Is this legal? Plan assets to Pay IRS liability

[Guest BravelyObey]

A plan participant has an outstanding liability with the IRS. The participant has a small retirement balance in her 401(k)/profit sharing plan. The IRS is pressuring her to withdraw that money to cover her liability.

Is that legal for them to do?

[Leopurrd]

Not sure about them pressuring the participant, but it would be legal for them to put a lien on her account balance. If they know she has the money in the account, it may only be a matter of time before they issue the lien?

Vicki

[E as in ERISA]

This describes the IRS position http://www.benefitscounsel.com/archives/001128.html

[mbozek]

E: the cite you referred to is for collection of fines owed to the Fed govt which are collected by the US attorney. The IRS authority to levy on pension benefits is contained in IRC 6331. There are at least 6 laws that permit collection of pension benefits by federal agencies. Participant needs to consult with counsel.