The U.S. Supreme Court today ruled that savings in all IRAs can be protected from bankruptcy proceedings. In the case Richard Gerald Rousey v. Jill R. Jacoway, Associate Justice Clarence Thomas, writing for the majority, said that assets held in IRAs may be shielded from Chapter 7 bankruptcy because they are similar to other exemptions such as "a payment under a stock bonus, pension, profit-sharing, annuity or similar plan or contract," to the extent "reasonably necessary for the support of the debtor and any dependent of the debtor." The decision overturns a ruling by the 8th U.S. Circuit Court of Appeals.
The high court's decision was "not terribly surprising," said Carol Connor Flowe, a partner in the Washington law firm Arent Fox. "So much of the money in IRAs is rollover money from qualified plans. It's pretty clearly the right result," she said.