Yes, an IRA can be garnished, but only by a narrow set of claimants. The IRS can levy it for unpaid federal taxes. A family court can order it tapped for child support or alimony arrears. A federal criminal restitution order can reach it. And in bankruptcy, traditional and Roth IRA balances above $1,711,975 can be pulled into the estate. Ordinary creditors holding a court judgment usually cannot touch an IRA, though how much protection you actually have outside bankruptcy depends on the state you live in.
Who Can Actually Reach Your IRA
Most people worry about IRAs the same way they worry about 401(k)s, but the two are not equally protected. A 401(k) is governed by ERISA, which contains a broad anti-alienation clause that blocks nearly all creditors, in or out of bankruptcy. An IRA is not an ERISA plan. Its protection comes from a federal bankruptcy statute with a dollar cap, plus whatever your state’s exemption law provides against judgment creditors.1NAPA Net. Case of the Week: Creditor Protection and Retirement Assets
That gap between IRAs and 401(k)s matters most when a creditor sues you and wins a judgment outside of bankruptcy. It also means a handful of claimants can reach IRA funds regardless of any exemption: the IRS, family support recipients, victims of federal crimes, and, above the cap, the bankruptcy estate.
IRS Tax Levies
Unpaid federal taxes are the clearest way to lose an IRA. Under 26 U.S.C. § 6331, the IRS can levy “all property and rights to property” belonging to a taxpayer who fails to pay after notice and demand. Section 6334 lists property that is exempt from levy, including basic clothing, school books, unemployment benefits, and a minimum wage exemption. Retirement accounts are not on that list.2Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt From Levy
Legally, the IRS can seize the entire balance of your IRA to satisfy a tax debt, plus accumulated penalties and interest. In practice, it treats retirement account levies as a last resort. Internal Revenue Manual section 5.11.6.3 tells revenue officers to look for other collectible assets and consider payment agreements first, and to levy a retirement account only where the taxpayer has engaged in “flagrant conduct.” The manual gives examples: frivolous tax arguments, tax evasion convictions, fraud penalties, pyramiding unpaid payroll taxes, and, notably, contributing to an IRA while knowing you owe the IRS.3Internal Revenue Service. IRM 5.11.6 Notice of Levy in Special Cases
Before levying, the IRS must send written notice at least 30 days in advance. Under 26 U.S.C. § 6330, the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” tells you the amount owed and your right to request a Collection Due Process hearing before the IRS Independent Office of Appeals.4Office of the Law Revision Counsel. 26 USC 6330 – Notice and Opportunity for Hearing Before Levy Requesting the hearing within the 30-day window pauses collection. At the hearing you can dispute the underlying liability, propose a payment plan or offer in compromise, or argue that the levy would cause economic hardship. Miss the deadline and the IRS can direct your custodian to turn over the funds.5Taxpayer Advocate Service. Notice of Intent to Levy
Even after a levy takes effect, you can ask for a release on hardship grounds. The IRS defines economic hardship as being unable to meet necessary living expenses like housing, food, and medical care. A hardship release stops the seizure but does not erase the debt.6Internal Revenue Service. What if a Levy Is Causing a Hardship
Child Support and Alimony
Family support obligations can reach IRA funds too. If you fall behind on child support or alimony, the recipient can obtain a court order directing your IRA custodian to distribute assets to satisfy the arrearage.
The mechanism is different from what happens with a 401(k). Employer plans use a Qualified Domestic Relations Order, a device created by ERISA.7Internal Revenue Service. Retirement Topics – Qualified Domestic Relations Order Because IRAs are not ERISA plans, QDROs do not apply. The order runs through state court instead, and the specific procedures depend on state law.
Criminal Restitution
If you are ordered to pay restitution to victims of a federal crime, your IRA has almost no protection. Under 18 U.S.C. § 3613(a), a federal restitution order can be enforced against “all property or rights to property” of the defendant, “notwithstanding any other Federal law.” The narrow § 6334 exemptions still apply, but retirement accounts are not among them.8Office of the Law Revision Counsel. 18 USC 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
Federal appeals courts have confirmed this authority extends to retirement accounts, including ERISA-governed 401(k)s. If a 401(k) is not safe from criminal restitution, an IRA is not either.
Ordinary Creditors With a Court Judgment
Outside bankruptcy, whether an ordinary judgment creditor can garnish your IRA turns almost entirely on state law. BAPCPA only applies in bankruptcy proceedings. Some states protect IRAs from judgment creditors without any dollar limit. Others cap protection at a specific amount, protect only contributions and not earnings, or limit the exemption to certain kinds of claims. A few states offer relatively little IRA protection at all.
State law also governs the procedures a creditor must follow to execute against an IRA, including required notice and the account holder’s chance to claim an exemption. Because the variation is so wide, there is no useful general rule. If you are facing a lawsuit or already have a judgment against you, reading your own state’s IRA exemption statute is the single most important step.
Bankruptcy and the $1,711,975 Cap
When you file for bankruptcy, federal law takes over. Under 11 U.S.C. § 522(n), traditional and Roth IRA assets are shielded from creditors up to an aggregate limit of $1,711,975 per person. That figure took effect April 1, 2025 and applies through March 2028. It covers the combined value of all your traditional and Roth IRAs, not each account separately. Anything above the ceiling can be pulled into the bankruptcy estate, though a judge has discretion to extend protection further if fairness demands it.9Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
The cap is indexed for inflation every three years. The previous limit was $1,512,350, so the 2025 adjustment added roughly $200,000 in additional protection.10Kiplinger. Is Your IRA Protected from Creditors in Bankruptcy
SEP IRAs, SIMPLE IRAs, and rollover IRAs that originated from an employer-sponsored plan like a 401(k) get unlimited bankruptcy protection. There is no dollar cap on those accounts; they are treated the same way as 401(k)s for bankruptcy purposes.11Investopedia. IRA Protection in Bankruptcy
Inherited IRAs Are Different
An IRA you inherited from someone other than a spouse gets no federal bankruptcy protection at all. The Supreme Court decided this unanimously in Clark v. Rameker (2014), holding that inherited IRAs are not “retirement funds” under the bankruptcy code.12Justia. Clark v. Rameker, 573 U.S. 122 (2014) The Court pointed to three features that set inherited IRAs apart from ordinary retirement accounts: you cannot contribute to them, you must take required distributions regardless of your age, and you can empty the account at any time without the 10% early withdrawal penalty.
A few states have responded with their own laws. Texas, Florida, North Carolina, and South Carolina have enacted statutes that shield inherited IRAs from creditors even though federal law does not. In other states, an inherited IRA from a non-spouse is fully exposed.
How You Can Forfeit Protection Yourself
An otherwise protected IRA can lose its status entirely if you engage in a prohibited transaction. Under IRC § 408(e)(2), if you or a disqualified person such as a family member conducts a prohibited transaction involving the account, it ceases to be an IRA as of January 1 of that year. The full balance is treated as though it were distributed to you on that date, triggering income tax on the whole amount.13Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
Common prohibited transactions include borrowing money from your IRA, selling property to it, using it as collateral for a loan, and buying property for personal use with IRA funds.14Internal Revenue Service. Retirement Topics – Prohibited Transactions Once the account loses IRA status, the assets are just personal property. No bankruptcy exemption. No state creditor protection. And the income tax still comes due.
Contributing to an IRA specifically to shelter money from a known creditor creates a different problem. If you move assets into the account while facing a lawsuit or another known claim, a court may treat the transfer as fraudulent and let the creditor reach the funds despite any exemption. The timing and intent behind large contributions matter, especially if you were already in financial trouble when you made them.
The Tax Bill After a Seizure
Losing IRA money to a creditor or the IRS does not relieve you of the tax on it. Under IRC § 408(d)(1), money leaving a traditional IRA is generally treated as a taxable distribution to the account owner. If a creditor garnishes $50,000 from your traditional IRA, you owe ordinary income tax on that $50,000 even though the money went straight to someone else.
Distributions taken before age 59½ normally carry an additional 10% early withdrawal penalty, and for private creditor garnishments that penalty applies. The IRS levy is the one clear exception: when the IRS itself seizes an IRA to satisfy a tax debt, the 10% penalty is waived. Income tax still applies, and the added distribution can push you into a higher bracket and generate a larger bill the following April.
Because the tax follows the money out, the practical loss from a garnishment can be considerably larger than the amount the creditor actually takes. Anyone weighing bankruptcy against continued collection pressure on an IRA should account for that hidden second bill.