Federal & State Laws Around Asset Protection
Federal and state laws play a significant role in protecting your retirement assets. For example, some states exempt more significant amounts of equity in the retiree’s home or protect more types of retirement accounts. However, there are limits to these exemptions. For instance, qualified retirement plans are only protected up to a certain amount. In 2023, this amount is $1,512,350 per person. SEP IRAs, SIMPLE IRAs, and most rollover IRAs and 401(k)s are fully protected in certain situations. Additionally, non-qualified retirement plans, such as deferred compensation plans, are not protected by federal law and may be subject to creditor claims.
On the other hand, some states offer fewer asset protection benefits. In these states, retirees may need to implement additional strategies, such as creating trusts, to safeguard their assets from creditors. It’s essential to consult with a knowledgeable financial professional like Goldstone’s fiduciary advisors to determine the specific asset protection laws in your state.