Well, yes and no.  While a traditional IRA is still an asset-protected account, the U. S. Supreme Court recently ruled that “inherited” IRAs are not subject to the same asset protection status.  Most people, including most attorneys, believed that all IRAs had special asset protection status.  It was only until just recently that we had our highest court tell us otherwise.  We thought an IRA was an IRA was an IRA.  It’s not.  If it’s an inherited IRA then you simply are not going to have the same asset protection status that you have with your own IRA.

An inherited IRA is simply where you become the beneficiary of someone else’s IRA. You can elect to take the IRA over time, or if you are the spouse of the original owner of the IRA, then you can “rollover” the IRA.  The case did not specifically address “rollover” IRAs so there may be some question that that is a distinction from IRAs inherited by non-spouse beneficiaries who do not have a rollover option.

The way to solve this problem is with an IRA Trust.  They are flexible and can provide a significant degree of asset protection that we now see Federal law does not provide.