IRA Funds Exempt in Bankruptcy Despite Rollover

The court overruled the bankruptcy trustee’s objection to an exemption for IRA funds where the rollover of funds from the IRA was permissible.  Here, the debtor withdrew $50,000 from his IRA and deposited the funds into his personal checking account, eventually transferring $20,000 back into his IRA.  The bankruptcy trustee argued that the IRA funds lost their exempt status on withdrawal from the IRA because the debtor commingled the withdrawn funds with the debtor’s personal funds.  The court ruled that the commingling of the withdrawn funds was irrelevant.  The relevant fact was that the withdrawn funds in the amount of $20,000 were reinvested into the same IRA within the 60-day rollover time frame allowed by the IRS.  Therefore, the withdrawn, and later re-contributed, funds in the amount of $20,000 retained their exempt status.

Bloomberg Tax Daily Tax Report. Case: IRA Funds Exempt in Bankruptcy Despite Rollover. Apr. 18, 2019.

In re Jones, No. 18-31532 (Bankr. S.D. III. Apr. 15, 2019).

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Bernie Sanders Proposes Extreme Estate Tax on Billionaires

According to a statement, Sanders’s proposed plan would set a 45% tax on the value of estates between $3.5 million and $10 million, with the rate increasing so that amounts greater than $1 billion would be taxed at a rate of 77%.  Meanwhile, some Senate Republicans seek to repeal the estate tax entirely.

The current approximately $11 million estate and gift tax exemption per person has risen from $650,000 per person 20 years ago.\

Davis, Laura and Arit John. Sanders Proposes Estate Tax of Up to 77 Percent for Billionaires. Bloomberg Law. Feb. 1, 2019