Nevada law protects IRA assets up to 500,000. In addition, if you have more than 500,000 you are protected in bankruptcy up to 1,000,000, but must file BK in a federal court. IRA assets attributed to employer plan rollovers are protected without limit.

Note that the above applies to your lenders, but you have no protection against IRS liens or divorce settlements. Congress was considering exempting from current taxation the cancellation of debt, which up to now was considered taxable. In other words, if your loan was written off, you might get a 1099 making the amount of the write off taxable, then the IRS could come after your IRA for the income tax. I am not sure what the status of legislation is providing tax relief from loan write offs, but you should probably follow up on those developments.

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The debt relief was signed into law on 12/20/07. Following is the basics of the extent of relief granted:
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The new law provides relief to taxpayers who meet certain requirements.

The discharge of indebtedness has to occur on or after January 1, 2007. People that had debt cancelled in foreclosure before 2007 must rely on existing exceptions or, if they don’t qualify, pay the tax.
The discharge has to occur before January 1, 2010. An earlier version of the law would have created a permanent exception but the final version expires after 2009, in accordance with President Bush’s wish.
The debt has to be incurred in the acquisition, construction or substantial improvement of the home. In other words, if you took out a home equity loan for a purpose other than home improvement, this relief isn’t available.
The home has to be your principal residence. Relief isn’t available if the loan was used to buy a property for rental or investment, or a second home.
You have to owe no more than $2,000,000 on the home ($1,000,000 if married filing separately).
Relief isn’t available if debt was discharged in exchange for services you provided to the lender.
If you qualify for this relief, the amount excluded from income will reduce your basis in the home. This won’t matter except in a situation where you ended up with an overall profit after the foreclosure sale. Even then, you may avoid tax because of a rule allowing people that meet certain requirements to exclude up to $250,000 of gain from the sale of a principal residence. But if you don’t qualify for the $250,000 exclusion, or your gain exceeds the amount you can exclude, this basis adjustment can result in additional tax. The additional tax is likely to be smaller than if you had to report COD income, however.

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