Yesterday, Justice Sotomayor delivered the unanimous opinion of the Court that Inherited IRAs are NOT exempt in bankruptcy proceedings.
Read the full opinion here: Clark v. Rameker.
Central to the Court’s opinion was the interpretation of the phrase “retirement funds.” In bankruptcy, an individual is allowed to exempt certain of their assets from the proceedings. The code specifically sets out what can be exempt and what cannot be. One such exemption is “retirement funds to the extent those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457 or 501(a) of the Internal Revenue Code.” Clark v. Rameker, No. 13–299, at slip op. at 1-2 (June 12, 2014) (citing 11 U.S.C. § 522(b)(3)(C)(d)(12)).