Bankruptcy – exemptions — retirement funds

By: WISCONSIN LAW JOURNAL STAFF//June 12, 2014//

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U.S. Supreme Court

Civil

Bankruptcy – exemptions — retirement funds

Funds held in inherited IRAs are not “retirement funds” within the meaning of §522(b)(3)(C).

The ordinary meaning of “retirement funds” is properly understood to be sums of money set aside for the day an individual stops working. Three legal characteristics of inherited IRAs provide objective evidence that they do not contain such funds. First, the holder of an inherited IRA may never invest additional money in the account. 26 U. S. C. §219(d)(4). Second, holders of inherited IRAs are required to withdraw money from the accounts, no matter how far they are from retirement. §§408(a)(6), 401(a)(9)(B). Finally, the holder of an inherited IRA may withdraw the entire balance of the account at anytime — and use it for any purpose — without penalty.

714 F. 3d 559, affirmed.

13-299 Clark v. Rameker

Sotomayor, J.

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