Retirement Accounts and Asset Protection

No matter how careful, diligent, or professionally successful you are, owning a business always involves some degree of risk. A lawsuit, accident, or poor investment can easily lead to financial disaster despite your hard work and meticulous planning. Therefore, you should always take steps to protect your personal assets, including retirement accounts, from the reach of creditors to the greatest extent possible. Fortunately, the Florida asset protection lawyers at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can help you take measures to secure your financial future and protect against potential creditor claims.

Exemption of Retirement Funds Under Florida Law

Florida Statutes §222.21 generally exempts pensions and certain tax-exempt funds and accounts from legal processes. This statute covers most pensions, 401(k) plans, 403(b) plans, IRAs (including Roth, traditional, and simple employee pensions or SEP-IRAs), and other tax-deferred retirement accounts from the reach of creditors. This statutory section also specifically exempts pension plans for:

  • Teachers;
  • County officers and employees;
  • State officers and employees;
  • Police officers; and
  • Firefighters.

Public policy strongly favors the protection of retirement assets from creditors. Debtors need these assets to support themselves and their family members during retirement. Otherwise, they may become dependent on state and federal government subsidies and care.

Furthermore, the federal government exempts many of these plans to preserve them for future taxation. Individuals can fund traditional retirement plans with pre-tax dollars. As a result, when they withdraw funds from these plans, they must pay the tax that becomes due on the withdrawn funds.

Inherited IRAs

Inherited IRAs also historically were not exempt from creditors under §222.21. However, the Florida legislature amended the statute in 2011 to include rollover and inherited IRAs as exempt from creditors.  exe

However, some states do not exempt inherited IRAs from creditors. Therefore, if a Florida resident has a child that lives in another state that does not exempt inherited IRAs, the child would not be able to use Florida law to protect that inherited IRA from their creditors. As a result, Florida residents may want to consider another asset protection technique to safeguard the IRAs that their children in other states may inherit. For instance, the parent could set up a trust to protect the proceeds of the inherited IRA from the child’s creditors.

Distributions from Retirement Accounts

Funds that individuals have withdrawn from retirement accounts  generally no longer protected or exempt from creditors.

Contact Our Office Today for Your Asset Protection Needs

The asset protection attorneys of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. are ready to assist you in protecting your assets, including retirement accounts, from the reach of judgment creditors. We know how hard you have worked to build your assets over your lifetime and know how to help you preserve them.

As a result, our objective is to take all actions necessary to protect your wealth for your and your family’s benefit. 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.

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