scratchy throat to the this case comes out of the bankruptcy appellate panel on a decision that was made concerning the exemption of retirement accounts that mr low back in my client received in his divorce he was awarded a small ira in a portion of his wife's for one k in the divorce and before he got them transferred into his own name into his own account he filed bankruptcy and he filed bankruptcy to stop the and twenty two b three c and this section asked two questions one are the funds retirement funds into are they in a tax exempt account so that the bankruptcy judge robert crystal but involved and i or a that had been inherited by the daughter the daughter was the debtor and saw that the mother had been the one who it was her her retirement and when we corrected otherwise it will have a chilling effect on future bankruptcy filers the baffle wrote the opinion meaning clarke clearly suggests that the exemption is limited to individuals who create and contribute funds into the retirement retirement funds obtained or received by any other means do not meet this definition now you think that's too broad because if you can get it in a way that it retains its character as a retirement fund then it should be  idea i had done the dreaded exempted as a tactical matter and i had a brief that so if you didn't raise the state issue then we're just here and that's an open question yeah i think that's still what sort of whether it's one is it in a retirement and they looked at that and they said the standard should be an objective standard that is it a retirement account as opposed to in a checking account i intended you know and so what they said in inherit or inherited by someone other than the surviving spouse but what do you do with the entirely different your group of course what the supreme court says retirement funds means funds currently an account set aside for retirement not set aside at a prior date by an entirely different person that likes going to be the same person well it sounds like it but when you look at it it it's not because what they have either way the money remains retirement funds so if they're saying that a and surviving spouses retirement their inheritance into retirement account then we're saying that the marital that's important that that says to me that the supreme court didn't intend its opinion to restrict the exemption of an end of an ira received through a and funds retirement twenty years later they split the retirement age file bankruptcy the next day how is that not the spouse the nonworking spouses retirement it was intended for that for her kids or her retirement as well that's a terrible public policy but now the u s supreme court has also recognized this anticipation by a spouse in the marital assets in the receive the benefits that they otherwise would have had a valuable during their retirement as a means of income so that we're speaking of quadros there is a relief from the state granted in this case i've got the order by judge cristol here in my option to take all that out immediately within sixty days so doesn't that mean that it's not going to be exempt because it's not well because it has that option and the supreme court says if you could take it out for media bankruptcy and exempt it you can sell it the next day you know it's the same think here the it's the it's the expectation that the debtor had with respect to that marital asset what about the ira can that be withdrawn immedia created and funded the sire a he still could have taken it out but he'd be subject to the ten percent penalty what do you do with the entirely different person words in the supreme court's opinion i penned trying to you know what i'm referring to it's where they define the critical point of the opinion the supreme court says retirement funds the funds were set aside for that retirement not so i quoted it earlier not set aside for that purpose at some party by an entirely different person right but and you have to look at the context it was you have to go back the common law and say that the husband or wife or one person now i get it may not be in a to protect people's retirement and so that they're not destitute and wards of the state that's the whole point so you've got to read you've got to read clarke in its entirety and what the point of clarke was the point of say that no and i are a rich inherited by a daughter is not every time a cult that's the point of course now turning to what we need here in this case is that it decision i think that  when they when a spouse inherits or receives in a divorce in iraq and puts it into his or her own account and  then it's passed in a sixty day limit that is that person's retirement age it's treated the same under the tax laws and to be treated the same under bankruptcy law i mean ask another point in the opinion the supreme court says whether as an objective matter the county is set aside for the day when an individual stops working again it sounds like it's not designed for couples well it's of any kind it may sound like that but i don't know why they would have said then about that about the surviving spouse what do you mean when they compare the penalties and when right when that you know you got it and when the th circuit said and if it were the surviving spouse it would it would remain a retirement the supreme court is not approving of the seven circuits opinion right there's no reference here that they're proving you know tell me if i'm wrong because i didn't look forward to the truth they didn't but they did discuss the surviving spouse i did she but that was to prove their point yeah and i will submit a letter on it but the revealing council may respond if you send a letter on standard review going so the court should not reverse unless there's clear  the ten percent penalty for early early withdrawals from qualify plans twenty six u s c way seventy two t section seventy two team one borrows the definition of cases and and law cited by the meets you were incorrect because they are citing for example the cohen case which involved a transfer from one spouse to another spouse under ira who had to pay the penalty it's not the situation where the withdrawing spouse originally the husband in that case paid the penalty and so it's an entirely different different  did and what we're talking about here is the holder of the account do they have to pay a penalty for an early withdrawal that's a husband here that in well in this case it's the wife i'm sorry you're right you're right i'm wrong it's the wife does not have to pay a penalty nor does the husband you know if the husband here who gets it immediately decides to spend it all after putting the i right has to pay a penalty right if he puts it into an tax but not a penalty and that's true of the for one case as well and that's why clark means what it says when it says a different individual when it in other words it has to be the debtor who put that money into the retirement account and there were in the reason it it has to be that is because every non bitter has the right to do something with that money other than put it into  gets it there might be time limitations on when you do it there might be penalties even on some situations not our case and your part says right in clerk they discuss spouses did they did they discuss spouses writing clark well they talk talking on the bench where they say they talked about early in the opinion and i don't have the exact page for you but they talked about the difference in inherited iras what it what a spouse can do and what they and what an on spouse can do and there were some penalty situations that were just distinct between the two but it's not what clark was about clark was about a broad proposition at under nature of the funds at issue it then talked about some steps in that case under those facts you could look at but the what you do is you look at the character of one of the funds you're talking about and that and we talked a little bit about both the meaty and appellant the public policy but in fact this public policy is not what they think it is if you look at the tax laws and bankruptcy laws together in particular what you have is a large portion well let me back up there's no penalty for any distribution in the context of a divorce under quadrille either from an irate or from a forty one k and they are not retirement funds because of that exclusion of that excuse me that exclusion from penalty alone that takes them away from the retirement funds because it the holder the retirement funds does pay penalty on early withdrawal a large portion of a couple's assets are often in these retirement accounts and what these are earning stream the course of the marriage usually and they've been deferred for use later use but in a divorce one of the spouses the non earning or lower earning spouse may need that money now not in the future and so what the what the tax code does is give them if that spouse gives that spouse the right to use them as that spouse deems necessary now they can choose to put them into a retirement account and they've got sixty days to do so they could they can choose to spend and which funds both were about going back to the amicus brief they say a distribution from an ira that is then paid to one's x files pursued to divorce judgment instead of a transfer by way of a name change or direct roll over is taxable it clear cohen says koen was this situation there's a divorce the husband has a large ira they don't quadrille the wife opens a new wiring and the money is transferred perfectly ok no penalty the penalty issue isn't is on the husband will the husband have to pay a penalty of ten percent for an early withdrawal from that are very answer no because if it went over to the spouse fiery and that spouse doesn't pay a penalty either six months later she changed her mind and said and took a withdrawal which was an early withdrawal from her new ira and the con said you have to pay a penalty i know that a quadrille curd we know a quadro curd but we're past the quater now now head that spouse filed for bankruptcy before taking the money out of would have had that entitlement to the exemption because that's her retirement fund she put them there and that's why clark means what it says because you can the owner of the account the person who put it there that's who gets to claim the exemption and that's why cohen doesn't support exactly what they mea plural and remember where we are in the record in a state court we have an order from a state court judge saying that those those monies come to my client that both the funds in reality and i think you saw in both the district bankruptcy court in the industry appellate court they didn't give it a heck of a lot of analysis all agreeing that the reason was because explanation but these are not hands and they never were and he didn't have a quadroon place for them at the time the court saw what was happening the blower court saw what was happening and that was an attempt to get around in order enforcing a statutory attorneys lean in state court and then in the decision was these are not retirement funds under clark and then when the order about the attorney's lien enforcement came out then we have this bankruptcy because reality is mr law there bokken wanted to use these funds for whatever he wanted to use them for that and it was foiled in a sense by the attorney to clean enforcement so we tried to do an end around and get and get an exemption in bankruptcy court that he wasn't entitled to try to stop having to pay my client under the attorneys and i think well plea bankruptcy court and the bankruptcy appellate panel saw through that pretty quickly realize these are retirement funds certain obese retirement funds the divorce has been granted right correct the interest are in the ex wife the money is in the ex wife's accounts right correct thanks and so under clerk he can't claim these exemptions they're thank you let's go back to the issue of whether there's a penalty should be easy to determine at some point here but the only time that and i or ray can be withdrawn without penalty in this situation is upon  didn't roll it into his own he had sixty days to roll it into his own then then it would be taxable and subject to the penalty well the council says you are right in your opening brief that he can take out the iranian any without a penalty within sixty days under seven to teach that's i don't believe that to be correct what's wrong what's wrong with the argument the argument is that there is a penalty that the only time that you can take it out go through but i don't believe i do believe that there is a temper sent penalty on receiving an ira if you cash it in if you don't roll it into your own it's interesting to note that the trustee in this case did not object that kind of tells you that it was a little bit out of the blue but all right thank you very argument thank you to both counsel the cases submitted and filed opinion