Is My 401(k) or IRA Protected From a Lawsuit in Florida?

A judgment creditor in Florida cannot take your tax-qualified retirement account, no matter how large it is. Florida’s exemption has no dollar cap. The exemption does have limits, and the sections below take each one in turn, including withdrawals, federal tax liens, pledged accounts and deposits made after a claim arises.

1. Can a Judgment Creditor Go After My IRA in Florida?

A common question I hear is, “In Florida, can a judgment creditor go after my IRA?” The answer is no, while the money sits inside the account. Florida law exempts money in tax-qualified retirement plans from claims of creditors, with no limit on the amount. The exemption covers the accounts most people actually have, including traditional and Roth IRAs, SEP and SIMPLE IRAs, 401(k)s and other qualified employer plans, 403(b)s, and 457(b) plans. A retiree with $3 million in an IRA built through a career of ordinary saving is as protected as someone with $30,000.

You may have read about a federal cap on IRA protection in bankruptcy, currently more than $1.5 million. The cap belongs to the federal exemption list, and Florida opted out of the federal list. Florida debtors use Florida’s own unlimited exemption instead, in state court and in bankruptcy. For a Florida resident, the federal cap does not apply.

2. Employer 401(k)s Get a Second, Federal Layer

People ask me whether a 401(k) is protected from lawsuits in Florida, and the answer is that it is protected twice. An employer plan such as a 401(k), 403(b) or pension is also governed by ERISA (the federal pension law), which contains an anti-alienation rule, meaning the plan cannot pay your benefits to anyone but you. The US Supreme Court has held that ERISA plan assets do not enter a bankruptcy estate. An employer plan is therefore protected by federal law and by Florida law, while an IRA relies on the Florida statute alone. For a Florida resident the practical result is the same, and the second layer is one reason to think before moving money out of an old employer plan.

3. How Florida Protects Inherited IRAs

In 2014 the US Supreme Court held that an inherited IRA is not “retirement funds” under the federal bankruptcy exemption. The Court reasoned that the money was the parent’s retirement rather than the child’s, because the beneficiary cannot add to the account, must draw it down, and can empty it at any time. Under the federal exemption, an inherited IRA is exposed.

Florida answered the question three years earlier. In 2011 the Legislature amended the exemption statute to expressly protect a beneficiary’s account after the owner’s death, naming the inherited IRA specifically. Florida residents use the Florida exemption rather than the federal one, so the Supreme Court’s decision does not reach them.

The protection depends on the law of the state where the beneficiary lives. Your IRA is protected in Florida, but if your daughter in another state inherits it, her state’s law or the federal rule applies, and her creditors may be able to reach the inherited account, including in a divorce or a bankruptcy. The usual fix is naming a properly drafted trust as the IRA beneficiary instead of the child outright. We cover how that works in what happens to your IRA when you die and beneficiary designations.

4. Withdrawn Money Loses the Protection

The exemption protects money inside the plan. Federal courts in Florida have held that a distribution loses the protection once it lands in your regular checking account, and the six-month tracing rule that protects deposited wages does not extend to retirement distributions. Florida law does not clearly protect retirement money held in an ordinary account, even a segregated one, so the safe assumption is that a creditor can reach withdrawn money.

A direct rollover keeps the exemption. The statute says assets do not stop being exempt because of a direct transfer or eligible rollover, so moving an old 401(k) into an IRA, or one IRA to another custodian, keeps the protection. If creditor protection matters to you, move retirement money custodian to custodian, and do not hold it in a general account.

5. What the Exemption Does Not Stop

• The IRS. A federal tax lien reaches both ERISA plans and IRAs, and neither Florida law nor ERISA protects against it. If you owe back federal taxes, the IRS can reach your retirement account.
• Divorce and family support. A divorce court can divide a retirement account with a qualified domestic relations order (a QDRO, the court order that carves out a spouse’s share), and support obligations can reach benefits the exemption would stop a commercial creditor from touching. Florida’s statute also says the exemption does not apply against a qualified domestic relations order.
• Pledging the account. Listing an IRA as collateral on a loan can forfeit the exemption and cause serious tax consequences. A 2023 Florida amendment keeps blanket “all assets” loan language from sweeping in retirement accounts, but agreements signed before the amendment may still reach them, and a deliberate pledge can still forfeit the protection. Do not pledge a retirement account.

6. Moving Money Into a Retirement Account After a Claim

Florida has a fraudulent-conversion statute aimed at one move, turning non-exempt assets into exempt ones to avoid a creditor. Moving $200,000 from a brokerage account into a retirement plan the month after you are served is the standard example. A court can unwind the conversion and strip the exemption from what you put in, and the statute reaches conversions made up to four years back, whether the claim arose before or after the conversion.

The cases separate ordinary saving from a deposit made to beat a creditor. Balances built through ordinary saving before the claim arose are protected. The federal appeals court that covers Florida upheld a surgeon’s multimillion-dollar IRA against a malpractice creditor because it was built over years, long before the claim. Payroll-withheld 401(k) deferrals are the safest ongoing contributions because the money never passes through your hands. Rollovers are safe because the money was exempt before it moved. What gets unwound is a large deposit made on the eve of a judgment. If your situation falls between those two, get advice before you move money.

What This Means for You

If most of your wealth is in retirement accounts, Florida protects all of it with no dollar cap, as long as you leave the money in the plan, roll it directly when you move it, never pledge it, and make no deposits to avoid a claim. The planning work is structuring beneficiary designations so the protection survives your death (which we coordinate with your financial advisor), pairing the accounts with tenancy by the entirety, exempt annuities and life insurance, and the other Florida exemptions, and reviewing the plan before anyone sues you. Physicians and other high-liability professionals can see the whole structure in asset protection for doctors. We review all of it at the no-cost consult and quote any planning work there as a flat fee before anything starts.

Frequently Asked Questions

Common Situations

The surgeon being sued. A physician facing a malpractice claim is worried about her $2 million 401(k). We walk through the two layers of protection, confirm the balance was built years before the claim, and stop her from cashing it out “to put it somewhere safe,” which would have ended the protection. The money stays in the plan, where the malpractice creditor cannot reach it.

The out-of-state daughter. A Naples retiree names his daughter in Ohio as his IRA beneficiary. His account is protected in Florida, but the inherited IRA she would receive may be exposed under her state’s rules and the federal bankruptcy rule, and she is in the middle of a divorce. We restructure the designation to a trust for her benefit so the protection survives the handoff.

The rollover done right. A retiree leaving his employer wants to consolidate an old 401(k) into his IRA while a business dispute is brewing. Because a direct rollover moves already-exempt money between exempt accounts, it is safe even with the dispute pending. We have the custodians transfer it directly so the funds never touch his checking account.

The old loan file. A small-business owner signed a bank loan years ago with a security agreement pledging “all assets” as collateral, never imagining that boilerplate could reach her IRA. Before Florida’s 2023 amendment, courts read that kind of blanket language to sweep in a retirement account and forfeit its protection, and agreements signed before 2023 can still reach the account. Pledging an IRA can also trigger severe tax consequences on top of the lost exemption. We read the loan documents she signed before the fix, flag the exposure, and work on getting the account released from the collateral description.

Sources of Law

• Fla. Stat. §222.21 (unlimited exemption for tax-qualified retirement accounts; §222.21(2)(c) protects rollovers and, as amended in 2011, inherited accounts); §222.20 (Florida’s opt-out of the federal bankruptcy exemptions); §222.30 (fraudulent conversion of non-exempt assets into exempt ones). Clark v. Rameker, 573 U.S. 122 (2014) (inherited IRAs unprotected under the federal exemption); Patterson v. Shumate, 504 U.S. 753 (1992) (ERISA anti-alienation); In re Goldenberg, 218 F.3d 1264 (11th Cir. 2000) (pre-claim IRA balance protected); Universal Physician Services, LLC v. Del Zotto (M.D. Fla. 2016) (distributions lose protection). (retrieved 2026-06-10)
• The inherited-IRA paragraph and the case behind it: Robertson v. Deeb, 16 So. 3d 936 (Fla. 2d DCA 2009) (an inherited IRA held outside the exemption as then written, because the statute protected only the original fund or account); ch. 2011-84, Laws of Fla. (adding what is now §222.21(2)(c), stated to be remedial and retroactive to every inherited IRA); §222.21(2)(d) (no exemption against a qualified domestic relations order or a surviving spouse’s elective-share contribution order). Read in full from the official opinion and statute text (retrieved 2026-09-03).

What the Inherited IRA Case Shows

I have seen this go wrong far more often through a missing signature than through a bad plan. With a retirement account the plan is the statute, and the statute is generous, so the losses I see come from the paperwork at the two moments the money moves, when the owner dies and when the beneficiary decides how to receive it.

The Florida case that decided what the words meant started with a promissory note. A man borrowed money, did not repay it, and the lender took a judgment against him for more than $188,000. His father died and left him an IRA, and the brokerage sent the son a letter and a fact sheet with two choices. He could move the money into an inherited IRA and take at least the yearly minimum, or he could draw the whole account down within five years under the death rule. He chose the inherited IRA, and the brokerage retitled it in his name as beneficiary with his father named as the decedent. The lender then served a garnishment on the brokerage, which reported $75,372 in cash and securities in that account. The son claimed the retirement exemption. The trial judge read the statute, which protected the original fund or account that the owner had maintained, and said in plain words that the account in front of him was not an IRA in the sense the legislature meant, because the son could not add to it, had to take money out of it, and paid no early-withdrawal penalty when he did. In August 2009 the Second District agreed, and the $75,372 stayed within the garnishment’s reach.

My reading of that case is that the son lost on the words, and the legislature agreed with him about the words two years later. In 2011 Florida added a paragraph saying that an exempt account does not stop being exempt at the owner’s death by reason of a direct transfer or eligible rollover, naming the inherited IRA specifically, and calling the change remedial and retroactive to every inherited account. When the United States Supreme Court went the other way in 2014 for the federal bankruptcy exemption, Florida already had its own answer. In reading the 2009 opinion against the paragraph written to overrule it, I have a few take-home points.

The first is the transfer. The 2011 paragraph protects money that arrives by a direct transfer or an eligible rollover, and a beneficiary who instead takes a check, or elects the five-year payout into a checking account, has left the paragraph behind, because withdrawn money loses the exemption on the day it lands. Practice pointer. When a parent dies, the beneficiary’s first call is to the custodian to set up the inherited account by direct transfer, and the signature on the distribution form is the one I ask about before any other, because a beneficiary with a creditor problem can lose the whole account with that one signature.

Second, the words that decide the case belong to the state where the beneficiary lives. The 2009 case was decided on Florida’s words, and the 2011 fix rewrote Florida’s words. A beneficiary in another state inherits under that state’s exemption, and in a bankruptcy the federal rule from 2014 treats the inherited account as ordinary money. Practice pointer. An owner who wants the protection to survive the handoff names a trust drafted for retirement accounts as the beneficiary rather than the child outright, and that is the design I use for a child who lives out of state, is mid-divorce, or runs a business. Coordinating the beneficiary designations with the trust is part of the Complete Trust Plan, which is a flat fee from $3,200 for one person and $4,500 for a couple.

Third, the statute names the creditors it does not stop, and one of them is a surviving spouse. The exemption does not apply against a qualified domestic relations order, and it does not apply against a court order fixing a surviving spouse’s elective share and the contribution owed toward it. Practice pointer. In a second marriage where the IRA is most of the estate, the spouse’s elective share reaches the account unless it was waived in writing, so the waiver in a prenuptial or postnuptial agreement is the document that protects the children named on the beneficiary form. Avoid receiving an inherited account as a distribution check. The son in the 2009 case lost an account he had set up as an inherited IRA, and under the 2011 paragraph the protection follows only money that moves custodian to custodian. A trust for the son as beneficiary of his father’s IRA would have held the $75,372 inside a spendthrift trust, where Florida’s trust code stops a beneficiary’s ordinary judgment creditor from attaching it, and the father could have added that trust to his plan for the cost of the trust plan above.

The honest limit is that the 2011 paragraph has not, as far as I have found, been applied by a Florida appellate court since it was written, so its retroactive language and its reach for a beneficiary who moves away have not been tested in a published Florida decision. I read the words as written, and I plan for the beneficiary who might one day live somewhere else.

Kevin D. Klagge, Esq., admitted in Florida since 2012. Each case described above is a decision of a Florida court rather than a matter handled by this firm. Past results do not guarantee a similar outcome.

Updated on September 23, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. General information about Florida law, not legal advice, and no attorney-client relationship is created. Creditor protection depends on your facts and timing, and no result is guaranteed. Do not send confidential information until we have agreed to represent you.