tag:blogger.com,1999:blog-5621914599310831423.post3856930912067790545..comments2024-03-01T03:44:39.796-08:00Comments on The Retirement Café: Is My Retirement Plan Protected?Dirk Cottonhttp://www.blogger.com/profile/05616143752082768155noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5621914599310831423.post-83720023650244944952016-03-14T14:28:30.774-07:002016-03-14T14:28:30.774-07:00In answer to your first question, as we lawyers li...In answer to your first question, as we lawyers like to say, it depends. If you live in NC or in another state with unlimited protection for IRAs and rollover IRAs that represent savings made toward your retirement (as distinguished from an inherited IRA), your rollover IRA funds are protected. If you took them as a distribution and commingled with non-retirement savings, then they would no longer be protected, but I understand your question to be with a rollover rather than a distribution. If you live in a state that does not have unlimited or other favorable protection by state law, you will still have protection in the rollover fund in bankruptcy up to $1,245,475 aggregate. Kim K. Steffanhttp://www.steffanlaw.comnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-60000294927394029312016-03-12T09:39:55.602-08:002016-03-12T09:39:55.602-08:00Dirk, excellent post, and timely for us. We are i...Dirk, excellent post, and timely for us. We are in the process of purchasing a home (after looking for 7 yrs yes 7 yrs). I needed to access some funds, and decided my 401K was the best option. I had heard/read that as you mention segregating the money rolled from my 401K to Trad Rollover IRA account would continue the ERISA protections provided the 401K. This is what I plan to do, and should I subsequently convert some of this Trad IRA money to a Roth Rollover IRA I have already established a segregated Roth Rollover account separate from my annual Roth contribution account. <br /><br />Unfortunately, when Ann took a new position about 18 yrs ago she rolled the money she had in her prior employer's 401K into a Traditional IRA account, but then as she converted it to a Roth over time she rolled the money into an existing annual contribution Roth account thereby commingling the the prior ERISA 401K money with her annual Roth contribution account. She lost the ERISA protection. This was a great article Dirk. Thanks for providing a lot of useful information in one article. BradAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-58760935483395800152016-03-12T08:23:49.959-08:002016-03-12T08:23:49.959-08:00Your first question is a legal issue, so perhaps K...Your first question is a legal issue, so perhaps Kim will respond. Based on what I have read, you have not lost all protection but you will have the headache you describe should it come to that – hence, my recommendation to create a separate account for rolling over ERISA plans and to not commingle the funds. I'm not a lawyer and this shouldn't be construed as legal advice.<br /><br />I assume you are referring to an umbrella liability policy. I have one. They're quite affordable. It will protect you from liability, not creditors. If the debt is due to a judgment from an insured liability, a policy should protect you, but it wouldn't protect you, for example, from huge medical bills.<br /><br />Bottom line, I like umbrella liability policies to protect against potential judgments, but they don't insure bankruptcy risk from other sources.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-88149149167213913132016-03-12T07:19:00.073-08:002016-03-12T07:19:00.073-08:00This is a great topic - one that I have fretted ov...This is a great topic - one that I have fretted over from time to time, each time becoming frustrated to the point of inaction. I am curious about the protection for rollovers from a 401(k). I had a 401(k) once upon a time, but have consolidated the collection of funds I once had into a few Vanguard funds. I believe most of the traditional IRA account came from that rollover, but I had some traditional IRA accounts outside of my employer plan at one time. Have I lost all protection by combining protected and unprotected retirement funds? If not, yay - but I imagine that determining the current value from each source is a headache I will contemplate only if I find myself in the position of needing to know. <br /><br />Also, I have contemplated buying an umbrella policy in order to protect my retirement funds but am wary of the insurance industry in general, I'm wondering if anyone has experience or insight on this strategy?Anonymousnoreply@blogger.com