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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. Should be beat this rap, I would not recommend lion hunting in Zimbabwe to celebrate.

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  4. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  5. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

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