The IRS has wide-ranging power, but its ability to use that power to place liens or seize assets is controlled by regulation, specifically U.S. Code Section 6334, Property Exempt from Levy. Some retirement accounts and pensions are protected, but IRA and 401(k) accounts are not, allowing IRS to file liens against them.

Can the IRS put a lien on your savings account?

3 Ways the IRS Goes After Your Money When you have an income tax debt, there are several actions the IRS can legally take to collect the money you owe. These include: Placing a tax lien on your personal property, such as real estate or vehicles. Freezing your bank accounts and taking the funds to pay your tax debt.

Advisor Insight The general answer is no, a creditor cannot seize or garnish your 401(k) assets. 401(k) plans are governed by a federal law known as ERISA (Employee Retirement Income Security Act of 1974). One exception is federal tax liens; the IRS can attach your 401(k) assets if you fail to pay taxes owed.

Can a tax lien be placed on a 401k?

The IRS normally places a federal tax lien on your 401k prior to taking any further action. This establishes the fact that the IRS is owed money. The IRS then issues a notice of intent to levy and finally a notice of levy on the 401k plan.

Can a tax lien be placed on a bank account?

The IRS is allowed to take any money to satisfy a tax liability that has been unpaid by you. However, the IRS may not immediately place a tax lien or levy on your account. Instead, you are given the option of paying your tax debt prior to any IRS action.

Can the IRS file a lien against my retirement accounts?

The Internal Revenue Service may or may not have the ability to place a lien on your retirement accounts. The IRS has wide-ranging power, but its ability to use that power to place liens or seize assets is controlled by regulation, specifically U.S. Code Section 6334, Property Exempt from Levy.

How is a 401k plan protected from lawsuits?

Your 401k plan is also protected from most types of lawsuits. Creditors are not allowed to attach the proceeds of your 401k while the money is in the account. Once exception to this rule, however, are claims made by the IRS. The IRS normally places a federal tax lien on your 401k prior to taking any further action.