Asset protection for physicians: how Annex Wealth Management reads the rules

What does asset protection for physicians cover before any trust or LLC?

Asset protection for physicians usually starts with three layers, in order: malpractice and umbrella insurance pay first; accounts exempt by law come second, including covered ERISA plans, IRAs under bankruptcy and state rules, and the homestead; account titles and entities come last, with an attorney handling that legal work.

A verdict above policy limits, a personal guarantee on your practice loan, or a car accident involving a teenage driver can reach beyond the insurance layer. Annex Wealth Management opens the financial review with the monthly spending plan. Your savings are there to pay for that plan, and a protected account you cannot spend from does little for a family paying tuition.

Read the statute, not the paraphrase

“Retirement accounts are protected” leaves out the part that changes a physician's decision. ERISA's anti-alienation rule generally covers qualified employer plans, such as a practice 401(k) or a cash balance plan with employees, without a federal dollar cap. Exceptions include federal tax levies, a qualified domestic relations order (QDRO) in divorce, and criminal restitution. A brokerage account is usually reachable by a judgment creditor; home equity depends on the state's homestead exemption, which can be small or unlimited. A bankruptcy filed within 1,215 days of buying a home caps the exemption for that equity; check the current cap. Before comparing the rows, separate a rollover IRA from an inherited IRA. They do not carry the same federal bankruptcy treatment.

In federal bankruptcy, contributory traditional and Roth IRAs are exempt up to an inflation-adjusted cap; check the current figure. Employer-plan rollover money is not subject to that cap. Outside bankruptcy, state law decides whether a creditor can reach an IRA, and Roth accounts are not treated alike in every state. A physician who rolls a $300,000 practice 401(k) into an IRA for more fund choices may discover the tradeoff years later, when a judgment creditor's attorney lists that IRA in a post-judgment asset search. At that point, the state's statute decides whether the creditor can reach it. Annex Wealth Management checks the legal category before weighing account convenience. Every investment carries risk, including the chance of getting back less than you put in.

Does an inherited IRA keep the protection your kids expect?

An inherited IRA does not qualify as “retirement funds” under the federal bankruptcy exemption. Under the SECURE Act, most beneficiaries other than a spouse have 10 years to withdraw the full balance. The account can become taxable money exposed to creditors sooner than a child expects; an older estate plan may have assumed lifetime withdrawals.

Pull the beneficiary forms and have an estate attorney say whether naming a trust makes sense for your family. A widow or widower has a different option: they can move the inherited balance into an IRA in their own name, and it then follows their own-IRA rules. In divorce, a QDRO is the route for an ex-spouse to receive part of a 401(k).

Can Farid move brokerage money into his 401(k) before December 31?

Yes, if Farid's plan accepts roll-ins and payroll can withhold the deferrals by December 31; the cash needed for tuition in three years should stay accessible. A direct rollover from an IRA into the plan is not taxable, but it also changes the pro-rata calculation for a backdoor Roth IRA.

Farid, 51, and Siobhan, 49, are a hypothetical couple with one child starting college in three years. Farid is a general dentist with a four-chair practice set up as an S corporation; Siobhan runs the front office. They have $650,000 saved and Farid personally guarantees a $400,000 practice loan. Their money sits in three places: $300,000 in the practice 401(k), $130,000 in a rollover IRA and $220,000 in a joint brokerage account. The first calculation is $300,000 divided by $650,000, or 46% already under ERISA. If the plan accepts the IRA roll-in, $300,000 plus $130,000 equals $430,000; divided by $650,000, that is 66%.

For 2026, Farid can defer $32,500 and Siobhan $24,500, or $57,000 combined. When Siobhan reaches age 50, her available deferral rises to $32,500, so their combined amount becomes $65,000. Over three years, $57,000 plus $65,000 plus $65,000 equals $187,000. Add that to the original $430,000 under ERISA: $617,000 divided by $650,000 is about 95%, before growth. Payroll must take the deferrals by December 31; unlike IRA contributions, they cannot be made after year-end. Siobhan's catch-up begins in the calendar year she turns 50, while Farid's catch-up rises to $11,250 at ages 60 to 63.

The tax detail matters. Deferrals reduce taxable W-2 wages, but an S corporation owner's shareholder distributions do not count as compensation for plan deferrals; only W-2 salary does. If Farid's prior-year FICA wages exceeded $150,000, his $8,000 catch-up must go in as Roth. It remains protected under the plan, but it is not deductible. Before raising payroll deferrals, Annex Wealth Management lays out the monthly plan using the smaller take-home pay. Tuition due in three years stays in cash or the brokerage account; high-basis brokerage lots can be sold first if cash flow needs support, since selling other lots may realize gains. The practical rule: move toward the annual limit only with taxable money the monthly plan will not need in the next three years. The 2026 figures come from the IRS; check the current IRS limit in a later year.

Ask the plan administrator whether the plan is covered by ERISA

Ask the plan administrator whether the plan is subject to Title I of ERISA and accepts IRA roll-ins. Three answers should give you pause: “owner-only plan” means state law may govern protection outside bankruptcy; “governmental plan” points to state law too; and “non-governmental 457(b)” means the money is the hospital's asset and can be reached by its creditors. Also ask the brokerage custodian whether your state allows a joint account to be titled as tenancy by the entirety. Annex Wealth Management can place those answers beside your cash needs, but account ownership and exemption questions belong with an attorney.

Bring this question to Annex Wealth Management

Ask which accounts a judgment creditor could reach first, and how much of next year's saving can move into an ERISA plan without squeezing the monthly spending plan or tuition money. Bring each account's year-end statement and the practice loan's personal-guarantee terms; an asset protection attorney should review state exemptions, transfers and any trust or entity structure.