Risks to Your Pension

IRS issues can bring you and your family a lot of stress. You've worked hard all your life to be able to purchase a home and a car. Now they might be taken away by the IRS. You've received notice telling you that they are going to seize your properties to pay off tax debt you need to pay. They can do this. They can seize your home, car, and even your pension.

The IRS may seize assets to settle your tax debt, but there are certain assets that are safe from the IRS.

• Furniture, food, fuel, and personal effects up to $2,500
• Clothing and school books
• Undelivered mail
• $1,250 worth of tools and job-related books
• Certain annuity and pension benefits, such as Special Pensions for Medal of Honor awardees, Retired Serviceman's Family Protection and Survivor Benefit Plan, Railroad Retirement Act, and Railroad Unemployment Insurance Act
• Some service-oriented disability payments
• Worker's compensation, job training, public assistance, and unemployment benefits
• The minimum amount exempt from levy on wages, other income, and salary
• Deposit to the special Treasury Fund made by Public Health Service employees and members of the armed forces on permanent duty overseas

Certain annuity and pension benefits are not completely exempted, putting your pension at risk if you need to pay the IRS a particularly large sum.

Assets are seized in order, normally:

1. Savings and checking accounts
2. Vehicles – planes, automobiles, boats, luxury vehicles
3. Life insurance cash equivalent
4. Accounts receivable
5. Stocks and bonds
6. Wages
7. Collectibles
8. Real estate – investment and holiday
9. IRAs, Keoghs, and pensions
10. Your home

As you see, pensions are low on the list.

When the IRS seizes assets, they only take enough to pay off your tax bill. Do not forget, though, that your bill has been accruing penalties and interest, so it has been growing every day. If there are no other assets available to settle your bill, the IRS can seize your pension.

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