The retirement plan was prepared by Christopher McDermott, vice-president of retirement and financial planning at mutual fund giant Fidelity.

The retirement plan is for a husband and wife, ages 51 and 49 respectively, with two kids in college and a third headed that way. The pair earn a seemingly comfortable $210,000.

Read the retirement plan at businessweek

Fidelity Investment Retirement Plans is a post from: Daily Investment Tips

Under ERISA, which is Federal law, defined contribution and defined benefit plans are protected from creditors in bankruptcy actions. Almost all US states extend this protection to their own courts in civil actions.

In one case, a California physician who operated his practice as a corporation filed for bankruptcy. The physician had accumulated nearly $2 million in a retirment plan. California like many other states exempts assets in a retirement plan from liquadation.

The physician’s creditors challenged the $ 2 million exemption on the grounds that it was unfair. The court agreed with the creditors that the exemption was unfair but the court found it was powerless to ignore the exemption. As a result the physician eliminated all of his debts and walked away from bankruptcy with $ 2 million. Had he withdrawn that $ 2 million from the corporation and invested it in a personal portfolio outside of a retirement plan, he would have lost the $ 2 million.

A word of note not all retirement plans are protected from creditors. A retirement plan is not protected under ERISA if it covers only owners and spouses. You need other participating employees.

Participants should include you, your secretary, accountant, even your janitor and almost everyone working for you.

How To Protect Your Retirement Assets From Creditors is a post from: Daily Investment Tips