If you have a balance due with the IRS, your retirement accounts can be seized. Usually a retirement asset is not the first asset to be garnished but the IRS has the authority to levy upon your retirement account.

The levy on the retirement account creates various issues. First the money will be used to offset any tax liabilities. Even if you believe you do not owe the tax, the IRS can grab the retirement funds.

The second problem is the additional tax created because the seizure is treated as a taxable event and will be required to be reported on the current year return. In other words, more tax to be paid.

If you have a tax problem, work it out with the IRS. Do a payment plan, offer in compromise or look at a bankruptcy option. Do not ignore the issue.

Click here to read a short article on the ability of the IRS to seize a retirement account.