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Tax

Oct. 15, 2024

Major changes to California retirement plan protections coming in January 2025

California law currently exempts tax-qualified retirement plans and their distributions from creditor claims, provided distributions are deposited into a segregated bank account. However, IRAs are only partially exempt based on a means test.

Jacob Stein

Asset Protection Attorney and Chair of the Private Client Practice, Aliant, LLP

Email: jacobstein@aliantlaw.com

Shutterstock

On Jan. 1, 2025, a new California law goes into effect, significantly reducing the protection currently afforded to tax-qualified retirement plans.

Currently, California law, like federal law, fully exempts from creditor claims the assets of a debtor in a tax-qualified retirement plan (think 401(k), defined benefit, or profit-sharing plans). California also currently fully exempts from creditor claims the distributions from these plans, so long as they a...

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