Nevada Retirement Account and IRA Protection

A judgment creditor cannot reach a Nevada resident’s IRA or retirement plan while the money stays in the account and the balance sits under the state’s cap. Nevada exempts up to $1,000,000 in present value across a resident’s IRAs, Roth IRAs, SEP and 401(k) plans and pension or profit-sharing trusts, inherited accounts included.

The statute exempts money “held in” the account, so a withdrawal turns exempt savings into ordinary property the day it comes out, and there is no grace period for rolling it over. Whatever sits above the cap is reachable. In bankruptcy a Nevada debtor takes the Nevada list, though a federal rule for retirement funds still applies.

Which Retirement Accounts Nevada Exempts

Nevada exempts four kinds of retirement account and one college-savings account in a single paragraph of its exemption statute, and one dollar cap covers all of them together. The paragraph covers “money, not to exceed $1,000,000 in present value, held in” the accounts it lists, a cap the IRA protection chart sets beside every other state’s rule (Nev. Rev. Stat. § 21.090(1)(r)). The five accounts are:

• an IRA that conforms to section 408 or 408A of the tax code, which covers a traditional, Roth or SIMPLE IRA, an inherited IRA included;
• a written simplified employee pension plan under section 408, an inherited SEP included;
• a cash or deferred arrangement plan, the 401(k) form, qualified and maintained under the tax code, an inherited plan included;
• “a trust forming part of a stock bonus, pension or profit-sharing plan” kept qualified under section 401 of the tax code;
• a trust that forms part of a Nevada prepaid-tuition or college-savings program under section 529.

The college-savings entry on that list has two exceptions written into the statute. Money put in after a judgment against the account’s owner or purchaser is not exempt, and neither is money that no beneficiary will use for college.

The list does not name a 403(b) annuity or a 457 deferred-compensation plan, and no Nevada decision has placed either inside or outside it. A public employee’s pension has its own exemption in the same section, for benefits paid from the Public Employees’ Retirement System (§ 21.090(1)(ii)).

The cap is one figure for the whole list. The statute states the amount once and then names the accounts, so on the statute’s words one cap covers everything a person holds across those accounts. Nothing in the statute adjusts the figure for inflation. No Nevada court has construed the cap, the phrase “present value,” or how the cap applies to a person holding several accounts.

A 401(k) or pension plan an employer runs has a second layer of protection that the Nevada cap does not touch. ERISA requires every pension plan it governs to carry a bar on assigning benefits. In Patterson v. Shumate the Supreme Court read that bar to exclude a participant’s interest from the bankruptcy estate. Outside bankruptcy the same bar stops an ordinary judgment creditor, with no dollar cap.

An owner-only plan, one that covers nobody but the business owner, is generally outside ERISA, so the Nevada cap is its only protection against a lawsuit. For an IRA the cap is the whole rule.

Are Inherited IRAs Protected from Creditors in Nevada?

Yes. Nevada’s statute names an inherited IRA, an inherited SEP and an inherited cash or deferred arrangement plan as exempt, under the same cap that covers the owner’s own accounts. Eleven states, Nevada among them, name inherited accounts in their exemption statutes. The pension and profit-sharing entry has no inherited clause, and neither does the college-savings entry.

The words were added in 2017, three years after the Supreme Court decided Clark v. Rameker, 573 U.S. 122 (2014). Clark held that an inherited IRA’s balance is not “retirement funds” under the Bankruptcy Code’s own retirement exemption. The holder may never contribute more, must take withdrawals whether or not retirement is near, and may take the whole balance at any time with no penalty, so the money is not set aside for retirement. The bankruptcy court in In re Gagow took the 2017 words as the Legislature’s answer to Clark.

In Nevada the inherited-account question does not turn on a bankruptcy election, as it does in Texas. Texas lets a bankruptcy debtor choose between the federal list and the state list, and an inherited IRA survives there only under the state list. Nevada has barred the federal list, so a Nevada bankruptcy debtor is on the Nevada list from the start, and that list names the inherited account.

The cap still applies. An inherited IRA counts toward the same cap as the owner’s own accounts, on the statute’s words, and no Nevada decision has yet applied the inherited-account words to a creditor’s claim. A surviving spouse who moves the inherited money into her own IRA owns an ordinary IRA from then on, and Clark does not apply to it.

The California statute is silent on inherited accounts, and whether its exemption reaches one is undecided there. A Nevada heir has the statute’s own words to rely on.

Money Withdrawn from a Nevada Retirement Account

Money withdrawn from a Nevada retirement account loses the exemption the day it leaves, because the exemption is written for money “held in” the account and for nothing else. A withdrawal sitting in a checking account is ordinary money that an ordinary judgment creditor can take, and only the wildcard covers part of it.

The one decision construing the retirement-account entries, among the Nevada asset protection case law on exemptions, is In re Gagow, 590 B.R. 517 (Bankr. D. Nev. 2018). Before filing, the debtor had taken money out of an IRA and put it in a checking account. The bankruptcy court held that the money was not exempt. The statute says “held in,” the court reasoned at 522-25, and not “from” or “for.” Nevada’s statute, the court added, has no counterpart to the sixty-day rollover grace that federal bankruptcy law carries.

The wildcard covers part of the withdrawn money. Nevada lets a debtor shield $10,000 of any personal property not otherwise exempt, money on deposit included, and the Gagow court noted that the wildcard remained available for the withdrawn balance. The Nevada Supreme Court has read the wildcard the same way for wages. In Platte River Insurance Co. v. Jackson, 137 Nev. Adv. Op. 82, 500 P.3d 1257 (2021), it held that the part of a paycheck a creditor can still reach is “personal property not otherwise exempt,” which the wildcard then covers.

The withdrawal in Gagow was one the debtor chose. No Nevada decision addresses a required minimum distribution or money moving between two accounts, and the statute draws no line between the reasons for a withdrawal. Some states keep the exemption on money after it leaves the account, and Nevada is not one of them.

The same decision also ruled on a second exemption. Nevada also exempts a shareholder’s stock in a small corporation, and Gagow held that the words reach a Nevada corporation’s stock alone, so a member’s interest in a California limited liability company fell outside them. The Nevada Supreme Court held in Becker v. Becker, 131 Nev. 857, 362 P.3d 641 (2015), that the stock exemption does not shelter the shareholder’s economic interest, which stays subject to a charging order. A Nevada LLC member’s creditor gets the same remedy, a charging order, and cannot foreclose.

What Happens to Retirement Savings Above the Cap

Retirement savings above the cap are ordinary property in Nevada, and a judgment creditor can reach them. Nevada is one of five states with a dollar-figure cap on the IRA exemption. The cap does not move with inflation, so a balance that grows past it is exposed though the owner did nothing.

The cap falls hardest on a rollover. Money inside an employer’s ERISA plan is beyond an ordinary judgment creditor with no dollar limit, and a rollover into an IRA trades that federal protection for the Nevada exemption and its cap. A business owner who rolls a large 401(k) balance into an IRA keeps the capped amount against a Nevada judgment and exposes the rest. Leaving the money in the employer’s plan, or moving it into a new employer’s plan, keeps the federal protection.

Retirement Accounts in a Nevada Bankruptcy

A Nevada bankruptcy debtor cannot use the federal exemption list. The Nevada statute provides that those federal exemptions “do not apply to property owned by a resident of this State unless conferred also by subsection 1” (Nev. Rev. Stat. § 21.090(3)). Nevada’s retirement cap follows the debtor into the case, but a separate federal exemption for retirement funds applies alongside the Nevada list.

The opt-out is written as a residency rule. Under federal bankruptcy law the state whose exemptions apply is the one where the debtor was domiciled during the 730 days before filing. A recent arrival may therefore still be on another state’s list, and a debtor that rule leaves with no exemptions at all may take the federal list.

Whichever state list applies, the Bankruptcy Code adds its own exemption for “retirement funds” held in a tax-exempt retirement fund or account (11 U.S.C. § 522(b)(3)(C)). That exemption is part of the state-law option, so a Nevada debtor keeps it even though the federal list is closed.

For an employer plan that federal exemption has no dollar limit. For a traditional or Roth IRA it carries a dollar cap that is adjusted on a three-year cycle. Money a debtor rolled over out of an employer plan stays outside that cap, and a SEP or SIMPLE account is outside it altogether.

The two rules together give a rollover IRA more protection in bankruptcy than against a Nevada judgment. Outside bankruptcy the account is exempt only up to the Nevada cap. In a Nevada bankruptcy the whole rolled-over balance stays exempt, because rollover money sits outside the federal cap and the Nevada opt-out reaches the federal list alone.

An employer’s ERISA plan is not part of the bankruptcy estate at all, under Patterson, so neither cap touches it. Clark closes the federal retirement-funds exemption to an inherited IRA, so a Nevada debtor claims the inherited account under the Nevada list, which names it.

Which Creditors Still Reach a Nevada Retirement Account

The IRS and a former spouse reach a Nevada retirement account when an ordinary judgment creditor cannot. A federal tax levy overrides every state exemption. The regulation (26 C.F.R. § 301.6334-1(c)) provides, for any federal tax, that “No provision of a State law may exempt property or rights to property from levy.” The federal list of property beyond a tax levy names neither an IRA nor an employer plan.

How a divorce divides a retirement account depends on which kind of account it is. A qualified domestic relations order, ERISA’s own exception to its assignment bar, lets a court divide an employer plan between divorcing spouses, and it reaches only such a plan. An IRA passes to a former spouse under the divorce instrument itself, and the tax code then treats the account as the recipient’s own.

Another state’s tax collector reaches nothing at all in Nevada. When another state holds a judgment for unpaid income tax on pension or retirement benefits, Nevada exempts every asset the debtor holds in the state (§ 21.090(1)(o)).

What Nevada Retirement Protection Comes To

A Nevada resident’s retirement account is out of an ordinary judgment creditor’s reach while the money stays in it and the balance stays under the cap. An inherited account is covered on the same terms. The exposure begins at three points. A balance above the cap is reachable at any time, and a withdrawal is reachable the day it leaves the account. A rollover out of an employer plan moves the balance from federal protection to the capped Nevada exemption, outside bankruptcy.

The balance above the cap, brokerage accounts and cash beyond the wildcard are the liquid property a Nevada judgment reaches, and the rest of asset protection in Nevada addresses that property.