Can Your Retirement Check Be Garnished?

Garnishment is a legal process where a portion of an individual’s earnings or assets is withheld by a third party, such as an employer or bank, for the payment of a debt. This procedure allows creditors to recover owed funds directly from a debtor’s income or assets. The ability to garnish retirement income varies significantly, depending on the specific type of retirement income involved and the nature of the debt being collected.

Social Security Benefit Garnishment

Social Security benefits, which include retirement, disability, and survivor benefits, generally receive protection from garnishment under federal law through the Social Security Act. This protection means that most private creditors, such as credit card companies or medical bill collectors, cannot directly seize these funds to satisfy consumer debts.

However, exceptions exist where Social Security benefits can be garnished. A portion of benefits can be withheld to satisfy legally enforceable obligations for child support and alimony. The amount garnished for these domestic support obligations is subject to federal limitations, often up to 50% or 60% of the benefits, with the higher percentage applying if the individual is more than 12 weeks behind on payments.

Federal agencies can also garnish Social Security benefits to collect certain federal debts. This includes unpaid federal income taxes, for which the Internal Revenue Service (IRS) can garnish up to 15% of the monthly payment. For defaulted federal student loans, the Department of Education can garnish up to 15% of the monthly payment. Other federal non-tax debts owed to federal agencies, such as overpayments of federal benefits, can also lead to garnishment. To maintain the protected status of Social Security funds, it is important to keep them separate from other funds in a bank account.

Employer-Sponsored Retirement Plan Garnishment

Employer-sponsored retirement plans, such as 401(k)s, 403(b)s, 457(b)s, traditional defined benefit pensions, and profit-sharing plans, are primarily protected by the Employee Retirement Income Security Act (ERISA). ERISA generally prohibits creditors from garnishing or attaching assets held within these plans through its anti-alienation provisions. This means that most private creditors cannot access these funds.

However, specific exceptions to ERISA’s protection exist. A Qualified Domestic Relations Order (QDRO) is a distinct type of court order that allows a portion of an ERISA-protected retirement plan to be paid to an alternate payee, such as a spouse, former spouse, child, or other dependent, for child support, alimony, or marital property division.

Employer-sponsored plans can also be subject to garnishment for federal debts. The IRS can levy funds in these plans for unpaid federal income taxes. Defaulted federal student loans can also lead to garnishment of these plans. Additionally, plan assets can be garnished if the participant committed a crime or civil breach of fiduciary duty related to the plan. Once funds are distributed from these plans to the individual, they may lose some ERISA protections and become subject to state garnishment laws for other types of debts.

Individual Retirement Account (IRA) Garnishment

Individual Retirement Accounts (IRAs), including Traditional, Roth, SEP, and SIMPLE IRAs, generally do not have the same broad federal anti-alienation protection as ERISA-qualified employer-sponsored plans. For non-bankruptcy garnishment by private creditors, the primary protection for IRAs comes from state laws. These state laws vary widely in the extent of protection they offer.

Federal law provides specific protection for IRAs in bankruptcy proceedings. As of April 1, 2025, federal law protects up to $1,711,975 of combined Traditional and Roth IRA contributions and earnings in bankruptcy. However, amounts rolled over from employer plans into an IRA receive unlimited protection in bankruptcy.

Similar to other retirement assets, IRAs can be garnished in certain situations. They are generally subject to garnishment for child support and alimony obligations, often through court orders, with many states providing no exemption in these cases. IRAs can also be garnished for unpaid federal income taxes. The IRS can levy an IRA if the taxpayer has access to and can remove funds from it. Defaulted federal student loans can also lead to garnishment of IRAs. Understanding the specific state laws where an individual resides is important, as these laws dictate the extent of protection from private creditors outside of bankruptcy.

State Law Influence on Retirement Income Garnishment

State laws play a significant role in providing additional or specific protections for retirement income, particularly for Individual Retirement Accounts (IRAs) and some non-ERISA pensions, beyond federal minimums. Many states have exemption laws designed to protect a debtor’s assets from creditors, aiming to ensure a basic standard of living. These state laws can offer stronger protections than federal law for certain assets, but they cannot override federal mandates, meaning federal debts will still allow for garnishment.

The variety of state approaches regarding retirement account exemptions is notable. Some states offer unlimited protection for IRAs from private creditors. Other states may offer protection up to a certain dollar amount, or only for contributions made before a specific event, such as a judgment being entered. Conversely, some states may provide limited or no specific protection for certain types of retirement accounts from private creditors. These state protections often function as part of broader exemption statutes that define which assets are shielded from collection. State laws also establish the procedures for garnishment within their respective jurisdictions. Understanding the specific legal framework in one’s state of residence is important to determine the exact protections and procedures relevant to retirement income.