The Supreme Court affirmed protections for the retirement savings of debt-strapped older workers yesterday, ruling unanimously that a bankrupt debtor’s individual retirement account must generally be kept off-limits to his creditors.
In an opinion written by Justice Clarence Thomas, the court ruled that IRA assets are shielded by the same provision of the bankruptcy code that says debtors may keep a “reasonabl[e]” amount of the money they would be entitled to have under a pension, annuity or other age-based income scheme.
Though not specifically listed in a federal statute naming these exemptions, IRAs are similar to them, Thomas wrote. He added that, like a pension, an IRA is paid out on the basis of age, because the government charges a 10 percent penalty for withdrawals before age 59 1/2.
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