State Laws and Retirement Asset Protection

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#006699" TEXT="#080000" bgproperties="fixed" background="0be285a1erlcgo.gif"> <div> <FONT SIZE="5" COLOR="#FFCC66" FACE="Arial" ><B>NONQUALIFIED PLANS</B></FONT><B>     |     </B><A HREF="index.htm" TARGET="_top" TITLE="NONQUALIFIED PLANS"><U><B>home</B></U></A><B>                              </B><A HREF="id19.htm" TARGET="_top" TITLE="TABLE OF CONTENTS"><U>TABLE OF CONTENTS</U></A>   |   <A HREF="id48.htm" TARGET="_top" TITLE="FINAL EXAMINATION"><U>FINAL EXAMINATION</U></A></div> <div> <A HREF="id22.htm" TARGET="_top" TITLE="NONQUALIFIED PLANS "><U>NONQUALIFIED PLANS </U></A>   |   <A HREF="id23.htm" TARGET="_top" TITLE="DEFERRED COMPENSATION"><U>DEFERRED COMPENSATION</U></A>   |   <A HREF="id24.htm" TARGET="_top" TITLE="EXECUTIVE BONUS PLANS"><U>EXECUTIVE BONUS PLANS</U></A>   |   <A HREF="id26.htm" TARGET="_top" TITLE="GROUP CARVE OUT PLANS"><U>GROUP CARVE OUT PLANS</U></A>   |   <A HREF="id25.htm" TARGET="_top" TITLE="TAKEOVER DEFENSES"><U>TAKEOVER DEFENSES</U></A>   |   <A HREF="id89.htm" TARGET="_top" TITLE="REVIEW QUESTIONS"><U>REVIEW QUESTIONS</U></A>   |   <A HREF="id50.htm" TARGET="_top" TITLE="PRINTABLE VERSION"><U>PRINTABLE VERSION</U></A></div> <div> </div> </td> </tr><tr> <td valign="top" width=210 BGCOLOR="#FFCC66" TEXT="#080000" background="0bdd2c00dkelyh.gif"> <div> <A HREF="http://www.wallstreetinstructors.com" TARGET="_top" TITLE="http://www.wallstreetinstructors.com"><U><IMG SRC="0caaf630.gif" border=0 width="175" height="99" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <div> copyright © 2002-2007 Wall Street Instructors, Inc.  All rights reserved.  </div> <bR> <div> <TABLE BORDER="2" CELLPADDING="2" CELLSPACING="1" WIDTH="164" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" BGCOLOR=#FFFFFF > <tR> <tD VALIGN=TOP HEIGHT= 20 ><NOBR><div> <A HREF="mailto:instructor@wallstreetinstructors.com" TARGET="_top" TITLE="mailto:instructor@wallstreetinstructors."><U><B>E-Mail An Instructor</B></U></A></div> </NOBR></tD> </tR> </TABLE></div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>Module 1</B></div> <div> <B>MODULE 1 TITLE</B></div> <div> <B>__________________</B></div> <bR> <div> <A HREF="id65.htm" TARGET="_top" TITLE="NONQUALIFIED PLAN ADVANTAGES"><U><B>NONQUALIFIED PLAN ADVANTAGES</B></U></A></div> <div> <A HREF="id67.htm" TARGET="_top" TITLE="NONQUALIFIED PLAN DISADVANTAGES"><U><B>NONQUALIFIED PLAN DISADVANTAGES</B></U></A></div> <div> <A HREF="id68.htm" TARGET="_top" TITLE="TYPES OF NONQUALIFIED PROGRAMS"><U><B>TYPES OF NONQUALIFIED PROGRAMS</B></U></A></div> <div> <A HREF="id91.htm" TARGET="_top" TITLE="Review Questions Module 1"><U><B>Review Questions Module 1</B></U></A></div> <bR> <bR> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <I><B>State Laws and Retirement Asset Protection</B></I></div> <bR> <bR> <div> Although a creditor may not be able to directly get to the funds if they are protected under the Employee Retirement Income Security Act (ERISA), the creditor may still attempt to attach, levy, execute, or garnish any amounts received by the plan participant. The only thing that can possibly stop a creditor from doing so is a state law. (Of course, some types of creditors cannot be prevented from getting access to these funds at all.)  So the last battle to protect retirement assets from judgment creditors is waged at the state level.</div> <bR> <div> States are generally barred by federal law from taxing retirement income of its former residents or nonresidents who earned income in the state. A new law, enacted in 2006, clarifies that state taxation of retirement income is limited to the state where the retiree resides. This treatment applies whether the retirement payments are made to a retired employee or to a retired partner.</div> <bR> <div> State laws protecting retirement assets from creditors come in the following two varieties:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.gif" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">state retirement plan exemption statutes </div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.gif" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">general wage garnishment statutes that operate similarly to state exemptions (although with garnishment statutes only a percentage of a distribution may be exempt) </div> <bR> <div> Asset protection consultants suggest many convoluted ways to protect your assets. As in other areas, the best suggestion is usually the one that is the simplest.</div> <bR> <div> One of the important considerations to make in the retirement planning process is where to retire. In deciding where to retire, one of the factors to consider is whether a state's laws (including its asset protection laws) are favorable to retirees. Businesses looking to locate operations in a particular state weigh such factors, so why shouldn't you?</div> <bR> <bR> <div> <B>Florida Retirement Asset Protection Laws</B></div> <bR> <div> Florida laws protect <I><B>qualified</B></I> retirement and profit-sharing plans, except for payments required under a Qualified Domestic Relations Order (QDRO) — that is, an order of separation or a divorce decree. Also protected are:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.gif" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">U.S. government pension funds received by a debtor within three months prior to execution, attachment, or garnishment, to the extent necessary for maintenance of the debtor or the debtor's family; </div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.gif" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">state retirement system benefits; and </div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.gif" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">county officers' and employees' retirement system benefits. </div> <bR> <div> Please note: nonqualified plan assets are not protected, per se — although <I><B>insured</B></I> nonqualified plans, by virtue of protections offered insurance products, may offer some level of safety.  </div> <bR> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <TABLE BORDER="2" CELLPADDING="2" CELLSPACING="1" WIDTH="76" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" BGCOLOR=#FFCC66 > <tR> <tD VALIGN=TOP HEIGHT= 23 ><NOBR><div> <A HREF="id67_creditor_protection.htm" TARGET="_top" TITLE="NONQUALIFIED PLAN DISADVANTAGES"><U><B>BACK </B></U></A></div> </NOBR></tD> </tR> </TABLE></div> <div> <I><B>  </B></I></div> <bR> </td> </tr></table></body>