If you live in New York and a creditor gets a judgment against you, that judgment creditor will probably not be able to collect from your retirement account. Retirement accounts are exempt (with a few with limited exceptions) in New York regardless of whether they are ERISA retirement accounts (such as 401ks and profit-sharing plans) or non-ERISA accounts (such as IRAs).
(Learn about other ways that judgment creditors can collect from your income and assets.)
Federal Protection for ERISA-Qualified Retirement Accounts
Federal law prohibits judgment creditors from going after money in a pension plan that was set up under the Employee Retirement Income Security Act (ERISA). To be protected against creditors, your ERISA account must be either a qualified retirement plan or an employee welfare benefit plan covered by ERISA.
Examples of ERISA-qualified pension plans and benefit plans covered by ERISA include:
- 401(k) accounts
- pension and profit-sharing plans
- group health and life insurance plans
- dental and vision plans, and
- HRAs, HSAs, and accidental death or disability benefits.
There are circumstances when a judgment creditor may be able to get to your ERISA account, such as for a domestic relation order for spousal or child support (called a “QDRO”), or an IRS tax garnishment.
To learn more about ERISA-qualified retirement accounts, their protection from judgment creditors, and the exceptions to that protection, see Can Judgment Creditors Go After My Retirement Accounts?
New York Law Also Protects Non-ERISA Retirement Accounts
In many states, judgment creditors can get money in non-ERISA. That is not the case in New York. New York exempts "all trusts, custodial accounts, annuities, insurance contracts, monies, assets or interests established as part of, and all payments from, either any trust or plan, which is qualified as an individual retirement account” by IRS tax-exemption law. This language is quite broad. New York's protection can extend to accounts inherited by other persons, even those who were not the spouses of the original account owner.
Common types of non-ERISA accounts that are usually exempt from collection by New York judgment creditors include:
- IRAs, Roth IRAs and SIMPLE IRAs
- SEP and Keogh Plans
- owner-only or single-participant retirement plans rolled into an IRA
- 403(b) plans for employees of a public school or university
- plans that do not benefit employees, or “employer-only” plans, and
- government or church plans
Exceptions: When a Judgment Creditor Might Get Your Non-ERISA Accounts
As with many laws that seemingly offer blanket protection, there are some exceptions.In this case, your IRA or other non-ERISA account may be subject to attachment by a judgment creditor in the following situations:
- contributions you made into the IRA within 90 days before the creditor filed a claim that resulted in a judgment against you (called interposition), or
- contributions made with the intent to keep that money away from a judgment creditor (called a fraudulent transfer or fraudulent conveyance).
In addition, as with ERISA accounts, your IRA may not be exempt from claims for child or spousal support under a QDRO.