Retired people often face a surprise tax notice from the IRS, which can be stressful and financially devastating for retirees. However, tapping into a traditional IRA or 401(k) to pay a tax bill can create a financial strain. This is not the norm, as every dollar withdrawn from a traditional retirement account is treated as ordinary income, which could result in a higher tax bracket and a larger portion of Social Security benefits becoming taxable. The IRS has significant collection tools but retirement accounts have specific protections under federal law. If you can't pay, the IRS may garnish wages, place liens on property, and levy bank accounts, but it rarely does this. If the debt is unpaid, penalties and interest accrue over time.