Items ( click on item to see list of documents)

A debtor’s right to receive payment from an individual retirement account (IRA) may be exempt from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E), even though the debtor has not yet reached retirement age.

In a recent precedential ruling, the US Court of Appeals for the Third Circuit held that  a debtor’s right to receive payment from an individual retirement account (IRA) may be exempt from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E), even though the debtor has not yet reached retirement age.

The US Court of Appeals concluded as follows “ It is undisputed that the Debtor’s IRA meets the first two requirements of 11 U.S.C. § 522(d)(10)(E). Further, Rousey impliedly overrules Clark, so Krebs’ right to receive payment from her IRA may be exempt from the bankruptcy estate under § 522(d)(10)(E) even though she has not yet reached 59 ½ years of age. Accordingly, we will vacate the order of the District Court and remand for consideration – without Clark posing any obstacle – of whether the Debtor  establishes the third requirement of § 522(d)(10)(E), that is, whether and to what extent her right to receive payment under the IRA is reasonably necessary to support her and her dependents. Click here for additional details

"The Court's judgment was unanimous, although two concurring opinions were filed. Justice Thomas, joined by Justice Scalia, was of the view that the Court's result followed from the text of ERISA, without any need for recourse to other bases for statutory interpretation. Chief Justice Roberts, joined by Justice Kennedy, would add that the Court's judgment leaves open the question of whether LaRue's claim properly lies only under § 502(a)(1)(b), implicating exhaustion of administrative remedies among other requirements, and not under § 502(a)(2)." (Sutherland Asbill & Brennan LLP)

Excerpt: "Plaintiffs are former participants in 401(k) plans, who allege that in rolling over their plan accounts to IRAs, defendants violated ERISA. On April, 21 2008, a federal judge in Iowa ruled that former participants in a 401(k) plan lacked standing to pursue legal remedies under ERISA, despite the Supreme Court's recent ruling in LaRue v. DeWolff, Boberg & Assoc., Inc., 128 S. Ct. 1020 (2008), but held that standing was proper to pursue equitable relief under ERISA. Young v. Principal Financial Group, Inc., S.D. Iowa., No. 4:07-cv-386." (Sutherland Asbill & Brennan LLP)