Protecting Plan Assets upon plan termination

[dmb]

A client with a Profit Sharing plan with about 25 participants is considering terminating his plan and shutting down his business. We are trying to help him keep his retirement plan money protected. I think he's going through some litigation of some sort. His son owns his own business, but our client would not be considered an employee and therefore couldn't roll his profit sharing money into his son's plan. Any ideas on how to keep his profit sharing money protected from litigation/creditors would be appreciated. Thanks.

[mbozek]

Your client needs to retain counsel in the state in which he lives to determine the rights of creditors to qualified plan benefits of persons who are not employees and the rights of creditors to assets held in an IRA. Before judgment he may be able to move assets without restriction but needs to check with counsel. After judgment is rendered any transfer of assets could be construed as a fraud on creditors.

[david rigby]

Best advice.

One possible action might be to leave the plan (and company) in existence.