A recent ruling by the U.S. Supreme Court has made inherited IRAs fair game for creditors in bankruptcy cases in most of the nation. However, Ohio is one of the few states — along with Alaska, Arizona, Florida, Missouri, North Carolina, and Texas — where this ruling doesn’t apply. Why doesn’t it apply? Because laws in these states specifically protect inherited IRAs from bankruptcy or other financial claim.
Ohio’s law protecting inherited IRAs can be found in ORC Title 23, Chapter 2329, section 10(e), which states that a person’s rights to or interests in any payment or benefit under any individual retirement account, individual retirement annuity, Roth IRA, 529 plan or education individual retirement account left by a decedent in trust or otherwise under any measure is protected.
Non-inherited IRAs, Roth IRAs, and tax-exempt retirement accounts such as 401(k) plans are also exempt from bankruptcy in the state. Other exemptions from bankruptcy proceedings in the state of Ohio include a homestead exemption of up to $132,900; some personal property; up to 75 percent of wages; public benefits such as unemployment and workers’ compensation; a $1,225 wildcard for any property; spousal and child support; and up to $2,325 worth of books, implements, and tools used in your trade.
Bankruptcy is not an action to be taken lightly. Along with appearing on your credit report, it can also cause the loss of some of your assets. It’s important that you understand before filing for bankruptcy all the ways that it can impact you. Piqua, Ohio Bankruptcy Attorney Chris Wesner is well versed on the exemptions allowed under state law and would be happy to talk with you about it. Contact us today to schedule a consultation.