Safety of various buckets from "attachment"

[Finance Dave]

Sometimes I think about worst-case scenarious. How are various accounts/income streams/assets protected from various "events"?

Stocks/bonds/mutual funds/annuities - what if the company (such as FIDO) were to go bankrupt?

What items are "attachable" in a lawsuit? For example, if I was sued, and lost...could they take...

My 401k?

My Annuity purchased from my 401k money?

My house?

A DB pension?

An IRA/Roth?

What about catastrophic medical costs? What of the above can they take to get me down to the limit to go on Medicaid?

I do have an executive insurance policy for $1M...and am considering increasing it to $2M due to the growth of our assets over the past 5 years.

 

[donheff]

And your mission should you choose to accept it is to research those questions and post answers.

 

[pb4uski]

If FIDO were to go bankrupt, then your investments should be safe as they are supposed to be segregated from FIDOs finances (similar to being held in trust). The most likely outcome would be that the funds would be transferred to another provider who would pay FIDO for the transfer. That said, fund companies require very little capital and are quite profitable, so the likelihood of a fund company going bankrupt is remote.

If the insurer issuing the annuity went into receivership, then the state guaranty funds would step in (up to certain limits).

 

[rescueme]

Sometimes I [-]think[/-] worry about worst-case scenarious.

Fixed it for you ....

From my/DW's perspective, spending well over six decades "going around the sun", we find that our greatest fears from a younger age were never realized.

Problems? Of course - that's life. However, I feel it's how you approach those problems - if they happen, and at the time they happen is much more important than worrying about them for a great deal of your life.

Just my/our POV...

 

[FIREd]

Based on my research (circa 2010):

401Ks are safe from creditors in all cases.

IRAs? Based on Federal law, IRAs should be safe in case of bankruptcy up to $1M (though there are questions regarding the interpretation of the law). In case of a liability lawsuit, however, state law prevails. In some states like TX, IRAs are safe. In others like CA, they are not.

House and annuities? The level of creditor protection depends on your state. I get very little protection on these where I live.

DB Pensions? don't have one, so never researched it in depth. But it is my understanding that pensions are pretty well protected (unless you take the lump sum).

 

[kaneohe]

Based on my research (circa 2010):

401Ks are safe from creditors in all cases.

IRS? angry ex-spouses?

 

[FIREd]

IRS? angry ex-spouses?

Those situations didn't apply to me, so...

 

[John Galt III]

IRS? angry ex-spouses?

A 401k is not safe from a spouse in a divorce, at least in my state.

 

[rescueme]

A 401k is not safe from a spouse in a divorce, at least in my state.

Nor is a rollover 401(k) to an IRA, even if happily married. DW still spending funds from "mine" ...