Bankrupt? NoIRA Problemo

Richard and Betty Jo Rousey of Arkansas, who took their lump-sum pension distributions from the Northrop Grumman Corp. and deposited them into two IRAs. Years later, when they filed a Chapter 7 bankruptcy petition, they sought to protect their IRAs from creditors. Read the law.com article here (free registration) required. The case is Rousey v. Jacoway (U.S. 04/04/2005) Justice Thomas 03-1407 544 U. S. ____ (2005) Northrup Grumman? Werent they a big aircraft manufactuing firm? Do you think Richard and Betty were bought out and these IRA's contained everything left from years of employment at an old economy firm? The Chapter 7 trustee sought to liquidate the Rousey's IRA's; like most debtors they probably had no other assets and Trustees are commissioned. The local Bankruptcy Court, the BAP and the Eighth circuit agreed with tthe trustee that the IRA's were the trustees. The Court held that Sec522(d)10E allowed the Rousey's to exempt the IRAs, Subsection (E) exempts "a stock bonus, pension, profitsharing, 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 ... ." lucky for you retired olks, the new Bankruptcy law does not amend Sec 522(d)10E!