The Asset Protection Law Letter
A Service of Klueger & Stein, LLP


Creditor Protection for Retirement Plans

There is no asset protection topic more confusing than protection afforded to retirement plans.  It is an important topic - for many of us retirement plans are a very significant asset.  It is estimated that over $15 trillion are held in ERISA and IRA plans.  ERISA-qualified retirement plans (like 401k and defined benefit plans) are usually fully protected from creditors under federal law.  Some non-qualified plans, including IRAs, are protected at least partially under state law (more on that below).  IRAs that are inherited (i.e., the plan participant has died) are not protected, which is a big missing piece in the asset protection planning of most people. 

ERISA Protection
ERISA provides protection from creditors for all qualified plan assets while the assets remain inside the plan, and there are non-owner employers participating in the plan.
ERISA protection extends to all plan assets, regardless of how or when contributed to the plan, so long as the contribution is allowed within the ERISA guidelines (i.e., the plan is not over-funded, etc.).

IRAs (regardless of their prefix), are not governed by ERISA and do not enjoy ERISA protection.  IRA protection varies from state to state.  They are fully protected in Florida, but are partially protected in California.

Inherited IRAs
All retirement plans are protected (fully or partially) because either Congress or state legislators considered it important to safeguard retirement benefits of plan participants and their spouses.  Protection for heirs and beneficiaries was never contemplated. 


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Robert F. KluegerJD, LLM 
Mr. Klueger is one of the very few private attorneys in America who has argued a tax case before the United States Supreme Court, [United States v. Brockamp], which resulted in a change in the tax law regarding tax refund claims filed by disabled taxpayers....

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