|ROUSEY V. JACOWAY (03-1407) 544 U.S. 320 (2005)
347 F.3d 689, reversed and remanded.
[ Thomas ]
The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
ROUSEY et ux. v. JACOWAY
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
Several years after petitioners deposited distributions from their pension plans into Individual Retirement Accounts (IRAs), they filed a joint petition under Chapter 7 of the Bankruptcy Code. They sought to shield portions of their IRAs from their creditors by claiming them as exempt from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E), which provides, inter alia, that a debtor may withdraw from the estate his right to receive a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of age. Respondent Jacoway, the Bankruptcy Trustee, objected to the Rouseys exemption and moved for turnover of the IRAs to her. The Bankruptcy Court sustained her objection and granted her motion, and the Bankruptcy Appellate Panel (BAP) agreed. The Eighth Circuit affirmed, concluding that, even if the Rouseys IRAs were similar plans or contracts to the plans specified in §522(d)(10)(E), their IRAs gave them no right to receive payment on account of age, but were instead savings accounts readily accessible at any time for any purpose.
Held: The Rouseys can exempt IRA assets from the bankruptcy estate because the IRAs fulfill both of the §522(d)(10)(E) requirements at issue herethey confer a right to receive payment on account of age and they are similar plans or contracts to those enumerated in §522(d)(10)(E). Pp. 414.
(a) The Court reaffirms its suggestion in Patterson v. Shumate, 504 U.S. 753, 762763, that IRAs like the Rouseys can be exempted from the bankruptcy estate pursuant to §522(d)(10)(E). Pp. 45.
Rouseys IRAs provide a right to payment on account
age within §522(d)(10)(E)s meaning.
The quoted phrase requires that the right to receive payment be
because of age. Bank of America Nat. Trust and
Sav. Assn. v. 203 North LaSalle Street Partnership,
526 U.S. 434,
450451. This meaning comports with the common,
dictionary understanding of on account of, and
§522(d)(10)(E)s context does not suggest another
meaning. The statutes governing IRAs persuade the Court that
Jacoway is mistaken in arguing that there is no causal
connection between that right and age or any other factor
because the Rouseys IRAs provide a right to payment on
demand. Their right to receive payment of the entire balance
is not in dispute. Because their accounts qualify as IRAs
under 26 U.S.C. §
408(a), they have a nonforfeitable right to the balance
held in those accounts, §408(a)(4). That right is
restricted by a 10 percent tax penalty on any withdrawal made
before age 59
Rouseys IRAs are similar plan[s] or
contract[s] to the stock bonus, pension,
profitsharing, [or] annuity
plan[s] listed in
§522(d)(10)(E). To be similar, an IRA must be
like, though not identical to, the listed plans or contracts,
and consequently must share characteristics common to them.
Because the Bankruptcy Code does not define the listed plans,
the Court looks to their ordinary meaning. E.g., United
States v. LaBonte, 520 U.S. 751, 757.
Dictionary definitions reveal that, although the listed plans
are dissimilar to each other in some respects, their common
feature is that they provide income that substitutes for wages
earned as salary or hourly compensation. That the income the
Rouseys will derive from their IRAs is likewise income that
substitutes for wages lost upon retirement is demonstrated by
the facts that (1) regulations require distribution to begin no
later than the calendar year after the year the accountholder
347 F.3d 689, reversed and remanded.
Thomas, J., delivered the opinion for a unanimous Court.