Your individual retirement account (IRA) savings can be garnished to satisfy child-support payments in most states. Though some states protect IRAs from garnishment of any kind, a majority lift this exemption in cases for which the account owner owes child support.

Key Takeaways

  • IRAs, which are not governed by ERISA, are not exempt from court-ordered garnishments.
  • States can employ the U.S. federal government's system of exemptions or create their own.
  • Most states offer no exemptions to absolve IRA holders of their child-support obligations.

IRA Protections

Unlike 401(k) plans or other qualified retirement savings accounts covered under the Employee Retirement Income Security Act of 1974 (ERISA), IRA accounts are not automatically protected from garnishment by creditors.

If you are court-ordered to pay off a debt, including the payment of overdue child support, your IRA counts as an asset that may be used to satisfy that debt in most states. Though there are some situations in which your IRA may be exempt from garnishment, failure to pay child support is generally not among them.

The degree to which IRAs are protected from garnishment is determined largely by state governments. The federal government does have its system of exemptions, but states are allowed to choose between adhering to federal regulations or creating their systems.

Most states choose to develop their systems of exemptions, meaning that the specific protections offered can vary greatly depending on your state of residence.

Federal Exemptions

Under federal law, there is no protection for IRA funds, except in the case of bankruptcy. When enacted, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 protected up to $1 million of your IRA savings if you declared bankruptcy, a limit that is adjusted every three years. As of 2021, the limit is $1,362,800.

However, states have the final say over which bankruptcy regulations apply to their residents. This means that the BAPCPA $1.3 million exemption only applies if your state of residence allows you to choose between the state-specific exemption system and the federal exemption system.

Aside from this partial bankruptcy exemption, IRAs can be garnished to pay off any federal debt, including debts to the IRS for overdue taxes.

In some states, residents do not have a choice between state and federal exemptions.

State Exemptions

Most states offer some form of limited protection from creditors for IRAs. In the event of bankruptcy, for example, many states exempt any IRA funds deposited more than 120 days before a bankruptcy filing. In Minnesota, only IRA funds over $75,000 may be garnished to satisfy creditors. Your IRA funds may also be exempt from garnishment to the extent that they are necessary to support you and your dependents, though some states cap the maximum amount of IRA funds that can be considered necessary.

Though several possible exemptions protect your IRA from creditors, many states lift these exemptions in the case of domestic relations judgments. Garnishment to satisfy child support obligations is the most common exception to these protections. In many states—including Kentucky, Colorado, Wisconsin, and Louisiana—IRAs are offered no protection from collections related to overdue child support. Judgments relating to alimony, divorce, annulment, or legal separation are also common exceptions to state exemption laws.

Kansas, Connecticut, and Illinois are a few of the states in which your IRA cannot be garnished if you owe child support. They offer blanket protection for IRA retirement savings.

Can IRA Savings Be Garnished for Child Support?

Depending on the state in which you live, your IRA can be garnished for child support. IRA funds are provided no protection for overdue child support in most states.

Which States Don’t Garnish IRAs for Child Support?

Kansas, Connecticut, and Illinois are among the few states that offer blanket protection for IRA retirement savings. In these states, your IRA cannot be garnished for any reason, even if you owe overdue child support.

Can My IRA Be Garnished for Other Debts?

There are no federal laws that protect IRAs from creditors, except in the case of bankruptcy and only up to $1,362,800 as of 2021. Your IRA can be garnished by the government to pay your federal debts, such as back taxes owed to the IRS. Other than federal debts, states can create their own rules about garnishing IRAs to pay debts. The rules vary widely.