Putting your retirement funds in a 401k account without taking them as distributions keep them safe from commercial creditors. In certain scenarios though, e.g. failure to pay your federal income tax, it does not protect them from Internal Revenue Service (IRS). If you are in a similar situation and want to know if IRS can seize your 401k account, then keep reading.
Why will the IRS take my 401k?
Majority of retirements accounts are kept secure from creditors but not the IRS. Still, the IRS will not try to seizethe money in your 401k account for no reason. The only reason the IRS will try to take out of your 401k account is when you fail to pay your taxes. Basically, IRS levy is the confiscation of your money to pay your tax debts. Before doing this though, IRS will send you a notice and insist that you pay your taxes. Another notice will be sent if you still refuse to pay your taxes afterward, giving you 30 days before a levy is carried out on your account.
Asides your 401k account, the IRS can also seize money from your other retirement accounts such as IRA, SEP-IRAs and Keogh plans. There are no codes or laws keeping your retirement accounts safe from the IRS.
When can the IRS seize my 401k account?
As explained above, if you owe taxes, the Internal Revenue Service can seize your account, but only if distributions can be taken from it. If you are limited from withdrawing money from your 401k account, the IRS will not be able to take money from the account.
How To Protect Your 401k Account
Protecting your 401k account might be difficult if you intend to do it yourself, but with the aid of Atlanta tax attorney, it’s much easier. The first thing to note when protecting your account is that the IRS can only seize what you can receive. So if you are unable to gain access to your retirement money due to age, plan, etc. then the IRS will also be unable to seize your retirement money.
There are so many retirement plans that do not grant you access to your funds until you are disabled, deceased, get a job with a different company or permanently retire. Until one of these happens, the IRS cannot seize your 401k account. This is because you cannot be forced to retire or to quit your job. So long as you are employed, your retirement account will be out of reach to the IRS. In situations like these, the IRS will consider your other personal assets and wages to pay your taxes. But if you have access or are eligible to withdraw money from your 401k account, then the IRS will also have this access.
With the aid of IRS tax debt attorney, you can prove to the IRS that they no authority or right over your retirement money and they will leave your 401k account alone. The IRS is usually reluctant to seize retirement money and most times do not have the right to do so. So with help from a tax lawyer Atlanta, you can make the right negotiations to protect your account. An Atlanta tax attorney also has sufficient knowledge of these processes to help you defend your retirement accounts.
What is the best way to keep my 401k account secure?
The best way to keep your 401k account safe is to pay your taxes efficiently. You can set up a long term payment plan to make this easier for you.
Contact a tax lawyer Atlanta to protect your 401k account today.
