Hello,

Per my review of various Ed Slott articles, I wanted to confirm my understanding of creditor protection of IRAs, whether Traditional, Roth, SEP or Simple:

1. Any ROLLOVERS of prior ERISA plans into an IRA is 100% protected from creditors in the event of bankruptcy under FEDERAL law.

2. Any IRAs that are based exclusively on CONTRIBUTIONS (NOT ROLLOVERS) are covered up to $1,512,350 under FEDERAL law from creditors (outside of bankruptcy).

3. An individual w/ an IRA residing in a State such as NJ, which has its own State bankruptcy laws protecting ALL IRA funds in bankruptcy is NOT limited to the $1,512,350 in #2 above (in effect, the IRA owner would have 100% protection from ALL creditors, whether bankruptcy OR otherwise).

4. If an individual resides in a State w/ an ANTI-GARNISHMENT LAW, no IRA may be reached to pay off a NON-bankruptcy legal judgment. DO YOU MAINTAIN A LIST OF WHICH STATES HAVE AN ANTI-GARNISHMENT LAW?

If a state like NJ does NOT have an anti-garnishment law, then it’s possible CONTRIBUTIONS to IRAs, while protected 100% in the event of bankruptcy (under both Federal & State law), may NOT be 100% protected from creditors NOT related to bankruptcy, correct?

5. While Inherited IRAs are NOT protected from bankruptcy creditors per the 2014 Clark v. Rameker case, in the Case of In re: Dockins, No. 20-10119 (Bankr. W.D.N.C. June 4, 2021), the Bankruptcy Court in this instance ruled that that Inherited 401k WAS protected from bankruptcy creditors. However, this is just one case, in the State of NC, and solely involved bankruptcy (not non-bankruptcy creditors).

A. After affirming/correcting anything pertaining to the above, my question is, for clients w/ IRAs (both Rollover and Non-Rollover) that are NOWHERE near the $1,512,350 figure, is there any reason these IRAs cannot/should not be combined?

B. Also, assume that a client has both Rollover and Non-Rollover IRAs that would be close to, or exceeding, the $1,512,350 figure. In this case, would you always recommend segregating the Rollover from Non-Rollover (Contributory) IRAs, rather than commingling them, even if there would be support for the amount of the Rollover IRA sum prior to the date or combination?

C. Finally, a client w/ a Qualified Plan RMD MUST take the RMD prior to transferring these funds to a Rollover IRA (such as an old 401k Plan or using an in-service distribution) – since the 1st monies out must be the RMD. However, is this also the case w/ respect to a client w/ an Inherited Qualified Plan AND an Inherited IRA? Or, may both be combined, w/ 1 RMD taken by 12/31 of the year following the Acct. owner’s death?

Thank you!

Jason