DEFINITION of 'Sequestered Account'

A deposit account that is seized through legal action or court order. Funds cannot be removed from a sequestered account without the approval of the seizing party. Sequestered accounts are usually segregated from other accounts at an institution and are kept in a separate file.

BREAKING DOWN 'Sequestered Account'

Virtually any type of account can be sequestered, including bank and brokerage accounts. IRAs and qualified plans are more difficult to sequester, as they are protected by federal law from most types of creditors. Usually only the IRS has the authority to sequester these accounts.

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