Bankruptcy creditors can’t grab a debtor’s individual retirement annuity. In a divorce, a woman was granted 50% of her husband’s retirement accounts, and her half was directly transferred tax-free into her 401(k) and 403(b) accounts. She subsequently used money from those two accounts to purchase the annuity in a direct trustee-to-trustee transfer and later filed for Chapter 7 bankruptcy. Under bankruptcy law, up to $1,283,025 of IRA assets is exempt from creditors. The bankruptcy trustee argued that the divorce transfer and the subsequent rollover cost the woman the exemption, but a court disagreed (Ecle Kees, D.C., Ore.).
Bankruptcy
by Shawn Wesley | May 31, 2018 | 401(k), Divorce, Retirement, TallyTaxMan, Tax court, Tax Disputes | 0 comments