Are IRA’s exempt from IRS levies for unpaid taxes of the owner of the IRA?

IRA’s are not exempt from IRS levies for the unpaid taxes of the owner of the IRA.  While it is the policy of the IRS to avoid levying against a taxpayer's IRA or qualified pension plan benefits, it can do so as a last resort (Internal Revenue Manual 5.11.16).  It is also well settled that the IRS lien and levy powers contained in the Internal Revenue Code take precedence over any asset protection provisions in state law, such as FL Stat. 222.21.  The good news is that there is a Tax Court case which holds that in the case of death benefits payable under a qualified pension plan, the IRS levy does not attach to the death benefit, even if the IRS levies against the delinquent taxpayer's pension account before the death (Asbestos Workers Local 2004-1 USTC 50129).  There does not appear to be any similar case involving IRA death benefits but the analysis should be the same.  It is somewhat similar to IRS levies against life insurance policies owned by a delinquent taxpayer who dies.  While the IRS can reach the cash surrender value, it can't reach the pure insurance portion of the death benefit payable to a third party beneficiary.
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Babette: At Bach Elder Law, we are committed to viewing our clients and their multi-generational families in a very holistic way. We try to be very active listeners. We want to preserve the integrity of the family and give them the level of service that they need, particularly when they're in crisis, because when you're in crisis you need to be taken care of, you need to have your phone call returned, you need to know your case is a priority, so that you can feel the relief that someone is servicing you and solving the problems for you. Fred: One of things that I enjoy so much in working with Babette, having done this for a lot of years, is the standard of excellence that we have in the office. Nothing goes out of that office unless it's perfect, unless it's been reviewed, unless it's well thought out, unless it's in the best interests of the client and achieves the best possible result for the client. Nothing else is acceptable.
Babette: In order to obtain the type of services and the level of knowledge that we would like to present to our clients, we are very involved in the Florida Bar. I am often putting on CLEs on behalf of the bar as chair of the elder law section. I have frequently written articles or lectured in the field of elder law. I am frequently attending different continuing legal education programs, and also tracking programs that are provided by the National Academy of Elder Law Attorneys so that I am appraised of all of the newest events that occur in my field.
Fred: In the field of taxation, you must absolutely be current and up to date. In addition to practicing with Babette, I am also a tax law professor at Stetson Law School, which is in St. Petersburg, Fla., approximately 30 miles north of here. In order to stand in front of 25 law students two and three times a week, you must be absolutely current in the tax law. You have to know what you're talking about and as a result of that experience, the give and take with students, you are obligated to know and understand the law including the most recent changes and additions to the tax law.

Fred: I bring to Bach Elder Law my expertise in tax matters. Frequently our clients come into the office with tax problems. Some of them haven't filed returns for a number of years, some of them are engaged in disputes with the Internal Revenue Service, some of our wealthier clients need tax planning on estate issues which can become very complicated, particularly now at this time where there is great uncertainty in the estate tax law. Congress failed to renew our estate tax law and it went out of business on December 31, 2009. Most tax practitioners, myself included, believe that when the Congress gets to it, it will reinstate the federal tax law in substantially the same form that existed as of December 31, 2009. This means that persons with estates of less than 3.5 million dollars, or 7 million dollars between a husband and wife, need not be concerned with federal estate taxes.

Bach Elder Law's Memory walk team raised over $37,000 for the Gulf Coast Chapter of the Alzheimer's Association on October 24th and was awarded the prize for the highest team contribution

Babette: Both Fred and I have litigation experience, and unfortunately in elder law, even with good planning, sometimes you end up in court. Fred: The typical case is a gentleman passes away, and leaves substantially all of his assets to a person or persons other than his natural beneficiaries, and by natural beneficiaries we mean typically the children of the decedent. Many times, people, particularly elderly people, come under the influence of persons and are induced to leave portions of their estate to those persons. In many cases the elderly person did not fully realize what he or she was doing. In a typical case, someone will come into the office and say, "my goodness, this is my dad's will. I hardly know this person! how could he have possibly left so much to so-and-so? Can you do anything about this?" And at that point, Babette takes over.
Babette: On the other hand, there are times when an elderly person knows exactly what they're doing, and they intentionally disinherit an heir. We can get very involved in preparing that case for litigation, even while the testator is alive and preparing the will, because we anticipate that it might be contested at a later date and so we develop the case right then and there on the spot. Unfortunately, that's not always the case, but we believe in a person's right to leave their estate to who they choose. That is one of the liberties we have in the United States and in the Florida Constitution. In protecting the elderly that means protecting their freedom of choice. Not every state is the same.
Fred: In those types of situations, we will frequently videotape the person who is making the will. We will record the signing of the will, we will ask that person questions like, "who you are? Do you understand what you're doing? Who are your beneficiaries? What is the nature and extent of your financial assets? How come you're not leaving so much to so-and-so and how come you're making a bequest to so-and-so?"
In other words, we have it all on tape, and when the person dies and if there is litigation, the judge and the jury and everyone else can see the person who prepared the will while they were alive, and can make a determination of whether they feel that person was competent, and they also hear right out of the person's own mouth why they are or are not doing a certain thing with regard to the disposition of their assets. We have found that that videotaping can be very persuasive in a court of law.