- No. 13-3682 (8th Cir. Feb. 13, 2015).
- Funds taken from an individual retirement account for the purpose of purchasing an annuity retain their exempt status under 11 U.S.C. § 522(b)(3)(C) as “retirement funds…in a fund or account that is exempt from taxation under [28 U.S.C. § 408].”
- Procedural context:
- The chapter 7 trustee (Running) objected to Miller’s claimed exemption in his chpater 7 case. The bankruptcy court overruled the objection, and the trustee appealed. The Bankruptcy Appellate Panel affirmed, and the trustee appealed to circuit court.
- Prior to his chapter 7 case, Miller purchased an annuity contract for a lump sum payment of $267,319.48, plus eight annual income payments of $40,497.95 each, using funds from his individual retirement account to make each of the payments. Miller later filed chapter 7, claiming the annuity as exempt pursuant to 11 U.S.C. § 522(b)(3)(C). The Circuit Court concurred with the lower courts that the exemption applies even to funds transferred from one qualified retirement plan to another; the funds do not become property of the estate “in transit.” Although to be eligible to be a qualified retirement annuity, annual premiums cannot exceed $6,000, the Circuit Court concluded that “an annual premium does not encompass funds that already were contributed to a qualified retirement plan;” rather, it refers to retirement contributions being made for the first time. The payments made by Miller were more in the nature of rollover contributions, which are expressly distinguished from premium payments by § 408 of the Internal Revenue Code. Accordingly, the Circuit Court affirmed.
- Murphy, Smith, and Gruender.
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