Roth 401(k) protected from creditors?

[Santo Gold]

Roth 401(k) contributions held in a trust as part of a qualifed plan has the same protection from creditors as traditional 401(k) contributions, correct? This is spelled out in ERISA.....is it Title I?

Someone outside the office begs to differ

Thanks

[J Simmons]

Roth 401(k) contributions held in a trust as part of a qualifed plan has the same protection from creditors as traditional 401(k) contributions, correct? This is spelled out in ERISA.....is it Title I?

Someone outside the office begs to differ

Thanks

It's part of the anti-alienation requirement (IRC 401a13 and ERISA 206d). It merely refers to all ERISA plan benefits, it doesn't single them out for individual mention. There are special rule exceptions for QDROs and for certain judgments and settlements.

Ask the one begging to differ what exception or rationale they are using for that position. They might be confusing rules applicable to non-ERISA IRAs, which Roth IRAs would be, but you're talking Roth contributions to a 401k plan governed by ERISA (unless its governmental, church, etc. sponsored).

[Santo Gold]

The person who begs to differ is a financial advisor who, for selfish reasons, would prefer the plan not offer after-tax Roth contributions. I think he is thinking Roth IRAs and assumes the same rules apply to Roth 401ks.

Thanks

[masteff]

My experience w/ financial advisors is that they tell our employees the worst case scenarios (even to the point of distorting the rules) in order to get rollover money. I'd politely explain to him "qualified plans are similar but different from IRAs".