In earlier posts, we’ve discussed the the local case that has made its way up to the United States Supreme Court. “In Re Clark,” or “Clark v. Rameker,” deals with the question of whether an inherited IRA is considered exempt under Section 522(b)(3)(c) of the Bankruptcy Code, or more simply put, whether an inherited IRA is protected in bankruptcy proceedings. As we have previously discussed, generally all retirement type accounts are considered “exempt” or protected in bankruptcy. Unfortunately for debtors, the Supreme Court has ruled that an inherited IRA should not be afforded “exempt” or protected status. Judge Sotomayor wrote the Court’s opinion and concluded that there were basically three reasons which made an inherited IRA different from the typical or regular IRA, and ultimately, unprotected in bankruptcy. First, the holder of an inherited IRA may never invest any additional monies in the account. Second, the holder is required to withdraw monies from the account no matter how far from retirement he or she may be. Third, the holder may withdraw the entire balance of the account at any time, for any purpose, without penalty. According the the decision, these three basic features of an inherited IRA distinguished it from a typical IRA, one that is funded by the holder, and prevented it from receiving the protection that the typical IRA other similar retirement account usually receives in bankruptcy court proceedings. While the Zaleski Law Firm has enjoyed following a Madison, Wisconsin bankruptcy case in the United States Supreme Court, the result is a tough one for debtors. The “take away” from the case is that if you have an inherited IRA, you will want to consult with an experienced Wisconsin bankruptcy lawyer who can help you with some pre-bankruptcy exemption planning and counseling. Call Madison, Wisconsin bankruptcy attorney Steven Zaleski with any question on retirement accounts in bankruptcy.