Are IRAs protected in MI from a lawsuit?
I often hear comments on this discussion forum about IRAs not being protected from lawsuits and/or creditors the way 401(k) balances are protected from lawsuits – depending on the state one lives in.
I live in Michigan.
I am a physician and am always concerned about lawsuits.
I have a 401(k) account through the company I own with several partners.
I also have an IRA account.
Does anyone know if my IRA account balance has the same protection from lawsuits and/or creditors in Michigan that my 401(k) account has?
Ultimately, I’m wondering about the advisability of taking an in-service distribution from my 401(k) and rolling it over to my IRA.
Can my IRA be taken in a lawsuit while the 401(k) would be protected in a lawsuit?
Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2019-05-14 17:08
Michigan fully protects IRAs in most situations. Exceptions include amounts contributed within 120 days of filing BK, non deductible IRA contributions, or orders from a domestic relations court. IRAs are not protected in divorces anyway, but this exception implies that these courts in Michigan might render broader orders. You would have to check with local counsel regarding the scope of such possible orders.
Permalink Submitted by Robert Wright on Tue, 2019-05-14 17:18
Thanks.