Individual 401(k) Plan offers significant creditor and asset protection for retirement account holders.
IRA Financial Group, the leading provider of self-directed IRA and Individual 401(k) Plans announces the introduction of the “Individual 401K Asset Protection Plan.” The “Individual 401(k) Asset protection Plan has been created to offer asset and creditor protection to retirement investors. “Because retirement accounts have become many Americans most valuable assets, we believe it is extremely important that our self-employed and small business retirement investors have the power to protect them from creditors or potential creditors,“ stated Adam Bergman, a tax attorney with the IRA Financial Group.
In general, retirement assets are protected from creditors inside of bankruptcy based on the 2005 Bankruptcy Act. The general exemption found in section 522 of the Bankruptcy Code, 11 U.S.C. 522, provides an unlimited exemption for retirement assets exempt from taxation for Section 401(a) (tax qualified retirement plans, pensions, profit-sharing and section 401(k) plans). Therefore, ERISA qualified plans as well as individual 401(k) plans are afforded full bankruptcy exemption.
Outside of bankruptcy, an individual 401(k) plan benefits under a pension, profit-sharing, or section 401(k) plan are generally safe from creditor outside of bankruptcy due to ERISA and the Code’s broad anti-alienation protections. However, according to Mr. Bergman, “because case law and Department of Labor Regulations have held that such a plan that benefits only an owner (and/or an owner’s spouse) are not ERISA plans, thus voiding the anti-alienation protections generally afforded to ERISA plans. Thus, state law will govern the protection afforded to individual 401(k) Plans outside the bankruptcy context.”
Most states offer full creditor protection for individual 401(k) plan participants outside of bankruptcy. Aside from States such as Colorado, California, Michigan, and Rhode Island, most Individual 401(k) plan participants will have their individual 401(k) plan assets protected from creditors outside of bankruptcy. “Accordingly the Individual 401(k) Asset Protection Plan is such a popular option for the self-employed and small business owner seeking to protect their retirement assets from creditors,” stated Mr. Bergman.
The IRA Financial Group was founded by a group of top law firm tax and ERISA professionals who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.
IRA Financial Group is the market’s leading provider of self directed 401k Plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.