Creditor and Bankruptcy Protections for IRA Owners in Georgia

Submitted by Jennifer Weir on Tue, 2024-10-15 15:47

Hello,

I have a client who lives in Atlanta, GA and she has a Rollover IRA, a Traditional IRA, and Inherited IRA from her mother, and a Roth IRA. From my research, I have found some conflicting information regarding the protections from creditors and bankruptcy trustees in the state of GA for Rollover and Traditional IRAs.

  1. Are Rollover IRAs fully protected from creditors and bankruptcy in the state of GA or is there a $1.5 million cap until 2025?
  2. Are Traditional IRAs only protected up to the $1.5 mn cap, thus, it would be unwise to merge her Rollover IRA to the Traditional IRA if she is worried about a reduction in creditor and bankruptcy protections?
  3. Inherited IRAs are not protected from creditors in bankruptcy, correct?
  4. Roth IRAs are not protected from creditors in bankruptcy, correct?

Thank you,

Jennifer

 

 



Submitted by Alan - IRA critic on Tue, 2024-10-15 17:52

Traditional IRAs including rollover IRAs are fully protected without limit, but any distributions from the IRAs are only protected up to basic needs.

Roth IRAs and inherited IRA are not protected.

Creditor protection sites may not be updated to reflect recent court decisions.

Submitted by Jennifer Weir on Wed, 2024-10-16 11:55

Thank you, can you please expand upon “any distributions from the IRAs are only protected up to basic needs.” Are you saying that once money has already been dispersed, that money can be clawed back?

Submitted by Alan - IRA critic on Wed, 2024-10-16 13:26

They could be, therefore if there is creditor exposure, perhaps distributions from the IRA should not be taken until ready to spend them. Of course, RMDs cannot be avoided.  The amount subject to meet basic needs would be a subjective determination of the court.

Submitted by Jennifer Weir on Wed, 2024-10-16 14:05

Thank you.

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