The safest states to live in to protect Self-Directed Gold IRA funds are Arizona, Texas and Washington. Arizona state laws only allow a judicial creditor to request retirement funds during bankruptcy starting with the last 120 days of contributions, which means that all of the above has 100% legal protection. For the purposes of the BAPCPA, an accrued Self-Directed Gold IRA is a traditional or Roth IRA account that was originally funded through a transfer from a qualified retirement plan. This limited protection applies to the sum of all traditional and Roth Self-Directed Gold IRAs held by a specific person, not to each IRA account in isolation. While federal bankruptcy laws have long protected 401 (k) plans, pensions, and qualified employer-sponsored retirement plans and the like, IRAs only received federal protection with the enactment of the BAPCPA.
In addition, SEP and IRA SIMPLE accounts also enjoy an exemption, as do IRA account renewals for employment plans. Among a wide variety of bankruptcy reforms, including the intensification of requirements for filing for bankruptcy under Chapter 7, the BAPCPA introduced the first explicit federal bankruptcy protections for assets held in IRA accounts. There are many other types of exemptions to protect you from lawsuits, in addition to the protection of IRA creditors in each state. SEP IRAs, SIMPLE IRAs and most renewed IRAs are fully protected from creditors in the event of bankruptcy, regardless of dollar value.
Keep in mind that once asset reinvestment is complete, a reinvestment IRA is essentially no different from any other traditional or Roth IRA, aside from the source of the assets. The Simplified Employee Plan (SEP) IRAs and the Small Employer Employee Savings Incentive Compensation Plan (SIMPLE) are fully protected in the event of bankruptcy. 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. According to the BAPCPA, a properly executed reinvestment IRA that originates from a qualified retirement plan is fully protected from creditors in the event of bankruptcy.
To ensure that an accumulated IRA from a qualified retirement plan is protected in the event of bankruptcy, it's helpful to create a separate account just for those assets. To ensure the full protection of an accumulated IRA from a qualified retirement plan, it's a good idea to create a separate IRA for accumulated assets, unlike any other existing traditional or Roth IRA. With separate accounts, the source of assets is easy to document and asset funds are easy to trace in order to ensure all available bankruptcy protections. Below, you'll see the various exemptions for creditors per IRA judgment by state (at the time of writing).
