How to Guard Your Retirement Savings
The retirement assets of business owners can be just as vulnerable to lawsuits as your other assets. Fortunately, there are steps you can take to protect your retirement nest egg:
Structure your business so stakeholders are not personally liable. These options shield your personal assets from business lawsuits to a degree, some options include LLC and S Corporation.
Set up a retirement plan. 401(k) plans are largely protected from creditors by federal law but the protections for Individual Retirement Accounts (IRAs) vary from state to state, so make sure you know the rules.
Asset Protection Trust
Create an asset protection trust to help guard your retirement assets. The trust can own almost any type of asset, including investment accounts. The assets placed in the trust are separate from the donor (in this case you), so if you’re sued, these assets can’t be pursued.
Insurance also can safeguard your retirement. Professional liability (malpractice) insurance, known as errors and omissions coverage, can be useful if you own a legal, medical or technology business among others.
Personal umbrella insurance, which is extra liability coverage beyond the limits of your home and auto insurance, also can help protect retirement assets. But some policies don’t apply to business-related liabilities, so look carefully.