ira withdrawls
in new york state in what amount of a qualified I.R.A. distribution can be attached by creditors. I understand that if distributions in any amount are electronically transferred to a checking account , a creditor may attach an amount over $2500.. I understand I.R.A. s are protected from creditors but what about distributions. Also if the account is held by a brokerage in another state ,
and monies transferred to a checking account in new york state, does the same protections apply. thank you
Permalink Submitted by Alan Spross on Tue, 2009-09-29 18:34
I hope Bruce Steiner sees this post, as he practices in NYS. I do not know how NYS deals with IRA distributions once they occur, even though there is excellent state creditor protection there for IRA accounts. The state of residence determines the creditor protection, not the state where the brokerage IRA is held. I also doubt the state where the taxable account is held would change anything.
A related question would be –
if the distribution can be attached, what happens if you immediately transfer it to another payee, eg. a medical bill? Can the creditor recover it or not?
Perhaps Bruce can comment on this.
Permalink Submitted by Bruce Steiner on Wed, 2009-09-30 02:27
See New York CPLR 5205(c) and (d)(1), set forth below:
(c) Trust exemption.
1. Except as provided in paragraphs four and five
of this subdivision, all property while held in trust for a judgment
debtor, where the trust has been created by, or the fund so held in
trust has proceeded from, a person other than the judgment debtor, is
exempt from application to the satisfaction of a money judgment.
2. For purposes of this subdivision, all trusts, custodial accounts,
annuities, insurance contracts, monies, assets or interests established
as part of, and all payments from, either any trust or plan, which is
qualified as an individual retirement account under section four hundred
eight or section four hundred eight A of the United States Internal
Revenue Code of 1986, as amended, a Keogh (HR-10), retirement or other
plan established by a corporation, which is qualified under section 401
of the United States Internal Revenue Code of 1986, as amended, or
created as a result of rollovers from such plans pursuant to sections
402 (a) (5), 403 (a) (4), 408 (d) (3) or 408A of the Internal Revenue
Code of 1986, as amended, or a plan that satisfies the requirements of
section 457 of the Internal Revenue Code of 1986, as amended, shall be
considered a trust which has been created by or which has proceeded from
a person other than the judgment debtor, even though such judgment
debtor is (i) in the case of an individual retirement account plan, an
individual who is the settlor of and depositor to such account plan, or
(ii) a self-employed individual, or (iii) a partner of the entity
sponsoring the Keogh (HR-10) plan, or (iv) a shareholder of the
corporation sponsoring the retirement or other plan or (v) a participant
in a section 457 plan.
3. All trusts, custodial accounts, annuities, insurance contracts,
monies, assets, or interests described in paragraph two of this
subdivision shall be conclusively presumed to be spendthrift trusts
under this section and the common law of the state of New York for all
purposes, including, but not limited to, all cases arising under or
related to a case arising under sections one hundred one to thirteen
hundred thirty of title eleven of the United States Bankruptcy Code, as
amended.
4. This subdivision shall not impair any rights an individual has
under a qualified domestic relations order as that term is defined in
section 414(p) of the United States Internal Revenue Code of 1986, as
amended or under any order of support, alimony or maintenance of any
court of competent jurisdiction to enforce arrears/past due support
whether or not such arrears/past due support have been reduced to a
money judgment.
5. Additions to an asset described in paragraph two of this
subdivision shall not be exempt from application to the satisfaction of
a money judgment if (i) made after the date that is ninety days before
the interposition of the claim on which such judgment was entered, or
(ii) deemed to be fraudulent conveyances under article ten of the debtor
and creditor law.
(d) Income exemptions. The following personal property is exempt from
application to the satisfaction of a money judgment, except such part as
a court determines to be unnecessary for the reasonable requirements of
the judgment debtor and his dependents:
1. ninety per cent of the income or other payments from a trust the
principal of which is exempt under subdivision (c); provided, however,
that with respect to any income or payments made from trusts, custodial
accounts, annuities, insurance contracts, monies, assets or interest
established as part of an individual retirement account plan or as part
of a Keogh (HR-10), retirement or other plan described in paragraph two
of subdivision (c) of this section, the exception in this subdivision
for such part as a court determines to be unnecessary for the reasonable
requirements of the judgment debtor and his dependents shall not apply,
and the ninety percent exclusion of this paragraph shall become a one
hundred percent exclusion;