15 Mar Inherited IRA’s Are NOT a Protected Asset Class in FEDERAL Bankruptcy Proceedings
Posted at 00:00h in IRA
Traditional retirement accounts are generally speaking considered a protected asset should you be required to endure FEDERAL bankruptcy protection. However an Inherited IRA is not generally considered a protected asset in 2 distinguishable regards:
The distributions of funds from an inherited IRA to a surviving beneficiary transforms the nature of the IRA. An inherited IRA is subject to a different set of rules. It must be set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary. The beneficiary may make no contributions to the new account nor may he/she roll the inherited funds over into another retirement plan. Beneficiaries of inherited IRA’s may make withdrawals at any time without penalty, but must either start taking lifespan-measured withdrawals within one year or withdraw the it all within five years.
The funds contained in an inherited IRA are not funds intended for retirement purposes but instead are distributed to the beneficiary of the account without regard to age or retirement status.