Retirement Plan Seizure

Can the IRS levy or garnish the money in your 401(k) Retirement Account?​

That depends on your retirement plans rules and regulations regarding your access to your retirement account and each taxpayer’s situation. Generally, according to Internal Revenue Manual (IRM) 5.11.6.2 and Internal Revenue Code (IRC) Section 6334, the IRS can access the following funds if the taxpayer can:

• 401(k)
• SEP IRA
• Keogh
• IRA

When a Levy is issued the IRS sends a form (IRS Form 668(A) Notice of Levy) to the administrator of the taxpayer’s retirement account. It instructs the administrator to seize funds from the taxpayer’s retirement account to fulfill the tax liability their employee owes to the IRS.

The IRS Cannot have access to a taxpayer account if:

• If a taxpayer’s retirement account does not allow access to the funds in. their employer-sponsored retirement account.
• They have a vested interest in the funds within your retirement account.
• Taxpayer separated service from your employer.
• Until the taxpayer is retired, disabled, or has died before retiring.

The IRS may not be able to levy a taxpayer’s retirement even if they access their retirement to:

• Pay for some or all of their necessities of life due to being retired or disabled or otherwise having lost a means of support.
• Pay for ongoing medical care due to a chronic medical condition such that their retirement account can be classified as an income source rather than as an asset.