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|Subject: Re: 457 exposure to creditors||Date: 9/2/1998 5:18 PM|
|Author: TMFPixy||Number: 5304 of 77082|
Greetings, Dennis, and welcome. You wrote:
My spouse is a county employee and she opened a 457 account a little over a year ago. Never having heard of the strange beast that is the 457, I read the literature pretty closely and had some questions for the plan representative. One of them dealt with how much exposure 457 account funds have to county creditors. Visions of Orange County CA were fresh in my mind at the time. The representative said something to the effect that legislation had just been passed (Jan 1997) that would protect these accounts. I am unsure whether he was talking about state legislation (Wisconsin) or federal legislation. And based on a reading of TMFPixy's Retirement Plan Primer, I am beginning to wonder if this legislation exists at all. Call me paranoid, but I do not relish the thought of having what is essentially our money dangling in the breeze that way. Any thoughts out there, or should I actually use the phone to call the plan administrator? Thanks in advance.
One major drawback to a 457 plan is the money must remain subject to the claims of the employer's creditors. I was asked a similar question some time back on the AOL site about this piece of legislation as it pertains to governmental employees. I was unsuccessful in finding anything on the subject anywhere. Therefore, so far as I know nothing has changed in that regard. If the county goes bust, the 457 plan monies will be subject to the claims of creditors.
If someone knows different, pretty please give me the pertinent legal reference/cite so I can verify it.
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