IRAs and Creditor Protection

Hello

Can someone please provide some guidance on IRAs and creditor protection in California? And how it might be different than 401ks and/or annuities?

Thanks so much.



it is covered under the following code of civil procedure:  http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=00001-01000&file=703.010-703.150  In particular:  §703.140(B)(10)(E) 703.140.  (a) In a case under Title 11 of the United States Code,all of the exemptions provided by this chapter, including thehomestead exemption, other than the provisions of subdivision (b) areapplicable regardless of whether there is a money judgment againstthe debtor or whether a money judgment is being enforced by executionsale or any other procedure, but the exemptions provided bysubdivision (b) may be elected in lieu of all other exemptionsprovided by this chapter, as follows: (b) The following exemptions may be elected as provided insubdivision (a): (10) The debtor’s right to receive any of the following:   (A) A social security benefit, unemployment compensation, or alocal public assistance benefit.   (B) A veterans’ benefit.   (C) A disability, illness, or unemployment benefit.   (D) Alimony, support, or separate maintenance, to the extentreasonably necessary for the support of the debtor and any dependentof the debtor.   (E) A payment under a stock bonus, pension, profit-sharing,annuity, or similar plan or contract on account of illness,disability, death, age, or length of service, to the extentreasonably necessary for the support of the debtor and any dependentof the debtor, unless all of the following apply:   (i) That plan or contract was established by or under the auspicesof an insider that employed the debtor at the time the debtor’srights under the plan or contract arose.   (ii) The payment is on account of age or length of service.   (iii) That plan or contract does not qualify under Section 401(a),403(a), 403(b), 408, or 408A of the Internal Revenue Code of 1986.



Basically, in CA an IRA is only exempted to the extent necessary for the support of the IRA owner and his dependents, and CA has opted out of the federal bankruptcy Act protections that pertain to IRAs. For that reason, it is often recommended to keep retirement assets in qualified retirement plans that provide protection under the anti alienation clause of ERISA. 



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