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2.) More legal protections for 401Ks than IRAs

Not anymore. This used to be true, but the laws changed sometime within the last decade or so. IRAs have the same creditor protections that 401Ks have.


Hi Ira,

I looked into this a few weeks ago and my understanding at the time was that the additional creditor protection is due to Federal bankruptcy law and thus only applies to protection in bankruptcies. ERISA (the Federal law that protects 401Ks) provides additional protections, e.g. if you get a court judgement against you. In the latter scenario it is still state law that applies to IRAs, which in California appears to provide inferior protection compared to most other states.

Since my understanding of this might be totally wrong, it would be great, if you could elaborate on the protections of IRAs vs. 401Ks a bit more.

Thanks so much,
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