TAX BREAK

Protecting Retirement Accounts From Creditors

by Nick R. Taylor (Continued)

 

 

As a planning matter, this might make it wise for retirement account owners to keep separate the IRA rollover accounts from their non-rollover accounts and spend out of their non-rollover accounts (these being the only ones subject to the $1,000,000 limitation). Even this is a very long-range plan, however, given that the maximum amounts that can be contributed to an IRA, based up on $2,000 per year, would have required very healthy double digit rates of return from 1975 to current to begin to reach the $1,000,000 exemption figure. Finally, and still helpful for the owner of the account, the new federal exemptions apply whether the owner is electing federal exemptions or state law exemptions. 

 

In light of all of the above, it can be said that qualified plans and IRA accounts are now largely exempt from creditors (subject to the $1,000,000 limitation on non-rollover IRAs discussed above). Additionally, in the state of Nebraska, legislation is pending that would also grant an exemption from creditors of the cash value of life insurance and annuities up to $100,000. The Bill number is LB 465 and you can monitor its status at www.unicam.state.ne.us.

 

 

 

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