Law Office of John S. Palmer Attorney at Law

Inherited IRAs and Bankruptcy-update

Posted Thursday, March 27, 2014 by John S. Palmer

The US Supreme Court heard oral arguments on Monday in the case of Clark v. Rameker. At issue is whether inherited IRAs meet the definition of “retirement funds” under the bankruptcy code and therefore enjoy the same protection from creditors as other IRAs. The court’s decision is expected to resolve a conflict among lower courts on this issue.

I previously discussed the Clark case, in which the U.S. Court of Appeals for the Seventh Circuit held that inherited IRAs are not exempt from the bankruptcy estate, as well as prior decisions by the Fifth and Eighth Circuits reaching the opposite conclusion.

Scotusblog has a summary of the briefs filed with the Supreme Court. The actual briefs are available here, including amicus briefs filed in support of the petitioner (the debtor/inherited IRA owner) by the National Association of Consumer Bankruptcy Attorneys and a group of retirement plans with approximately $1.6 billion in assets.

The Supreme Court is expected to issue its decision by the end of June.

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