Creditor Protection of Employer Plan Rollover to IRA

My understanding is that if Employer plan funds are rolled over to an IRA and not mixed with contributory funds that it would maintain it’s federal unlimited creditor protection and not be subject to a limit such as 1 million (I’m in Calif) that a contributory IRA would be. Can you cite the code on that. I need to reference it for a CPA I’m working with.

Lee



A rollover IRA has the same unlimited protection as an employer plan for federal bankruptcy purposes only. The reference is the federal bankruptcy act – it was enacted in 2005 or 2006 I believe.

Creditor protection is a slightly different story. In CA you can protect from creditors only the amount needed for your retirement – whatever that is. There is no specific dollar amount specified so each IRA would be a facts and circumstances situation if creditors are after it. The $1,000,000 that you referenced is also part of the federal bankruptcy law – it applies to all IRAs other than rollvor IRAs.



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