QP Rollover to IRA as conduit- protected from creditors
Question- the client has a Profit Sharing Plan that is terminating- there is a large balance to rollover to an IRA- will that asset be protected from creditors as long as we do not commingle it with any other IRA funds- is there something in writing to provide to the client as well.
Thank you.
Permalink Submitted by Alan Spross on Fri, 2008-05-09 20:58
This issue can become rather complicated, but check the appropriate state protection of IRAs per links following. The basic federal protection only applies pursuant to a federal court Bk filing, and the limits of protection are 1,000,000 for all IRAs except rollover (conduit ) IRAs that will not be subject to a limit. When funds are commingled in an IRA account, the actual limit of protection may depend on documenting the amount that traced from a rollover, but this has not yet been tested and therefore it is safer to avoid commingling.
There is NO protection against marital settlement or IRS claims in any event.
http://www.assetprotectionbook.com/state_resources.htm
http://www.fpanet.org/journal/articles/2005_Issues/jfp0805-art6.cfm