IRS Levy on Retirement Accounts – Can They Take My 401(k) or IRA?

Think Retirement Funds Are Safe from the IRS? Think Again.

Most taxpayers assume their 401(k), IRA, or pension is untouchable when it comes to IRS collections—but that’s not always true.

While the IRS doesn’t go after retirement accounts as often as bank accounts or wages, they do have the legal authority to levy these assets under certain conditions.

In this post, we explain when the IRS can levy your retirement, how it works, and how to protect your savings before it's too late.

Can the IRS Levy a Retirement Account?

Yes—under IRC §6331, the IRS has authority to levy most retirement assets, including:

• Traditional and Roth IRAs
• 401(k) and 403(b) accounts
• Self-employed retirement accounts (SEP, SIMPLE)
• TSP (Thrift Savings Plans)
• Some pensions and annuities

However, they typically only do this in serious cases where:

• The taxpayer has ignored repeated notices
• There’s significant tax debt
• All other collection avenues have failed
• The taxpayer has access to withdraw the funds

This is one of the key IRS levy vs lien differences — a lien secures the government’s claim to your property, but a levy is an active seizure of your money or assets.

What Retirement Accounts Are Exempt?

• Social Security Income is partially protected (but may still be levied at 15%)
• Supplemental Security Income (SSI) is fully exempt
• Certain employer pension plans may be protected under ERISA, but only from private creditors—not the IRS

How Does an IRS Retirement Levy Work?

1. The IRS sends Final Notice of Intent to Levy (Letter 1058 or LT11)
2. If no action is taken in 30 days, the IRS may issue a levy
3. The IRS contacts your plan administrator or financial institution
4. The funds are frozen or withdrawn and sent directly to the IRS

For some taxpayers, this may feel no different than an IRS bank account levy in California — your funds are suddenly unavailable, and you may even feel like IRS seized my bank account without warning.

Will the IRS Levy Your Retirement Without Warning?

No. The IRS must:

• Assess the tax
• Send a notice and demand for payment
• Send a final notice at least 30 days before levying

Related:  What to Do After Receiving a CP504 Notice

If you never received this notice, the levy may be improper. That’s when knowing whether can you stop an IRS levy after it starts becomes critical — quick legal or CPA intervention can sometimes reverse or release the action.

What If You’re Not Yet Retired?

If the IRS levies your 401(k) before you’ve reached retirement age or while it’s still protected by plan rules, they may not be able to take the funds unless:

• You have a current right to withdraw (e.g., separated from employer)
• The plan allows in-service distributions

In many cases, the IRS cannot force a distribution before you’re eligible—but they will levy the account once it becomes accessible.

How to Stop the IRS from Levying Your Retirement

1. Respond to Notices Immediately

Don’t ignore CP504, LT11, or other levy warnings. Request a Collection Due Process hearing using Form 12153 if you’re within the 30-day deadline.

Related: IRS Collection Appeals Program (CAP) vs CDP Hearings – What’s the Difference?

2. Enter a Resolution

Options include:

• Installment Agreement
• Settling tax debt with an Offer in Compromise
• Using Currently Not Collectible status to stop levies

These can stop the levy and preserve your retirement funds.

3. Request a Levy Release or Taxpayer Advocate Intervention

If the levy was wrongful or causes serious hardship, you may:

• Request a manual release
• File Form 911 for Taxpayer Advocate help
• Provide Form 433-A with financials proving hardship

We Help Orange County Taxpayers Protect Their Retirement from the IRS

At Boulanger CPA and Consulting PC, we:

• Stop IRS levies on retirement accounts
• File emergency appeals and hardship requests
• Negotiate settlement or payment plans
• Restore access to retirement funds

📞 Call (657) 218-5700 or request a strategy call at www.orangecounty.cpa

Learn more about your options and explore more in Defend What’s Yours to protect your financial future.

📣 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.

He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.

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 holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.