[WSBAPT] Inherited IRA subject to IRS lien?

Wed Apr 20 17:30:34 PDT 2016

I agree, but the note indicates the Clark v. Rameker decision does not address exemption claims made under state law rather than federal law.   Washington bky filers may choose either Federal or State Exemptions, and in the case of execution outside of bky court, what law governs?   It may be that RCW 6.15.020 requires actual dependency or perhaps even a court-ordered QDRO/child support order for the state exemption to hold up for any inherited IRA beneficiary.  Anyone have more info on this?  (I’m assuming the client will not seek appointment as PR, which probably would make him liable for decedent’s federal taxes.)
dlm

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Ashley Raymond
Sent: Wednesday, April 20, 2016 5:04 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Inherited IRA subject to IRS lien?

Correct me if I'm wrong, but I believe the Clark v. Rameker decision applies to individuals who have inherited an IRA and are holding it in an inherited IRA account. Meaning if that individual attempts to file bankruptcy, the inherited IRA is not exempt.

Ashley Raymond, J.D., LL.M.
Ashley Raymond, PLLC
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On Wed, Apr 20, 2016 at 4:55 PM, David Moe <davidmoe at maplevalleylaw.com<mailto:davidmoe at maplevalleylaw.com>> wrote:
Interesting situation—unfavorable 2015 SCOTUS decision, and favorable (I think) Washington Statute.  I’m not up to date on bankruptcy law.  Please respond to list with what further you discover.

2014 SCOTUS Case:

Clark v. Rameker, 134 S. Ct. 2242 (U.S. S.Ct 2014)
View this case in Google Scholar: Clark v. Rameker, 134 S. Ct. 2242 (U.S. S.Ct 2014) <http://scholar.google.com/scholar_case?case=6536441922745620892&hl=en&as_sdt=2006&btnI=1>
Topics
•         77. Exemptions: Inherited IRAs exempt under either 522(b)(3)(C) or 522(d)(12)?<https://www.legalconsumer.com/bankruptcy/bankruptcy-case.php?TopicID=77&CitationID=1519>
Form 22A Line: :: Form 22C Line:
Case Type: B - No, inherited IRAS are not exempt.
Supreme Court holds that Inherited IRAS are NOT exempt in bankruptcy under federal law. Does not address state law exemptions.

WA Statute:
RCW 6.15.020
Pension money exempt—Exceptions—Transfer of spouse's interest in employee benefit plan.
(1) It is the policy of the state of Washington to ensure the well-being of its citizens by protecting retirement income to which they are or may become entitled. For that purpose generally and pursuant to the authority granted to the state of Washington under 11 U.S.C. Sec. 522(b)(2), the exemptions in this section relating to retirement benefits are provided.
(2) Unless otherwise provided by federal law, any money received by any citizen of the state of Washington as a pension from the government of the United States, whether the same be in the actual possession of such person or be deposited or loaned, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever, and when a debtor dies, or absconds, and leaves his or her family any money exempted by this subsection, the same shall be exempt to the family as provided in this subsection. This subsection shall not apply to child support collection actions issued under chapter 26.18<http://app.leg.wa.gov/RCW/default.aspx?cite=26.18>, 26.23, or 74.20A<http://app.leg.wa.gov/RCW/default.aspx?cite=74.20A> RCW, if otherwise permitted by federal law.
(3) The right of a person to a pension, annuity, or retirement allowance or disability allowance, or death benefits, or any optional benefit, or any other right accrued or accruing to any citizen of the state of Washington under any employee benefit plan, and any fund created by such a plan or arrangement, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever. This subsection shall not apply to child support collection actions issued under chapter 26.18<http://app.leg.wa.gov/RCW/default.aspx?cite=26.18>, 26.23, or 74.20A<http://app.leg.wa.gov/RCW/default.aspx?cite=74.20A> RCW if otherwise permitted by federal law. This subsection shall permit benefits under any such plan or arrangement to be payable to a spouse, former spouse, child, or other dependent of a participant in such plan to the extent expressly provided for in a qualified domestic relations order that meets the requirements for such orders under the plan, or, in the case of benefits payable under a plan described in 26 U.S.C. Sec. 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984, to the extent provided in any order issued by a court of competent jurisdiction that provides for maintenance or support. This subsection does not prohibit actions against an employee benefit plan, or fund for valid obligations incurred by the plan or fund for the benefit of the plan or fund.

Dave Moe

David Moe, Attorney
David L. Moe & Associates, P.S.
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>] On Behalf Of Amy Goertz
Sent: Wednesday, April 20, 2016 11:49 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Inherited IRA subject to IRS lien?

Young client’s father recently passed away. His dad had some issues with the IRS, including having had the IRS seize his personal checking account approximately a year ago. The son does not know how much is/was owed to the IRS or how much was taken from the account.

Client and his brother are only heirs and are named beneficiaries on $100,000 life insurance policy and $36,000 IRA. There are no other assets whatsoever.

Can the IRS come after these funds or are they exempt?

Thanks in advance for your input.

Amy

Amy J. Goertz, J.D.
Elder Law Group PLLC
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Spokane, WA  99205-4848
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