Retirement Options for the Self-Employed

If you're self-employed, you have access to multiple retirement accounts, including a SEP IRA, a SIMPLE IRA. and, if you run your business just by yourself, an individual 401k. But how much asset protection do you really have with these retirement options? I can't vouch for the accuracy of the information below, because it's from 2005, but the basic information appears to be useful:

http://www.financewin.com/html/Taxes/200511/IRA-Protection-10193.htm

Because I save a lot of money in my retirement accounts, I've always been concerned about what would happen if I somehow received a judgment against me. Perhaps I need not have worried.

On October 17, 2005, the bankruptcy reform law, formally named The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (11 USC 101), went into effect and apparently protects most retirement accounts.

SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

   (a) In General.--Section 522 of title 11, United States Code, is
amended--
           (1) in subsection (b)--
                   (A) in paragraph (2)--

[[Page 119 STAT. 63]]

                         (i) in subparagraph (A), by striking ``and''
                     at the end;
                         (ii) in subparagraph (B), by striking the
                     period at the end and inserting ``; and'';
                         (iii) by adding at the end the following:
           ``(C) retirement funds to the extent that those funds are in
       a fund or account that is exempt from taxation under section
       401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
       Code of 1986.''

Basically, it appears the bankruptcy law allows you to protect most retirement accounts against creditors when you declare bankruptcy. For more information, you should contact a CPA or tax attorney.