Keith A. Yerian v. Richard B. Webber II, 927 F.3d 1223

Debtor Keith Yerian opened a self-directed IRA in 2012 holding an LLC that purchased two cars and a Puerto Rico condo using IRA funds.
Yerian used IRA assets for personal benefit (titled cars in his/ spouse’s name, drove a vehicle, stayed in the condo), conduct he concedes were prohibited transactions under the IRC, causing the IRA to lose tax-exempt status as of Jan. 1, 2014.
Yerian filed Chapter 7 on Feb. 27, 2015, and amended his schedules to claim a Florida exemption for the IRA under Fla. Stat. § 222.21(2)(a)(2).
The bankruptcy trustee objected; the bankruptcy court held Yerian forfeited the Florida IRA exemption because he did not maintain the IRA in accordance with its governing instruments; the district court affirmed.
On appeal, the Eleventh Circuit reviewed de novo the legal conclusions and for clear error the factual findings and affirmed dismissal of the exemption claim.

Issue	Yerian's Argument	Trustee's Argument	Held
Whether Fla. Stat. § 222.21(2)(a)(2) protects an IRA from creditors when the IRA was established with compliant governing instruments but later operated in violation of those instruments and the IRC	An IRA is exempt so long as it was established under a governing instrument that the IRS determined exempt; loss of tax-exempt status is the only ground to forfeit exemption and must be established in a final proceeding	The statute requires (1) an initial IRS determination, (2) that the IRA be maintained in accordance with that governing instrument, and (3) no subsequent final determination that it is not exempt; actions violating the governing instrument forfeit the exemption	The court held the Florida statute requires maintenance in accordance with the governing instrument; Yerian’s admitted self-dealing violated the governing instrument and thus forfeited the exemption

Owen v. Owen, 500 U.S. 305 (bankruptcy exemptions withdraw property from the estate)
Law v. Siegel, 134 S. Ct. 1188 (court may not refuse to honor a claimed exemption absent statutory basis)
Rousey v. Jacoway, 544 U.S. 320 (IRS requirements for retirement accounts to be tax-exempt)
Comm’r v. Keystone Consol. Indus., Inc., 508 U.S. 152 (prohibited transactions and plan abuse doctrine)
In re Valone, 784 F.3d 1398 (Eleventh Circuit: Florida as an opt-out state for bankruptcy exemptions)
In re Hood, 727 F.3d 1360 (standard of review for bankruptcy appeals)
In re McFarland, 790 F.3d 1182 (burden on objector to prove exemption inapplicable)
Ellis v. Comm’r, 787 F.3d 1213 (prohibited transactions under IRC can void tax-exempt status)
In re Failla, 838 F.3d 1170 (textual interpretation principles)
Jackson v. Bank of Am., N.A., 898 F.3d 1348 (affirmation on any ground supported by the record)
CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d 1217 (strict standard for finding statutory absurdity)
Merritt v. Dillard Paper Co., 120 F.3d 1181 (courts should not impose judges’ policy preferences on statute)
In re Gamble, 168 F.3d 442 (states may set their own exemption schemes under § 522(b))