Rousey v. Jacoway
Debtors Richard and Betty Rousey filed for bankruptcy under Chapter 7 of the United States bankruptcy code. Included in the couple’s assets were two Individual Retirement Annuities (IRAs) valued at $42,915.32 and $12,118.16. The Rouseys claimed exemptions for a large portion of the IRAs from the bankruptcy estate under 11 U.S.C. § 522(d)(10)(E). The bankruptcy trustee filed an objection to the exemptions.
The Bankruptcy Court of the Western District of Arkansas and the Bankruptcy Appellate Panel for the Eight Circuit found that the IRAs were not exempt under 11 U.S.C. § 522(d)(10)(E). The Eight Circuit Court of Appeals affirmed. The court based its decision on a provision of section 522(d)(10)(E), which stated that debtors’ IRAs are exempt from a bankruptcy estate only if the payments are made “on account of illness, disability, death, age or length of service.” Eight Circuit precedent established that future payments from the corpus of an IRA are not “on account of age” where the debtors have unfettered discretion to withdraw the funds at any time subject only to minor tax penalties. Since the Rouseys had unlimited access to the funds in their IRAs, the court determined their withdrawals were not made “on account of illness, disability, death, age or length of service” and, therefore, the IRAs were not exempt from the bankruptcy estate.
Question Presented:
Should this Court grant certiorari to resolve the three-way circuit conflict over whether and to what extent Individual Retirement Accounts (IRAs) are exempt from a bankruptcy estate under 11
U.S.C. § 522(d)(10)(E)?
