What Funds Are Exempt From Garnishment: Wages, Benefits, and IRAs

Federal and state law protect several kinds of money from creditors with a judgment against you. The funds exempt from garnishment include most Social Security and veterans benefits, Supplemental Security Income, disability payments, employer-sponsored retirement accounts, and a portion of your wages. For ordinary debts like credit cards and medical bills, no creditor can take more than 25% of your disposable earnings, and nothing at all if your weekly disposable pay is $217.50 or less. The protections are strong but not absolute: child support, federal taxes, and defaulted federal student loans can reach into money that commercial creditors cannot.

Wages: How Much Stays Yours

The Consumer Credit Protection Act sets a nationwide limit on paycheck garnishment for ordinary debts. A creditor with a court judgment can take the lesser of 25% of your disposable earnings, or the amount by which those earnings exceed 30 times the federal minimum wage.¹ With the federal minimum wage at $7.25, that second figure works out to $217.50 per week. If your disposable earnings for the week are at or below $217.50, your paycheck is completely off-limits to judgment creditors.²

Disposable earnings aren’t the same as take-home pay. The calculation starts with your gross wages and subtracts only legally required deductions: federal, state, and local income taxes, Social Security, Medicare, and state unemployment insurance. Voluntary deductions like 401(k) contributions, health insurance premiums, and union dues don’t reduce the base.² So your disposable earnings will usually be higher than the amount you actually receive.

Many states cap garnishment more strictly than the federal 25%. When state law is more protective, the state rule controls.

Social Security, SSI, SSDI, and Veterans Benefits

Government benefits get some of the strongest protection in federal law, but the details differ by program.

Social Security retirement and survivor benefits. The Social Security Act bars these payments from garnishment, levy, attachment, or any other legal process brought by a commercial creditor.³ Courts can still reach Social Security to enforce child support, alimony, or restitution, and the federal government can offset benefits for back taxes and defaulted federal student loans.⁴

Supplemental Security Income. SSI is protected across the board. Because it is a needs-based program for elderly, blind, or disabled people with very limited income, it cannot be garnished for any purpose, including child support and federal debts. The protection follows the money into your bank account.⁵

Social Security Disability Insurance. SSDI is protected from commercial creditors but reachable for child support, alimony, and certain government debts.⁴

Veterans benefits. Payments due under any law administered by the VA are exempt from creditor claims, taxation, and garnishment. That covers disability compensation, pension payments, and education benefits.⁶ The two exceptions: the IRS can levy VA benefits for unpaid federal taxes, and family courts can reach them for child support and alimony.

Other federal benefits carry similar protection from commercial creditors, including civil service and federal employee retirement, railroad retirement and unemployment insurance, military pay and survivor annuities, federal student aid, and FEMA disaster assistance.⁴ State-administered programs like unemployment insurance and workers’ compensation follow state law, though workers’ comp wage-replacement payments count as “earnings” under federal law and get at least the 25% wage protection.²

Retirement Accounts: 401(k)s and IRAs Are Treated Differently

Money in an employer-sponsored retirement plan is among the best-protected assets you can own. The Employee Retirement Income Security Act contains an anti-alienation rule that shields 401(k), 403(b), and traditional pension funds from creditors, and the protection generally holds even in bankruptcy.⁷ The main exceptions are a Qualified Domestic Relations Order in a divorce or support case, which can direct part of your benefits to a spouse, former spouse, or dependent child, and an IRS levy for unpaid taxes.⁸

Traditional and Roth IRAs are not covered by ERISA because they aren’t employer-sponsored. In bankruptcy, IRA assets are exempt up to an inflation-adjusted cap, currently $1,711,975 as of April 1, 2025, and rollovers from an employer plan don’t count against that cap.⁹ Outside of bankruptcy, IRA protection depends entirely on your state’s exemption statute. Some states protect the full balance; others cap the exemption or offer only partial protection.

Life Insurance and Personal Injury Proceeds

Life insurance proceeds paid to a beneficiary and personal injury settlement funds are protected from garnishment in most states, on the theory that these funds compensate for death or bodily harm and shouldn’t be diverted to creditors. Scope varies significantly. Some states exempt the full amount, others cap it or exclude certain policy types. If you receive a large settlement or payout while a judgment is outstanding, your state’s exemption law will determine how much is safe.

What Happens When Exempt Funds Reach Your Bank Account

Depositing exempt money doesn’t strip its protected status, but the mechanics matter. When a bank receives a garnishment order on an account that gets direct deposits of federal benefits, federal regulation requires the bank to look back two months and automatically protect the sum of those deposits. That “protected amount” stays fully accessible to you, with no freeze and no paperwork required.¹⁰ The automatic review covers Social Security, SSI, VA benefits, railroad retirement, and civil service and federal employee retirement.

The automatic protection only applies to electronic deposits. If your benefits arrive by paper check, the funds are still exempt, but you’ll have to claim the exemption yourself.¹¹

Commingling creates problems. If your account mixes Social Security with income from a side job, only the benefit portion gets the two-month automatic protection; anything above it can be frozen. Exempt funds keep their protected status even when mixed with other money, but only if you can reasonably trace them to the source. Keeping benefits in a separate account makes that traceability far easier to prove.

Debts That Reach Further Than Ordinary Creditors

Several categories of debt can get past protections that stop credit card companies and medical debt collectors.

Child support and alimony. Under the CCPA, support obligations can take up to 50% of your disposable earnings if you’re supporting another spouse or child, or 60% if not. If you’re more than 12 weeks in arrears, those caps rise to 55% and 65%.² Support orders can also reach Social Security (except SSI), SSDI, VA benefits, and retirement accounts through a QDRO.¹²

Federal tax debts. The IRS operates under its own authority and is explicitly excluded from the CCPA’s garnishment restrictions.¹ The IRS can levy wages, bank accounts, Social Security, and VA benefits for unpaid taxes.⁶ A small weekly amount based on your filing status and dependents is left to you, but the IRS can take a far larger share than any private creditor.

Defaulted federal student loans. The Department of Education can garnish wages without a court order through administrative wage garnishment. The maximum is the lesser of 15% of disposable pay or the amount by which weekly income exceeds 30 times the minimum wage.¹³ Federal student loan collectors can also offset Social Security benefits and tax refunds. SSI remains protected.

Claiming an Exemption Before the Deadline

Outside the automatic bank review for direct-deposited federal benefits, exemptions aren’t self-executing. You have to claim them, and the window is short.

When a garnishment order is served, your bank or employer will send you notice. That notice explains your right to claim exemptions and includes a deadline that is often 20 days or less. To assert the exemption, you file a claim with the court that issued the order, identifying which funds are exempt and the legal basis, then serve a copy on the creditor (or their attorney) and on the garnishee. If the creditor objects, the court holds a hearing. If no objection comes within the deadline, the garnishment is typically dissolved and your funds released.

The most common way people lose exempt money is by waiting too long. Courts treat these deadlines seriously, and money the law was designed to protect can be paid out to a creditor if the claim is late. Keep bank statements and deposit records that clearly show the source of funds in your account. A statement showing a direct deposit from the Social Security Administration or the VA makes an exemption easy to prove; reconstructing the origin of commingled funds after the fact is much harder.

1
Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment
2
U.S. Department of Labor Wage and Hour Division. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
3
Social Security Administration. Social Security Act 207
4
Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits Like Social Security or VA Payments
5
Administration for Children & Families. Garnishment of Supplemental Security Income Benefits
6
Office of the Law Revision Counsel. 38 U.S. Code 5301 – Nonassignability and Exempt Status of Benefits
7
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
8
Office of the Law Revision Counsel. 29 U.S. Code 1056 – Form and Payment of Benefits
9
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
10
eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
11
Consumer Financial Protection Bureau. Can a Debt Collector Take or Garnish My Wages or Benefits
12
Social Security Administration. Can My Social Security Benefits Be Garnished or Levied
13
eCFR. 34 CFR Part 34 – Administrative Wage Garnishment