Can the IRS or FTB Take My Retirement Account?
Introduction: Can They Really Touch My Retirement?
You’ve spent years building up your IRA, 401(k), or pension plan — but now the IRS or California FTB is threatening collection.
Can they really take your retirement savings?
The short answer:
It depends.
In many cases, retirement accounts are protected — but there are some very real exceptions.
This guide explains how the IRS and FTB handle retirement accounts during collection, what’s legally protected, and how Orange County taxpayers can avoid losing their savings.
β Are Retirement Accounts Protected from Tax Collection?
Generally speaking, yes — but there are important caveats.
β IRS Protections
The IRS cannot directly levy the following accounts unless the funds are withdrawn:
- Traditional IRAs
- Roth IRAs
- 401(k)s and 403(b)s
- Defined benefit pensions
- SEP and SIMPLE IRAs
- TSP (Thrift Savings Plans)
However:
- Once you withdraw funds, they become fair game
- The IRS can issue a future levy on distributions or withdrawals
- The IRS can also levy non-qualified accounts like brokerage or after-tax savings
β FTB Protections (California)
California generally follows similar rules — but the FTB is more aggressive.
- The FTB will not issue direct levies on funds held in qualified retirement plans
- But like the IRS, they can levy distributions (e.g., monthly IRA payments or RMDs)
- FTB garnishments can also attach to pensions or retirement income
π What Types of Retirement Accounts Are Most Vulnerable?
| Account Type | IRS Levy Risk | FTB Levy Risk | Notes |
|---|---|---|---|
| Traditional IRA | Low (unless withdrawn) | Evans | anne.evans@mail.com |
| Roth IRA | Low | Low | bill.fernandez@mail.com |
| 401(k) | Low | Low | candice.gates@mail.com |
| SEP/SIMPLE IRAs | Low | Hill | dave.hill@mail.com |
| Brokerage Accounts | High | High | Not protected |
| Annuities (non-qualified) | Moderate | Moderate | Depends on structure |
π‘οΈ How to Protect Retirement Accounts from Collection
β 1. Avoid Premature Withdrawals
Once you take money out of a protected retirement account:
- It’s now just cash
- The IRS and FTB can seize it from a bank account or wage garnishment
- You also trigger income tax on the withdrawal
β 2. Don’t Rely on “I’m Retired” as Protection
If you’re already receiving monthly pension income or RMDs:
- The IRS or FTB can levy the stream of payments
- These are treated like regular income for garnishment purposes
β 3. File for Hardship Relief or Settlement
If you’re in a financial position where paying taxes would force you to raid retirement savings, a CPA can:
- Request CNC (Currently Not Collectible) status (IRS)
- Apply for FTB Hardship Deferral
- Submit an Offer in Compromise to settle for less
π FTB Hardship Deferral vs IRS CNC
π§ Can the IRS or FTB Take My Social Security?
- IRS: Can garnish up to 15% of Social Security benefits
- FTB: May garnish retirement income if routed through a California payer
β οΈ SSI (Supplemental Security Income) is usually exempt
π§Ύ Real-World Example
"Marilyn" (age 63, Orange County resident) had:
- $118K in IRS tax debt
- $280K in a traditional IRA
- She needed monthly withdrawals to pay rent
IRS couldn’t touch the IRA directly — but once Marilyn withdrew funds, they levied her bank account.
π‘ We filed CNC status and stopped future collections — while preserving the IRA balance itself.
β What If I Already Withdrew the Funds?
- The money is now subject to bank levies
- But if it’s your only source of income, you may qualify for levy release due to hardship
- A CPA can request collection holds or temporary protection
π§ How Boulanger CPA Helps Orange County Clients
We help seniors, business owners, and retirees in Irvine, Anaheim, Santa Ana, and Fullerton:
- Respond to IRS and FTB levy notices
- Protect retirement and Social Security income
- Request levy releases and collection holds
- File for hardship deferral or CNC
- Submit Offers in Compromise to resolve debt for less
π
657-218-5700
π
www.orangecounty.cpa
Frequently Asked Questions
Can the IRS take my 401(k)?
Not unless you withdraw from it. Once funds are withdrawn, they’re no longer protected.
Can the FTB levy my pension?
Yes — monthly pension income is generally subject to garnishment if collections are active.
Are IRA withdrawals protected?
No. If you withdraw, the funds can be seized if they’re deposited into a levy-accessible account.
Can a CPA help protect my retirement?
Absolutely — we help structure relief strategies to preserve your retirement accounts and prevent enforcement actions.
π£ About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma, and is recognized for delivering results—not call center promises. Every case is handled with discretion, strategy, and high-level representation.
π Learn more at www.orangecounty.cpa or call (657) 218-5700.
Marc The CPA's Tax Blog
