SEPs, SIMPLEs, creditors

[Santo Gold]

Are participants assets in a SEP or SIMPLE shielded from claims from creditors? A participant in one of these plans (he's not sure which one he is in) has some major credit card problems and was told by the collection agency that they could go after his SEP/SIMPLE.

Thanks

[Belgarath]

Well, they can always "go after" funds. Being successful in getting them is something else again. With the caveat that this should be referred to an attorney familiar with such matters, and that I'm not really versed in these matters ...

You didn't mention that there was any bankruptcy proceeding, so I'll assume there isn't. If this is a bankruptcy, then while IRA and SIMPLE assets are not EXCLUDED from the bankruptcy estate, there is an EXEMPTION up to, I seem to recall, 1 million dollars - don't recall if that is adjusted for inflation. There also may be a choice as to whether the client chooses federal bankruptcy law or chooses state law, but again, this is a matter for an attorney.

If this isn't a bankruptcy, then I believe any protection from creditors is dependent upon state law protection.

Maybe one of the attorneys on these boards will chime in with some more concrete information.

[Gary Lesser]

Absent bankruptcy, state law is controlling. That being said, some states treat SEP funds differntly than traditional IRA funds; even if held in the same account.

What state? Perhaps someone can be of assistance.