Ever wanted to start a business using a retirement plan? There’s a way to roll over plan benefits into a new business without paying taxes and penalties, but you have to be careful. Two recent cases illustrate how not to do it.
Updated: The bankruptcy court in In re Sherr (Bankr ND Cal, Sept. 27, 2016, No. 16-10283) 2016 Bankr Lexis 3521 has held that the exemption for “retirement funds” applies to inherited IRAs under California law.
The law says that retirement funds are exempt property in bankruptcy, but the Supreme Court has held that this exemption doesn’t apply to inherited IRAs. End of story? Not quite.