Answers in Legal

The previous 2 advisers are correct. Your 401k account is protected from the company's creditors. However, the normal procedure will be for the company to terminate the plan. The termination will be completed by a third party administrator (TPA). It is often difficult for the TPA to get paid their fee when a bankruptcy is taking place which could drag on the termination. If the plan is not terminated and you are still employed, you may not be eligible for a distribution.

Read your summary plan description. If you are over age 59 1/2, you may be able to take an in-service distribution, meaning a distribution while you are working. If the plan does not allow for it, you will need to wait for the termination to be completed or until you terminate employment.

Keep your most recent statement. The company does not own your investment, so it is not vulnerable to their creditors. At the close of the plan, you will have the ability to roll over to an independent advisor that you choose. I suggest you find one while you are waiting. At plan termination, your company will send you paperwork, possibly directing you to a new advisor of their choosing. Your new advisor (that you have chosen) can help you understand your options and get all the paperwork straightened out.

The good news is your company doesn't own your 401(k). So even if the company goes bankrupt, you will be able to keep the vested portion of your 401(k) assets. Vested assets are typically any contributions you have made. Employer matching programs will often have vesting requirements around the money the employer contributes. These requirements can be based off your length of employment with the firm or other factors.
You may want to look at your most recent 401(k) statement to find the plan administrator. The plan administrator services the plan and will have the specifics regarding your 401(k) and your options to opt out.

Kathleen, I can't verify the credibility of the following forum but it sounds as if there quite a few people like yourself in the same situation:

http://www.topix.com/forum/com/pop/TUA1CRMRQ1DSJLKF5

According to the forum it doesn't look like there has been any resolution as of August 2012. I will continue to research the subject and will be sure to update you if I come across any new, relevant information.

You need to be concerned about this and do everything you can to stop it from bleeding through to your credit report. But I think Honda is trying to scare you by claiming it is already has, and you can confirm that by accessing your Government-mandated free credit report at https://www.annualcreditreport.com.

Since you co-signed the loan, you are on the hook if your friend doesn't pay up/solve the lease overages. Start by letting your friend know this is putting you in a really difficult position. Then make Honda aware of the back story, and especially that their may be a pending lawsuit. Ask them to first solve that discrepancy before coming back to you for payment. Finally, recognize that you may actually have to pay up. That's the whole idea of co-signing a loan...your friend didn't have the credit score to afford the car, but with yours as a guarantee, that made the lease possible.

Kay - I am very sorry that you are going through this.

Where you live, your total assets, and how your assets have grown during your marriage are all factors that are likely to affect your negotiating position. The fact that you have additional beneficiaries on your 401k is not not likely to make any difference. Retirement assets are not ring-fenced in a divorce proceeding like they are in a bankruptcy.

You should start by speaking to a divorce attorney and consider bringing in a financial advisor to provide advice and counsel about asset valuations. What I mean by that is, a nominal dollar in a 401k plan is worth less than a dollar in a bank account because of the deferred tax liability in a pre-tax account. At the same time, the issue is not as simple as multiplying the 401k balance by 1 minus the tax rate to obtain an after-tax value, because there is an embedded value in maintaining tax deferred status for as long as possible.

A financial advisor, working alongside your legal advocate, can help ensure that you are treated fairly during the settlement process, and may be able to improve the terms of your settlement through his or her understanding of asset valuation, investment taxes, liquidity, and the time value of money. Good luck to you and please feel free to post back with any additional questions.

If you are currently married, the spouse will receive the proceeds, unless they have signed a spousal consent form giving up their entitled benefit.

I would like to encourage you to seek the advice of an attorney and accountant to make sure that your estate is directed to the beneficiaries of your intentions. They will encourage you to look at all beneficiary forms, such as life insurance and retirement accounts, and update provisions in your will.

David G Niggel

http://www.keywealthpartners.com

Hello Sheila, Before I answer this question - I must say that this is definitely a legal question, and, as such, you should seek personalized legal advice on the issue. However, I CAN share with you my own professional EXPERIENCE in dealing with trust accounts that my firm manages.

First I want to clarify a few things in your question. The TRUSTEE is the person IN CHARGE of making decisions for the trust. Generally it is not a child (but can be, if the child referenced is an adult). Based upon your question, it is likely that the type of trust you are referencing is what is known as a QTIP trust - a Qualified Terminable Interest Property Trust. Typically, this is used when a husband and spouse have children from a previous marriage. Let me create an example that we see most commonly:

Dad has divorced Mom (or she passed away) and he has remarried. When he dies, he wants to take care of his new wife while she is alive - but pass the remaining assets to his children. Essentially, he wants to prevent his new wife from remarrying and her new husband from inheriting the assets - essentially disinheriting you and your siblings - but he wants her taken care of for her life. This desire is VERY common. This control (and guarantees) requires the use of a trust - a simple will just won't do the trick.

So - Dad dies. The surviving spouse (his 2d wife) is generally the INCOME BENEFICIARY of the trust (she can take income from it). Likely she can get money from the trust for her health, maintenance, education, and support (HEMS). The REMAINDER BENEFICIARIES (who gets whatever remains) would be his children. In this instance, the trustee (the person in charge) may be the surviving spouse, or there may be a third party such as a trust company, an attorney, or a bank that acts as the trustee, depending upon who Dad had appointed when he and the attorney wrote up the trust.

It sounds like you have one of these, or something similar to it. Generally, one does not see the remainder beneficiary (child) as the trustee since it is a conflict of interest and puts he beneficiaries at odds with each other. Usually, the income beneficiary (surviving spouse) is not the trustee either but I believe that structure is possible (but not recommended).

Simple answer to your question - YES - the trust document can (and often does) require the trustee to keep the details of trusts secret. This is not only to preserve the privacy of the family, but also to have the children pursue productive lives and careers instead of relying upon the trust for their future income. The income beneficiary may have needs which drain the trust - health care, long-term care, and other needs often legitimately and through no fault of their own, drain down trusts so that there is nothing left. Were the children to have relied on the existance of an imagined inheritance instead of pursuing successful careers or managed their finances thriftily, they might end up retiring in poverty, which is likely NOT what Dad would have wanted.

Again - seek legal advice. The only way to know for sure is to get a copy of the trust document itself - and take it to a TRUST lawyer licensed to practice in the state in which the trust was created. Ask your attorney if you actually have a right to see the document - or if it can be witheld from you. Trust laws vary from state to state - so making sure the attorney you consule with has relevant experience is important.

You can obtain an EIN for free from the IRS. The quickest way is by telephone or fax-back service. I would obtain the EIN now, as you will have an obligation to pay registration fees and taxes whether or not you have opened a bank or brokerage account. Most of the forms will ask for it. Good luck to you.

There seems to be a pretty good web resource at - http://www.qdropedia.com/ I have not used it for this purpose, but I believe you should be able to get what you need there. 1. Select the state-specific QDRO form that best suits your needs. Getting the right form is easy. First, browse the QDRO forms categories that appear below. After clicking the appropriate category, you will be directed to a menu of states. Select your state, and you will then be ready for step two. 2. Download the state-specific QDRO form that you have selected - all forms are available for immediate download upon approval of your credit card payment. You can also choose to receive a hard copy at no additional cost. 3. In most situations, after downloading your form, you will merely need to fill in the blanks. Because all of our QDRO forms are in MSWord format, they are easy to edit and modify to fit your individual needs.

Remember, this is a legal document and it is state specific so I HIGHLY encourage you to seek professional assistance from an attorney specializing in Divorce law in your state. It is easy to make mistakes in this area so be sure you review everything you sign carefully and preferably with your Divorce attorney.