WESLEY B. HUISINGA,
TRUSTEE-APPELLANT,
v.
JON ARTHUR KEMMERER AND ELAINE MARIE KEMMERER, DEBTORS-APPELLEES.
| [1] | United States Bankruptcy Appellate Panel FOR THE EIGHTH
CIRCUIT |
| [2] | No. 00-6016 NI |
| [4] | July 26, 2000 |
| [5] | IN RE: JON ARTHUR KEMMERER AND ELAINE MARIE KEMMERER, DEBTORS. WESLEY B. HUISINGA, TRUSTEE-APPELLANT, v. JON ARTHUR KEMMERER AND ELAINE MARIE KEMMERER, DEBTORS-APPELLEES. |
| [6] | Before Schermer, Scott and Dreher, Bankruptcy Judges |
| [7] | The opinion of the court was delivered by: Schermer, Bankruptcy
Judge |
| [8] | Appeal from the United States Bankruptcy Court for the
Northern District of Iowa |
| [9] | Submitted: May 19, 2000 |
| [10] | Wesley B. Huisinga, Trustee ("Trustee") appeals the bankruptcy
court order overruling the Trustee's objection to the exemption claimed
by the Debtor Jon Kemmerer ("Debtor") in a certain individual
retirement annuity. We have jurisdiction over this appeal from the final
order of the bankruptcy court. See 28 U.S.C. § 158(b).
For the reasons set forth below, we reverse. |
| [11] | ISSUE |
| [12] | The issue on appeal is whether the Debtor's individual retirement
annuity is an individual retirement account within the scope of Iowa
Code Section 627.6(8)(f) which the Debtor canexempt from property of his
bankruptcy estate pursuant to 11 U.S.C. § 522(b)(2). We
conclude that the Debtor's individual retirement annuity does not fall
within the scope of Iowa Code Section 627.6(8)(f) and therefore cannot
be exempted from the Debtor's bankruptcy estate. |
| [13] | BACKGROUND |
| [14] | The Debtor worked as an employee of Midland Press Corporation
("Midland") from 1992 through 1996. While employed at Midland,
the Debtor participated in a retirement plan at Midland which qualified
as a retirement plan pursuant to 26 U.S.C. § 401(k) (the "Midland
401(k) Plan"). During the course of his employment, the Debtor
contributed $7,903.67 to the Midland 401(k) Plan and Midland contributed
$4,780.06 to the plan on the Debtor's behalf. At the time the Debtor's
employment with Midland terminated in 1996, the Debtor had a vested
balance in the Midland 401(k) Plan of $16,426.91. |
| [15] | On November 6, 1996, the Trustee and Administrator of the Midland
401(k) Plan issued a check in the amount of $16,426.91 payable to
"Equitable of Iowa/ TTEE/IRA fbo Jon A. Kemmerer," which
amount was deposited into a newly established Equi-Select #I466982-OP
Individual Retirement Annuity account (the "Equi-Select
Account"). The Equi-Select Account is an individual retirement
annuity and not an individual retirement account. The Debtor has not
contributed any amounts to the Equi-Select Account since November 7,
1996. The Debtor has had unlimited access to the funds in the Equi-Select
Account since November 7, 1996. |
| [16] | On June 2, 1999, the Debtor and his wife, Elaine Marie Kemmerer, filed
a joint petition for relief under Chapter 7 of the United States Bankruptcy
Code. In his schedules filed with the bankruptcy court,
the Debtor listed his interest in the Equi-Select Account as personal
property on Schedule B, under item 10 entitled "Annuities" *fn1
and claimed his interest in the Equi-Select Account as exempt under
Section 627.6(8)(f) of the Iowa Code on Schedule C. |
| [17] | On September 2, 1999, the Trustee timely filed an objection to the
Debtor's claimed exemption in the Equi-Select Account. The Debtor and
the Trustee stipulated that the Equi-Select Account had a value of
$21,027.82 as of June 2, 1999. After a hearing, the bankruptcy
court overruled the Trustee's objection to the Debtor's claimed
exemption in the Equi-Select Account |
| [18] | STANDARD OF REVIEW |
| [19] | The facts are not in dispute. We review the bankruptcy
court's conclusions of law de novo. Fed. R. Bankr. P. 8013; Minnesota
Department of Revenue v. United States, 184 F.3d 725, 727-28 (8th Cir.
1999); Eilbert v. Pelican (In re Eilbert), 162 F.3d 523, 525 (8th Cir.
1998); Waugh v. Internal Revenue Service (In re Waugh), 109 F.3d 489,
491 (8th Cir. 1997). |
| [20] | DISCUSSION |
| [21] | Pursuant to Section 522(b) of the Bankruptcy Code, a
debtor may exempt from property of the estate either: (1) certain
property listed in Section 522(d) of the Bankruptcy Code,
or (2) property which is exempt under applicable non-bankruptcy
federal law and the state and local laws of the place where the debtor
has been domiciled for the longest portion of the 180 days preceding the
bankruptcy filing. A state may opt out of the exemptions
enumerated in Section 522(d) of the Bankruptcy Code, in
which case a debtor whose domicile is in such state is limited to the
exemptions applicable under non-bankruptcy federal law and
the laws of such state and locality. 11 U.S.C. § 522(b)(1). |
| [22] | The Debtor's domicile is Iowa which has opted out of the exemptions
set forth in Section 522(d) of the Bankruptcy Code. Iowa
Code § 627.10 (1998). Therefore, the only exemptions available to the
Debtor are those recognized by Iowa and non-bankruptcy
federal laws. |
| [23] | Section 627.6(8)(f) of the Iowa Code permits a debtor who is a
resident of Iowa to hold exempt from execution the following: |
| [24] | f. Contributions and assets, including the accumulated earnings and
market increases in value, in any of the plans or contracts as follows: |
| [25] | (1) Transfers from a retirement plan qualified under the Employee
Retirement Income Security Act of 1974 (ERISA), as codified at 29 U.S.C.
§ 1001 et seq., to another ERISA-qualified plan or to another pension
or retirement plan authorized under federal law, as described in
subparagraph (3). |
| [26] | (3)
Forsimplifiedemployeepensionplans,self-employedpensionplans,Keoghplans(also
known as H.R. 10 plans), individual retirement accounts, Roth individual
retirement accounts, savings incentive matched plans for employees,
salary reduction simplified employee pension plans (also known as
SARSEPs), and similar plans for retirement investments authorized in the
future under federal law, the exemption for contributions shall not
exceed, for each tax year of contributions, the actual amount of the
contribution or two thousand dollars, whichever is less. . . . (Emphasis
added.) Iowa Code § 627.6(8)(f)(1) and (3) (Supp. 2000). |
| [27] | The issue before this Court is whether Section 627.6(8)(f) of the Iowa
Code permits the Debtor to exempt the Equi-Select Account. We conclude
that it does not. |
| [28] | By its express terms, Section 627.6(8)(f) of the Iowa Code permits the
exemption of a transfer from an ERISA-qualified plan to another ERISA-qualified
plan or to another pension or retirement plan authorized under federal
law, as described in subparagraph (3). The Midland 401(k) Plan was
clearly an ERISA-qualified plan. In dispute is whether or not the Equi-Select
Account into which the funds from the Midland 401(k) Plan were
transferred is "another pension or retirement plan authorized under
federal law, as described in subparagraph (3)." Iowa Code §
627.6(8)(f)(1) (Supp. 2000). |
| [29] | Where a statute's language is plain, the court's sole function is to
enforce such language according to its terms. Hartford Underwriters
Insurance Company v. Union Planters Bank, N.A., 120 S.Ct. 1942, 1947
(2000). Exemption statutes are construed liberally in favor of the
debtor; however, the purpose of such construction is to achieve the
legislative intent as set forth in the statutory language, not to extend
the provisions of the legislative grant. Eilbert v. Pelican (In re
Eilbert), 162 F.3d 523, 526 (8th Cir. 1998) (citing Iowa Methodist Hosp.
v. Long, 12 N.W.2d 171, 175 (Iowa 1943), Wertzv. Hale, 234 N.W. 534, 535
( Iowa 1931), In re Wiley, 184 B.R. 759, 766 (N.D. Iowa 1995), Matter of
Knight, 75 B.R. 838, 839 (Bankr. S.D. Iowa 1987)); Huebner v. Farmers
State Bank, 986 F. 2d 1222 (8th Cir. 1993);see also Iowa Rule
ofAppellate Procedure 14(f) ("In construing statutes the court
searches for the legislative intent as shown by what the legislature
said, rather than what it should or might have said."). |
| [30] | The language of Section 627.6(8)(f) of the Iowa Code is clear. It
lists as within its purview specific types of pensions and retirement
funds authorized under federal law. It also expressly includes similar
plans for retirement investments authorized in the future under federal
law. It does not, however, include similar plans for retirement
investments which were authorized under federal law at the time of its
enactment. *fn2 Individual retirement
annuities were authorized under federal law at the time of the enactment
of Section 627.6(8)(f) but are not listed therein and therefore are not
subject to exemption under Section 627.6(8)(f). Where the statutory
language is clear, our inquiry need go no further. |
| [31] | Notwithstanding the clarity of the statutory language, the Debtor
argues that the term "individual retirement account" in
Section 627.6(8)(f) of the Iowa Code includes both individual retirement
accounts authorized under Section 408(a) of the Internal Revenue Code
and individual retirement annuities authorized under Section 408(b) of
the Internal Revenue Code. 26 U.S.C. § 408. The Debtor argues that the
term "individual retirement account" is a general term which
includes both individual retirement accounts and individualretirement
annuities. For example, the Debtor points to Section 408 of the Internal
Revenue Code which is captioned "Individual retirement
accounts" yet pertains to both types of accounts. A statutory
caption does not supersede the actual statutory language, however. In
enacting Section 408 of the Internal Revenue Code, the United States
Congress separately defined the term "individual retirement
account" and the term "individual retirement annuity."
Congress neither used the terms interchangeably, nor used the term
"individual retirement annuity" as a subset of
"individual retirement accounts." |
| [32] | Furthermore, throughout the Iowa Code, the Iowa legislature has
separately identified individual retirement accounts authorized under
Section 408(a) of the Internal Revenue Code and individual retirement
annuities authorized under Section 408(b) of the Internal Revenue Code.
See, e.g., Iowa Code § 97A.6B(1)(b)(1) and (2); Iowa Code §
97B.53B(1)(b)(1) and (2); Iowa Code § 411.6B(1)(b)(1) and (2); Iowa
Code § 508.36(6)(c)(2) and (7); Iowa Code § 508.38(1); Iowa Code §
602.9105(1)(b)(1) and (2). The Iowa legislature thus clearly knew how to
include individual retirement annuities within the ambit of a specific
provision. The lack of a reference to individual retirement annuities in
Section 627.6(8)(f) is therefore a clear indication that such retirement
investment vehicles do not fall within its ambit. |
| [33] | We acknowledge the severity of this result for the Debtor; however,
the role of this court is to enforce the statutory language according to
its terms, not to expand the exemptions provided by the Iowa
legislature. Hartford Underwriters Insurance Company v. Union Planters
Bank, N.A., 120 S.Ct. 1942, 1947 (2000); Eilbert v. Pelican (In re
Eilbert), 162 F.3d 523, 526 (8th Cir. 1998). |
| [34] | In his appeal, the Trustee alternately argues that if the Debtor's
individual retirement annuity falls within the scope of Iowa Code
Section 627.6(8)(f), the amount which is subject to exemption is limited
by Section627.6(8)(f)(3) to either $2,000 (plus increases), assuming the
transfer into the Equi-Select Account constituted a single contribution,
or to $2,000 (plus increases) for each year during which contributions
to the Midland 401(k) plan were made, assuming the transfer to the Equi-Select
Account was a rollover and not a "single contribution." We
need not address this issue because we have determined that the Equi-Select
Account does not fall within the scope of Iowa Code Section 627.6(8)(f). |
| [35] | CONCLUSION |
| [36] | As an Iowa resident, the Debtor's exemption options are limited to
those provided for by the Iowa legislature. The Debtor's individual
retirement annuity does not fall within the scope of Iowa Code Section
627.6(8)(f). The Debtor therefore cannot exempt his interest in the Equi-Select
Account from property of his bankruptcy estate pursuant to
11 U.S.C. § 522(b)(2). |
| [37] | DREHER, Bankruptcy Judge, dissenting. |
| [38] | I disagree. The majority concludes that the statutory language of Iowa
Code § 627.6(8)(f) is clear. In my view, reasonable minds could differ
as to the meaning of the statute; and it is, therefore, ambiguous. Even
if the majority is correct that there is a "plain meaning" of
the statute, such a reading presents the rare case where it must be
disregarded because it leads to an absurd result and because it produces
a result demonstrably at odds with the intentions of the legislature. |
| [39] | Of course I agree with the general premises of statutory construction
enunciated by the majority: we live in a world of "plain
meaning" statutory construction. Hartford Underwrites Ins. Co. v.
Union Planters Bank, N.A., 120 S.Ct. 1942, 1947 (2000). Where I part
company with the majority, however, is in its judgment that §
627.6(8)(f) is clear. I think this statutory language quite ambiguous.
If a statute is ambiguous, of course, courts may consider (1) the object
sought to be obtained; (2) the circumstances under which the statute was
enacted; (3) the legislative history; (4) the common law or former
statutory provisions, including laws upon the same or similar subjects;
(5) the consequences of a particular construction; (6) the
administrative construction of the statute; and (7) the preamble or
statement of policy. Iowa Code § 4.6. |
| [40] | Moreover, a court must construe a statute to avoid absurd results,
even when a literal interpretation would yield a contrary result. Iowa
v. Green, 470 N.W.2d 15, 18 (Iowa 1991). The plain meaning is also not
conclusive in cases in which the literal application of a statute will
produce a result demonstrably at odds with the intentions of the
drafters. United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242
(1989); Waugh v. Internal Revenue Serv. (In re Waugh), 109 F.3d 489, 493
(8th Cir. 1997). |
| [41] | Iowa Code § 627.6(8)(f), added by the Iowa legislature in 1999,
exempts "assets . . . in any . . . plans or contracts as follows:
1) [t]ransfers from a retirement plan qualified under [ERISA] to another
ERISA-qualified plan or to another pension or retirement plan authorized
under federal law, as described in subparagraph (3)." Iowa Code §
627.6(8)(f). Subparagraph (3) lists "simplified employee pension
plans, self-employed pension plans, Keogh plans . . . , individual
retirement accounts, Roth individual retirement accounts, savings
incentive matched plans for employees, salary reduction simplified
employee pensionplans. . . , and similar plans for retirement
investments authorized in the future under federal law . . . ." Id.
(emphasis added). There are multiple reasons why the majority errs in
finding that the phrase "individual retirement accounts" does
not include the individual retirement annuity contract purchased by the
Debtor. |
| [42] | First, in ordinary parlance, it is common to equate individual
retirement annuities and individual retirement accounts. |
| [43] | Two types of individual retirement plans are recognized: individual
retirement accounts, which are usually investment accounts with banks or
mutual funds or, individual retirement annuities, which are annuity or
endowment contracts issued by insurance companies. These two types
usually are collectively referred to as IRAs. 2 Boris I. Bittker &
Lawrence Lokken, Federal Taxation of Income, Estates and Gifts §
62.3.1, at 62-39 (2d ed. 1990). Another commentator states: |
| [44] | An IRA has become the generic name for an individually directed and
established savings program that permits individuals having earned
income and their spouses to establish a personal retirement savings
program . . . . There are two basic types of plans than can be described
under the generic heading of IRA. These include IRAs described in
Section 408(a) and individual retirement annuities described in Section
408(b). |
| [45] | Robert E. Madden, TaxPlanning for Highly Compensated Individuals §
7.06, 7.06[1] (2000); see also In re Huebner, 141 B.R. 405, 408 (N.D.
Iowa 1992) (finding no distinction between individual retirement
annuities and individualretirement accounts); In re Moss, 143 B.R. 465,
465 (Bankr. W.D. Mich. 1992) ("An individual retirement annuity is
a variant on the individual retirement account theme."); American
Honda Finance Corp. v. Cilek (In re Cilek), 115 B.R. 974, 976 n.1
(Bankr. W.D. Wis. 1990) (finding no significant difference between
individual retirement accounts and individual retirement annuities) .
Thus, if the Iowa legislature was using ordinary parlance, at least as
the commentators view it, its use of the phrase "individual
retirement accounts," was intended as a collective reference to
both individual retirement accounts and individual retirement annuities.
The language of the statute is, therefore, far from unambiguous. |
| [46] | Second, the Iowa legislature's exemption of plans or contracts exempt
under federal law is a clear reference to the relevant federal statute,
26 U.S.C. § 408. That statutory section is entitled "Individual
Retirement Accounts" and includes a definition of both an
individual retirement account (§ 408(a)) and an "individual
retirement annuity" (§ 408(b)). The point is not, as the majority
urges, that a statutory caption cannot supercede statutory language. The
point is that the statute in question here generally refers to federal
law which covers both individual retirement accounts and individual
retirement annuities as subheads under a title "individual
retirement accounts." It is not at all clear that the legislature
intended to refer only to one subset of such statute and not the other.
I disagree, therefore, with the majority's view that "Congress did
not use term 'individual retirement annuity' as a subset of the larger
'individual retirement account.'" *fn3 |
| [47] | Third, § 627.6(8)(f) is replete with language demonstrative of a
statutory intent towards broad construction and, of course, exemption
statutes are to be construed liberally in favor of the debtor, as the
majority acknowledges. See Eilbert v. Pelican (In re Eilbert), 162 F.3d
523, 526 (8th Cir. 1998). The important statutory words are
"any" plans or contracts which contain assets transferred from
ERISA qualified plans to other ERISA qualified plans or pension or
retirement plans authorized under federal law, "as described in
Subparagraph 3." Both the prefatory language "any" and
the direction "as described in" are broad ways of approaching
the topic. There is nothing in such wording to suggest the parsimonious
reading tendered by the majority. Moreover, after reciting a series of
types of plans that are covered, the legislature provides a catchall
"and similar plans for retirement investments authorized in the
future under federal law." While the majority is correct in stating
that such words do not capture the debtor's individual retirement
annuity because such annuities were authorized at the time of enactment,
again the majority misses the point. Such language clearly imports a
statutory intent to capture the universe of authorized retirement plans,
now and in the future. The majority's reading leaves individual
retirement annuities authorized prior to 1999 as virtually the only, if
not the only, retirement planning vehicle not exempt from creditor
attack. In interpreting statutory language we must attempt to reach a
reading that avoids absurd results. Green, 470 N.W.2d at 18. The
majority's interpretation fails in this regard. |
| [48] | To prop up its conclusion as to clarity, the majority mainly relies on
citation to six instances where the Iowa Code separately lists
individual retirement accounts and individual retirement annuities, and
argues that these statutory provisions indicate that the Iowa
legislature knew the difference between individual retirement accounts
and individual retirement annuities and that it used such knowledge when
it only listed individual retirement accounts in § 627.6(8)(f). |
| [49] | Four of these statutes are more helpful than the other two because
they more directly relate to issues surrounding the rollover of a
retirement plan. These statutes indicate the types of retirement plans
that are eligible to receive rollovers from public employee pension
accounts. Each one defines an eligible retirement plan to include
"(1) An individual retirement account in accordance with section
408(a) of the federalInternal Revenue Code" and "(2) An
individual retirement annuity in accordance with section 408(b) of the
federal Internal Revenue Code." Iowa Code §§ 97A.6B(1)(b)(1) and
(2) (Public Safety Peace Officers'Retirement,AccidentandDisabilitySystem);97B.53B(1)(b)(1)and(2)(IowaPublicEmployees'
Retirement System); 411.6B(1)(b)(1) and (2) (Retirement System for
Police Officers and Fire Fighters); 602.9105(1)(b)(1) and (2) (Judicial
Retirement System). |
| [50] | The majority is correct that these statutes establish that the
legislature knew how to distinguish between individual retirement
accounts and individual retirement annuities. However, unlike the
statute at issue in this case which only refers to federal law, each of
these statutes provides reference to § 408(a) and § 408(b) of the
Internal Revenue Code to make the distinction. Therefore, these statutes
indicate more clearly than § 627.6(8)(f) that the term "individual
retirement account" was not meant to include individual retirement
annuities. Indeed, these four statutory provisions also indicate the
Iowa legislature manifestly knew how to make an unambiguous distinction
between individual retirement accounts and individual retirement
annuities if it so desired. |
| [51] | More important, however, is the substance of these statutes. The
legislature treated both types of plans identically. It found both
individual retirement accounts and individual retirement annuities to be
eligible retirement plans. See Iowa Code §§ 97A.6B(1)(b)(1) and (2);
97B.53B(1)(b)(1) and (2); 411.6B(1)(b)(1) and (2); 602.9105(1)(b)(1) and
(2). Such treatment in the context of these statutes supports an
interpretation of § 627.6(8)(f) that also treats individual retirement
accounts and individual retirement annuities equally. |
| [52] | The other two statutes cited by the majority relate to regulation of
life insurance companies. Iowa Code §§ 508.36; 508.38. Because they do
not directly relate to the same or similar subject as § 627.6(8)(f),
they are less helpful in determining the intent of the legislature and
may not even be appropriate to consider. See Iowa Code § 4.6(4)
(providing that the court may consider laws upon the same or similar
subjects). However, the majority includes these statutes as further
indication that the Iowa legislature knew how to distinguish between
individual retirement accounts and individual retirement annuities. Both
refer to "individual retirement accounts or individual retirement
annuities under section 408 of the Internal Revenue Code." Iowa
Code §§ 508.36; 508.38. While these statutes may help to establish
that the Iowa legislature knew how to make the distinction, the majority
ignores another statute that shows that the legislature also knew how to
refer only to individual retirement accounts when it so intended. See
Iowa Code § 633.357(1)(a) (referring to "an individual retirement
account in accordance with section 408(a) of the Internal Revenue
Code"). Thus, the Iowa Code contains contrasting evidence. It
indicates both that the legislature had the ability to specifically
include individual retirement annuities, Iowa Code §§ 508.36; 508.38,
and that it had the ability to specifically exclude individual
retirement annuities, Iowa Code § 633.357(1)(a). It chose to do neither
in § 627.6(8)(f). Therefore, these statutes create an even greater
ambiguity. |
| [53] | In sum, the language of the statute is ambiguous. Reference to federal
law and to other sections of the Iowa Code exacerbate rather than
alleviate the ambiguity. Because of this ambiguity, the court's analysis
may extend beyond the plain meaning of the statute. In this case it is
particularly appropriate to consider the legislative history, the object
sought to be obtained in enacting the statute, the circumstances under
which the statute was enacted, and the consequences of a particular
construction. See Iowa Code § 4.6. Examination of these sources also
reveals that, even if the language is unambiguous, the plain meaning
espoused by the majority leads to a result demonstrably at odds with the
intentions of the drafters. |
| [54] | The legislative history of § 627.6(8)(f) indicates the purpose behind
enacting the statute and the circumstances under which it was enacted: |
| [55] | The purpose of this bill is to eliminate the discrimination that
currently exists in Iowa law regarding the exemption of retirement
plans. Currently, ERISA qualified plans, such as most
employer-maintained pension plans, are exempt from the claims of
creditors. However, self-employed persons using a Keogh plan or IRA as
their retirement vehicle are not similarly protected. Likewise, those
who have taken their previously safe ERISA qualified pensions and rolled
them over into an IRA due to plan termination, retirement, job loss, or
other causes have, by such rollover, subjected their formerly protected
assets to the claims of creditors. These amendments will eliminate such
disparity and will clarify the types of federally authorized plans which
Iowans will be entitled to claim as exempt. |
| [56] | This bill also protects rollover contributions to IRAs by excluding
them from the contribution limit within the 24-month period prior to
claiming an exemption. *fn4 Iowa
Senate File 105 (1999). |
| [57] | This statement supports an interpretation that includes individual
retirement annuities within the term individual retirement accounts. The
purpose of the statute is to eliminate disparity between debtors who
participate in ERISA plans and debtors who transfer funds from an ERISA
plan to another federally qualified plan. This appeal presents the
precise problem the Iowa legislature intended to cure. There is no basis
for concluding that the Iowa legislature wished to maintain a disparity
for debtors who chose individualretirement annuities rather than other
qualified plans. Accordingly, the legislative history suggests that the
ambiguity in the statute should be resolved in favor of exempting the
Debtor's annuity. At the very least, the legislative history
demonstrates that the majority's decision leads to a result not intended
by the legislature. UnitedStates v. Ron Pair Enters., Inc., 489 U.S.
235, 242 (1989); Waugh v. Internal Revenue Serv. (In re Waugh), 109 F.3d
489, 493 (8th Cir. 1997). |
| [58] | On balance, then, I believe the legislature intended to include
individual retirement annuities within the scope of the term individual
retirement accounts. This conclusion is supported by the legislative
history and by the language of the statute itself. I would affirm the bankruptcy
court's holding that the Debtor's individual retirement annuity is
exempt pursuant to Iowa Code § 627.6(8)(f). |
| [59] | The majority does not reach the Trustee's alternative argument that,
even if the Debtor's individual retirement annuity is exempt under §
627.6(8)(f), such exemption is limited to only $2,000 (plus increases)
or $2,000 (plus increases) for each year during which the Debtor made
contributions to the Midland 401(k) plan. Because I would affirm the bankruptcy
court's decision, I must also address the Trustee's alternative
argument. |
| [60] | The statute exempts "[t]ransfers from a retirement plan qualified
under [ERISA] to another ERISA-qualified plan or to another pension or
retirement plan authorized under federal law,as described in
subparagraph (3)." Iowa Code § 627.6(8)(f) (emphasis added).
Subparagraph (3) provides that: "For simplified employee pension
plans, self-employed pension plans, Keogh plans . . ., individual
retirement accounts, Roth individual retirement accounts, savings
incentive matched plans for employees, salary reduction simplified
employee pension plans . . ., and similar plans for retirement
investments authorized in the future under federal law, the exemption
for contributions shall not exceed, for each tax year of contributions,
the actual amount of the contribution or two thousand dollars, whichever
is less." Id. (emphasis added). |
| [61] | The Trustee argues that because the transfer must be to an authorized
plan "as described in subparagraph (3)," the exemption must be
confined to the $2,000 annual contribution limitation contained in
subparagraph (3). The Trustee contends, first, that only $2,000 of the
entire amount transferred is exempt because it was all
"contributed" in a single tax year. In the alternative, the
Trustee contends that the Debtor is limited to a $2,000 exemption for
each year he contributed to the Midland plan. |
| [62] | In support of this argument, the Trustee cites to In re Barshak, 185
B.R. 210 (Bankr. E.D. Pa. 1995), rev'd, 195 B.R. 321 (E.D. Pa.
1996),rev'd, 106 F.3d 501 (3d Cir. 1997) and In re Goldman, 182 B.R. 622
(Bankr. D. Mass. 1995). In these cases, the courts determined that a
rollover contribution to an IRA was subject to the same yearly
limitation under the exemption statute as any other contribution because
the statutes did not make any distinction between contributions and
rollover contributions. Barshak, 185 B.R. at 213; Goldman, 182 B.R. at
626. |
| [63] | To the contrary, the statute at issue in this case specifically
distinguishes between "contributions" and
"transfers." *fn5 Because
the Iowa legislature referred to rollover contributions as transfers,
such transfers should not be subject to the $2,000 annual limitation for
contributions. Applying the $2,000 limitationto transfers would
impermissibly render the use of the distinct termstransfer and
contribution superfluous. See Miller v. Westfield Ins. Co., 606 N.W.2d
301, 305 (Iowa 2000) (noting that a statute should not be construed so
as to make any part of it superfluous). Accordingly, the $2,000
limitation contained in subparagraph (3) for contributions does not
apply to transfers governed by subparagraph (1). *fn6 |
| [64] | Based upon the foregoing, I would affirm the decision of the bankruptcy
court in its entirety. |
| [65] | A true copy. |
| [66] | Attest: |
| [67] | CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE EIGHTH
CIRCUIT |
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| Opinion Footnotes | |
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| [68] | *fn1 The Debtor did not list the
Equi-Select Account under item 11 of Schedule B entitled "Interests
in IRA, ERISA, Keogh, or other pension or profit sharing plans." |
| [69] | *fn2 Subsection (f) of Iowa Code
Section 627.6(8) was enacted in 1999. Individual retirement annuities
were authorized under federal law at that time. See 26 U.S.C. § 408(b). |
| [70] | *fn3 The majority also makes much of
the fact that the Debtor's annuity contains no restriction on the
Debtor's use or transfer, other than tax consequences and penalties.
However, the same would be true if the Debtor held an "individual
retirement account" rather than an "individual retirement
annuity." See In re Matthews, 65 B.R. 24 (Bankr. N.D. Iowa 1986).
Such is the difference between ERISA qualified and non-ERISA qualified
plans. |
| [71] | *fn4 The legislature subsequently
deleted the 24 month rule. |
| [72] | *fn5 The statute contains a
definition for contributions: "'Contributions' means contributions
by the debtor and by the debtor's employer." Iowa Code §
627.6(8)(f). It does not contain a definition for transfer. |
| [73] | *fn6 The Debtor argued in the court
below that the $2,000 limitation was unconstitutional. Because such
argument has not been made before this court, it has been waived. In any
event, because I would find that the $2,000 limitation is inapplicable,
I need not address the statute's constitutionality. |