What Funds Are Exempt From Garnishment: Wages, Benefits, Accounts

Funds exempt from garnishment include most government benefits, money held in retirement accounts, life insurance and personal injury proceeds, and a protected portion of your wages. Social Security, SSI, veterans benefits, and employer-sponsored retirement plans are the strongest categories, generally untouchable by credit card companies, medical creditors, or other commercial judgment holders. Wages get a federal floor: if your weekly disposable earnings are $217.50 or less, a judgment creditor cannot take anything. Above that floor, the cap is 25% of disposable earnings for ordinary consumer debts. These protections have real exceptions, though, and some of them (child support, federal taxes, defaulted student loans) can reach funds that are otherwise bulletproof.

Wages: What a Creditor Can and Cannot Take

The Consumer Credit Protection Act sets a nationwide limit on wage garnishment for ordinary debts. A creditor with a court judgment can take the lesser of two amounts: 25% of your disposable earnings for the pay period, or the amount by which your disposable earnings exceed 30 times the federal minimum wage.¹ With the federal minimum wage at $7.25, that second figure works out to $217.50 per week. Earnings at or below that line are completely off-limits.²

“Disposable earnings” is a term of art. It means your pay after legally required deductions: federal, state, and local income taxes, Social Security, Medicare, and state unemployment insurance. Voluntary deductions such as 401(k) contributions, health insurance premiums, and union dues do not reduce the base, so disposable earnings are typically higher than the take-home figure on your check.² Many states cap garnishment below the federal 25%, and when state law is more protective, the state rule applies.

Social Security, SSI, and SSDI

Social Security retirement and survivor benefits are broadly protected. The Social Security Act bars these payments from garnishment, levy, attachment, or any other legal process.³⁴⁵

Supplemental Security Income is stronger still. Because SSI is a needs-based program for elderly, blind, or disabled individuals with very limited income, it cannot be garnished for any purpose, including child support and federal debts. SSI keeps its protected status even after the money is deposited into a bank account.⁶

Social Security Disability Insurance sits in between. SSDI is protected from commercial creditors but can be garnished for child support, alimony, and certain government debts.⁵

Veterans Benefits

Payments under any law administered by the VA (disability compensation, pension, education benefits) are exempt from creditor claims, taxation, and legal process.⁷ Two exceptions matter: the IRS can levy VA benefits for unpaid federal taxes, and the benefits can be reached to satisfy child support or alimony. A medical collector, landlord, or credit card company has no path to these funds.

Other Federal Benefits

Several additional categories of federal income are shielded from commercial creditors: civil service and federal employee retirement payments, railroad retirement and railroad unemployment insurance, military pay and survivor annuities, federal student aid, and FEMA disaster assistance.⁵ Workers’ compensation wage-replacement payments count as “earnings” under the CCPA, so they receive at least the same protection that applies to regular wages.² State unemployment insurance protections vary.

Retirement Accounts

Money in an employer-sponsored retirement plan (401(k), 403(b), traditional pension) is among the most protected assets you can hold. ERISA’s anti-alienation rule blocks creditors from reaching these funds, and the protection carries into bankruptcy.⁸ The main exception is a Qualified Domestic Relations Order, which can direct a plan to pay a share of your benefits to a spouse, former spouse, or dependent child.⁹ The IRS can also levy an ERISA-protected account for unpaid federal taxes.

Traditional and Roth IRAs are not covered by ERISA, because they are individually owned. In bankruptcy, IRA assets are exempt up to an inflation-adjusted cap, set at $1,711,975 as of April 1, 2025, and amounts rolled over from an employer plan don’t count against that cap.¹⁰ Outside bankruptcy, IRA protection depends on state law, which varies widely in whether it exempts the full balance, part of it, or sets its own dollar cap.

Life Insurance and Personal Injury Proceeds

Life insurance proceeds paid to a beneficiary and personal injury settlement funds are protected to some degree in most states. The reasoning is that these funds exist to replace a life or to cover medical treatment, lost income, and rehabilitation after bodily harm. The size of the exemption varies by jurisdiction. Some states shield the full amount; others cap it or exclude certain policy types. If a large settlement or life insurance payout lands while judgments are outstanding against you, your state’s exemption statute controls the result.

Protected Funds in a Bank Account

Exempt money keeps its status after it reaches your bank, but the mechanics matter. Federal regulations require a bank served with a garnishment order to review the account and automatically protect two months’ worth of directly deposited federal benefit payments. The bank calculates a protected amount from the prior two months of benefit deposits and must leave those funds accessible to you, with no freeze and no paperwork required on your end. The automatic review covers Social Security, SSI, veterans benefits, railroad retirement, and civil service and federal employee retirement.¹¹

If you receive benefits by paper check instead of direct deposit, the automatic protection does not kick in, and you have to claim the exemption yourself.¹² Commingling is the other practical pitfall. If a benefit check and a paycheck from a side job both land in the same account, the automatic protection covers only the benefit portion, and non-exempt funds above that amount can be frozen. Exempt funds generally stay protected when mixed with other money, provided they’re reasonably traceable to their source, but tracing gets harder the more activity flows through the account. Keeping benefits in a separate account makes the protection much easier to enforce.

Debts That Reach Otherwise Exempt Funds

Several categories of debt can pierce protections that stop ordinary creditors.

Child Support and Alimony

Support obligations have the widest reach. The CCPA allows garnishment of up to 50% of your disposable earnings if you’re supporting another spouse or child, and up to 60% if you’re not. If you’re more than 12 weeks behind, those caps rise to 55% and 65%.² Support orders can also reach Social Security (except SSI), SSDI, and VA benefits,⁴ and retirement accounts can be divided through a Qualified Domestic Relations Order.¹³ Funds that are normally bulletproof against commercial creditors are often vulnerable to family support obligations.

Federal Tax Debts

Federal tax levies are explicitly excluded from the CCPA’s garnishment limits.¹ The IRS can levy wages, bank accounts, Social Security benefits, and VA benefits to satisfy unpaid taxes.⁷ A small weekly exempt amount keyed to your filing status and dependents is left to you, but the IRS can take a far larger share of income than any private creditor.

Defaulted Federal Student Loans

The Department of Education can garnish wages for defaulted federal student loans without a court order, through administrative wage garnishment. The maximum is the lesser of 15% of your disposable pay or the amount by which weekly income exceeds 30 times the minimum wage.¹⁴ Student loan collectors can also offset Social Security benefits and tax refunds. SSI remains protected.

Claiming an Exemption Before You Lose It

Outside the automatic bank review for directly deposited federal benefits, exemptions do not enforce themselves. If a garnishment order hits your bank or employer, you’ll receive a notice explaining your right to claim an exemption and the deadline for doing so. Deadlines are typically short, often 20 days or less. You file a claim with the court that issued the order, identify the exempt funds and the legal basis, and serve a copy on the creditor and the garnishee (your bank or employer). If the creditor objects, the court holds a hearing. If no objection comes within the deadline, the garnishment is usually dissolved and the funds released.

Missing the window is the costliest mistake. Courts enforce these deadlines strictly, and money the law intended to protect can be lost because the paperwork went in late. Hold on to deposit records that show the source of funds in your accounts; a bank statement showing a direct deposit from the Social Security Administration or the VA proves an exemption far more easily than reconstruction after the fact.

1
Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment
2
U.S. Department of Labor Wage and Hour Division. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
3
Social Security Administration. Social Security Act 207
4
Social Security Administration. Can My Social Security Benefits Be Garnished or Levied
5
Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits Like Social Security or VA Payments
6
Administration for Children & Families. Garnishment of Supplemental Security Income Benefits
7
Office of the Law Revision Counsel. 38 U.S. Code 5301 – Nonassignability and Exempt Status of Benefits
8
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
9
Office of the Law Revision Counsel. 29 U.S. Code 1056 – Form and Payment of Benefits
10
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
11
eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
12
Consumer Financial Protection Bureau. Can a Debt Collector Take or Garnish My Wages or Benefits
13
U.S. Department of Labor. Qualified Domestic Relations Orders Under ERISA
14
eCFR. 34 CFR Part 34 – Administrative Wage Garnishment