Do you have a Individual Retirement Arrangement (IRA)? No matter how successful or financially stable you are, the potential for catastrophic events is always present. Natural disasters, unemployment, disability, and even economic downturns can drastically affect your financial position at any time. As a result, taking steps to protect your assets from creditors, including placing funds in an IRA, is both wise and necessary.
While various ways to protect your assets from creditors exist, using an IRA to shelter some of your assets can be an effective means of protection. A Pembroke Pines asset protection lawyer at Kramer Green can answer your questions about IRAs and other means of asset protection. We are here to assist you in protecting your assets from the reach of creditors to the greatest extent possible.
State Law Protections for Your IRA
Florida Statutes §222.21 protects individual retirement accounts (IRAs) from creditors. Although many states have some protection for IRAs from creditors, Florida has some of the country’s most extensive protections for these accounts. As a result, even if a creditor sues you for a debt, the creditor cannot take your IRA to pay that debt. If you file for bankruptcy IRAs are even protected.
In addition to traditional and Roth IRAs, Florida law specifically protects inherited IRAs. Florida is one of only a few states that allow you to safeguard inherited IRAs from creditors. While inheritances, in general, are not protected from creditors, an inherited IRA is protected.
Likewise, Florida law protects self-directed IRAs from the reach of creditors. However, you must be cautious in complying with all IRS requirements for maintaining self-directed IRAs. Otherwise, those IRAs could lose their protected status.
Exceptions to Creditor Protection for IRAs
Some exceptions to the creditor protection for IRAs under Florida exist. For example, if you are going through a divorce, your IRA can be divided as part of a property settlement agreement or by court order between you and your spouse.
Furthermore, fraud can defeat state law protections for IRAs. If you fraudulently transfer non-exempt assets to an IRA to protect them from a creditor who has a judgment against you, the IRA may not be protected. Under these circumstances, the court may issue a court order garnishing your IRA to pay the debt owed to the creditor.
Asset Protection for Florida Residents
Asset protection permits individuals to shelter their hard-earned assets from creditors. Therefore, if you cause a car accident in which someone is injured, become disabled, or are unable to pay back a loan, or unexpectedly close your business, some of your assets, including your IRA, would be exempt from creditors. In other words, even though you continue to owe the debt, the creditor cannot force you to give up exempt assets like IRAs to pay that debt.
Due to the protection from creditors that an IRA offers, regularly transferring funds to an IRA account can be a good asset protection strategy over time. Not only will the funds continue to grow tax-deferred, but creditors will be unable to take those funds from you for debts you owe. Federal law limits how much money you can put in an IRA each year. In 2025, you can put $7,000 annually in an IRA and $8,000 annually if you are 50 or older. Therefore, while you may not be able to shelter a large amount of assets by using an IRA, consistently contributing to an IRA over time can be effective as a long-term asset protection strategy.
Allow Us to Help You Protect Your Assets Today
A Hallandale Beach asset protection attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can help you with the most effective steps in the asset protection process. Contact our office today at (954) 966-2112 or reach out to us online to schedule a time to discuss your legal issues with our attorneys.