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Old 05-15-2015, 07:27 PM   #21
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Originally Posted by explanade View Post
...........................

This reference seems to outline the laws in CA, in short 401k accounts are protected, IRAs are not:

Are My Retirement Accounts Protected From Judgment Creditors in California? | Nolo.com

.................................................. ......................

Did you notice this? from your link:
"Additional Roll Over Protection
If you roll over funds from an ERISA account or PRP into an IRA, those funds remain 100% exempt. This is the case even though the IRA is not fully exempt in California. As long as you are able to prove that the funds in your IRA originally came from an ERISA account or PRP, then you do not have to go through the “necessary for support” test."

Sounds good but I suspect the author is mixing up 2 concepts: ERISA is unconditionally protected (except for IRS and QDRO); the unlimited protection for ERISA funds in IRAs is under bankruptcy laws, I believe.......so perhaps not as good as ERISA.
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Old 05-15-2015, 10:44 PM   #22
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I've looked carefully at this and my interpretation of the statutory framework is in accord with this:

Quote:
Financial advisors are usually quick to recommend investors rollover their 401k/403b/etc. and consolidate them with an existing IRA. While this is usually a time and paperwork saving best practice, one should think twice if total qualified assets are near the $1 million threshold. If one rolls over a 401k account into a rollover IRA, it retains the unlimited bankruptcy protection afforded by ERISA.

However, if funds are commingled with a contributory IRA, they are more likely to be limited to the $1million protection afforded by BAPCPA. So, if you're a business owner, or in a profession at high risk for lawsuits, make sure you're not unknowingly giving up a valuable form of asset protection.
IRA Bankruptcy Protections | Seeking Alpha Thus, even though DW has way more than 1,000,000 in her Rollover IRA, I am not concerned--and intend to roll over her present 401k as soon as we retire. OTOH, there is a reason that we've segregated our original contributory accounts from the 1980s and will continue to do so.
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Old 05-16-2015, 01:45 AM   #23
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I've looked carefully at this and my interpretation of the statutory framework is in accord with this:



IRA Bankruptcy Protections | Seeking Alpha Thus, even though DW has way more than 1,000,000 in her Rollover IRA, I am not concerned--and intend to roll over her present 401k as soon as we retire. OTOH, there is a reason that we've segregated our original contributory accounts from the 1980s and will continue to do so.
It's that reference to bankruptcy that bothers me......my interpretation is that you have to file successfully for bankruptcy to get that protection. ERISA protects you unconditionally (w/ a few exceptions). I don't know if there is a practical effect tho......even if ERISA assets are protected, creditors can go after your non-ERISA assets if you don't file for bankruptcy.
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Old 05-16-2015, 11:10 AM   #24
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""CPAs should note the change that has occurred since the advent of the new bankruptcy law. Wealth residing in QUALIFIED RETIREMENT PLANS (pension, profit-sharing and section 401(k) plans) continues to possess the MOST EXTENSIVE DEBTOR PROTECTIONS BOTH IN AND OUTSIDE of a BANKRUPTCY proceeding. A distinct IRA into which qualified retirement plan assets are rolled, an asset frequently attacked under pre-act bankruptcy law, would constitute as strong a protected reservoir of wealth under the new post-act unlimited exclusion for such IRAs IN a federal BANKRUPTCY proceeding.(but note no mention about outside of bankruptcy).
Protect Retirement Assets
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Old 05-16-2015, 11:57 AM   #25
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It's that reference to bankruptcy that bothers me......my interpretation is that you have to file successfully for bankruptcy to get that protection. ERISA protects you unconditionally (w/ a few exceptions). I don't know if there is a practical effect tho......even if ERISA assets are protected, creditors can go after your non-ERISA assets if you don't file for bankruptcy.
kaneohe,

If I ever get into a situation in which I am liable to someone for more than my non-retirement account assets and they are aggressively undertaking collection efforts, bankruptcy will enter into the picture. First as a negotiating lever, then (if needed) as a fact. {excuse me while I knock on wood and !}

We've had a handful of individual clients who've had to go that route over the years after their businesses imploded in a flood of litigation and/or unpayable loans. (Real estate developers, mainly) Not a fun process; but, as it is designed to do, it permits you to get back on your feet with full possession of the statutorily permitted assets. Thus, at least in my eyes, having the rollover IRAs protected in those proceedings is what counts.

P.S.--As you note with "a few exceptions," even ERISA plans are not ironclad. We managed to get all assets out of both IRAs and a pension and profit sharing plan in one case. That situation, however, involved massive flouting of the self-dealing prohibitions and isn't going to arise in very many cases.
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Old 05-16-2015, 01:18 PM   #26
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kaneohe,

.................................................. ......

P.S.--As you note with "a few exceptions," even ERISA plans are not ironclad. ..................................
The few exceptions that seem to be mentioned are IRS/tax liens and QDROs.
Not afraid of IRS so all I need to do is treat DW well. After 40+ yrs, I hope
I've learned enough to do the latter so hopefully I'm in good shape.
I think it boils down to ERISA seems to have some additional benefits....whether they are practical benefits in the real world, I'm not sure.

The benefits often mentioned for IRAs......greater choices, lower cost, etc. don't
necessarily have benefits for me since my 401K seems to be reasonably priced and I just need a few low cost choices which I have. ymmv............
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Old 05-16-2015, 01:59 PM   #27
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The few exceptions that seem to be mentioned are IRS/tax liens and QDROs.
Not afraid of IRS so all I need to do is treat DW well. After 40+ yrs, I hope
I've learned enough to do the latter
so hopefully I'm in good shape.
I think it boils down to ERISA seems to have some additional benefits....whether they are practical benefits in the real world, I'm not sure.

The benefits often mentioned for IRAs......greater choices, lower cost, etc. don't
necessarily have benefits for me since my 401K seems to be reasonably priced and I just need a few low cost choices which I have. ymmv............
Amen on the treating DW right. (In my case though, she's the one with the bucks, so she better treat me right too!) Sounds like in your situation, not rolling over works well. DW's plan is definitely one we will get the money out of as soon as she exits, unless we succeed on our windmill tilting and get it changed. Arguably the most important acronym in personal finance: ymmv.
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rollover isn't the problem..
Old 05-17-2015, 08:22 AM   #28
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rollover isn't the problem..

OP..As others have said..the rollover isn't the problem..it's just the funds you're picking.

You sound like a great candidate for index-centric investing (also suggested to some extent by others here).

Here's some worthwhile reading:
https://www.bogleheads.org/wiki/Main_Page

Or cut to the chase (Fidelity has index funds to match any of the Vanguard index funds):
The Three Fund Portfolio - Bogleheads

Specifics on the 3 fund portfolio (note the Fidelity funds listed down below):
https://www.bogleheads.org/wiki/Three-fund_portfolio

The biggest decision you'll need to make is your asset allocation (72/25 equities/bonds, 70/30, 60/40..etc..). After that it's easy. Your fees will run less than 0.20%.

No muss, no fuss, and inexpensive.
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Old 05-17-2015, 09:23 AM   #29
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OP..As others have said..the rollover isn't the problem..it's just the funds you're picking.

You sound like a great candidate for index-centric investing (also suggested to some extent by others here).

Here's some worthwhile reading:
https://www.bogleheads.org/wiki/Main_Page

Or cut to the chase (Fidelity has index funds to match any of the Vanguard index funds):
The Three Fund Portfolio - Bogleheads

Specifics on the 3 fund portfolio (note the Fidelity funds listed down below):
https://www.bogleheads.org/wiki/Three-fund_portfolio

The biggest decision you'll need to make is your asset allocation (72/25 equities/bonds, 70/30, 60/40..etc..). After that it's easy. Your fees will run less than 0.20%.

No muss, no fuss, and inexpensive.
+1. Seems like the major firms now offer their own index mutual funds/ETFs.

Question, does your the 401k account offer a self-directed option? Might want to consider that.

Fund options recently changed in our 457b plan and all but one of the ERs went up so I was thinking of rolling over contributions to my IRA at the end of every year (the plan allows in-service withdrawals). However, our plan also offers a Schwab Self-Directed Brokerage Account (SDBA)/Personal Choice Retirement Account (PCRA) option. I was planning on just buying Vanguard index funds and/or ETFs on the IRA but learned Schwab has their own versions. ER for Schwab was around the same or ever so slightly lower than Vanguard's so in the end, I just went with the SDBA option instead of rolling over to IRA. Much less hassle and paperwork required. I could actually still get Vanguard ETFs. Just wasn't worth it to pay the $8.95 trading fee for each non-Schwab OneSource ETF since it's got a fairly small balance at the moment and I'm only contributing $5000 annually for now (will be increasing it every year along with my step increases thanks to a recent promotion).
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Old 05-17-2015, 10:04 AM   #30
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Protection fails when you do stuff like buy a house for your personal use using your IRA...at least those are the cases I have read about where the IRA assets are attacked.
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Old 05-17-2015, 01:17 PM   #31
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+1. Seems like the major firms now offer their own index mutual funds/ETFs.

Question, does your the 401k account offer a self-directed option? Might want to consider that.

Per a Fidelity guy I talked to, Fidelity & Vanguard had a war 5-6 years ago over which firm could offer the lowest cost index funds. I think he said Fidelity won, but I've never checked.

For the OP..my 401k is in Fidelity and the right 3-fund portfolio funds are not offered, but, oddly enough, the Vanguard Target funds are offered. The VG Target funds are made up of the same 3-4 funds that are used in the 3-fund portfolio..the key with the target funds is to pick the asset allocation you prefer rather than the target year. The equity-bond breakdown for each target fund is on the VG site. For example..I'll be retiring in the next year, but my money is in a 2020 Target fund as it has the 60/40 allocation I wanted. (the 2015 fund is about 50/50 I think)

If your 401k doesn't offer the VG Target funds, then look for Fidelity targets or assemble an appropriate allocation out of the index funds that are available.
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Old 05-18-2015, 12:10 AM   #32
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For those who are paranoid (enough), this site appears to present that you can set up a “CHECKBOOK” IRA, which invests in gold, real estate, or whatever else is not prohibited in the regulations…



http://www.augustagoldira.com/HSGI/?utm_source=E3LAND2015Mar10&utm_medium=email&utm_c ampaign=E3LAND2015Mar10
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