Protection Of 401K Retirement Proceeds
A client recently withdrew large sums of money from his 401 k plan to pay living expenses. He deposited the money in his bank account. The client wants to know if the money is protected from creditors after it has been deposited in his bank account. The Florida statutes exempt many specific assets including retirement proceed and annuities. The annuity statute specifically exempts not only the annuity but the proceeds of the annuity. The statute protecting retirement funds does not address proceeds paid from retirement funds.
I conducted initial legal research while the client was in my office. I quickly found several bankruptcy cases which held that retirement proceeds are exempt. The courts reasoned that although proceeds are not mentioned in the statute the legislature intended to protect retirement money and that protection extended to proceeds deposited in financial accounts. There may be cases with opposite holdings. Florida courts interpret exemption statutes liberally for the debtor's benefit. More likely than not retirement proceeds would be protected from creditors.
posted by Jonathan Alper, asset protection and bankrutpcy lawyer, Orlando, Florida
Jonathan:
It has been my experience that once funds arrive in a judgement creditor's bank account, they may be attached regardless of the source of those funds. Therefore, retirement proceeds and other exempt funds are quite succeptable to attachment once converted or transfered into one's checking or savings account. I suppose that the attachment can be challenged in court, but it's best to prevent the attachment in the first place by not placing the funds where they can be easily discovered and seized.
Jonathan:
It has been my experience that once funds arrive in a judgement creditor's bank account, they may be attached regardless of the source of those funds. Therefore, retirement proceeds and other exempt funds are quite succeptable to attachment once converted or transfered into one's checking or savings account. I suppose that the attachment can be challenged in court, but it's best to prevent the attachment in the first place by not placing the funds where they can be easily discovered and seized.
I meant to say "judgement debtor's" bank account.
I want to know whats if a creditor have a judgement against you can they garnish your umemployment