Retirees in Pensacola, Florida Protect Their Retirement Accounts

The Florida Gulf Coast is known as a great place to retire. You may be retired already or getting close, or even in the earlier planning stages. But what happens when you fall into trouble with the IRS? Can the IRS seize your retirement accounts? Even though retirement plans are protected from creditors, unfortunately, the IRS is an exception.

The general rule is if you can get access to it so can the IRS. The IRS can seize retirement accounts, including 401k plans, IRAs, and self-employed plans like SEP-IRAs and Keogh plans. There are no prohibitions in the Internal Revenue Code against it.

How might a person end up in this situation? Imagine someone who has been laid off and has difficulty finding another job. He is forced to live off of his retirement account. Then he gets hit with the tax bill for taking early distribution plus the 10% early distribution penalty, he has no way to pay the amount owed. If your only source of money is continuing to take distributions from your retirement accounts, the IRS will expect you to liquidate the account to pay off the taxes and penalties due.

However, many retirement plans deny you access to your funds unless you retire at the pre-designated age, separate from service, or experience a disability. Also, if you take a job with another company you cannot access the funds. This is good news for you. The IRS cannot force you to end your employment, and as long as you continue working the IRS cannot access your retirement account. The bad news is the IRS will still hunt for its money. They will look towards your wages and other personal assets in order to claim the taxes owed.

What happens if you do have rights to the money in your retirement account and the IRS can get to it? There are a couple of aspects to consider. First, what was your conduct leading to the liability. Was it flagrant? Examples of “flagrant conduct” would be tax evasion, fraud, or making contributions to the account while the unpaid taxes were becoming due. The second consideration is whether you depend on the money in the retirement account, or will in the near future. If it can be determined that your conduct was not flagrant or that you need to depend on the retirement money the IRS CANNOT levy your retirement account.

The IRS must stop trying to claim money that it has no rights to. Occasionally an aggressive IRS Revenue Officer will agree to not touch the retirement account but will instead place a levy on wages if the retirement money is not voluntarily withdrawn. But as you can see there are ways to protect your retirement account.

Any way you look at it though, once you are out of compliance with the IRS they can go to extreme lengths to collect the taxes. Don’t let it get to the point of retirement accounts and wage levies. If you’re in the Gulf Coast area we can help. Come in and meet us and let us show you some better options to get the IRS off your back for good. Call now at 877-254-4254,

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