United States v. Greebel, 47 F.4th 65

Background

Evan Greebel was convicted of conspiracy to commit wire fraud and securities fraud and ordered to pay $10,447,979 in restitution under the MVRA.
The Government moved under the Federal Debt Collection Procedures Act for writs of continuing garnishment to seize roughly $921,000 in two former 401(k) accounts (Fried Frank and Katten) to satisfy the restitution judgment; the district court granted the writs.
Fried Frank Plan: provides a participant a lump-sum distribution upon separation from service, but contains a provision delaying unilateral distributions over the cash-out threshold until age 62 unless the participant elects earlier distribution after notice.
Katten Plan: allows inactive participants to withdraw up to the entire account value by applying to the plan administrator (AANF); no minimum or annual cap on withdrawals in plan language.
Greebel argued ERISA’s anti-alienation protection bars garnishment because he allegedly lacks a current, unilateral right to withdraw; alternatively he argued the CCPA 25% garnishment cap applies. The district court rejected those arguments and ordered garnishment.
On appeal the Second Circuit held MVRA authorizes garnishment of ERISA-protected 401(k) funds, rejected the CCPA cap for lump-sum distributions, but remanded for the district court to determine whether a 10% early-withdrawal tax will be triggered and, if so, how that tax limits the Government’s recoverable amount.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether MVRA allows garnishment of ERISA‑protected 401(k) funds to satisfy restitution	MVRA’s "all property or rights to property" language—"notwithstanding any other Federal law"—permits garnishment of retirement accounts.	ERISA’s anti‑alienation clause protects retirement accounts from third‑party garnishment absent a current unilateral right to withdraw.	MVRA overrides ERISA anti‑alienation for restitution; Government may garnish ERISA 401(k) funds.
Whether Greebel has a current, unilateral right to withdraw under the plan terms	Government: plan documents grant Greebel a present right to the account balance upon separation; administrative procedures do not negate that right.	Greebel: plan provisions (distribution timing, application procedures, notice/election requirements) mean he lacks an immediate unilateral right to a lump‑sum.	Court: plan language and testimony show Greebel has a right to withdraw; administrative procedures do not defeat that right.
Whether the 10% early‑withdrawal tax (§ 72(t)) prevents or limits garnishment	Government: tax does not bar garnishment; in some contexts IRS rulings suggest tax may not apply but Government made no waiver.	Greebel: the tax restricts his property interest and therefore limits Government’s recoverable amount.	Garnishment is allowed, but the district court must determine whether the 10% tax is triggered and, if so, reduce the Government’s recoverable interest accordingly.
Whether the CCPA 25% garnishment cap applies to lump‑sum retirement distributions	Government: CCPA protects periodic "earnings" only; lump‑sum distributions are not "earnings" under the statute.	Greebel: 401(k) distributions are compensatory and thus qualify as "earnings," so the 25% cap applies.	CCPA cap does not apply to one‑time lump‑sum 401(k) distributions; no 25% limit here.

Key Cases Cited

United States v. Novak, 476 F.3d 1041 (9th Cir. 2007) (held MVRA can permit garnishment of ERISA‑protected funds and considered limits based on participant rights)
United States v. Irving, 452 F.3d 110 (2d Cir. 2006) (MVRA enforcement compared to tax levies; ERISA assets may be considered for fines)
United States v. Frank, 8 F.4th 320 (4th Cir. 2021) (MVRA allows garnishment of retirement funds; remanded to determine early‑withdrawal tax effect)
United States v. Sayyed, 862 F.3d 615 (7th Cir. 2017) (government may access retirement funds but recovery is subject to tax penalties that limit defendant’s property interest)
United States v. Cohan, 798 F.3d 84 (2d Cir. 2015) (explaining MVRA enforcement uses Federal Debt Collection Procedures Act processes)
United States v. National Bank of Commerce, 472 U.S. 713 (1985) (government "steps into the taxpayer's shoes" and acquires only the taxpayer's property rights)
Rousey v. Jacoway, 544 U.S. 320 (2005) (discussing IRA access and the 10% early‑withdrawal tax in assessing property interests)
Kokoszka v. Belford, 417 U.S. 642 (1974) (limits CCPA "earnings" to periodic payments and not every asset traceable to compensation)