The Employment Retirement Income Security Act of 1974 (ERISA) provides that benefits under "pension plans" must not be assigned or alienated. This provision has been construed as protecting pension benefits from claims of creditors. However, ERISA defines a "pension plan" as a plan established or maintained by an employer to provide retirement income to employees. An individual retirement plan is generally not maintained by an employer and, thus, is not protected under federal law by the anti-alienation clause of ERISA. Generally, then, whether an individual retirement plan is subject to attachment by creditors is a matter to be decided on the basis of applicable state law.

Under Ohio law, individual retirement accounts and annuities are not subject to attachment. A recently new law, Section 2329.66 (effective 12/06/96) does not allow the attachment of individual retirement accounts and annuities as long as the transfer to the individual retirement accounts and annuities was not for purposes of fraud against creditors (for example, receiving notice of a lawsuit and then depositing a large sum in an IRA account to try to "shelter" it) and the individual retirement accounts and annuities were not subject to collection for child support. The applicable Ohio law reads as follows:

(A)(12)(c) Except for any portion of the assets that were deposited for the purpose of evading the payment of any debt and except as provided in sections 3111.23 and 3113.21 of the Revised Code, the person's right in the assets held in, or to receive any payment under, any individual retirement account, individual retirement annuity, or Keogh or "H.R. 10" plan that provides benefits by reason of illness, disability, death, or age, to the extent reasonably necessary for the support of the person and any of the person's dependents.

Keep in mind that when money is withdrawn from the individual retirement accounts and annuities, not only will it be taxed as income, but also be subject to creditor's claims.