Save time with our cheat sheets, fact sheets, checklists & books!

March 17, 2009

Debtor’s Right to IRA -Bankruptcy estate

Share on print
Print
Share on facebook
Share on twitter
Share on pinterest
Share on linkedin

A debtor’s right to receive payment from an IRA may be exempt from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E), even though the debtor has not yet reached retirement age.

In a recent precedential ruling, the US Court of Appeals for the Third Circuit held that  a debtor’s right to receive payment from an individual retirement account (IRA) may be exempt from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E), even though the debtor has not yet reached retirement age.

The US Court of Appeals concluded as follows “ It is undisputed that the Debtor’s IRA meets the first two requirements of 11 U.S.C. § 522(d)(10)(E). Further, Rousey impliedly overrules Clark, so Krebs’ right to receive payment from her IRA may be exempt from the bankruptcy estate under § 522(d)(10)(E) even though she has not yet reached 59 ½ years of age. Accordingly, we will vacate the order of the District Court and remand for consideration – without Clark posing any obstacle – of whether the Debtor  establishes the third requirement of § 522(d)(10)(E), that is, whether and to what extent her right to receive payment under the IRA is reasonably necessary to support her and her dependents. Click here for a copy of the ruling

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Share on print
More

Keep Learning

Annual Benefit Limit

Definition The annual benefit limit for defined benefit plans is the lesser of: A) 100% of the participant’s average compensation for his or her highest

Be among the first to know when

IRA Rules
Change