Can either a SEP IRA or a SIMPLE IRA be attached in a bankruptcy or malpractice action, or are they safe from any financial judgments like these?

By Denise Appleby AAA
A:

State law determines whether or not an IRA, including SEP, SIMPLEs and Roth IRAs, can be attached in any bankruptcy proceedings, judgment or garnishment. The law varies among states and is subject to change at anytime.
The following are a few examples:
New York: The New York Statute protects Traditional, Roth and SIMPLE IRAs from bankruptcy proceedings. However, there have been at least two cases in which the court ruled that SEP IRAs are not offered the same protection; this resulted in differing legal opinions on whether SEPs are offered the same protection as Traditional, Roth and SIMPLE IRAs. Furthermore, the protection does not extend to amounts contributed to the account within 90 days after the judgment, or where judgment is made in cases of fraud.
Alabama: Traditional, SEP and SIMPLE IRAs are protected, but Roth IRAs are not.
New Jersey: Traditional, Roth, SEP and SIMPLE IRAs are protected, except where judgment is made in cases of fraud.
Utah: Traditional, Roth, SEP and SIMPLE IRAs are protected.
As you can see, the response will vary depending on the state. To be sure, consult with a lawyer to determine the law in your state and its applicability to the specific case.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What is the difference between a 408 (k) plan and a 401 (k) plan?

    Learn key differences between 401(k) and 408(k) plans. Employers provide different options to help employees save for retirement, ...
  2. Is a 408 (k) the same as a Simplified Employee Pension (SEP)?

    Find out the differences and the similarities between a 408(k) retirement plan and a simplified employee pension (SEP), and ...
  3. What are the 403(b) contribution limits?

    Determine whether 403(b) contributions meet federal guidelines. Contribution limits to this retirement plan are determined ...
  4. Can I roll over a 403b plan?

    Learn whether distributions from a 403(b) plan can be rolled over, where they can be rolled over to and what the income tax ...
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Gold IRA

    Definition of Gold IRA
  3. Bankruptcy Court

    What is bankruptcy court?
  4. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  5. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  6. Peri-Retirement

    A term for the period of time leading up to actual retirement. ...
comments powered by Disqus
Related Articles
  1. Top Financial Frights: Emergencies & ...
    Investing Basics

    Top Financial Frights: Emergencies & ...

  2. Preventing Medical Bankruptcy
    Budgeting

    Preventing Medical Bankruptcy

  3. Steps To Retiring With A Reverse Mortgage
    Retirement

    Steps To Retiring With A Reverse Mortgage

  4. When Your Job Offers An Awful Retirement ...
    Retirement

    When Your Job Offers An Awful Retirement ...

  5. Alternatives To Business Bankruptcy
    Entrepreneurship

    Alternatives To Business Bankruptcy

Trading Center