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Subject:  Re: Co-mingling lump sum Date:  1/22/1999  1:55 PM
Author:  TMFPixy Number:  7984 of 75335

Greetings, Glange, and welcome. You asked:

>>I was told by one (and only one) financial planner that I should not co-mingle my retirement lump sum with any other tax deferred monies. The reason, he said, is in the case of a law suit, retirement monies cannot be attached by any court order while all other monies can. He gave the example of O.J. Simpson. If he had co-mingled his funds, he would have had everything taken away.

While I am not likely to be sued, it can happen to anyone. Has anyone heard of this? Is it anything to be concerned about?>>

If you receive a lump sum distribution and roll that to a "conduit" IRA (see my Foolish Retirement Plan Primer at for an explanation), the money is still in an IRA. IRAs are not protected from creditors as are employer-provided qualified retirement plans, so it's up to the individual states to provide that protection. Some exempt IRA assets and some don't. If your state is one that doesn't, then the only way to ensure that money is unavailable to your creditors is to leave it in the plan. And that means you don't get the lump sum distribution. So the real question is "Do you want the lump sum or not?"

