Are deferred compensation plans creditor proof?
Posted on Jan 4, 2016 4:20am PST
Yes. And you can defer a significant portion of your compensation under
a non-qualified retirement or deferred compensation plan. Deferred compensation
plans are safe from your own creditors, but not the claims of your employer’s
creditors. So consider this before you invest in a deferred compensation
plan. There are, however, methods for an employer to lawsuit-proof a deferred
compensation plan. For instance, the employer can hold the deferred compensation
funds in an international ‘rabbi’ trust. This trust would
then invest in one or more ‘charging order only entities,’
such as an international LLC to insulate the funds from the employer’s
creditors.