Creditor protection in IRA v. 401k
I have a client that is concerned he may wind up in personal bankruptcy. He is considering rolling his IRA into his 401k plan (the 401 does allow for IRA rollovers into the plan). I don’t like the investment options in the 401k as much as those in the IRA, but will steer him in that direction if he can improve his creditor protection. His IRA balance is $600,000 and he resides in MI.
Can someone provide insight on the level of creditor protection available in the 401k vs. the IRA.
Thanks
Permalink Submitted by Alan Spross on Tue, 2009-02-03 18:37
Per attached link, if you scroll down to MI, you will see that MI provides 100% protection of IRAs from creditors, so there is no reason to pursue the transfer to the employer plan.
However, note that NEITHER type of plan provides any protection for either IRS liens OR for divorce settlements.
http://www.assetprotectionbook.com/state_resources.htm