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The possible impact of tax debts on retirement funds

On Behalf of | Dec 20, 2022 | Tax Debt

After spending years planning and saving for the golden years of life, most individuals might not want to let anything disrupt their plans for retirement. Unfortunately, things don’t always go as intended and those who struggle with overwhelming tax debts might have questions about how this could affect their lives. Understanding the possible challenges of entering retirement with tax debts could help individuals in Georgia prepare to seek advice on their available options for relief. 

Retirement funds 

According to experts, the IRS may retain the right to garnish funds from several types of retirement accounts if a person is behind on tax obligations. This could include anything from IRAs and pensions to 401(k)s and self-employment plans. In some cases, amounts garnished could include up to %25 of income from retirement funds and this may persist until obligations are fulfilled. 

While facing levies on retirement accounts can be stressful, it may be helpful to know that the IRS must send out a notification of delinquency prior to initiating garnishment. Failure to respond to this letter may eventually trigger a final notice informing a person of an intent to garnish funds. There may also be some scenarios in which the IRS will not proceed with a levy based on the needs of an individual and there may also be certain steps one can take to help protect against garnishment. 

Advice on one’s options 

Individuals who worry that tax debts may trigger levies on retirement funds may face an understandable desire for guidance on their available options. When similar issues arise, a person in Georgia may choose to speak with an attorney for guidance in addressing his or her situation and choosing the best course of action to take. An attorney can work toward protecting a client’s legal rights and assist in choosing the best available path with which to seek relief from the trials of tax debt.