Legal protection from lawsuits?

[Guest mlee]

I am unsure of this but are 401(k) assets, protected from lawsuits against the participants or account holder? Specifically, I'm wondering if 401(k) assets are protected like O.J. Simpson's pension was (I think it was protected...) from civil lawsuits (not necessarily for killing somebody but maybe from somebody falling on your home's steps, etc...). Would IRA assets also be protected?

Thanks

[jquazza]

Yes, 401(k) assets are protected just like OJ's pension (providing your 401(k) is covered by ERISA.) Only the IRS or an alternate payee under a QDRO (ex-spouse due to divorce usually) can get to them. The plan could also recover some of the assets in your account if you embezzled money from the plan.

IRAs are usually not afforded the same protection, though some states grant the same protection to conduit IRAs that were funded exclusively with funds from a qualified plan.

[Appleby]

Some states grant protection regardless of the source of the IRA funds.

You need to check with a local attorney to be sure.

See for http://www.ici.org/issues/sta/arc-leg/00_s...krupt_surv.html. This is a little dated, but it gives you the cite, which should help to make your research much easier.

[k man]

there is one exception to the rule stated above and that is if the company sponsoring 401(k) plan or retirement plan does not have any common law employees. in other words if the company has only one employee and that employee is the owner, the plan will not be considered an ERISA plan and you dont get the creditor protection afforded by ERISA.

[Guest mlee]

Thank you for the all the help....just wanted to ask another detail though...

In regards to the state protection that is afforded (would New Jersey be one of them) include protection from civil lawsuits such as O.J. faced? Or would it only provide protection from bankruptcy?

Again, many thanks.

[Lame Duck]

You should consult a local attorney who is familiar with New Jersey's laws. The information I have from 199 indicates that New Jersey does have at least some protections for IRAs, but only a local attorney would be conversant with the actual protections.