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 rest of this page is about the edges of that protection, because the edges are where people get hurt.
1. The Florida Rule: Unlimited, No Dollar Cap
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: 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
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: 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: 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.
Here is the planning point most people miss: the protection follows the beneficiary’s state, not yours. Your IRA may be bulletproof 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.
Your retirement account is most of your net worth?
Then the edges of this protection are worth a conversation. Book a free 30-minute consult; planning work is quoted there, flat fee, before anything starts.
Book your free consult4. 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: 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: structuring beneficiary designations so the protection survives your death, pairing the accounts with tenancy by the entirety and the other Florida exemptions, and stress-testing the plan before anyone is suing you. We map all of it at the free consult and quote any planning work there, flat fee, before anything starts.
Frequently Asked Questions
Is My 401(k) Protected From a Lawsuit in Florida?
Yes, and twice over. Florida law exempts tax-qualified retirement accounts from creditors with no dollar cap, and an employer 401(k) also carries its own federal shield: ERISA forbids the plan from handing your benefits to anyone but you. A judgment creditor in a Florida lawsuit cannot garnish or seize the money while it sits inside the plan. The protection has real limits, though: the IRS can reach it for federal tax debt, a divorce court can divide it, and money you withdraw into a regular bank account generally loses the shield.
Are IRAs Protected From Creditors in Florida?
Yes. Florida’s exemption covers traditional IRAs, Roth IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s, 457(b) plans, and other tax-qualified accounts, with no dollar limit. IRAs do not get the extra federal ERISA layer that employer plans have, so they rely on the Florida statute alone, but for a Florida resident that statute is enough: there is no cap on how much it protects.
Is There a Dollar Limit on the Protection?
Not in Florida. You may have read about a federal bankruptcy cap on IRAs (a bit over $1.5 million). That cap belongs to the federal exemption list, and Florida opted out of that list, so Florida debtors use Florida’s own unlimited exemption in both state court and bankruptcy. A $4 million IRA built through ordinary saving over the years is as protected as a $40,000 one.
Are Inherited IRAs Protected in Florida?
For a Florida resident, yes. The US Supreme Court held in 2014 that inherited IRAs are not protected under the federal bankruptcy exemption, but Florida had amended its own statute in 2011 to expressly protect a beneficiary’s inherited account, and Florida residents use the Florida statute. The catch is your beneficiaries: a child living in another state inherits under that state’s law or the federal rules, where the Supreme Court’s decision can leave the account exposed. Naming a properly drafted trust as the IRA beneficiary is the usual fix.
Does Money Stay Protected After I Withdraw It?
Generally no. The exemption protects money inside the plan. Once a distribution lands in your regular checking account, Florida courts have held it loses the protection, and the six-month tracing rule that applies to wages does not extend to retirement distributions. A direct custodian-to-custodian rollover is different: the statute says the exemption follows the money from one retirement account to another. If creditor protection matters to you, move retirement money by direct rollover and do not park it in a general account.
Can I Move Money Into My 401(k) or IRA After Being Sued?
Be careful. Existing balances built up before the claim arose are solidly protected, and rollovers between retirement accounts are safe because already-exempt money is simply changing addresses. But Florida has a fraudulent-conversion statute: stuffing non-exempt cash into an exempt account with the intent to dodge a creditor can be unwound, and the court can strip the exemption from what you put in. A large lump-sum contribution right after a lawsuit appears is exactly what that statute targets. Ordinary payroll deferrals are the cleanest; big defensive moves need legal advice first.
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.
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)
Updated on June 10, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. 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.