James Daley, Jr. v. Ann Mostoller

OPINION

SUTTON, Circuit Judge.

Generally speaking, the assets in an individual retirement account are off limits from tax collectors and creditors in bankruptcy. Yet if the owner of a retirement account uses it in a prohibited way, the taxation and bankruptcy protection disappears. After saving $66,000 in an IRA with Merrill Lynch, James Daley filed a Chapter 7 bankruptcy petition. The bankruptcy court and the district court thought that Daley had impermissibly used the IRA to extend himself credit by granting Merrill Lynch a lien on the retirement funds to cover any potential future debts to…