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457(b) Payouts

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Once a 457(b) account holder retires he/she must elect to receive a lump so or periodic payments. If periodic payments are elected can the account holder's creditors reach the balance that is not yet paid out, i.e. is the unpaid balance still protected from attachment under ERISA or Texas state law?

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Once a 457(b) account holder retires he/she must elect to receive a lump so or periodic payments. If periodic payments are elected can the account holder's creditors reach the balance that is not yet paid out, i.e. is the unpaid balance still protected from attachment under ERISA or Texas state law?

 

 

1. Assets in 457 plan are protected from creditors in bankruptcy.

 

2. Since the non alienation rule of ERISA does not apply to NP 457b plans, a participant's benefits are not protected from their non bankruptcy creditors. However, under Texas law periodic payments from a non qualified plan can be protected from creditors as an "annuity" exempt from creditors under TX insurance law. Also TX has a constitutional provision preventing seizure of wages which includes payments from a non qualified plan.

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