Traditional IRAs were created to encourage people to save for retirement. All employed persons may contribute to IRAs regardless of company retirement plans.
Under federal tax law, IRAs are qualified plans allowing tax-deferred growth. Roll-over IRAs are particularly good for couples to protect surviving spouses. Penalties to beneficiaries for early withdrawals or for missing required distributions are unusually harsh.
While generally known as a “pro-plaintiff” state, California offers extremely strong asset protections to private retirement plans. IRA stretch trusts & nested-accumulation trusts & conduit trusts are especially complicated & can result in tax disasters if constructed improperly, but with properly planning can be vary powerful devices to ensure the long-term well-being of heirs & beneficiaries while protecting them from unfair taxes & creditors.