401(k) protection against participant's judgment creditors

[stevena]

Can anyone cite to me where in writing it states that retirement plan assets are protected from civil lawsuit settlements (personal participant lawsuits, not plan lawsuits)

This is not a one person plan, or a spouse lawsuit, or a QDRO. The lawsuit is a personal participant lawsuit. If he loses, and is charged and has to pay a civil settlement, I need to know where it says his retirement plan assets can not be touched.

I can find a lot on PLAN lawsuits being protected in certain circumstances, just not personal lawsuits.

Really would appreciate CITES!

Thanks a lot.

[R. Butler]

Anti-alienation rule are disucussed in ERISA 206(d). Generally, civil suit judgments can't touch qualified retirement plan assets unless the civil judgment concerns a violation of fiduciary provisions of ERISA.

Several court cases on point. One that I have an immediate cite for is Guidry V Sheet Metal Workers Nat'l. Pension Fund, 493 US 365.

Hope this helps.

[stevena]

Arent there a couple of things, though....that are excluded from protection. I saw violation of fiduciary, settlement for DOL reasons, crime against plan and then it is listed "civil judgements." I am trying to figure out if that means civil judgements against the PLAN or if it would include civil judgements against individual participants. I was looking in 206(d) (4) and (5)

thanks for your thoughts

[stevena]

ok, you know what...nevermind...I was reading 206 wrong. Thanks for the help.

[david rigby]

IRC 401(a)(13) also addresses this. Here is the first part of that subsection:

(13) Assignment and alienation.--

(A) In general.--A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under the plan may not be assigned or alienated. For purposes of the preceding sentence, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment made by any participant who is receiving benefits under the plan unless the assignment or alienation is made for purposes of defraying plan administration costs. For purposes of this paragraph a loan made to a participant or beneficiary shall not be treated as an assignment or alienation if such loan is secured by the participant's accrued nonforfeitable benefit and

is exempt from the tax imposed by section 4975 (relating to tax on prohibited transactions) by reason of section 4975(d)(1). This paragraph shall take effect on January 1, 1976 and shall not apply to assignments which were irrevocable on September 2, 1974.

There are some exceptions, such as QDRO's.

IRC sections relevant to employee benefits can be accessed here: http://www.benefitslink.com/taxcode/index.shtml