IRS Seizures and Your Pension

You and your family can be stressed from IRS issues. You’ve labored all your life to be able to have a nice home and a car. Now they could be taken away by the IRS. You have received a notice stating that they are going to seize your properties to pay off the back taxes you owe. They can do this. They can seize your home, car, and even your pension.

Though most assets may be taken to pay your tax bill, there are some that are exempted, such as:

• Furniture, food, fuel, and personal effects as much as $2,500
• Clothing and books for school
• Undelivered mail
• Tools and books that are job related up to $1,250
• Certain annuity and pension benefits, such as Retired Serviceman’s Family Protection and Survivor Benefit Plan, Special Pensions for Medal of Honor awardees, Railroad Unemployment Insurance Act, and Railroad Retirement Act
• Certain service-oriented disability payments
• Worker’s compensation, job training, public assistance, and unemployment benefits
• The minimum amount exempt from a 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 who are on permanent duty overseas

Notice that the list says “certain annuity and pension benefits”. They’re not exempted from seizure totally. The larger the amount you need to pay to the IRS, the higher the risk is to your pension.

Normally, assets are seized in this order:

1. Checking and savings accounts
2. Vehicles – airplanes, automobiles, boats, luxury vehicles
3. Life insurance
4. Accounts receivable
5. Stocks and bonds
6. Wages
7. Collectibles
8. Real estate – vacation and investment
9. IRAs, Keoghs, and pensions
10. Your home

Pensions are low priority.

The IRS only seizes enough to pay the bill, though you should consider that interest and penalties are compounding on top of it. With no other assets present to cover the liability, your pension is at risk.