Most clients these days have some type of retirement account, whether it be a 401k, 403B, SEP, profit sharing plan, or an IRA. Clients contemplating bankruptcy understandably want to know, “Is my retirement account safe?” or “Am I going to lose that if I file for bankruptcy?” Fortunately, the general answer has been that a “retirement account” is considered to be an “exempt” asset, one that is protected under the bankruptcy code. There is also a Wisconsin state law provision which serves to protect retirement accounts as well. We’ll talk about those specific provisions in a later post. But here, I simply want to highlight an interesting case out the US Bankruptcy Court for the Western District of Wisconsin, now on appeal before the 7th Circuit Court of Appeals in Chicago. The case is “In Re Clark.” The bankruptcy judge ruled that an “inherited” IRA is not exempt, that it is not entitled to the usual protections afforded IRAs. The district court reversed and ruled otherwise. The 7th Circuit will now weigh in and hopefully issue a decision soon. But even when it does, that may not be the end of it. There are conflicting opinions on the issue from courts across the country. As such, perhaps it could end up in the US Supreme Court? Kind of interesting for a local case. We’ll watch and report back. Until then, the issue of an “inherited IRA” is a little murky. In a later post, we’ll have to discuss some strategies for dealing with an asset that is “nonexempt.” If you’re in this situation, you should speak with an experienced Wisconsin bankruptcy lawyer.