Short answer
Yes. Federal law lets the IRS levy 401(k)s, IRAs, Thrift Savings Plan accounts and pension payments. IRS procedures (IRM 5.11.6) say to consider other assets first, levy only after flagrant conduct, and not levy if you need the money for basic living expenses. A levied distribution avoids the 10 percent early withdrawal tax, but not income tax.
Key takeaways
- Retirement accounts are not on the list of property exempt from IRS levy (IRC 6334), so 401(k)s, IRAs, SEP-IRAs, 403(b)s, 457(b)s and the Thrift Savings Plan can all be levied.
- IRS procedures add three checks before a retirement account levy: other property or a payment plan considered first, flagrant conduct, and whether you depend on the money to live.
- A levy reaches only what you have a present right to withdraw under the plan; it does not speed up payments you cannot take yet.
- Money taken by levy is still taxable income, but the 10 percent additional tax on early distributions does not apply (IRC 72(t)(2)(A)(vii)).
- Monthly pension payments can be levied continuously, and Social Security and federal retirement annuities can be levied up to 15% (IRS.gov, 2026) of each payment through the Federal Payment Levy Program.
Which retirement money the IRS can levy
The tax code starts from a simple rule: the IRS can levy “all property and rights to property” of a person who owes (IRC 6331(a)), except the items on the exempt list in IRC 6334. Retirement accounts are not on that list, and IRC 6334(c) says no other property is exempt, even if another federal law says otherwise. IRS Publication 594 names retirement accounts as an example of property the IRS can take.
| Type of retirement money | Can the IRS levy it? | How it works |
|---|---|---|
| 401(k), profit-sharing and other ERISA-qualified plans, 403(b), eligible 457(b) | Yes | A Form 668-R, Notice of Levy on Retirement Plans, goes to the plan administrator. It reaches only what you could withdraw now under the plan’s terms. |
| IRAs (traditional and Roth), SEP-IRAs and Keogh plans | Yes | Same IRS procedures as employer plans. Publication 594 lists IRAs, SEP-IRAs and Keogh plans by name. |
| Thrift Savings Plan (federal employees) | Yes | The IRS manual says the IRS can seize the balance in a vested TSP account. The levy must ask for a stated dollar amount, not recurring payments. |
| Pension or annuity payments you already receive | Yes, continuously | One levy keeps attaching to each future payment until it is released, like a wage levy. |
| Social Security and federal retirement annuities (OPM) | Yes, a share of each payment | Usually through the Federal Payment Levy Program, up to 15% of each payment. |
| Railroad Retirement Act annuities and pensions; Medal of Honor special pensions; annuities under chapter 73 of title 10 (based on military retired or retainer pay) | No | Listed as exempt in IRC 6334(a)(6). |
The “present rights” rule matters. The IRS manual says “a levy only reaches the taxpayer’s present rights under the plan” and “does not accelerate payment.” If your plan would let you take a lump sum today, the levy can reach it. If you cannot take money out yet under the plan’s terms, or the money is not vested, the levy has nothing to grab until you become eligible. Inherited IRAs are handled under separate IRS rules and are not treated as your own retirement funds.
The IRS's own limits: three checks before a retirement levy
The law allows retirement levies, but the Internal Revenue Manual (IRM 5.11.6.3, revised March 2024) tells revenue officers to work through three steps first. These are internal IRS procedures, not statutory rights, but they explain why retirement levies are less common than bank or wage levies.
- Step 1: Look at other property and a payment plan first. The revenue officer must first decide what other property is available to collect the balance, and consider other property or a payment agreement before a retirement account.
- Step 2: Flagrant conduct. The manual says: “If the taxpayer has not engaged in flagrant conduct, do not levy on retirement accounts.” Its examples of flagrant conduct include making voluntary retirement contributions while knowing taxes were going unpaid, frivolous tax arguments, a tax evasion conviction or a fraud penalty for the balance, piling up unpaid payroll (trust fund) taxes or unpaid income taxes for several periods without fixing the problem, a pattern of not cooperating, and moving assets out of the government’s reach. Being enrolled automatically in an employer plan through payroll is expressly not flagrant conduct. Illness, job loss and identity theft can count as extenuating circumstances.
- Step 3: Do you depend on the money? The final step is whether you need the retirement funds, now or soon, for necessary living expenses. If you do, the manual says not to levy. Officers use the IRS Collection Financial Standards (IRM 5.15) and life-expectancy tables to judge how much you can draw each year.
A retirement levy also needs sign-off above the revenue officer: the manual requires approval of the Form 668-R at the Collection area director level or under its managerial approval rules. And the normal pre-levy rules apply: the IRS must have sent a final notice of intent to levy, such as an LT11 or Letter 1058, with your Collection Due Process (CDP) hearing rights.
Taxes on money the IRS takes from a retirement account
A levy does not make the money tax-free. Two rules decide what you owe on it:
- No 10 percent early withdrawal tax. IRC 72(t)(2)(A)(vii) excludes distributions “made on account of a levy under section 6331” from the 10 percent additional tax, for qualified plans and IRAs. The IRS’s early-distribution exceptions page lists “IRS levy of the plan” for both. The IRS manual confirms the taxpayer “is not liable for the 10 percent additional tax” on a levied withdrawal.
- Income tax still applies. The levied amount generally counts as a distribution, so pre-tax money is taxable income for that year. For employer plans, the IRS manual says the payer withholds 20 percent federal income tax under IRC 3405(c), and the levy reaches only what remains after withholding. The withheld amount is credited on your return like any other withholding.
Example (assumed figures)
Dana, 45, owes $28,000 and has $30,000 in a former employer’s 401(k) that allows a lump-sum payout. After the steps above, the IRS levies the account. The plan pays out the full $30,000: it withholds 20 percent ($6,000) for federal income tax and sends $24,000 to the IRS, leaving $4,000 still owed on the tax bill. The $30,000 is income on Dana’s return for that year, with the $6,000 counted as tax already paid. Because the payout was made on account of a levy, the $3,000 (10 percent) early withdrawal tax does not apply. Her actual income tax on the $30,000 depends on her bracket.
If a retirement levy is later found wrongful and the money is returned, IRC 6343(f) lets you put the returned amount, plus interest, back into a retirement plan or IRA as a rollover, generally by the due date of that year’s return (not counting extensions).
Pension payments, Social Security and federal annuities
Once you are retired and receiving monthly payments, the levy works more like a wage levy than a one-time grab.
- Private pensions and annuities. The IRS sends a Form 668-W, which also serves as notice of levy on benefit or retirement income. According to the IRS, a levy on wages “continuously attaches until it is released,” and that includes deferred compensation such as retirement or pension payments. The IRS manual explains why: you have a fixed right to future payments, so one levy stays in effect. Part of each payment is exempt, figured from IRS Publication 1494 (IRS.gov, 2026) based on your filing status and dependents.
- Social Security. Social Security is not exempt from IRS levy (IRC 6334(c) overrides the Social Security Act’s own protection). Through the Federal Payment Levy Program, the IRS can generally take up to 15% of each payment until the balance is paid, other arrangements are made or the levy is released. The usual final notice for this program is a CP90. Our post Can the IRS take my Social Security? covers the details.
- Federal retirement annuities. Office of Personnel Management annuity income is also on Publication 594’s list of payments the Federal Payment Levy Program can reach.
Retirees often have less room in the budget, which makes step 3 above (dependence on the money) and hardship status especially relevant. The Fresh Start hub’s guide for seniors and retirees walks through the options that fit fixed incomes.
How to keep the IRS away from your retirement account
A retirement levy comes late in the collection process. The CP504 warns you that the IRS intends to levy, and the LT11 or Letter 1058 (or CP90 for federal payments) is the final notice that gives you hearing rights. Each of these routes can stop it or make it unlikely:
| Route | What it does | Where to start |
|---|---|---|
| Request a CDP hearing | A timely request, within 30 days (IRS.gov, 2026) of the final notice, generally bars the proposed levy while Appeals decides. You can propose a payment plan, an offer or hardship status, and argue the levy is inappropriate. | Final notice 30-day plan |
| Set up a payment plan | The IRS may not levy while a plan request is pending or a plan is in effect (IRC 6331(k)). Individuals who owe $50,000 (IRS.gov, July 2026) or less can usually apply online for a Simple Payment Plan (formerly the streamlined installment agreement). | Simple Payment Plan |
| Show you depend on the money | A financial statement (Form 433-A or 433-F) showing that you need the account for living expenses speaks directly to step 3 of the IRS’s procedure. | Form 433-F guide |
| Currently not collectible status | If paying anything would leave you unable to cover basic living expenses, the IRS can pause collection. | Currently not collectible |
| Offer in compromise | No levy while an offer is pending (IRC 6331(k)). | Offer in compromise |
Stop making new voluntary retirement contributions while taxes are going unpaid: the IRS manual lists that exact behavior as an example of flagrant conduct. Our guide to pausing IRS collection compares every hold, and the ways to stop an IRS levy list covers the general levy options.
If your retirement account has already been levied
Act quickly. Call the number on the levy notice (or your revenue officer) and ask for a release if one of the IRC 6343(a) grounds applies: the balance is paid or the collection period ended, you have entered into an installment agreement (unless it says the levy continues), the levy creates an economic hardship, or the property is worth more than you owe and a partial release won’t hurt collection. Publication 594 adds that the IRS will release a levy issued improperly, for example before the required notice or while a payment plan request or offer was pending.
Release stops future takings; getting money already sent back is a separate request. Our guide to getting money back after a levy explains release versus return. If the IRS is not responding and the levy is causing a hardship, the free Taxpayer Advocate Service (877-777-4778 (IRS.gov, 2026)) can help through Form 911.
You can handle many of these steps yourself. If a revenue officer has issued or approved a retirement levy, though, the case usually involves larger balances and a financial review, and representation can help. Global Gate Tax Relief offers a free, no-obligation consultation; if it takes your case it files Form 2848, reviews your IRS transcripts and quotes a flat fee upfront. In urgent levy cases it can often act within 24 to 72 hours of engagement, though release timing depends on the IRS, and no outcome is guaranteed. Request a free case review or call 1-877-800-8180.
Frequently asked questions
Yes. A 401(k) is not exempt from IRS levy. IRS procedures say a revenue officer should first consider other property or a payment plan, levy only if your conduct was flagrant, and not levy if you need the money for basic living expenses. The levy reaches only what the plan would let you withdraw now.
No. Distributions made because of an IRS levy are an exception to the 10 percent additional tax under IRC 72(t)(2)(A)(vii). The money is still taxable income for the year, so you may owe income tax on it.
Yes, most pensions. A levy on pension payments is continuous: it attaches to each payment until it is released, with an exempt amount figured from IRS Publication 1494. Railroad Retirement Act annuities and a few other listed payments are exempt under IRC 6334(a)(6).
Yes. The IRS manual says the IRS can seize the balance in a vested TSP account, subject to the same flagrant conduct and living-expense checks as other retirement accounts. The TSP withholds 20 percent for federal income tax.
Only to the extent you have a present right to the money. The levy does not accelerate payments, so if your plan does not allow a withdrawal now, the levy cannot force one. Plan terms differ, which is why the IRS reviews them before levying.
Yes. Through the Federal Payment Levy Program, the IRS can generally take up to 15% of each Social Security payment after a final notice, usually a CP90. A payment plan or hardship status can stop it.
Respond to the final notice: request a CDP hearing within 30 days, or set up a payment plan, since the IRS may not levy while a plan request is pending or in effect. If you need the money to live, send a financial statement showing it.
Sources
- IRM 5.11.6.3, Retirement accounts and plans (rev. 03-14-2024)
- IRM 5.11.5, Levy on Wages, Salary and Other Income
- IRS Publication 594, The IRS Collection Process (Rev. 1-2026)
- IRS: Retirement topics, exceptions to tax on early distributions
- IRS: What if I get a levy against one of my employees, vendors, customers or other third parties?
- IRS: Levy
- IRS Publication 1494, Tables for Figuring Amount Exempt from Levy
- 26 U.S.C. 72, Annuities (72(t)(2)(A)(vii))
- 26 U.S.C. 6331, Levy and distraint
- 26 U.S.C. 6334, Property exempt from levy
- 26 U.S.C. 6343, Authority to release levy and return property
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