403(b) Plan Investments

[Nassau]

Are 403(b) plan investments subject to risk of creditors claiming the assets - unlike 401(k) plans.

[J Simmons]

I don't know of a specific ruling. However, if the 403b annuity is from work for a public school district, then ERISA Title I and its anti-alienation provision would not apply. Applicable state law might be of some help, though.

If the 403b annuity is from work for a 501c3, then ERISA Title I and its anti-alienation provision ought to apply, just as it would to IRA benefits that are from a SEP or SIMPLE IRA plan, where there are per-employee funding vehicles.

[Guest mjb]

Under 11 USC 522(b)(3)© 403(b) plan assets are exempt from the employee's creditors in bankruptcy whether or not the plan is subject to ERISA. A participant's interest in a 403(b) plan subject to ERISA is exempt from the participant's/employer's non bankruptcy creditors under ERISA 206(d). SEPS and Simples are not protected under ERISA's nonalienation rule from non bankruptcy creditors (any more than they are subject to the spousal death benefit requirement of ERISA 205) because the funds are invested in an IRA described in IRC 408 which under ERISA 201(6) is not covered under the vesting and participation provisions of Part 2 of ERISA. SEPS and SIMPLES are exempt from bankruptcy creditors under section 522(b)(3)©.

Non ERISA 403b plans funded by an annuity contract may be protected under state law against claims of general creditors or under state insurance law. Non ERISA 403b plan funded by mutual funds may be protected under state law against general creditors. 403(b) plans of municipal workers can also be exempt from creditor's claims under non alienation provisions in state laws which protect retirement benefts of state workers. You need to check state law.