Yes, it is true. The IRS MAY be able to put a levy on your retirement account. The IRS basically "steps in the shoes of the taxpayer: If the taxpayer can liquidate their retirement account, even with an early withdrawal penalty, then the IRS can reach it by a levy. If the taxpayer can't then the IRS can't either.
If the plan doesn't allow employees to liquidate the asset themselves, then the IRS cannot levy the account either. Most self-directed IRAs can be levied. 401(k) and 403(b) plans can be levied only if the employees have the right under the plan to liquidate the asset themselves.
It is a good idea to review your plan's documents and see what right, if any, you have to cash out the balance.
If you or anyone you know has problems with the IRS and needs help, please contact me at 702-469-9426 or cstevens@numbercruncherllc.tax.
Comments(11)