Non-ERISA Status and Bankruptcy
In 2005, Public Law 109-8 amended the Bankruptcy Code, by exempting most organized retirement plans, even those not subject to ERISA, and accorded them protected status, claimable as exempt property by a debtor declaring bankruptcy under the U.S. Bankruptcy Code.
Now, most pension plans have the same protection as an ERISA anti-alienation clause giving these pensions the same protection as a spendthrift trust. The only remaining unprotected areas are the SIMPLE IRA and the SEP IRA. The SEP IRA is functionally similar to a self-settle trust, and a sound policy reason would exist to not shield SEP IRAs, but many financial planners argue that a rollover (or direct transfer) from a SEP IRA to a rollover IRA would give those funds protected status, too.
Read more about this topic: Employee Retirement Income Security Act
Famous quotes containing the words status and/or bankruptcy:
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—Mary Stewart Van Leeuwen. Excerpted from, Gender Grace: Love, Work, and Parenting in a Changing World (1990)
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—Hannah Arendt (1906–1975)