Inherent Protection—Qualified Retirement Plans

Pension Services specialists help clients with plan designs and qualification issues, counting on legal counsel with extensive ERISA experience and actuarial resources well versed in large and small defined benefit plans. Their expertise enables doctors to take full advantage of the tax law changes enacted recently under the Economic Growth and Tax Relief and Reconciliation Act (EGTRRA), as well as the Pension Protection Act of 2006.

These laws increase doctors’ retirement savings opportunities to as much as $200,000 or more annually in tax-deductible net practice earnings inside IRS-approved plans. Just as important, however, is the fact that qualified retirement plans, by their very nature, are protected by ERISA law. Meaning, doctors who participate in such retirement savings vehicles will enjoy tremendous protection from creditors.

Moreover, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes significant changes to bankruptcy laws affecting retirement plans and IRAs. The Act exempts qualified retirement funds from the bankruptcy estate, including Code Section 401(a), 403 and 457 plans and IRAs, subject to a $1,000,000 limitation on contributory IRAs. The Act also states that all retirement funds that are tax-exempt under Sections 401, 403, 408, 408A, 414, 457 and 501(a) of the Code are beyond the reach of creditors in bankruptcy.

Due to the fact that qualified retirement funds are exempt from the bankruptcy estate (other than contributory IRAs over $1 million), as well as from judgment creditors, maximizing your retirement assets is a critical component of sound financial planning.