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Solo 401k Creditor Protection in Arizona
QUESTION:
I'm not to sure about my current financial situation so need to plan for the worst. Is a solo 401k plan protected from creditors as well as in in bankruptcy?
ANSWER:
Good question. Whether a solo 401k plan is protected from creditors, depends on your state of residence.
A solo 401k is 100% protected from creditors in the state of Arizona.
A solo 401k is also afforded bankruptcy protection which applies to all 50 states so yes.
Words of Caution
While a solo 401k is afforded both creditor and bankruptcy protection in Arizona, this may not be the case if the solo 401k plan gets tangled up in a prohibited transaction. Reason being, generally once a solo 401k plan is found to have engaged in a prohibited transaction, it is generally considered fully taxable from January 1 of the year of the first prohibited transaction.
To find out more about the solo 401k regulations, VISIT HERE.
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