OPINION
Thе United States District Court for the District of Minnesota certified to this court the following question of law: Does Minn. Stat. § 550.37, subd. 24 exempt funds in an Individual Retirement Account and/or an Individual Retirement Annuity, each as defined in Section 408 of the Internal Revenue Code, whether or not the debtor has unlimited access to the account balance? We answer the question in the affirmative.
The essential facts underlying the action that generated this certified question havе been stipulated to by the parties. In February 2003, appellant Thomas Paul Clark filed a petition for relief under Chapter 7 of the Bankruptcy Code. Clark’s household consisted of him and his wife, each age 55 at the time the рetition was filed. Clark owned a “qualified individual retirement annuity” (“IRA”),
1
on which the return
Clark claimed in his bankruptcy petition that the IRA was exempt from his bankruptcy estate under Minn.Stat. § 550.37, subd. 24, and the trustee, respondent Dwight Lindquist, objected to the claimed exemption. The bankruptcy court disallowed the exemption, concluding that the IRA was not exempt property. Clark appealed to the United States District Court for the District of Minnesota 2 and moved for certification of the question as to thе extent to which IRAs are exempt from the estate of a debtor under Minnesota law. The federal district court granted the motion and certified the question before this court. 3
Certified questions are questions of law that arе reviewed de novo.
B.M.B. v. State Farm Fire & Cas. Co.,
Under the Bankruptcy Code, virtually all property in which a debtor has a legal or equitable interest at the commencement of the case is included in the bankruptcy estate. See 11 U.S.C. 541 (2004). But thе code also includes a list of properties that may be exempted, 11 U.S.C. 522(d) (2004), and it allows states to establish separate exemption lists. See 11 U.S.C. 522(b)(2)(A) (2004). A debtor may choose either the federal exemption provisions or thе state provisions unless the debtor resides in a state that has “opted out” of the federal exemptions. See 11 U.S.C. 522(b)(1) (2004). In that Minnesota has not “opted out,” residents in this state may elect the federal exemptions included in section 522(d).
Pursuant to 11 U.S.C. § 522(d)(10)(E), a debtor may claim an exemption for
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 — •
(i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time thedebtor’s rights under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.
Federal circuit courts have reached differing conclusions with respect to whether IRAs are covered by the federal bankruptcy exemptions. Some circuit courts hold that IRAs are not exempt where the debt- or has the right to withdraw funds, at any time, subject only to early withdrawal tax penalties.
E.g., In re Rousey,
In Minnesota, debtors may exempt from their bankruptcy estate the right to payments from “a stock bonus, pension, profit sharing annuity, individual retirement account, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service.” Minn.Stat. § 550.37, subd. 24(a). Accordingly, unlike the Bankruptcy Code, Minnesota expressly exempts funds in IRAs. Nevertheless, to comport with the state constitution, the exemption is subject to monetary limitations.
Estate of Jones by Blume v. Kvamme,
In
Kvamme,
we concluded that an unlimited exemption for IRAs in a prior version of Minnesota’s exemption provision violated the state constitution’s “reasonable amount” requirement.
(1) to the extent the plan or contract is desсribed in section 401(a), 403, 408, or 457 of the Internal Revenue . Code of 1986, as amended, or payments under the plan or contract are or will be rolled over as provided in section 402(a)(5), 403(b)(8), or 408(d)(3) of the Internal Revenue Code of 1986, as amended; or
(2) to the extent of the debtor’s aggregate interest under all plans and contracts up to a present value of $30,000 and additional amounts under all the plans and contracts to the extent reasоnably necessary for the support of the debtor and any spouse or dependent of the debtor.
Minn.Stat. § 550.37, subd. 24 (1994). The state constitution provides: “A reasonable amount of property shall be exempt from seizure or sаle for the payment of any debt or liability. The amount of such exemption shall be determined by law.” Minn. Const, art. I, § 12. Because the first subsection of subdivision 24 did not require a court to limit the size of the exemption based upon objeсtive criteria, we held that it violated Minn. Const, art. I, § 12, and severed it, leaving subsection 2 in effect.
Kvamme,
With regard to the matter currently before us, the trustee argues that to qualify for the exemption under Minn.Stat. § 550.37, subd. 24(a), the debtor’s right to payment must be on account of illness, disability, death, age, or length of service, relying on a series of bankruptcy cases involving exemptions for annuities under state law and for IRAs under federal law.
See Rousey,
But it seems to us that our legislature clearly intended that IRAs generally be exempt by еxpressly listing them, in contrast to 11 U.S.C. § 522(d)(10)(E), which does not mention them by name. Furthermore, the debtor’s access to the funds is not completely unfettered. Consistent with the legislative intent of the exemption, as articulated in
Kvamme,
the statute properly balances a debtor’s need to access funds and the creditor’s right to satisfy judgments.
Kvamme,
Certified question answered in the affirmative.
Notes
. We use the generic term IRA for bоth Individual Retirement Accounts and Individual
. Pursuant to 28 U.S.C. § 158(c)(1)(A) (2004), an appeal from a bankruptcy court decision may be heard by the United States District Court if an election is filed.
. Minnesota Statutes § 480.065, subd. 3 (2002), provides:
The supreme court of this state may answer a question of law certified to it by a court of the United States * * * if the answer may be determinative of an issue in pending litigation in the certifying court and therе is no controlling appellate decision, constitutional provision, or statute of this state.
. Minnesota Statutes § 550.37, subd. 24 provides:
(a) The debtor’s right to receive present or future payments, or payments received by the debtor, under a stock bonus, рension, profit sharing, annuity, individual retirement account, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent of the debtor’s aggregate interest under all plans and contracts up to a present value of $30,000 [$54,000 under current indexing] and additional amounts under all the plans and contracts to the extent reasonably necessary for the support of the debtor and any spouse or dependent of the debtor.
(b) The exemptions in paragraph (a) do not apply when the debt is owed under a support order as defined in section 518.54, subdivision 4а.
. In 1999, the legislature amended the exemption statute to include Roth IRAs and to delete that portion of the statute held unconstitutional and severed in
Kvamme,
. This amount is adjusted periodically according to the implicit price deflator for the gross national product compiled by the United States Department of Commerce. Minn.Stat. § 550.37, subd. 4a (2002).