Opinion ID: 656195
Heading Depth: 3
Heading Rank: 3

Heading: The Relevant ERISA, Bankruptcy, and State Law Provisions

Text: 20 Section 514(a) of ERISA, 29 U.S.C. § 1144(a), broadly preempts any and all State laws insofar as they may now or hereafter relate to any employee benefit plan covered by ERISA. Section 514 also provides the following saving clause: 21 Nothing in this subchapter shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States (except as provided in sections 1031 and 1137(b) of this title) or any rule or regulation issued under any such law. 22 Section 514(d), 29 U.S.C. § 1144(d). 23 Under the Bankruptcy Code, an individual debtor is entitled to exempt certain property that has been swept into his bankruptcy estate under 11 U.S.C. § 541(a). While the Bankruptcy Code provides a set of federal bankruptcy exemptions in 11 U.S.C. § 522, Bankruptcy Code § 522(b) gives states the option of opting out of the federal bankruptcy exemption scheme. In states that have opted out, the debtor may only exempt any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition.... 11 U.S.C. § 522(b)(2)(A). Under the federal set of exemptions, the following may be exempted: 24 a payment under a stock bonus, pension, profit-sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless-- 25 (i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose; 26 (ii) such payment is on account of age or length of service; and 27 (iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), 408, or 409 of the Internal Revenue Code of 1986 (26 U.S.C. 401(a), 403(a), 403(b), 408, or 409). 28 11 U.S.C. § 522(d)(10)(E). 29 Florida law provides for an opt out/opt in scheme for its debtors who file for protection under the Bankruptcy Code. First, Fla.Stat. § 222.20 establishes the general nonavailability of the federal bankruptcy exemptions under 11 U.S.C. § 522: 30 In accordance with the provision of s. 522(b) of the Bankruptcy Code of 1978 (11 U.S.C. s. 522(b)), residents of this state shall not be entitled to the federal exemptions provided in s. 522(d) of the Bankruptcy Code of 1978 (11 U.S.C. s. 522(d)). Nothing herein shall affect the exemptions given to residents of this state by the State Constitution and the Florida Statutes. 31 Fla.Stat. § 222.201 then opts the state back in as far as exemptions in Bankruptcy Code § 522(d)(10) are concerned: 32 (1) Notwithstanding s. 222.20, an individual debtor under the federal Bankruptcy Reform Act of 1978 may exempt, in addition to any other exemptions allowed under state law, any property listed in subsection (d)(10) of s. 522 of that act. 33 Finally, in the section that the bankruptcy and district courts specifically held preempted by ERISA, Florida law expressly provides for exemption of pension money and retirement or profit-sharing benefits: 34 Except as provided in paragraph (b), any money or other assets payable to a participant or beneficiary from, or any interest of any participant or beneficiary in, a retirement or profit-sharing plan that is qualified under s. 401(a), s. 403(a), s. 403(b), s. 408, or s. 409 of the Internal Revenue Code of 1986, as amended, is exempt from all claims of creditors of the beneficiary or participant. 35 Fla.Stat. § 222.21(2)(a). There is no dispute in this case that the Schleins' IRA/SEP fits squarely within this exemption. The dispute is over whether this Florida law exemption is preempted by ERISA.