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Inherited IRA funds not considered ‘retirement funds’

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The Supreme Court of the United States unanimously held Thursday that funds contained in an inherited individual retirement account do not qualify as “retirement funds” within the meaning of a bankruptcy exemption.

Justice Sonia Sotomayor delivered the opinion for the court, which affirmed the 7th Circuit Court of Appeals. She noted three legal characteristics of inherited IRAs led the court to conclude the funds held in such accounts are not objectively set aside for purposes of retirement.

“First, the holder of an inherited IRA may never invest additional money in the account. Inherited IRAs are thus unlike traditional and Roth IRAs, both of which are quintessential ‘retirement funds.” She wrote. “Second, holders of inherited IRAs are required to withdraw money from such accounts, no matter how many years they may be from retirement. … Finally, the holder of an inherited IRA may withdraw the entire balance of the account at any time – and for any purpose – without penalty.”

The decision comes in Clark v. Rameker, 13-299, in which an IRA was inherited by a daughter who later filed for bankruptcy. Heidi Heffron-Clark argued the inherited IRA was still a retirement fund, and therefore, was exempt from creditors under Section 522 of the U.S. Bankruptcy Code. The 7th Circuit held that when an IRA was inherited by someone other than the owner’s spouse, it was no longer exempt from creditor’s claims.

Sotomayor also noted that the possibility that some investors may use their inherited IRAs for retirement purposes does not mean that the inherited IRAs bear the defining legal characteristics of retirement funds.

“Were it any other way, money in an ordinary checking account (or, for that matter, an envelope of $20 bills) would also amount to ‘retirement funds’ because it is possible for an owner to use those funds for retirement,” she wrote.

 

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  1. by the time anybody gets to such files they will probably have been totally vacuumed anyways. they're pros at this at universities. anything to protect their incomes. Still, a laudable attempt. Let's go for throat though: how about the idea of unionizing football college football players so they can get a fair shake for their work? then if one of the players is a pain in the neck cut them loose instead of protecting them. if that kills the big programs, great, what do they have to do with learning anyways? nada. just another way for universities to rake in the billions even as they skate from paying taxes with their bogus "nonprofit" status.

  2. Um the affidavit from the lawyer is admissible, competent evidence of reasonableness itself. And anybody who had done law work in small claims court would not have blinked at that modest fee. Where do judges come up with this stuff? Somebody is showing a lack of experience and it wasn't the lawyers

  3. My children were taken away a year ago due to drugs, and u struggled to get things on track, and now that I have been passing drug screens for almost 6 months now and not missing visits they have already filed to take my rights away. I need help.....I can't loose my babies. Plz feel free to call if u can help. Sarah at 765-865-7589

  4. Females now rule over every appellate court in Indiana, and from the federal southern district, as well as at the head of many judicial agencies. Give me a break, ladies! Can we men organize guy-only clubs to tell our sob stories about being too sexy for our shirts and not being picked for appellate court openings? Nope, that would be sexist! Ah modernity, such a ball of confusion. https://www.youtube.com/watch?v=QmRsWdK0PRI

  5. LOL thanks Jennifer, thanks to me for reading, but not reading closely enough! I thought about it after posting and realized such is just what was reported. My bad. NOW ... how about reporting who the attorneys were raking in the Purdue alum dollars?

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