Document: 544 U.S. 320 ROUSEY ET UX.v.JACOWAY. No. 03-1407. Supreme Court of United States. Argued December 1, 2004. Decided April 4, 2005. Several years after petitioners deposited distributions from their pension plans into Individual Retirement Accounts (IRAs), they filed a joint petition under Chapter 7 the Bankruptcy Code. They sought to shield portions IRAs creditors by claiming them as exempt bankruptcy estate 11 U. S. C. § 522(d)(10)(E), which provides, inter alia, that debtor may withdraw his "right receive ... payment stock bonus, pension, profitsharing, annuity, or similar plan contract on account age." Respondent Jacoway, Trustee, objected Rouseys' exemption and moved for turnover her. The sustained her objection granted motion, Appellate Panel agreed. Eighth Circuit affirmed, concluding that, even if were "similar contracts" specified in gave no right "on age," but instead savings accounts readily accessible at any time purpose. Held: Rouseys can IRA assets because fulfill both 522(d)(10)(E) requirements issue here — confer age are contracts those enumerated 522(d)(10)(E). Pp. 325-335. (a) reaffirms its suggestion Patterson v. Shumate, 504 753, 762-763, like be exempted pursuant 325-326. (b) provide age" within 522(d)(10)(E)'s meaning. quoted phrase requires "because of" age. Bank America Nat. Trust Sav. Assn. 203 North LaSalle Street Partnership, 526 434, 450-451. This meaning comports with common, dictionary understanding of," context does not suggest another statutes governing persuade Jacoway is mistaken arguing there causal connection between other factor demand. Their entire balance dispute. Because qualify 26 408(a), have nonforfeitable held accounts, 408(a)(4). That restricted 10-percent tax penalty withdrawal made before 59½, 72(t). Contrary Jacoway's contention, this substantial. It applies proportionally amounts withdrawn prevents access 10 percent would forfeit should early. therefore effectively limits "payment" balance. And condition removed when accountholder turns 326-329. (c) plan[s] contract[s]" "stock [or] annuity plan[s]" listed To "similar," an must like, though identical to, contracts, consequently share characteristics common them. Code define plans, looks ordinary E. g., States LaBonte, 520 751, 757. Dictionary definitions reveal although dissimilar each some respects, feature income substitutes wages earned salary hourly compensation. will derive likewise lost upon retirement demonstrated facts (1) regulations require distribution begin later than calendar year 70½ (2) taxation money deferred until it distributed; (3) withdrawals 59½ subject penalty; (4) failure take requisite minimum results 50-percent funds improperly remaining account. rejects argument cannot complete premised view modest, premise agree. also contention availability early renders more accounts. Sections 522(d)(10)(E)(i) through (iii) preclude using insider established contract; length service; Internal Revenue sections, including section only generally exempt, support Court's conclusion 329-335. 347 F. 3d 689, reversed remanded. THOMAS, J., delivered opinion unanimous Court. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR EIGHTH CIRCUIT. Pamela Karlan argued cause petitioners. With briefs Thomas Goldstein, Amy Howe, Claude R. Jones, G. Eric Brunstad, Jr. Colli McKiever respondent. brief Jill pro se, Seth P. Waxman, Craig Goldblatt, Jorian Rose.* JUSTICE THOMAS 1 permits debtors certain property estate, allowing retain rather divide among creditors. U.S.C. 522. question case whether (IRAs) We hold so exempted. 2 * Petitioners Richard Betty Jo Rousey formerly employed Northrup Grumman Corp. At termination employment, required lump-sum employer-sponsored plans. In re Rousey, 283 B. 265, 268 (Bkrtcy. App. CA8 2002); Brief 2. lump sums two IRAs, one names. R., 268. 3 number imposed Each "a trust created organized exclusive benefit individual beneficiaries." 408(a) (2000 ed. Supp. II). types IRA-holders invest §§ 408(a)(3), (a)(5), provides nonforfeitable, caps yearly contributions IRAs. 408(o)(2). Withdrawals are, limited exceptions, penalty. 4 favorable treatment. particular, defers placed withdrawn. See 219(a) (contributions deductible); 408(e)(1) (IRA exempt). Moreover, timeframe accountholders can, did here, roll over received 408(a)(1). encourages such rollovers making nontaxable. 408(d)(3), 402(c)(1), 403(b)(8), 457(e)(16). 5 agreements, well relevant regulations, "entire interest custodial be, distributed by" following yearend reach 70½. 275 307, 310 Ct. WD Ark. 2002). agreements permit prior note federal penalties applicable distributions. Id., 311. 6 establishing Western District Arkansas. schedules statements accompanying petition, . 8 "(E) illness, disability, death, age, service, extent reasonably necessary dependent debtor. ." 9 appointed respondent Trustee. As responsible overseeing liquidation proceeds. She claim motion. 309. appealed. (BAP) agreed could concluded "`similar contract[s]'" because, contrast permitted had "unlimited access" 272. meant, BAP reasoned, control "subject ten penalty." 273. control, payments 522(d)(10)(E)." Ibid. again appealed, Appeals affirmed. contracts'" "`on age.'" 693 (2003). Like BAP, reasoned was conditioned neither nor statutory factors. "readily easily avail themselves (albeit discouraging consequences) purpose." recognized several sister Circuits reached contrary result. Brucher, 243 242, 243-244 (CA6 2001); McKown, 1188, 1190 (CA9 2000); Dubroff, 119 75, 78 (CA2 1997); Carmichael, 100 375, 378 (CA5 1996). 12 certiorari resolve division Courts regarding 541 1085 (2004). II 13 general matter, filing bankruptcy, "all legal equitable interests property" become debtor's 541(a)(1). help obtain fresh start, him property, car home, up values. See, e. 522(d); Security Industrial Bank, 459 70, 72, n. (1982). case, claimed Under terms statute, see supra, 323-324, meet three provision: contract"; service"; then, "to extent" "reasonably [to] support" dependents. 14 dispute first second requirements. implied satisfy elements 753 (1992). There, construing Code, stated 762-763 ("Although [in IRA] excluded 541(c)(2) ..., nevertheless 522(d)(10)(E)" (footnote omitted)). now reaffirm statement conclude 15 turn requirement service." interpreted elsewhere mean thereby requiring term modifies statute issue. 450-451 (1999). reaching conclusion, we noted "certainly usage meant places [bankruptcy] statute," provision of." Random House English Language (2d 1987) (listing "by reason of"); Webster's Third New International (1981) (hereinafter 3d) (same). Congress deviated term's Thus, service. 16 argues these she asserts all, long willing pay maintains (or factor), 17 disagree. us causally connected II), 59½. deterrent creates suggests designed low rates consistent notion substantially deters accounts.1 withdrawn, early, thus IRAs.2 age.3 unrestricted contracting party has breach simply price doing damages.4 Accordingly, B 18 addition factors contract[s]." No contends contracts. issue, specific American Heritage 1206 Am. Hert.); 2120. 19 contend "similar" same "primary purpose," namely, "enabl[ing] Americans save retirement." Reply 13. counters unlike "deferred compensation," 22, whereas allow id., 22-24. agree statute. Those substitute (by wages, present purposes, compensation income), mere 20 share. "profitsharing," bonus," "pension," "annuity." look terms. 757 (1997); Perrin States, 444 37, 42 (1979). A "profitsharing" plan, course, "[a] system employees profits business enterprise." Hert. 1045.5 Profitsharing compensation, "cash plans" predetermined percentage set intervals. J. Langbein & Wolk, Pension Employee Benefit Law 48 (3d 2000). bonus profitsharing except distributes company cash profits. 49.6 defined fixed sum paid given conditions person service (as due disability) surviving dependents entitled pension." 1671.7 Finally, "an amount payable regular intervals uncertain period years, life, perpetuity)." 88.8 21 all plans' similarities 522(d)(10) concern wages. 522(d)(10)(A) ("social security benefit, unemployment local public assistance benefit"); 522(d)(10)(B) ("a veterans' 522(d)(10)(C) ("disability, 522(d)(10)(D) ("alimony, support, separate maintenance"). But respects: Employers establish contribute he selects. annuities payment, payment. while income, none necessarily income. What 22 considerations convince First, requirements, discussed above, latest likely retired lack wage Second, qualifying II) distributed, treating years. 219, 408(e) treatment further wait funds: occurs, longer taxes deferred. Third, absent applicability exceptions penalty, restricting preretirement funds. ensure beneficiary uses accountholder's 4974(a). All features show distinguish typical 23 find unpersuasive bottom, rests, argument, modest hence true limit explained however, erects substantial barrier withdrawal. Supra, 327-328. Funds account, contrast, without age-based 24 reject While correct penalty-free circumstances, 72(t)(2), do reduce 25 narrow. For example, health insurance premiums unemployed individuals who least consecutive weeks taken during made. 72(t)(2)(D). These actual accountholder, spouse, 72(t)(2)(D)(iii). of, sets qualifications for, higher education expenses first-time home purchases taken. 72(t)(2)(E), 72(t)(7) (higher expenses); 72(t) (2)(F), 72(t)(8) (home purchases). death event becomes disabled. 72(t)(2)(A)(ii)-(iii).9 scope. Even carveouts, remains exception, rule. discussing requirement, 27 Our finds clauses (i)-(iii) bring rights otherwise if: 28 "(i) auspices arose; 29 "(ii) 30 "(iii) 401(a), 403(a), 403(b) 408 1986." 31 governs 32 makes little sense exclude fail 408, unless exemption. If referred exception. 3d, 1190. More specifically, clause sections cited tax-qualified form things, annuities, By grouping subparagraph (E), text supports our 33 34 sum, judgment reversed, remanded proceedings opinion. 35 ordered. Notes: Patricia Kaeding, Brady Williamson, Elizabeth Warren, Jean Constantine-Davis, Nina Simon, Michael Schuster AARP amicus curiae urging reversal. Amromin Smith, Explains Early Accounts? Evidence From Taxpayers, 56 Tax 595, 602 (Sept. 2003) (Table 1) (3.4 took penalized 1996);In Cilek, 115 974, 988, Wis. 1990) ("[O]f $6,457,306,674 nation's credit unions, 1.2% suffered 1987, 1.27% 1988"); Sabelhaus, Projecting Balances Withdrawals, Research Institute Notes (May 1999) (finding "[t]he pattern [1993 1996] infrequent IRAs" noting consistency "has big impact behavior"). need less sufficient apart circumstances. 72(t)(2)(A)(ii)-(iv) (permitting disability IRA-holder, equal periodic life expectancy accountholder); 72(t)(2)(B) (medical 72(t)(2)(D)-(F) (health premiums, expenses, purchase). circumstances confined narrow uses. Seeinfra, 332-334. change undermine fact use solely factor. O'Gilvie 519 79 (1996), Commissioner Schleier, 515 323 (1995), relies, 17-19, petitioners' statute's requirement. cases involved exclusion damages account' personal injuries." O'Gilvie, 81 (emphasis deleted); 329. cases, rejected punitive nature injuries, since compensate injuries. 83-84; 331-332. holding expressly "but for" causation reading S., 82-83. concluded, means "`by of[, or] of.'" 83. Oxford 580 1989) (OED) ("[T]he sharing profits,spec. employer employed"); 1811 ("[A] process part industrial commercial enterprise"). alsoid., 2247 (defining bonus" corporation executives shares stock"). 970 ("sum regularly way patronage") 54 annual allowance income"; dividends annually investment money"); OED 488 ("[a] grant, allowance, income," "[a]n money, whereby investor series payments, which, perpetual includes ultimate return principal interest"). accountholder. 72(t)(2)(iv). exception limited. modified five start been previous 72(q)(3). result, withdrawal, lest taxes, interest. medical 72(t)(2)(B). capped deducted yearIbid.

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