The IRS can Levy Pensions
The common understanding is that pensions, IRAs and 401Ks are not reachable by creditors. Don’t kid yourself, when it comes to the government they can get to the money. The IRS cannot force you to liquidate these accounts, but they can levy any proceeds you take from them.
What can you do to protect this money? The best answer is to sign up for an Installment Agreement so that the IRS does not issue the levy. Another alternative is to make an Offer-in-Compromise to clear the debt for less than full value. Despite what you hear on TV, the IRS does not normally clear tax debts at “pennies on the dollar”, but they will accept offers that are their best bet to collect.
Retired people living on fixed income typically have little chance of ever paying off the debt in full. The IRS is often willing to take a smaller lump sum payment in these cases in order to get the debt off the books.
If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email firstname.lastname@example.org.