Inherited IRA Creditor Protection After Clark v. Rameker

Updated August 23, 2026. Quick answer: an IRA you inherited is not covered by the federal bankruptcy exemption for retirement funds the way your own IRA is. In 2014 a unanimous Supreme Court held that inherited IRAs are not “retirement funds” at all within the meaning of the exemption. Some states responded by protecting them expressly under state law — Arizona, Florida, Missouri, North Carolina and Ohio among the eighteen we read — which matters against ordinary creditors and, for a debtor in a state that requires state exemptions, in a bankruptcy case as well.

What the Court actually held

“Funds held in inherited IRAs are not ‘retirement funds’ within the meaning of § 522(b)(3)(C).”

Clark v. Rameker, 573 U.S. 122 (2014)

The reasoning is the useful part, because it explains why the result is not arbitrary. The Court pointed to three characteristics that distinguish an inherited account from your own:

• the holder may never contribute to it;
• the holder must take distributions regardless of how far they are from retirement;
• the holder may withdraw the whole balance at any time, for any purpose, without penalty.

Put together, the Court saw an account that does not behave like retirement savings and does not require the holder to treat it as such. Whatever one thinks of the outcome, the logic is coherent: the exemption exists to protect money set aside for someone’s own old age, and an inherited account is not that.

What the states did about it

Several rewrote their exemption statutes to say expressly that inherited accounts are protected. Among the eighteen states we read, Arizona, Florida, Missouri, North Carolina and Ohio address inherited IRAs in the statutory text. The other thirteen, California, Pennsylvania and Illinois among them, do not — which means unaddressed, not unprotected, and an unaddressed question is one that eventually gets litigated by someone.

The crucial limit is narrower than it first looks. Clark decided what “retirement funds” means in the federal bankruptcy exemption (§ 522(b)(3)(C), and the identical § 522(d)(12)), and a state statute cannot change that. But a state statute can supply a separate exemption, and which set of exemptions you use in bankruptcy depends on your state. Congress let each state decide whether its residents may use the federal list in § 522(d). In a state that has opted out, such as Florida (Fla. Stat. 222.20), a debtor uses the state’s exemptions, because § 522(b)(3)(A) exempts any property that is exempt under the law of the state where the debtor has been domiciled (generally for the 730 days before filing, subject to § 522(o) and (p)). So a state statute that protects inherited IRAs, such as Fla. Stat. 222.21(2)(c), can protect one inside a bankruptcy case there. In a state that lets debtors choose, a debtor who takes the federal list is bound by Clark, and a debtor who takes the state list gets whatever that state’s statute provides. Where the state statute is silent, the question is open, and it is decided case by case. Which states protect IRAs, and how sets out the underlying rules.

What this changes about planning

It bears on the choice of beneficiary far more than on anything the beneficiary can do afterwards. If you are leaving a large IRA to someone whose circumstances carry real creditor risk — a business owner, someone in a difficult marriage, someone in a claims-exposed profession — the account may arrive without the protection it had while you held it, depending on the beneficiary’s state. A trust is the usual answer, and it comes with its own tax consequences that are not small: what happens when a trust is the beneficiary, and how trust taxation differs.

For the beneficiary already holding one, the rules that govern the account itself are separate and stricter than most people expect: the inherited-IRA rulebook and the ten-year rule with its annual distributions.

The line this page does not help you cross

Everything here describes protection that exists because you arranged your affairs before anyone had a claim against you. That is ordinary, lawful planning, and it is what exemption statutes are for.

Moving assets to defeat a creditor who already exists, or one you can reasonably foresee, is a different act with a different name. Courts call it a fraudulent transfer, or in the more modern phrasing a voidable transaction, and the remedy is that the transfer is undone — often alongside consequences considerably worse than the original debt. The two things courts look at are timing and intent, and a transfer made after the car accident, after the demand letter, or after the audit notice tends to answer both questions by itself.

We have not verified each state’s version of that doctrine for this page, and we are not going to summarise fifty of them from memory. The principle is what matters, and it does not vary much: protection is something you build in advance, not something you reach for once a claim has arrived. If a claim has already arrived, the person you need is a lawyer in your state, today — not a website.

Figures verified against the U.S. Reports text of Clark v. Rameker, 573 U.S. 122 (2014) (loc.gov), 11 U.S.C. § 522 (law.cornell.edu), and the statutes of Florida (Fla. Stat. 222.20 and 222.21), Arizona (A.R.S. 33-1126), Missouri (RSMo 513.430), North Carolina (G.S. 1C-1601) and Ohio (R.C. 2329.66) on September 30, 2026; the eighteen-state count and the thirteen states said not to address inherited IRAs (California, Pennsylvania and Illinois among them) were not re-checked.

Clark v. Rameker, 573 U.S. 122 (2014), read at law.cornell.edu; the exemption provision at 11 U.S.C. § 522(b)(3)(C); state treatment from each state’s own statute as cited on the state table. Read August 2026. This is a factual compilation of published statutes and constitutional provisions for planning purposes. It is not legal advice, exemption law is intensely fact-specific, and the difference between winning and losing an exemption fight is usually a detail no article can see. Confirm your own position with a lawyer licensed in your state.