Monday, June 7, 2004
The U.S. Supreme Court today granted certiorari in Rousey v. Jacoway (No. 03-1407), which raises the important issue of whether federal bankruptcy law protects IRAs from creditors. The 8th Circuit ruled that IRAs are unlike pensions and annuities and thus not protected in bankruptcy.
One response to “Supreme Court Grants Certiorari in Rousey v. Jacaway”
My understanding was that Federal law did not exempt IRAs from the claims of bankruptcy creditors, but that the states could enact exemptions that would be honored in a bankruptcy proceeding. That has been the case in Maryland, where there is a specific state exemption for IRAs. (Note, however, that the drafting of the statute has been found wanting, since it is unclear whether contributions in excess of tax-deductible amounts are protected and whether rollovers from qualified plans are protected. I will try to get a better fix on this issue from some of my bankruptcy law colleagues.)