mcck Posted February 23, 2007 Report Share Posted February 23, 2007 We have bunch of charged off accounts that are 1 year old since last default and are all with CAs. If they got a judgement can they go after retirement invenstments and or 529 programs? Link to comment Share on other sites More sharing options...
Recovering Attorney Posted February 23, 2007 Report Share Posted February 23, 2007 If you are the owner of the 529 account, they probably could take it or force a liquidation, since you can cash it in anytime. However, there may be law in your state that protects the 529 account from execution. Rerirement accounts like IRAs and 457 accounts are exempt until you take a distribution. Link to comment Share on other sites More sharing options...
mcck Posted February 23, 2007 Author Report Share Posted February 23, 2007 Where do I possibly look to find out on the 529 program? If that is the case and 529 programs could be liquidated, I am better off to invest in an IRA so I can protect the college savings for my 2 kids. Link to comment Share on other sites More sharing options...
AISLE4 Posted February 23, 2007 Report Share Posted February 23, 2007 If any of your charged off accounts are business accounts, those creditors can get to your IRA. Most states protect IRA's up to a particular amount. In NY it's one million. But, again, a business creditor can get to your IRA even if it has a balance of $1. Link to comment Share on other sites More sharing options...
walterg55 Posted February 23, 2007 Report Share Posted February 23, 2007 I am not an attorney but I do work in relevant areas. 1. They cannot touch IRA/ Qualified Retirement assets in most states but you should check state laws, here in Texas a creditor cannot touch them. 2. They can attach distributions from IRA/ Qualified Retirement assetsI would suspect that they could get to 529 plan assets since the Principal has full control of the funds and the children are beneficiaries. Nothing prevents a principal from taking money out and using it as he/she sees fit subject only to tax liability if not used for educational expenses. Link to comment Share on other sites More sharing options...
Methuss Posted February 23, 2007 Report Share Posted February 23, 2007 The US Supreme Court ruled on April 4, 2005 that IRAs, 401k and other retirement accounts are off-limits for debt collection and are given the same status as social security or pension benefits in that regard.So not only can they not touch the accounts, they cannot touch any money distributed from those accounts...just like they can't seize cash resulting from a social security distribution. Link to comment Share on other sites More sharing options...
mcck Posted February 23, 2007 Author Report Share Posted February 23, 2007 I will try to find more on the IN statues, but I think a 529 plan would be considered a retirement or college fund investment. I am being too cautious that a CA could sue, win suit, get a judgement and ultimately get hold of a 529 plan. Thank You all for your responses. Link to comment Share on other sites More sharing options...
Recovering Attorney Posted February 24, 2007 Report Share Posted February 24, 2007 Chances are the creditor isn't smart enough tto go looking for the 529, but you are vulnerable there. Aisle> Where in NY law does it say you can attach an IRA over 1MM? Link to comment Share on other sites More sharing options...
AISLE4 Posted February 25, 2007 Report Share Posted February 25, 2007 R.A., it's not NY specific (my mistake). New bankruptcy law offers protection for all retirement assets rolled over to IRAs and for up to $1million in contributory and Roth IRA assets. AND 529s are protected. In cases of bankruptcy, contributions made to a 529 plan at least a year prior to filing are protected. Link to comment Share on other sites More sharing options...
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