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Are 401(k) accounts exempt or considered part of bky estate?
First, David you didn't ask if the doctor was gay or straight.
Second, Jeff, get a very big retainer or don't write the letter.
Doctors often play with their retirement accounts and when they do they are often attacked successfully. Every single investment in pension had to be allowed. All of the uses of the pension money have to be allowed, or it just a savings account.
You need to send the doctor to a professional who defends retirement accounts. Only someone who defends these accounts knows what is really an a pension, and not just a doctor's play toy.
dennis
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Jake:
Take a look at section 522(b)(3)(C) and 522(n). Its pretty clear that 401(k)s (and a whole bunch of other tax exempt retirement accounts) are exempt up to $1,090,000. These exemptions are available to debtors even in an opt-out state like Calif.
Here is the better question for a client I have, who has a stunning retirement portfolio (a physician), virtually no other assets, and is staring down the barrel of a malpractice case that will likely exceed his med-mal coverage. If a chunk of those accounts are in ERISA qualified accounts they are not even part of the estate, right? Thus those accounts don't need section 522 exemption protections, right? So if my doctor has about $1.5 million in a retirement account that is ERISA qualified through his employer (a pension), and another $800K in non-ERISA accounts, but that ARE clearly exempt under section 522, he can pull the trigger on the Chapter 7, and keep all the retirement $$, if he gets whacked in the malpractice action, right?
I just have a hard time issuing an opinion to my client who has $2.3 million in the bank that he can file a Chapter 7 and keep it, but I think that this is exactly the law. Still, why do I feel like I need to call my own carrier before I put that in writing?
Thoughts?
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
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I have a PC looking to file Chapter 7. He has substantial assets which
wiped out all wildcard exemptions. Left unprotected are two 401(k)
accounts, one with Merrill Lynch under Employee Savings Plan for $24k, and
second with Principal Financial Group with vested balance of $6.5k and
ending balance of $8.5k. Given his total debt of over $400k, I need to find
out whether his 401(k) accounts are part of the bky estate, and if so,
whether they are fully exempt. If the 401(k)'s are not part of the bky
estate, I still need to list them, right?
Thanks for your help.
Jake
I have a PC looking to file Chapter 7. He has substantial assets which
wiped out all wildcard exemptions. Left unprotected are two 401(k)
accounts, one with Merrill Lynch under Employee Savings Plan for $24k,
and second with Principal Financial Group with vested balance of $6.5k
and ending balance of $8.5k. Given his total debt of over $400k, I
need to find out whether his 401(k) accounts are part of the bky
estate, and if so, whether they are fully exempt. If the 401(k)'s are
not part of the bky estate, I still need to list them, right?
Thanks for your help.Jake
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