I've now read several threads on the issue of IRA protection from creditors. There is little concensus and no cites of authority to back up opinions that I can find. Hopefully, there is someone out there that knows a definitive answer to this:

A client has an IRA which consists of monies granted to her from her ex-spouse's qualified plans. The marital settlement was to have $500,000 moved from the ex-spouse's qualified plans to her "rollover" IRA. The IRA is now worth $700,000. This was done per a judge's agreement and no DRO or QDRO was ever in place.

Is her IRA protected against non-bankruptcy liens/creditors? This is in California. Help very much appreciated.

That may be because this is a state law issue. Recheck your sources - if all the responses from Cali are heading in 1 direction, then you have some agreement to go by. Otherwise, check your state law statutes.

IRAs are protected from creditors under both state and federal law. All IRAs are protected from creditors in bankruptcy under Section 522(n) of the federal bankruptcy law in amounts of up 1,000,000. In other cases state law may protect the IRA from creditors. CA civil procedure code section 704.115 protects IRAs. I have not check this cite in yrs and understand that it has been revised. IRAs are subject to divison in divorce and ont by a QDRO and may be transfrred tax free under IRC 408(d)(6).

Thanks mjb for the specific reference. I'll be checking out 704.115 as soon as I get a chance and hopefully will have some information to report back.

Exactly how was the $500k moved from the ex-spouse's qualified plans without a QDRO, and what is a "judge's agreement"? In addition to a qualification problem for the qualified plans involved, it would have been an invalid rollover, the ex-spouse would have liable for tax on the $500k (plus a 10% add'l tax if younger than 59-1/2), and then excise taxes attributable to the invalid rollover pyramiding year after year after year. And, perhaps the lack of validity of the rollover creates a problem seeking protection from creditors under the pertinent state law. Possibly I am misunderstanding you, and maybe what happened is that the ex-spouse took the $500k from his plan and rolled it over to his IRA, and then he split the IRA pursuant to the Section 408 divorce rules, for which no QDRO is necessary. But, if that is what happened, what was the distributable event under the ex-spouse's plans?

Thanks for the alert ipod. I now have in my possession an actual QDRO, so there in fact exists one.

Is this order a real qdro that states it complies with IRC 414(p) and is addressed to the plan administrator or is it a ct order that requires the transfer of some/all of the interest in the IRA to the ex spouse under IRC 408(d) (6) on account a divorce under IRC 71 that is referred to as a qdro. Most custodians will not agree to a transfer of IRA assets that requires compliance with 414(p) because they do not perform the duties of a plan administrator under ERISA.

There is an actual QDRO document and the assets were transferred years ago and are now sitting in an IRA. But that's not the issue I want to learn about. I have tried to learn if the assets in the IRA are protected against liens in a non-bankruptcy judgement against the IRA holder (ex-spouse). I checked out the CA civil procedure section 704.115 and really cannot decipher it at all. Nobody seems to know the answer to this question including ERISA attorneys who, like attorneys, only answer in generalities so that they can never be wrong. I would really appreciate it if anyone knows the answer to this question or has a reference or referal where I can discover the correct answer.

You may find this helpful. Good chart. Taking into account that free advice is worth only what you pay for it, it might be wise to engage a California attorney to give you a definitive answer.

http://www.aicpa.org/pubs/jofa/jan2006/altieri.htm#state