In the wake of the Coronavirus (Covid-19) pandemic,more businesses are struggling and many are ultimately going under. As a result, many self-employed individuals with solo 401k plans are rightfully concerned if their plans are protected from creditors under the employee Retirement Income Security Act (ERISA).
While solo 401k plans are fully protected from bankruptcy creditors pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, solo 401k plan are not protected from general creditors (lawsuits) under ERISA because solo 401k plans are for owner-only businesses. However, solo 401k plans are protected from creditors based on state law. Therefore, if you live in a state that affords self-employed plans such as SEP IRAs, SIMPLE IRAs and solo 401k plans protection from general creditors, you won't need to consider an LLC.
While solo 401k plans are fully protected from bankruptcy creditors pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, solo 401k plan are not protected from general creditors (lawsuits) under ERISA because solo 401k plans are for owner-only businesses. However, solo 401k plans are protected from creditors based on state law. Therefore, if you live in a state that affords self-employed plans such as SEP IRAs, SIMPLE IRAs and solo 401k plans protection from general creditors, you won't need to consider an LLC.
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