Understanding Creditor Protections forON Semiconductor Employees

Healthcare Provider Update: Healthcare Provider for ON Semiconductor ON Semiconductor partners with various health insurance providers to administer employee healthcare benefits. While the specific provider may vary based on location and employee needs, large national insurers such as UnitedHealthcare and Anthem BlueCross BlueShield are often utilized by companies of ON Semiconductor's size. This partnership emphasizes ON Semiconductor's commitment to providing comprehensive healthcare benefits to its workforce. Potential Healthcare Cost Increases in 2026 As we look ahead to 2026, ON Semiconductor, along with other companies, may face substantial increases in healthcare costs due to anticipated record hikes in premiums for Affordable Care Act (ACA) marketplace plans. Reports indicate that some states could experience premium increases over 60%, driven by factors such as rising medical costs and the potential expiration of enhanced federal premium subsidies. This perfect storm of challenges is expected to push out-of-pocket premiums up by 75% or more for a significant number of enrollees, thereby amplifying the financial burden on employers and employees alike. Companies like ON Semiconductor will need to prepare for these increased costs in their healthcare budgets, particularly as the healthcare landscape continues to evolve dramatically. Click here to learn more

'ON Semiconductor employees must be aware that while ERISA-qualified plans provide significant protection from creditors, non-ERISA accounts like IRAs are more vulnerable, and it's crucial to understand state-specific laws to ensure full asset security as you approach retirement,' says Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'As retirement approaches, ON Semiconductor employees should consider not only the strength of their ERISA-qualified plans but also the potential vulnerabilities of non-ERISA accounts, and seek guidance from legal and financial experts to ensure their assets are fully protected,' advises Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. The protection of retirement savings under ERISA-qualified plans.

2. The limitations of ERISA protection, including potential risks from creditors.

3. The role of state laws in protecting non-ERISA retirement accounts like IRAs.

For employees at ON Semiconductor, an important issue is the security of retirement savings, especially when employees approach the retirement age or are retired. It is generally assumed that all retirement assets are protected from creditors. Nevertheless, the extent to which these assets are protected differs greatly depending on the type of retirement plan and the laws of the state. In this article, we explore the specifics of asset protection.

Plans Covered by ERISA: A Stronghold Against Creditors
Most of the retirement plans that meet the eligibility requirements of the Employee Retirement Income Security Act (ERISA) are generally safe. Such ERISA-qualified plans are also usually safe from the reach of creditors in the event of bankruptcy or civil suits. Importantly, this protection is maintained even if the company sponsoring the plan goes bankrupt. These assets are usually out of the reach of personal creditors.

To meet the ERISA requirements, a retirement plan must be offered by an employer or an employee organization and must meet certain federal requirements regarding membership reporting, funding, and vesting. Typical ERISA-qualified plans include profit-sharing plans, pensions, deferred compensation plans, and 401(k)s.

Furthermore, ERISA applies to some employee health and welfare benefits, such as:

• Hospital, surgical, and medical coverage through Health Maintenance Organization (HMO) plans.

• Health care Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs).

• Dental and vision plans.

• Prescription drug programs.

• Disability insurance.

• Specific welfare benefit plans under sections 419(a)(f)(6) and 419(e).

The anti-alienation clause in these plans prohibits the assignment of benefits and thus keeps the assets beyond the reach of most creditors.

Weaknesses of ERISA-Qualified Plans
Although they are very strong, ERISA plans are not foolproof. They can be subject to claims by:

• A former spouse for child support or divorce settlements, with a Qualified Domestic Relations Order (QDRO).

• The Internal Revenue Service (IRS) for any unpaid federal income taxes.

• The federal government in cases involving fines and penalties for crimes.

• Creditors in the event that a plan participant breaches the terms of the plan.

The State of Non-ERISA Plans
The protection of retirement accounts that are not covered by ERISA, such as traditional and Roth IRAs, is not uniform. Some 403(b) plans offered by government or religious organizations may also not be ERISA plans.

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BAPCPA provides some protection for IRA funds in bankruptcy, but such funds are not protected by ERISA.

State Laws and IRA Security
The protection of IRAs and other non-ERISA plans against creditors can vary greatly by state. Some offer little protection, while others offer almost none. It is imperative to know these nuances in order to manage the risk of potential creditor claims. ON Semiconductor employees are encouraged to seek the advice of experienced local attorneys in order to navigate these complex legal situations.

Conclusion
The legality of protecting retirement funds from creditors depends on the type of retirement account, state laws, and certain exemptions. Although most employer-sponsored retirement plans are relatively safe, the legal framework is complex, and it is advisable to seek legal advice early to maximize the protection of retirement assets.

Sources:

Mavar, Tyson.  The Retirement Group, a Division of Wealth Enhancement Group . Interview. January 2025.

'ERISA: A Guide to Employee Retirement Income Security Act.'  U.S. Department of Labor , 2024,  www.dol.gov/general/topic/retirement/erisa . Accessed 31 Jan. 2025.

'How Bankruptcy Affects Retirement Accounts.'  National Bankruptcy Forum , 2023,  www.nationalbankruptcyforum.com/affects-of-bankruptcy-on-retirement-accounts . Accessed 31 Jan. 2025.

'State Laws and IRA Protection.'  Retirement Law Journal , vol. 12, no. 4, 2024, pp. 47-52.

'Understanding Qualified Domestic Relations Orders (QDROs).'  Internal Revenue Service , 2023,  www.irs.gov/retirement-plans/plan-participant-employee/understanding-qualified-domestic-relations-orders . Accessed 31 Jan. 2025.