated. While there are some statutory exceptions, ERISA essentially prevents retirement assets from being joined in any legal process to collect a commercial debt. These actions include garnishment, attachments, and other similar legal devices. There are some exceptions to this rule, the most obvious being divorce or legal separation.

Can I Open a Roth IRA and Fund it with my IRA?

This week's Slott Report Mailbag examines ERISA creditor protection differences for 401(k)s and IRAs and answers a consumer's question on funding a Roth IRA.

Is Your IRA Protected From Creditors? You May Be Surprised

If you are like many Americans, your IRA may be one of your biggest assets. You may be surprised to discover that this important part of your retirement savings plan may be more vulnerable than you might think. Here is what you need to know about protection of your IRA in bankruptcy and beyond.

How Safe From Creditors is Your 401(k) Money if You Roll it to an IRA?

“If I roll my 401(k) money to an IRA, how safe will it be from creditors?” This is one of the most common – and in some cases, important – questions people have when they are considering moving their 401(k) money to an IRA. Unfortunately, there’s not just one simple answer.

3 Reasons to Consider a 401(k) Instead of a SEP IRA

One of the most popular small business retirement plans is the SEP IRA. In contrast to other potential options for small businesses, such as a 401(k), the SEP IRA is often favorable. That said, there are many reasons you might consider using a 401(k) for your small business instead of a SEP IRA. Here are three of them.

5 Retirement Account Creditor Protection Myths ... And What Facts REALLY Are

The creditor protection rules that apply to retirement accounts are complex and frequently misunderstood. In an effort to correct some of the most frequently misunderstood concepts and provide some clarity in these seemingly murky waters, below we explore 5 Retirement Account Creditor Protection Myths and then give you the real facts behind them.

3 Things You Didn't Know About IRA Prohibited Transactions

Prohibited transactions are a list of things that you cannot do with your retirement account. In fact, they are one of the worst things you can do with a retirement account. When a prohibited transaction occurs, your entire IRA is deemed distributed as of January 1 of the year you made the prohibited transaction. This can lead to any number of negative consequences, the least of which include massive taxation and penalties. Since the prohibited transaction rules are so important, the basic information can be readily found in IRS publications and other places on the web, but here are 3 things most people don’t know about them.

When NOT to Roll Over Your Company Retirement Plan Money to an IRA

When you switch jobs or retire, you are generally entitled to a full distribution from your company retirement plan funds such as a 401(k). You must be given the option to roll over those funds to an IRA. Certainly, a rollover to an IRA is a great decision most of the time. A direct rollover to an IRA is tax-free and keeps your retirement funds intact and growing on a tax-deferred basis.

Roth Conversions and Contributions, Creditor Protection Highlight Mailbag

This week's Slott Report Mailbag includes questions on Roth conversions and contributions, the always-confusing Roth IRA 5-year rules and creditor protection for IRAs. Happy a happy, healthy Memorial Day weekend and thank you to the servicemen and women who risk their lives daily to defend and protect us.

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