my IRA is protected after transferring the funds to my bank account?

[mohenen]

What is the name of your state? FL
I am judgment debtor (the creditor is my former friend) and I stopped working after 20 years of service and taking rest. I have some money in my traditional 403(b) and roth 403(b) and these plans are provided by my former employer. I also have some money in my personal Roth IRA (this IRA is not provided by my former employer and I accumulated money in this account before the lawsuit was filed). All the amounts together around 65K. I understood form the law below that these accounts are protected from the creditor. If I withdraw any money from any of these accounts and put it in my personal bank account(s) (without comingling with any other money) then whether that money is also protected from creditor?

The relevant law statute 222.11 http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.21.html explains
(1) Money received by any debtor as pensioner of the United States within 3 months next preceding the issuing of an execution, attachment, or garnishment process may not be applied to the payment of the debts of the pensioner when it is made to appear by the affidavit of the debtor or otherwise that the pension money is necessary for the maintenance of the debtor’s support or a family supported wholly or in part by the pension money. The filing of the affidavit by the debtor, or the making of such proof by the debtor, is prima facie evidence; and it is the duty of the court in which the proceeding is pending to release all pension moneys held by such attachment or garnishment process, immediately, upon the filing of such affidavit or the making of such proof.

(2)(a) Except as provided in paragraph (d), any money or other assets payable to an owner, a participant, or a beneficiary from, or any interest of any owner, participant, or beneficiary in, a fund or account is exempt from all claims of creditors of the owner, beneficiary, or participant if the fund or account is:

1. Maintained in accordance with a master plan, volume submitter plan, prototype plan, or any other plan or governing instrument that has been preapproved by the Internal Revenue Service as exempt from taxation under s. 401(a), s. 403(a), s. 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b), or s. 501(a) of the Internal Revenue Code of 1986, as amended, unless it has been subsequently determined that the plan or governing instrument is not exempt from taxation in a proceeding that has become final and nonappealable;

2. Maintained in accordance with a plan or governing instrument that has been determined by the Internal Revenue Service to be exempt from taxation under s. 401(a), s. 403(a), s. 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b), or s. 501(a) of the Internal Revenue Code of 1986, as amended, unless it has been subsequently determined that the plan or governing instrument is not exempt from taxation in a proceeding that has become final and nonappealable;

…..

….

 

[adjusterjack]

pensioner of the United States

Looks to me that the statute applies to employees of the federal government.

So, the answer to your question:

If I withdraw any money from any of these accounts and put it in my personal bank account(s) (without comingling with any other money) then whether that money is also protected from creditor?

I think no.

 

[mohenen]

Thank you. I read some postings in this forum and if I understood correctly, there is tenancy by entirety bank account for married couple in Florida and the money in that acount can be attached, only by the joint creditors of both the wife and husband. My wife has no judgment against her. If the money in my 403(b) is directly wire transferred to the tenancy by entirety account then will it be protected?

 

[adjusterjack]

My wife has no judgment against her. If the money in my 403(b) is directly wire transferred to the tenancy by entirety account then will it be protected?

Based on our recent discussions here, I would say yes. But please don't completely rely on what strangers on the internet are telling.

If you are going to transfer small amounts from your protected retirement accounts, and use the money for ordinary living expenses, you are probably OK.

If you are thinking of taking large amounts, it's probably not a good idea for a couple of reasons. You'll pay taxes on the money. And you'll be on the creditor's radar and give the creditor more reason to come after you.

Of course, the safer alternative is to use that money for paying your debt instead of trying to figure out how to hide the money from your creditor.

 

[mohenen]

Great, and highly appreciated.

 

[mohenen]

Another question I have

222.21(2)(c) http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.21.html

“Any money or other assets or any interest in any fund or account that is exempt from claims of creditors of the owner, beneficiary, or participant under paragraph (a) does not cease to be exempt after the owner’s death by reason of a direct transfer or eligible rollover that is excluded from gross income under the Internal Revenue Code of 1986, including, but not limited to, a direct transfer or eligible rollover to an inherited individual retirement account as defined in s. 408(d)(3) of the Internal Revenue Code of 1986, as amended. An interest in any fund or account awarded or received in a transfer incident to divorce described in s. 408(d)(6) of the Internal Revenue Code of 1986, as amended, is exempt upon the interest being awarded or received and continues to be exempt thereafter.”


I have an adult son living in Georgia. He has no lawsuit or judgment against him. He is 100% beneficiary of all my traditional and roth 403(b) plans and for my personal roth IRA as well. Upon my death, whether my current 403(b) and roth IRA will become inherited IRAs for my son? Or the laws of Georgia will determine on how my IRAs will be “owned” by my son? In either case, whether my current judgment creditor can grab any money from my 403(b) or roth IRA upon my death?

 

[adjusterjack]

Any accounts that are exempt from attachment under federal law will be exempt from attachment when you die because they will no longer be yours, they will belong to your son.

Make sure you have him properly designated as beneficiary and check that every couple of years to make sure it is still up to date.

Also make sure your son knows where you keep your financial records and who and how to contact the appropriately people quickly.

 

[mohenen]

Great, and highly appreciated again. This forum is a valuable resource.