The named beneficiary of an Individual Retirement Account (IRA) or Roth IRA inherits a golden egg —an asset with uniquely valuable characteristics. In June, however, the United States Supreme Court in Clark v. Rameker issued a unanimous opinion that removed one of the beneficial characteristics of an "inherited IRA." The Court held that an inherited IRA is not exempt from a debtor’s bankruptcy estate based on federal bankruptcy exemptions, meaning that funds held in a nonspouse beneficiary’s inherited IRA are now available in bankruptcy proceedings to the claims of the account holder’s creditors. It is unclear at this time how the Court’s ruling in Clark v. Rameker affects spousal IRAs.

Assets held in qualified plans, such as pension plans, 401(k) plans, and 403(b) plans, are exempt from creditors under ERISA. Assets held in IRAs, however, are not protected under ERISA but do have protection from creditors under state laws and the federal Bankruptcy Code. Under the Bankruptcy Code, amounts held in an IRA, without regard to amounts rolled over from a qualified plan, are exempt up to $1,000,000 (adjusted for inflation to $1,245,575 in 2014). Because the Bankruptcy Code does not reference inherited IRAs, it was unclear before the Court’s ruling in Clark v. Rameker whether inherited IRAs were protected in bankruptcy.