Bankruptcy does not include IRA's

[SmokeyTheBear]

http://story.news.yahoo.com/news?tmp...tus_bankruptcy


WASHINGTON - The Supreme Court on Monday ruled that creditors may not seize Individual Retirement Accounts when people file for bankruptcy, giving protection to a nest egg relied upon by millions of Americans.


The unanimous decision sides with a bankrupt Arkansas couple fighting to keep more than $55,000 in retirement savings. As a result, IRAs now join pensions, 401(k)s, Social Security and other benefits tied to age, illness or disability that are afforded protection under bankruptcy law.


IRAs should not be treated any differently because the benefits are tied to people's age, the court said, citing a substantial tax penalty that is imposed for withdrawals before a person turns 60.


"That penalty erects a substantial barrier to early withdrawal," Justice Clarence Thomas wrote for the court. "Funds in a typical savings account, by contrast, can be withdrawn without age-based penalty."
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What does this mean for self employed people ?

It means you can put 4,000 a year away ( tax free ) in an i.r.a. and if you ever go bankrupt , its safe.

[Fred Quimby]

If that also covers ROTH IRA's then that is a major loophole.

Just throw all your cash in a ROTH IRA,,,declare bankruptcy and wipe out your debts, then withdraw your cash.