We Help Businesses Protect Assets From Creditors

As long as a your retirement plan is deemed to be “an ERISA Qualifed Plan” it is a great way to protect the assets inside of that plan from Creditors and Bankruptcy proceedings.

The two primary factors when determining whether a plan is “Qualified” according to ERISA is to ask two very simple questions.

1.  Does the plan cover “Employees”?

For the purpose of determining whether the plan covers employees, it does not include “self-employed” individuals (including partnerships, or LLC members being taxed as partners) or the sole owner of a corporation and his or her spouse.

2. Are the assets of the plan held in a trust?

This is pretty straight forward, “Does your plan have a trustee or not?”  Plans that typically do not qualify here include Individual IRA’s, SEP’s, SARSEPS, and SIMPLE IRA’s and occasionally 403(b)’s.

If the preceding analysis results in a determination that the individual’s benefits are being held by an ERISA qualified plan, there will be two important results. First, all state creditor processes will be preempted; i.e., they will be inapplicable. Second, the benefits will be excluded from the individual’s bankruptcy estate.  Stated differently, such ERISA qualified benefits will not be available to satisfy general creditor claims, whether pursued through state law procedures or through federal bankruptcy.