by Thomas D. Begley, Jr., CELA<\/strong><\/p>\n

Introduction<\/em><\/strong><\/p>\n

The United States Supreme Court in a 9-0 unanimous ruling held that an inherited IRA is not protected in bankruptcy under federal law.[1]<\/a> Heidi Heffron-Clark inherited an IRA from her mother in 2001 and filed for bankruptcy nine years later. The court held that the IRA was not shielded from her creditors, because the funds were not earmarked exclusively for retirement. The Supreme Court indicated that creditor protection does not apply to inherited IRAs for a number of reasons:<\/p>\n

\n
Beneficiaries cannot add money to an inherited IRA like IRA owners can to their accounts;<\/li>\n
Beneficiaries of inherited IRAs must generally begin to make Required Minimum Distributions (RMDs) in the year after they inherit the accounts regardless of how far away they are from retirement;<\/li>\n
Beneficiaries can take total distributions of their inherited accounts at any time and use the funds for any purpose without a penalty. IRA owners must (more…)<\/span><\/a><\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
by Thomas D. Begley, Jr., CELA Introduction The United States Supreme Court in a 9-0 unanimous ruling held that an inherited IRA is not protected in bankruptcy under federal law.[1] Heidi Heffron-Clark inherited an IRA from her mother in 2001…<\/span><\/p>\n
Read more ›<\/a><\/div>\n
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