In Re Thiem
443 B.R. 832
| Bankr. D. Ariz. | 2011Background
- Debtors filed Chapter 7 petition; Mrs. Thiem is employed and Mr. Thiem receives disability Social Security.
- Mrs. Thiem inherited her mother's traditional IRA; $10,032.57 remained in the inherited IRA at petition date.
- Debtors claimed exemption in the inherited IRA under ARS § 33-1126(B) and 11 U.S.C. § 522(b)(3).
- Trustee objected, arguing inherited IRAs are not exempt under state or federal law; argument included a possible $5,361.62 exemption limit.
- Debtors amended Schedule C to include § 522(b)(3) and, alternatively, ARS § 33-1126(A)(1); court evaluated both bases.
- Court found the inherited IRA remains exempt under § 33-1126(B) and § 522(b)(3)(C), with alternative exemption under § 33-1126(A)(1).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the inherited IRA is exempt under ARS § 33-1126(B) or § 522(b)(3)(C). | Thiem; inherited IRA qualifies as retirement funds under exempt category. | Thiem; inherited IRA not exempt, as not a traditional retirement plan or properly exempted funds. | Yes; inherited IRA exempt under both ARS § 33-1126(B) and § 522(b)(3)(C). |
| Whether the inherited IRA qualifies under ARS § 33-1126(A)(1) as money payable upon the life of a deceased parent. | Thiem; provision covers death benefits to survivors, including death of parent. | Trustee; phrase limited to life-insurance concepts; not applicable here. | Yes; alternative exemption under ARS § 33-1126(A)(1) recognized. |
Key Cases Cited
- In re Nessa, 426 B.R. 312 (8th Cir. BAP 2010) (supports exemption of retirement funds under § 522(b)(3)(C) and § 522(d)(12))
- Tabor, 433 B.R. 469 (Bankr. M.D. Pa. 2010) (inherited IRAs may be exempt as retirement funds under IRC; expansion under BAPCPA)
- Kuchta, 434 B.R. 837 (Bankr. N.D. Ohio 2010) (opt-out state; inherited IRA exempt under § 522(b)(3)(C) and IRC § 408)
- Jarboe, 365 B.R. 717 (Bankr. S.D. Tex. 2007) (inherited IRA exemption analyzed under § 522(b)(3)(C))
- In re Palidora, 310 B.R. 164 (Bankr. D. Ariz. 2004) (Arizona interpretation of state exemption and how it applies to retirement funds)