Protecting Retirement Assets
After you build up wealth, it is only natural that you would want to protect it from anyone trying to take it away from you. For this reason, asset protection strategies are a necessary part of any wealth building program, and constitute a special situation in retirement planning.
As far as retirement planning goes, there is good news and bad news when it comes to protecting your retirement assets. The good news is that there is a very good possibility that your retirement benefits will be protected from the grubby hands of judgment creditors. The bad news is that this area of the law is very confusing and is plagued with exceptions that make it just as likely that your creditors can get to the savings you need for retirement.
No need to worry, though. Once again, we come to your rescue to help guide you through this difficult topic.
The extent to which creditors have access to your retirement savings comes down to answering the following three questions:
- Who is the creditor?
- To what extent does the Employee Retirement Income Security Act (ERISA) shield your retirement benefits from creditors?
- If ERISA offers no protection, do the laws in your state bar creditors from raiding your retirement assets?
To help answer these questions, consult the discussions found under these sections:
Bankruptcy. On a related note, the bankruptcy code generally protects a debtor's right to receive payments from an employer's qualified retirement plan (such as a stock bonus, pension, or profit sharing plan), annuity, or similar plan or contract on account of illness, disability, death, age, or length of service. The payments received are protected to the extent reasonably necessary for the support of the debtor and the debtor's dependents. In addition, courts have interpreted the bankruptcy code to also protect individual retirement accounts (IRAs). Because of this, the discussions that follow will involve creditors outside the bankruptcy setting.
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