by Brian Mahany
Millions of Americans think of IRA’s and company 401 plans as a means of retirement planning and reducing taxes. When used as part of a comprehensive asset protection and estate planning program, they are great for protecting assets from creditors too.
If an account is a “qualified retirement plan,” it is protected by federal law, the Employee Retirement Income Security Act or ERISA for short. Congress passed the ERISA statute in 1974. It’s purpose is to insure that when workers go to retire, their pensions and retirement funds will be available. Under the law, qualified plans are protected from civil judgments and even bankruptcy. The rules get tricky with IRA’s, especially rollover IRA’s.
Many people think that IRA’s are always exempt from creditors. That’s not true. While traditional IRAs are normally pretty safe, there is a list of prohibited transactions that can open up exposure to creditors. Purchasing not traditional investments with your IRA is especially risky.
The bottom line? Putting your retirement money in an IRA, a 403 plan or a 401(k) plan often makes sense from both a tax planning and asset protection standpoint. Before you do this, however, spend some time getting some professional advice. Creditors are getting more aggressive. If you are in an occupation with high litigation risks, the need for professional planning is even greater.
For more information, contact attorney Bethany Kroes. The asset protection lawyers at Mahany & Ertl, LLC can help you protect your hard earned money and insure a legacy for your family. From our offices in Milwaukee, Detroit, Portland & San Francisco, we have helped people across the United States. An ounce of prevention now is worth tens of thousands of dollars of legal fees and years of hassle later.
Bethany can be reached at (262) 970-8500 or at