Why are IRA's protected from creditors?

Because its not the depositor's money until constructive receipt is made and income tax is paid. First lien holder is the federal government. Can't be used as collateral either.

The problem is that if a creditor takes the money, it would incur income taxes and penalties perhaps to the owner.

And if a rule was passed that made "debt collection" not subject to penalties, everyone would just tell collectors to go tap the accounts.

There are much greater abuses of "hiding money from creditors" than retirement plans.