creditor protection | Ed Slott and Company, LLC

creditor protection

$1,512,350 is the New $1,362,800

When you file for bankruptcy, one thing you usually don’t have to worry about is protecting your IRA funds from creditors. That’s because, in just about every case, all of your IRA (and Roth IRA) monies are off limits. Under the federal bankruptcy law, IRA assets up to a certain dollar limit cannot be reached by creditors. That dollar limit is indexed every three years based on the cost-of-living. The current dollar limit is currently $1,362,800, but on April 1 it goes up to $1,512,350 until March 31, 2025.

Are Your Retirement Accounts Protected from Creditors?

One question that continues to come up is whether company retirement plan dollars are protected from creditors. This becomes an issue if you are forced to declare bankruptcy or you owe money after a legal action is brought against you.

Court Decides that Bankruptcy Creditors Cannot Touch Inherited 401(k) Funds

Suppose you inherit 401(k) (or other ERISA plan) funds and then file for bankruptcy before receiving those funds. Can you lose those 40(k) dollars to your bankruptcy creditors? According to a recent decision of a Bankruptcy Court in North Carolina, you don’t have to worry.

YEAR-OF-DEATH RMDs AND IRA CREDITOR PROTECTION: TODAY’S SLOTT REPORT MAILBAG

Question: Your newsletter is so helpful, and your book was a great resource to me when my mom passed away 5 years ago and I inherited her IRA. I am 76 and have not taken my RMD for 2021. Should I pass away and my wife age 69 transfers my IRA to hers, must my RMD for 2021 be taken first? Thanks much. A columnist in the Chicago Tribune led me to you years ago. F. Perry

AM I ENTITLED TO ERISA 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.

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