Markola
Thinks s/he gets paid by the post
I would like to ask for some clarification about the liability protections of 401Ks (and their brethren like 403Bs) versus IRAs. Some opinions I've read, like this thread from 2007, seem to indicate that all is well because IRAs now have full federal protection up to $1M:
http://www.early-retirement.org/forums/f28/401ks-and-iras-and-lawsuits-29252.html
That's great except that we have north of that amount in our IRAs, as do lots of others here. Other links I've read on the interwebs indicate that, no, IRAs remain less protected than 401Ks from bankruptcy creditors (and I assume other legal claimants?) because they are subject to the laws of one's state of residence. See:
http://www.thetaxadviser.com/content/dam/tta/issues/2014/jan/stateirachart.pdf
We have $2 million in a liability policy but if there's a big legal vulnerability in IRAs, then that is rather important to know about. I don't trust insurance companies all that much either. Maybe I will roll our IRAs back into our 401Ks to sleep more soundly in our litigious society. Any insights are much appreciated.
http://www.early-retirement.org/forums/f28/401ks-and-iras-and-lawsuits-29252.html
That's great except that we have north of that amount in our IRAs, as do lots of others here. Other links I've read on the interwebs indicate that, no, IRAs remain less protected than 401Ks from bankruptcy creditors (and I assume other legal claimants?) because they are subject to the laws of one's state of residence. See:
http://www.thetaxadviser.com/content/dam/tta/issues/2014/jan/stateirachart.pdf
We have $2 million in a liability policy but if there's a big legal vulnerability in IRAs, then that is rather important to know about. I don't trust insurance companies all that much either. Maybe I will roll our IRAs back into our 401Ks to sleep more soundly in our litigious society. Any insights are much appreciated.