Which is safer from the IRS, a 401(k) or an IRA?

Question

May 14, 2008, 01:01 PM

dklawson

New Member

Join Date: May 2008

Posts: 1

Which is safer from the IRS, a 401(k) or an IRA?

I currently have a sizable tax lien, and I am paying on an installment agreement with the IRS for back taxes. I have around $45,000 in a 401(k) of which I now have the option to rollover into an IRA. The IRS has to-date not tried to seize any funds from my 401(k). If I decide to move the funds to an IRA, will it be easier for the IRS to sieze the money?

Answers

May 14, 2008, 03:23 PM	#2

MukatA Tax Expert Join Date: Nov 2007 Location: CA Posts: 2,170	IRS will not take 401(k) or IRA money. If you want to do rollover, don't get money in your hands. Get it done through the investment company.

May 15, 2008, 05:53 AM	#3

AtlantaTaxExpert

Tax Expert

Join Date: Feb 2005

Location: Atlanta, Georgia

Posts: 10,043

MukatA, that is NOT true.

If the tax lien is large enough, the IRS CAN and WILL go after money inside an IRA or 401(k) if they determine that is the only way they can get the taxes paid. That is why there is a provision in the law that waives the 10% Early Withdrawal Penalty for IRS garnishment of such pension funds.

However, as long as DKLawson remains current on his payment plan, the IRS will not likely attach the 401(k) or IRA.

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