Can a retirement plan protect your assets

Can a retirement plan protect your assets?

Setting up a solid retirement plan now is a crucial step toward ensuring financial security in the future. A successful investment strategy allows you to live comfortably long after you’ve left the workforce. Other than any homes or property you own, your retirement accounts are generally the most valuable assets you have. Given that fact along with the litigious nature of the country we live in, it’s vital to make sure that these assets are protected from creditors as well as individuals who have won a lawsuit against you.  

Your asset protection strategy depends on the type of retirement account you have. Employer-sponsored retirement plans, such as a pension or 401K, are legally protected from creditors by a law called the Employee Retirement Income Security Act (ERISA). However, in most states this protection does not extend to funds that are withdrawn in liquid form or those that have been rolled into an individual IRA. 

In California, if a judgment is won against you, the judge can use his or her discretion to shelter an amount deemed to be “necessary for support” from your creditors. 

One more reason to start now

So, can a retirement plan protect assets? Yes, if protecting assets is taken into consideration when creating the plan. Filing for bankruptcy or being the target of a lawsuit can completely disrupt your plans and deplete your funds. Although these events may seem improbable to you now, it’s far better to play it safe when it comes to long term financial security.

Make sure that you are informed on the pros and cons of all of your options when looking at providing for yourself and your family in the future. Planning for retirement is not a one-and-done operation. Your situation as well as tax laws will likely change along the way, and you may need to adjust your plan accordingly. For this reason, it makes sense to seek out financial help from a trusted advisor whose job it is to help you keep your assets protected.

Need advice?  

Confused yet? If this all seems complicated to you, you’re not alone. Fortunately, there are estate attorneys, like those at the Jeffrey M. Verdon Law Group, who are experts in asset protection services. They have the knowledge and resources to help you design a plan for your retirement accounts that includes the best strategy to protect the funds from creditors and litigation.

Call today to set up a consultation and get the peace of mind that comes with knowing you’re working with the best. 

Posted in Asset Protection, Client Alert.