Arizona law goes further by protecting assets from an individual retirement agreement (“IRA) by law.” Arizona law goes even further by protecting IRA assets from the beneficiary's creditors after the death of the original owner, provided that the account is treated as an inherited IRA or a Self-Directed Gold IRA. Only 401 000 assets can be affected by creditors and be bankrupt. While individual 401 000 plans are federally protected in the event of bankruptcy, protection from creditors falls at the state level. Therefore, whether your individual 401k plan is protected from creditors will depend on your state of residence. If you live in a state that doesn't allow individual 401 K plan creditor protection, one option is to get property insurance if you're investing in real estate.
Another option is to invest the individual 401k plan in a single-member LLC. Below, you'll see the various exemptions for creditors per IRA judgment by state (at the time of writing). In addition, SEP and IRA SIMPLE accounts also enjoy an exemption, as do IRA account renewals for employment plans. Clark focused on the characteristics of legacy IRAs that make them more than just “retirement funds.” Whether you have a traditional IRA, a Roth IRA, or both, you should keep in mind that creditor protection from an IRA varies by state.
There, the question was whether an inherited IRA was included in Section 522 (b) (C), which exempts “retirement funds” if they are exempt from taxes under specific provisions of the Internal Revenue Code. Willis borrowed funds from the Merrill Lynch IRA to purchase the transfer of Southwest's Ocean One real estate mortgage. According to lawyers, federal and state laws protect many types of retirement assets from creditors, and Arizona's safeguards are quite strong. See 11 USC 541 (b) (B) and states that ERISA plans and Section 414, Section 457 and Section 403 (b) are protected (nothing is mentioned about voluntary contributions of 401,000).
Section 33-1126 of the Arizona Revised Statutes specifies that money or other assets payable to participants or beneficiaries of various retirement plans are exempt from all claims made by the beneficiary or participant's creditors. As a general rule, the assets you accumulate in an individual retirement account, pension, or 401 (k) account are protected and beyond the reach of creditors. The district court ruled that inherited IRAs are exempt because they retain their status as retirement funds, but the U.S. Court of Appeals for the Seventh Circuit overturned that ruling.
This is for informational purposes with respect to the state's protection of creditors from an IRA and should not be considered tax or legal advice. Rameker case, in which a debtor (a bankrupt person) cannot protect a retirement account, the funds were inherited from his mother. In addition to creditor protection, another reason to do so is to delay distributions to your heirs, allowing IRA assets to accumulate or last longer. But if your IRA amounts to hundreds of thousands or millions of dollars, it might make sense, especially if the heirs live in other states.
