3602. Are IRAs subject to attachment?Nuco Employeercline202014-06-03T20:28:00Z2014-06-03T20:28:00Z35353053Albany Law School257358114Site Map/Individual Retirement Plans/Roth IRA/In GeneralSite Map/Individual Retirement Plans/Traditional IRA/In Generalindividual retirement account annuity2005-01-25T00:00:00ZTaxFactsDefaultArticle114690216-00-tf1.xml217.00;#1812;#1821;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1Are IRAs subject to attachment?106500.000000000TaxFactsDefaultArticle2010-01-15T00:27:46ZSBMEDIA\moss-admin3602. Are IRAs subject to attachment?ERISA provides that benefits under “pension plans” must not be assigned or alienated.ERISA Sec. 206(d)(1). This provision has been construed as protecting pension benefits from claims of creditors. ERISA defines a “pension plan” as a plan established or maintained by an employer to provide retirement income to employees. An individual retirement plan generally is not maintained by an employer and, thus, is not protected under federal law by ERISA’s anti-alienation clause.Patterson v. Shumate, 504 U.S. 753 (1992).Exclusions from bankruptcy are provided for qualified retirement plans, SEP IRAs, SIMPLE IRAs, and elective deferral Roths, but not for traditional IRAs and Roth IRAs.11 U.S.C. §§541(b)7), 541(c)(2). In addition, exemptions from bankruptcy may be available for qualified retirement plans, SEP IRAs, SIMPLE IRAs, elective deferral Roths, traditional IRAs, and Roth IRAs. A debtor can choose to exempt property from the bankruptcy estate under either of two methods. Under the nonlist method, these exemptions are available if the debtor chooses not to list property that is exempt under federal, state, or local law.11 U.S.C. §522(b)(2). Under the list method, these exemptions are available unless applicable state law does not so authorize.11 U.S.C. §§522(b)(1), 522(d)(10)(E), 522(d)(12). (The U.S. Supreme Court has ruled that assets in a traditional IRA are eligible for the list exemption under Section 522(d)(10)(E) of the federal Bankruptcy Code).Rousey v. Jacoway, 544 U.S. 320 (2005). Many states provide that the federal list exemptions are not available but instead provide their own state law exemptions in bankruptcy.Planning Point: A debtor choosing between the list or nonlist methods should examine all of his or her assets, not just the IRA provisions, to determine which method would be more beneficial in bankruptcy. The debtor also should determine whether additional protection is provided by the law of the state (or states) that have jurisdiction over the debtor’s assets. The bankruptcy exemption for contributory (non-rollover) traditional and Roth IRAs is limited in the aggregate to $1 million (the amount is indexed every 3 years and the current limit is, $1,245,475 per person), unless the bankruptcy court determines that “the interests of justice” require otherwise.11 U.S.C. §§104 and 522(n). The exemption for IRA balances rolled over from other retirement accounts with an unlimited exemption is unlimited.The exemption limit applies to the aggregate of all retirement accounts in combination, without regard to rollover contributions, and does not apply separately to each. Amounts in excess of the limit are subject to the claims of creditors.11 U.S.C. §522(n). Planning Point: Although assets rolled over from non-Roth IRA retirement accounts, and future earnings on those assets, do not lose their unlimited exemption by virtue of a rollover, taxpayers with significant IRA balances are advised to keep their contributory and rollover IRA accounts segregated. Otherwise, to the extent that rollover IRA assets are commingled with contributory IRA assets, it may be difficult to calculate the value of the assets attributable to the rollover.Outside the bankruptcy context, the U.S. Court of Appeals for the Seventh Circuit has ruled that because ERISA’s anti-alienation provisions do not apply to assets contained in IRAs, such assets may be seized under criminal forfeiture proceedings brought by the federal government.Infelise v. U.S., 159 F.3d 300 (7th Cir. 1998). The Tenth Circuit Court of Appeals has held that an IRA trustee was not in breach of its fiduciary duty to an IRA account holder when the trustee responded to an IRS service of notice of levy for delinquent taxes owed by the account holder by turning over to the IRS assets held in the account.Kane v. Capital Guardian Trust Co., 145 F.3d 1218 (10th Cir. 1998).