Are Roth IRA's protected from creditors in a lawsuit? I've been led to believe that in a Traditional IRA, only the deductible portion of contributions and the earnings of on the deductible portion are protected from creditors. Anyone have any insight?

The issue of IRA and Roth IRA creditor protection is a matter of state law. I know that they are both protected in NY and NJ.

Roth IRAs sitused in Missouri, have, as of this summer, the same creditor protections as regular IRAs.



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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO

I need to know if Roth IRA's are protected from creditors in North Carolina. How can I find out?

You can check North Carolina law for a list of protected assets, of course preferably with the help of your attorney.

However, note that the previous advice mentioned where the IRA is sitused. You may live in North Carolina, but your IRA may live in California. Your IRA agreement may stipulate that it will therefore follow California rules.

So there are two parts to your question:

If NC law says the asset is protected and you are involved in a creditor proceeding there, then presumably the IRA is protected.

If NC law does not protect the IRA, you might still have protection under CA law.

This is just a suggestion for you to discuss with a local attorney and I am not offering legal advice.

Steve Hample, CFP