An individual inherited an IRA and later went bankrupt. This is becoming more and more common as more beneficiaries are inheriting IRAs and blowing the money! Now the question becomes, “Are inherited IRAs protected in bankruptcy?”
As The Wall Street Journal’s Kelly Greene writes:
“Retirement funds, including regular IRAs, generally are protected under federal bankruptcy law, says Jeffrey Levine, a certified public accountant and IRA technical consultant at Ed Slott and Company in Rockville Centre, N.Y.
But IRAs that people inherit are another story. Courts in different parts of the country are split on whether they should be protected or not.”
Click here and get through the pay wall to read Greene’s entire story on the issue.
This case highlights a bigger issue: that of beneficiaries not being able to hold on to money that was saved for a lifetime. It demonstrates how those who earned and saved for retirement are much more prudent about money than those who didn’t earn the funds they inherited. The money doesn’t mean as much to those who inherited it.
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