Retirement plans are protected from creditors in Florida, except when the “retirement plan” is not a retirement plan. Consider, for example, a client who told me about his “Senior Executive Retirement Plan (SERP).” Initially, I told him his plan is protected from creditors as a retirement or pension plan. Upon further review, it turned out that this employer benefit plan is not protected by Florida law.
Florida Statute 222.21 protects tax deferred retirement and pension plans including most IRAs. The statute refers to specific IRS Code sections, and the debtor’s benefit plan must fit under one of the listed Code sections. After our initial meeting, this client sent me written information about his SERP. It turned out that the Senior Executive Retirement Plan was actually a deferred compensation plan. The employer withheld parts of the client’s salary until after retirement. The company’s plan did not fall under any of the IRS deferred taxation retirement plans listed in the applicable Florida Statute 222.21. The client suggested that his deferred compensation might be protected under Florida Statute 222.11 which protects from garnishment wages of a head of household. His current compensation consist of wages, and therefore, he argued that the same compensation paid after his retirement is also a form of protected wages.
Florida courts have not protected money paid or payable to a debtor as deferred compensation. A Florida bankruptcy court rejected attempts to protect a debtor’s deferred compensation either as wages under F.S. 222.11 or as a form of a pension under F.S. 222.21. (221 B.R. 537). This example illustrates the importance of examining statements and underlying documents of your financial plans to make sure they are protected under Florida law.