Can an inherited IRA be claimed as an exemption?: U.S. Supreme Court decides Clark v Rameker

The answer to this question may matter to you, your children, and your grandchildren! (Hint, the answer is no.)

Clark v. Rameker (13-299), in a unanimous decision:

“JUSTICE SOTOMAYOR delivered the opinion of the Court.

When an individual files for bankruptcy, she may exempt particular categories of assets from the bankruptcy estate. One such category includes certain “retirement funds.” 11 U. S. C. §522(b)(3)(C). The question presented is whether funds contained in an inherited individual retirement account (IRA) qualify as “retirement funds” within the meaning of this bankruptcy exemption. We hold that they do not….

The Bankruptcy Code does not define “retirement funds,” so we give the term its ordinary meaning….” [Link to full case.]