Florida Debt Collection

Florida Garnishment Exemption

 

In Robertson v. Deed and RBC Wealth Management, 34 Fla. L. Weekly D1661 (Fla. 2DCA 2009), the Florida Second District Court of Appeal held that an  IRA inherited by a judgment debtor was subject to Florida garnishment by a judgment creditor.  Florida Statute 222.21(2)(a) provides that a fund or account maintained in accordance with a plan that has been either preapproved or determined to be exempt from taxation by the IRS is exempt from claims of creditors.  In this instance, the Second District found that an inherited IRA does not fall into the exemption since it is not the original fund or account. The original IRA before passing by death is tax exempt and has severe restrictions on when and how it can be accessed.  Conversely, the tax status of an inherited IRA changes drastically as it becomes a liquid asset that a beneficiary may access at any time without penalty and that the beneficiary must take as income.  Unlike the original IRA, an inherited IRA is not a vehicle to defer taxation on income in order to preserve income for retirement.  Accordingly, the Second District ruled that an inherited IRA is no longer subject to the exemption under Florida Statute 222.21(2)(a) and therefore can be garnished by a judgment debtor.

TrackBack URI for this entry

Name

Email

Comment smaller | bigger

Subscribe via email (registered users only)

I have read and agree to the Terms of Usage.

Write the displayed characters

Add Comment