D. James (Jim) Gehring Quoted in The New York Times
"Protecting Retirement Accounts From Creditors"

D. James (Jim) Gehring was quoted in the article, "Protecting Retirement Accounts From Creditors," which appeared in the April 2, 2009 issue of The New York Times. The article discussed how retirement accounts remain a very valuable asset to most people, even at today's depressed values, and for this reason you must protect them from creditors (which can include former spouses or people who have won lawsuits against you). According to Jim, you can start by understanding the exemptions in federal or state laws that may protect your retirement accounts. He explained that the good news is most employer-sponsored plans, including 401(k)s, are covered by the Employee Retirement Income Security Act (ERISA), and are completely protected from creditors, except when those creditors are former spouses or the I.R.S.

However, individual retirement accounts, such as an I.R.A., are not covered by ERISA. The article noted that for anything short of bankruptcy, state law determines whether I.R.A.'s are protected from creditors' claims. Jim advised that if, for example, you have been laid off or are retiring, rolling over assets from a qualified plan, like a 401(k), into an I.R.A. has estate-planning benefits. However, he warned that if you live in or are moving to a state where I.R.A.’s are not protected from creditors, you would be better off leaving the assets in the company plan.

Another warning Jim discussed was that if you are leaving a company that has a cash-balance pension plan, you should resist the temptation to withdraw the money in a lump sum, unless you need the money to live on. Upon withdrawal, the money would be exposed to creditors’ claims, and you would have to pay income tax on the full amount. Jim also noted that if you are returning to work after a period of unemployment and have rolled over an I.R.A. when you left your previous employer, most companies will allow you to transfer that money directly into their plans as you come on board. He advised that you might want to do that either for asset protection or to take advantage of investment offerings.