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

If you are being sued, or you can feel a claim coming, and most of what you have built sits in a 401(k) or an IRA, here is the sentence you came for. 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 edges of that protection are where people get hurt.

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?” No, not 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 a bit over $1.5 million. That number 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 alike. For a Florida resident, the federal cap simply does not bind.

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 honest 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 even enter a bankruptcy estate. So an employer plan is protected twice, once by federal law and once by Florida law, while an IRA relies on the Florida statute alone. For a Florida resident the practical result is the same, but the double layer is one reason not to rush money out of an old employer plan without thinking it through.

3. Inherited IRAs: Florida Fixed What the Supreme Court Broke

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

Florida saw this coming. In 2011, before the Supreme Court ruled, the Legislature amended the exemption statute to expressly protect a beneficiary’s account after the owner’s death, specifically including an inherited IRA. Because Florida residents use the Florida exemption rather than the federal one, the Supreme Court’s decision does not reach them. Florida is one of a minority of states that protect inherited IRAs by statute.

The planning point most people miss is that the protection follows the beneficiary’s state, not yours. Your IRA may be protected in Florida, but if your daughter in another state inherits it, her state’s law or the federal rule applies, and the account she inherits can be reachable by her creditors, 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. The Withdrawal Trap: Protection Stops at the Account Door

The exemption protects money inside the plan. Florida courts have held that once a distribution lands in your regular checking account, it loses the protection, and the six-month tracing rule that shields deposited wages does not extend to retirement distributions. Florida law does not yet clearly protect retirement money parked in an ordinary account, even a segregated one, and until the Legislature fills that gap the safe assumption is that withdrawn money is fair game.

Rollovers are the clean exception. 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 shield intact. The practical rule is to move retirement money custodian to custodian, and never leave it sitting in a general account if creditor protection matters to you.

5. What the Exemption Does Not Stop

• The IRS. A federal tax lien reaches both ERISA plans and IRAs. Neither Florida law nor ERISA protects against it. If you owe back federal taxes, your retirement account is not safe from that particular creditor, full stop.
• 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. The shield is against lawsuits, not against your own family-law obligations.
• Pledging the account. Listing an IRA as collateral on a loan can forfeit the exemption and trigger brutal tax consequences. A 2023 Florida fix keeps blanket “all assets” loan language from sweeping in retirement accounts, but older agreements may still bite, and a deliberate pledge is still a mistake. Never pledge a retirement account.

6. The Timing Trap: Cramming Money In After Trouble Starts

Florida has a fraudulent-conversion statute aimed at one move, turning non-exempt assets into exempt ones to dodge a creditor. Shoveling $200,000 from a brokerage account into a retirement plan the month after you are served is the textbook case; a court can unwind it 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 draw a sensible line. Balances built through ordinary saving before the claim arose are solidly protected; a Florida-based federal court 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 cleanest ongoing contributions because the money never passes through your hands. Rollovers are safe because exempt money is only changing addresses. What gets unwound is the large, defensive, eve-of-judgment deposit. If you are somewhere in the middle, get advice before you move money, not after.

What This Means for You

If your wealth lives in retirement accounts and you stay inside the lines (leave the money in the plan, roll it directly when you move it, never pledge it, and do not make panic deposits after a claim appears), Florida gives you protection most states cannot match. The planning work is at the edges. That means structuring beneficiary designations so the protection survives your death (a job 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 stress-testing the plan before anyone is suing you. Physicians and other high-liability professionals can see the whole structure in asset protection for doctors. We map all of it at the free consult and quote any planning work there, flat fee, before anything starts.

Frequently Asked Questions

Common Situations

The surgeon being sued. A physician facing a malpractice claim panics 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 the one move that would have hurt, cashing it out “to put it somewhere safe.” The money stays in the plan, where it is untouchable.

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 is exposed under federal law and her state’s rules, and she is mid-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 fix, courts read that kind of blanket language to sweep in a retirement account and forfeit its protection, and older agreements can still bite. 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, because in the 2009 case the account that lost was the one the son had chosen to set up, and today the protection follows only the 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 3, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. 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.