States That Protect Inherited IRAs From Creditors Despite Clark v. Rameker

Clark v. Rameker does not mean every inherited IRA is exposed to every creditor. The Supreme Court denied a federal bankruptcy “retirement funds” exemption, but states can create their own exemptions. Current statutes in Florida and Arizona are clear examples: both expressly protect beneficiary interests in qualifying retirement accounts, including interests arising by inheritance.

This article deliberately does not publish a supposedly permanent 50-state yes/no table. Exemption statutes change, bankruptcy domicile rules can determine which state law is available, and some exemptions have special exceptions. A current statute is more useful than a stale list.

Federal and state exemption systems answer different questions

Clark interpreted 11 U.S.C. §522(b)(3)(C), a federal bankruptcy exemption for “retirement funds.” The Court held that a non-spouse inherited IRA did not have the legal characteristics of retirement funds for that provision. Section 522, however, also interacts with state exemption systems, and many states have statutes protecting retirement-account interests from attachment or execution.

A state legislature can write an exemption more broadly than the federal phrase interpreted in Clark. If the statute expressly protects a “beneficiary” or an interest that arises “by inheritance,” the state-law question is no longer whether the inherited account is the debtor’s own retirement fund. The statutory text supplies an independent protection.

Florida is unusually explicit

Florida Statutes §222.21 protects money or other assets payable to an owner, participant, or beneficiary from qualifying retirement accounts described in Internal Revenue Code sections including 408 and 408A. The 2026 statute goes further: it says protection does not cease after the owner’s death because of a direct transfer or eligible rollover, specifically including a direct transfer or rollover to an inherited IRA.

That language addresses the post-Clark concern directly. It also contains exceptions, including claims involving certain domestic-relations interests. A Florida resident should read the complete statute and bankruptcy domicile rules rather than quoting only the favorable sentence.

Arizona also expressly uses beneficiary and inheritance language

Arizona Revised Statutes §33-1126(B) exempts money or assets payable to a participant or beneficiary, or the participant’s or beneficiary’s interest, in listed retirement plans including Code sections 408 and 408A. It specifically says the beneficiary’s interest can arise “by inheritance, designation, appointment or otherwise.”

The Arizona statute also has exceptions, including certain domestic-relations and timing provisions. Its value for comparison is the drafting: Arizona did not require the protected beneficiary interest to be the beneficiary’s personally accumulated retirement savings. That is materially different from the federal phrase interpreted in Clark.

Why this is not a complete state ranking

Other states may protect inherited accounts through statutes, case law, or broader retirement-account language, while some have narrower protection or unresolved appellate authority. The answer can also change depending on whether the creditor is acting outside bankruptcy or the beneficiary has filed under the Bankruptcy Code.

A static table can silently become wrong after a legislative amendment or court decision. For a real claim, retrieve the current statutory text for the beneficiary’s state, search for “beneficiary,” “inheritance,” “individual retirement account,” “408,” and the specific creditor exceptions, and then confirm whether that state’s exemption law is actually available in the case.

Bankruptcy domicile can prevent shopping for a favorable statute

A beneficiary cannot necessarily move to a protective state the week before bankruptcy and immediately claim that state’s exemptions. Federal bankruptcy law contains domicile rules governing which state’s exemptions a debtor may use. The lookback and choice-of-law analysis is technical and should be handled by bankruptcy counsel.

That means state protection is a legal entitlement, not a relocation slogan. A Florida statute is powerful for someone properly entitled to Florida exemptions; it does not automatically protect every inherited IRA held at a Florida-based custodian.

Example: two beneficiaries, same inherited IRA facts

Assume Ava and Ben each inherit a $240,000 traditional IRA from different parents. Both accounts are properly titled inherited IRAs and both beneficiaries later face an ordinary judgment creditor. Ava is a Florida resident entitled to invoke Florida §222.21. Ben lives in a state whose current law does not clearly extend its retirement-account exemption to inherited beneficiary interests.

Clark is the same federal case for both people. Ava nevertheless has a textual state-law protection that may apply, while Ben needs a different state-law analysis. The difference comes from state exemption law and procedural facts, not from the custodian or investment holdings inside the IRA.

Spending the account can destroy the practical protection

Even where an inherited IRA itself is exempt, a distribution can move cash into a bank account that does not receive the same statutory protection. Some exemption statutes contain tracing rules, but others do not protect distributed funds indefinitely. The withdrawal can also create income tax.

This is why a person facing creditors should not automatically empty the account after reading Clark. Preserving an available state exemption can be more valuable than moving the money. Required federal RMDs still need to be taken, so counsel may need to decide how required distributions are handled and traced.

Trust planning happens before death, not after the lawsuit

If the original IRA owner is alive and concerned about a beneficiary’s creditor exposure, a properly drafted trust named as beneficiary can sometimes provide spendthrift protection that a directly inherited IRA would not have under federal bankruptcy law. That planning must also satisfy the federal RMD trust rules if see-through treatment is desired.

See trust planning for inherited IRA creditor protection and the four see-through trust requirements. Once an individual already owns the inherited IRA, simply assigning it to a new trust can create tax problems rather than retroactive asset protection.

A current-law verification checklist

• Read Clark v. Rameker for the federal baseline.
• Pull the current official exemption statute for the beneficiary’s state rather than a blog summary.
• Confirm that the text covers beneficiaries, inherited interests, or Code section 408/408A accounts.
• Read every exception for domestic support, tax claims, fraudulent transfers, and other special creditors.
• If bankruptcy is contemplated, determine which state exemption law the Bankruptcy Code permits the debtor to use.
• Keep the account properly titled and avoid unnecessary distributions while protection is being analyzed.

State protection can be explicit, but the statute still has boundaries

Florida’s current statute is a good example of explicit drafting: section 222.21 protects qualifying tax-exempt funds or accounts payable to an owner, participant, or beneficiary, and the provision includes inherited interests. Arizona section 33-1126 likewise protects a beneficiary’s interest in specified retirement plans and expressly states that the beneficiary’s interest may arise by inheritance, designation, appointment, or otherwise. Those words make the statutes stronger evidence than a generic article saying the state is “IRA friendly.”

Even an explicit exemption can contain exceptions. Domestic-relations orders, child-support obligations, fraudulent transfers, recent contributions, or other statutory carveouts may reduce protection. Bankruptcy domicile rules can also determine which state’s exemptions a debtor may claim. Moving to Florida the week before filing bankruptcy does not necessarily let the debtor immediately use every Florida exemption.

State statutes also change. This article intentionally avoids publishing a purported 50-state ranking that would become stale quickly. If your state is not one of the examples discussed here, search the current statute for IRA, retirement plan, beneficiary, inheritance, and creditor language, then check recent state appellate and bankruptcy decisions interpreting it. A statute that protects the “participant” but never mentions a “beneficiary” may present a different question from Arizona’s text.

For practical planning, distinguish protection while assets remain inside the inherited IRA from protection after withdrawal. A state may exempt the retirement account but offer little or no protection to cash once distributed. Beneficiaries facing known creditor exposure should coordinate tax deadlines with exemption counsel so they do not miss an RMD while also avoiding unnecessary early liquidation.

Verify the exact exemption that applies to the proceeding

A statute protecting an inherited IRA from “all claims of creditors” can still interact with bankruptcy choice-of-law rules and statutory exceptions. Before relying on a state exemption, identify whether the problem is a Chapter 7 or Chapter 13 bankruptcy, a state-court judgment, domestic-support enforcement, or another collection process. The applicable exemption analysis may differ.

Keep the inherited IRA separate while counsel reviews the issue. Even a strong account exemption may not follow money indefinitely after it is distributed into an ordinary checking or brokerage account.

Practical note: Ask counsel to cite the current subsection, not just the state name. Statutes are amended, renumbered, and interpreted by courts. A 2018 blog saying a state “protects inherited IRAs” is weaker evidence than the 2026 statutory text plus current appellate or bankruptcy decisions applying it.

This is general information, not personalized tax or legal advice — a CPA or estate attorney can confirm how this applies to your specific inherited account.