Legal Question in Bankruptcy in California

Re: The Supreme Court ruling on IRAs in bankruptcy

It applies to all IRAs that meet the IRS requirements, which I believe they all do. However, the holding, in my opinion, was NOT that IRA assets could not be seized by a Trustee. To the contrary, the holding was merely that IRAs MAY be exempted under the exemption that provides for retirement accounts which, in California, is the amount reasonably necessary for the debtor's future maintenance and support.

Re: The Supreme Court ruling on IRAs in bankruptcy

Yes, previously there was a distinction between company-provided accounts and IRAs in some BK trustees' minds because of liquidity issues. However, the Supreme Court held that even though it may be easier to access, the intent is still for retirement, especially since there's a severe penalty if withdrawn early. In CA, IRAs are exempt in the amount that's reasonable and necessary for retirement. For instance, if you are 22, file bankruptcy and have some big bucks in an IRA, it's more likely to be seized than that of a debtor who is 64 years old.