Supreme Court shields IRAs from creditors

WASHINGTON — The Supreme Court ruled today that creditors may not seize Individual Retirement Accounts when people file for bankruptcy, giving protection to a nest egg relied upon by millions of Americans.

The unanimous decision sides with a bankrupt Arkansas couple fighting to keep more than $55,000 in retirement savings. As a result, IRAs now join pensions, 401(k)s, Social Security and other benefits tied to age, illness or disability that are afforded protection under bankruptcy law.

IRAs should not be treated any differently because the benefits are tied to people's age, the court said.

IRAs allow most investors to contribute up to $4,000 in earned income annually to a fund that grows tax-free until withdrawals. It is the only retirement plan available to the self-employed and small business owners and is typically used by workers between jobs, according to AARP.

http://www.chron.com/cs/CDA/ssistory.mpl/nation/3117031

now we need to keep contacting our house reps regarding the current bill.

when we have a supreme court that reflects "the culture of life" we may not get these decisions anymore.

what percentage of the rich?
who are they protecting?

"That penalty erects a substantial barrier to early withdrawal," Justice Clarence Thomas wrote for the court. "Funds in a typical savings account, by contrast, can be withdrawn without age-based penalty."

http://www.chron.com/cs/CDA/ssistory.mpl/nation/3117031

Who here can afford to save enough to put money into an IRA? 5% or maybe it's even less than 2%? Whatever, it's a very small number. I've done about 400 tax returns so far this year, and I haven't seen one yet where someone put more than $1k in their IRA for the year. Again, this mainly helps rich repukes.

and I bet their bankruptcy was due to health reasons

What a relief.

http://www.bloomberg.com/apps/news?pid=10000103&sid=a5jTC6wH25og&refer=us

April 4 (Bloomberg) -- The U.S. Supreme Court buttressed the ability of people who file for bankruptcy to shield money in their Individual Retirement Accounts from creditors.

The justices unanimously sided with an Arkansas couple who argued that IRAs, like pensions and company stock bonuses, are exempt under federal bankruptcy law to the extent they are necessary for the debtor's financial support.

. . .

The case is Rousey v. Jacoway, 03-1407.

When the folks let go from the big corporations left our jobs, we took our 401(k) and other retirement benefits with us. IRAs are the only place that money goes for nearly all of us. It's untouchable before we turn 59 1/2.

I'm not rich; all the investments I have in the world are in that IRA. And no, I didn't have more than $3500 total in that IRA until I left my job after 32 years. Now I have considerably more, all Rollover money from my company benefits.

It's not enough to ensure a secure retirement, especially as I've now been out of work for the past two years, but wipe that out and I'd qualify for bankruptcy.

So I'm breathing easier today.