In one case, a husband and wife were the only participants in a retirement plan established by their corporation.

They had accumulated $1.6 million in the plan. Because the plan did not cover any employees other than the business owner and his spouse, the plan was not qualified and therefore not protected under ERISA.

The result: The entire $1.6 million was made available to the couple's creditors.

An effective strategy would be for the business to hire a child of the business owner and include the child as a participant in the plan. A child as young as seven or eight can perform simple tasks like dusting, emptying wastebaskets and making copies, and therefore can be a legitimate employee.

This simple strategy qualifies your retirement plan under ERISA and thus protects all of the plan's assets from the reach of creditors. It also has other advantages. The child's earned income will not be subject to income taxes, to the extent of the standard deduction, currently $5,800 for singles in 2011. In addition, any of the child's income up to $11,500 in 2011, plus another 3 percent matching contribution by the business, could be contributed to a SIMPLE 401(k) plan, where it will accumulate tax-deferred.

In one case, a physician was successfully sued for malpractice. The plaintiff obtained a judgment of over $60,000, and sought to attach the physician's retirement plan.

The physician and his spouse were participants in the plan. However, the physician also employed one other person. This was sufficient to bring the plan within the protections offered by ERISA.

While this other employee was actually employed by a corporation separate from the entity that offered the retirement plan, the two entities were both owned by the physician and his spouse, and thus were combined under the Internal Revenue Code's rules governing controlled entities.