Can My Retirement IRA Be Attached to Pay a Judgment?

Full question:

I was involved in a collision with a bicyclist over a year ago and now am getting info from the DMV saying a personal injury attorney is making inquiries. The police report states it was the bicyclist's fault and he violated at least 2 sections of the vehicle code, but the insurance company says I still might be found partially liable. I'm about to retire any my retirement accounts will be rolled into an IRA. My question is; in California, are those assets exempted should a judgment go against me? If so, I may have to rethink my retirement.

• Category: Judgment Liens
• Date: 04/07/2025
• State: California

Answer:

Assets in a non-qualified plan (called “private retirement plans” under California law) are exempt from the claims of creditors; and assets in an IRA or any other self-employed retirement plan are exempt to the extent the assets are necessary for the retirement needs of the debtor and the debtor’s dependents. See CCP Section 704.115

Please see the exemption information at the following link:

http://www.uschambersmallbusinessnation.com/toolkits/popup/P98_12_assettables_CA
http://www.uschambersmallbusinessnation.com/toolkits/popup/P98_12_assettables

Please see the following CA statutes to determine applicability:

704.115. (a) As used in this section, "private retirement plan"
means:
(1) Private retirement plans, including, but not limited to, union
retirement plans.
(2) Profit-sharing plans designed and used for retirement
purposes.
(3) Self-employed retirement plans and individual retirement
annuities or accounts provided for in the Internal Revenue Code of
1986, as amended, including individual retirement accounts qualified
under Section 408 or 408A of that code, to the extent the amounts
held in the plans, annuities, or accounts do not exceed the maximum
amounts exempt from federal income taxation under that code.
(b) All amounts held, controlled, or in process of distribution by
a private retirement plan, for the payment of benefits as an
annuity, pension, retirement allowance, disability payment, or death
benefit from a private retirement plan are exempt.
(c) Notwithstanding subdivision (b), where an amount described in
subdivision (b) becomes payable to a person and is sought to be
applied to the satisfaction of a judgment for child, family, or
spousal support against that person:
(1) Except as provided in paragraph (2), the amount is exempt only
to the extent that the court determines under subdivision (c) of
Section 703.070.
(2) If the amount sought to be applied to the satisfaction of the
judgment is payable periodically, the amount payable is subject to an
earnings assignment order for support as defined in Section 706.011
or any other applicable enforcement procedure, but the amount to be
withheld pursuant to the assignment order or other procedure shall
not exceed the amount permitted to be withheld on an earnings
withholding order for support under Section 706.052.
(d) After payment, the amounts described in subdivision (b) and
all contributions and interest thereon returned to any member of a
private retirement plan are exempt.
(e) Notwithstanding subdivisions (b) and (d), except as provided
in subdivision (f), the amounts described in paragraph (3) of
subdivision (a) are exempt only to the extent necessary to provide
for the support of the judgment debtor when the judgment debtor
retires and for the support of the spouse and dependents of the
judgment debtor, taking into account all resources that are likely to
be available for the support of the judgment debtor when the
judgment debtor retires. In determining the amount to be exempt under
this subdivision, the court shall allow the judgment debtor such
additional amount as is necessary to pay any federal and state income
taxes payable as a result of the applying of an amount described in
paragraph (3) of subdivision (a) to the satisfaction of the money
judgment.
(f) Where the amounts described in paragraph (3) of subdivision
(a) are payable periodically, the amount of the periodic payment that
may be applied to the satisfaction of a money judgment is the amount
that may be withheld from a like amount of earnings under Chapter 5
(commencing with Section 706.010) (Wage Garnishment Law). To the
extent a lump-sum distribution from an individual retirement account
is treated differently from a periodic distribution under this
subdivision, any lump-sum distribution from an account qualified
under Section 408A of the Internal Revenue Code shall be treated the
same as a lump-sum distribution from an account qualified under
Section 408 of the Internal Revenue Code for purposes of determining
whether any of that payment may be applied to the satisfaction of a
money judgment.