ORDER DENYING DEBTOR’S CLAIM OF EXEMPTION
THIS MATTER comes before the Court on the Chapter 7 Trustee’s Objection to Debtors’ Claim of Exempt Property and Supplement to Objection to Debtors’ Claims of Exempt Property. The Court has reviewed the facts and arguments presented by -the parties, as well as the pertinent legal authority, and hereby makes the following findings of fact and conclusions of law.
JURISDICTION
The Court has jurisdiction over this matter under 28 U.S.C. § 1334(a) and (b) and 28 U.S.C. § 157(a) and (b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I), as it involves an objection to a claimed exemption.
BACKGROUND
Debtors Stephen J. Ludwig (“Debtor”) and Melody Ann Ludwig filed for Chapter 7 bankruptcy on July 19, 2005. The Chapter 7 Trustee, Glen R. Anstine, Esq., filed Trustee’s Objection to Debtors’ Claim of Exempt Property on September 21, 2005, and Trustee’s Supplement to Objection to Debtors’ Claims of Exempt Property on March 23, 2006.
A hearing was held on April 5, 2006. Testimony and evidence presented at trial were as follows:
Debtor testified that, in the months pri- or to filing for bankruptcy, he used assets from a brokerage account to purchase an educational IRA for his children and to make improvements to his family home.
On July 15, 2005, Debtor used the remaining assets in the brokerage account to purchase a U.S. Allianz High Five Variable Annuity (the “Allianz Annuity”) in the amount of $33,000.00. The Contract Profile for the Allianz Annuity (“Allianz Annuity Contract”) was admitted into evidence at trial. A Prospectus for the Allianz Annuity was also admitted.
Debtor testified that he has a professional background in finance and performed financial services in his previous employment with Montgomery Ward & Co. While there, he participated in a stock purchase program, and purchased shares of Mobil Corporation stock (now the Exxon-Mobil Corporation). At trial, Debtor offered no testimony or documentary evidence explaining the employee stock pur *313 chase program or indicating whether the program was ERISA-qualified. 1
On cross-examination, Debtor testified that after leaving Montgomery Ward, he placed the assets from this stock ownership program in a brokerage account with Merrill Lynch in Debtor’s name. The brokerage account consisted primarily of Exxon-Mobil stock, which the Debtor eventually sold. Debtor later purchased the Allianz Annuity with proceeds from this brokerage account. Debtor did not offer evidence as to whether the change from the stock purchase program to the brokerage account involved a “roll over” of funds.
By stipulation of the parties, the Court admitted into evidence a letter dated October 3, 2005, from Debtor’s financial advis- or, Todd A. Dussex, CFP, of LPL Financial Services. Debtor testified that he sought financial advice from Mr. Dussex prior to filing bankruptcy. The letter is written in response to an inquiry from Debtor after filing bankruptcy. Thе letter states that Debtor was under the impression that his Montgomery Ward stock purchase program was an ERISA-qualified plan. Mr. Dussex informed Debtor that the stock program and the assets in the brokerage account were non-qualified funds and could not be directly rolled over into a qualified plan. He also informed Debtor that the Allianz Annuity created an environment that was “similar to” and “closely matched” an ERISA-qualified plan, but that the Allianz Annuity was not itself an ERISA-qualified plan or qualified for special treatment under the Internal Revenue Code.
Debtor did not disclose the brokerage account or the liquidation of the Montgomery Ward stock purchase program among his Closed Financial Accounts in the Statement of Financial Affairs of his Chapter 7 Petition. Debtor did disclose ownership of the Allianz Annuity in his original Schedules B and C. The original Schedule C claimed an exemption for the Allianz Annuity pursuant to Colo.Rev.Stat. § 10-7-106. Debtor eventually amended his Schedules B and C to reflect the purchase of the Allianz Annuity, and revised Schedule C to claim an exemption pursuant to Colо.Rev.Stat. § 13-54-102(l)(s). The Amended Schedules B and C were admitted into evidence.
At trial, Debtor and the Chapter 7 Trustee did not pursue the argument that the Allianz Annuity was exempt under Colo. Rev.Stat. § 10-7-106, which generally prohibits the alienation of proceeds from an annuity contract, or an account of any beneficiary other than the insured. Therefore, the Court will not address this issue.
The issue before the Court is whether the Allianz Annuity is exempt from the bankruptcy estate. Because the State of Colorado has opted out of federal exemption statutes, the applicable law is Colorado’s exemption statute, Colo.Rev.Stat. § 13-54-102.
Debtor concedes that the Allianz Annuity is not an ERISA-qualified plan and is not exempt on this basis. Instead, he argues:
(1) The Allianz Annuity is an “individual retirement account” as defined by the Internal Revenue Code (“I.R.C.”), 26 U.S.C. § 408(a), and is therefore qualifies for Colorado’s specific exemption for *314 an “individual retirement account, as defined in 26 U.S.C. sec. 408.” See Colo. Rev.Stat. § 13-54-102(l)(s).
(2) Even if the Allianz Annuity does not qualify as an “individual retirement account,” Colo.Rev.Stat. § 13 — 54—102(l)(s) also recognizes a broad exemption for “retirement plans.” Because Debtor intended to use the Allianz Annuity for his retirement, it qualifies for an exemption as a “retirement plan.”
The Chapter 7 Trustee argues:
(1) The Allianz Annuity is not an “individual retirement account” as defined by I.R.C. § 408(a) and, therefore, is not exempt under Colo.Rev. Stat. § 13-54-102(l)(s).
(2) The term “retirement plan” as it appears in Colo.Rev.Stat. § 13-54-102(l)(s) cannot be interpreted so broadly as to include the Allianz Annuity contract.
(3) Debtor’s subjective intent has no bearing on whether the Allianz Annuity falls under the exemptions listed in Colo.Rev.Stat. § 13-54-102(l)(s).
DISCUSSION
I. COLORADO’S EXEMPTION STATUTE
The ultimate question is whether the Allianz Annuity is exempt under Colorado’s exemption statute, Colo.Rev.Stat. § 13-54-102(1). At the outset, the Court observes that § 13-54-102(l)(s) incorporates the definitions set forth in I.R.C. § 408. The Colorado statute states in relevant part:
(1) The following property is exempt from levy and sale under writ of attachment or writ of execution:
(s) Property, including funds, held in or payable from any pension or retirement plan or deferred compensation plan, including those in which the debtor has received benefits or payments, has the present right to receive benefits or payments, or has the right to receive benefits or payments in the future and including pensions or plans which qualify under the federal “Employee Retirement Income Security Act of 1974” as an employee pension benefit plan, as defined in 29 U.S.C. sec. 1002, any individual retirement account, as defined in 26 U.S.C. sec. b08, any Roth individual retirement account, as defined in 26 U.S.C. sec. 408A, and any plan, as defined in 26 U.S.C. sec. 401, and as these plans may be amended from time to time....
Colo.Rev.Stat. § 13 — 54—102(l)(s) (2005) (emphasis added).
The Court’s analysis is threefold. First, it will determine whether the Allianz Annuity is exempt as an “individual retirement account” under I.R.C. § 408(a). Second, although Debtor did not raise this argument, the Court will also examine whether the Allianz Annuity qualifies as an “individual retirement annuity” under I.R.C. § 408(b). See Colo.Rev.Stat. § 13-54-102(l)(s) (referring broadly to “any individual retirement account, as defined in 26 U.S.C. sec. 408”). Third, the Court will address Debtor’s argument that § 13-54-102(l)(s) provides a broad exemption for “retirement plans” and that the Allianz Plan qualifies as one such “retirement plan.”
The Court appreciates the zealous advocacy of Debtor’s counsel and his substantive research on particularly difficult questions of law. However, Debtor’s arguments hinge on assumрtions that are not supported by statute or case law, as discussed below.
*315 II. “INDIVIDUAL RETIREMENT ACCOUNTS” UNDER I.R.C. § 408(a)
The I.R.C. § 408(a), defines “individual retirement account” as:
(a) Individual retirement account.—For purposes of this section, the term “individual retirement account” means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements:
(1) Except in the case of a rollover contribution described in subsection (d)(3), in section 402(c), 403(a)(4), 403(b)(8), and 457(e)(16), no contribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A).
(2) The trustee is a bank (as defined in subsection (n)) or such other person who demonstrates to the satisfaction of the Secretary [of the Treasury] that the manner in which such other person will administer the trust will be consistent with the requirements of this section.
(3) No part of the trust funds will be invested in life insurance contracts.
(4) The interest of an individual in the balance in his account is nonforfeitable.
(5) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
(6) Under regulations prescribed by the Secretary, rules similar to the rules of section 401(a)(9) and the incidental death benefit requirements of section 401(a) shall apply to the distribution of the entire interest of an individual for whose benefit the trust is maintained.
26 U.S.C. § 408(a).
In this case, it is clear that the Allianz Annuity does not meet the definition of an “individual retirement account.” Among other factors, (1) the lump sum premium for the Allianz Annuity was $33,000.00, an amount exceeding the statutory limit of $4,000 for the 2005-2007 taxable years as set by 26 U.S.C. §§ 219(b)(1)(A) and 219(b)(5)(A); and (2) the Allianz Annuity is in Debtor’s name and is not entrusted to a bank or other trustee. The Court therefore holds that the Allianz Annuity is not exempt under Colo.Rev.Stat. § 13-54-102(l)(s) as an “individual retirement account.”
III. “INDIVIDUAL RETIREMENT ANNUITIES” UNDER I.R.C. § 408(b)
Though Debtor did not raise the argument, the Court will also examine whether the Allianz Annuity qualifies as an “individual retirement annuity” under the I.R.C. § 408(b), insofar as Colo.Rev.Stat. § 13—54—102(l)(s) refers generally to individual retirement accounts “as defined in 26 U.S.C. sec. 408” and does not restrict the exemption to specific subsections of I.R.C. § 408.
A. Definition of “Individual Retirement Annuity”
The I.R.C. definition of “individual'retirement annuity” parallels the definition of “individual retirement account,” and states as follows:
(b) Individual retirement annuity.—For purposes of this section, the term “individual retirement annuity” means an annuity contract, or an endowment contract (as determined under regulations *316 prescribed by the Secretary [of the Treasury]), issued by an insurance company which meets the following requirements:
(1) The contract is not transferable by the owner.
(2) Under the contract—
(A) the premiums are not fixed,
(B) the annual premium on behalf of any individual will not exceed the dollar amount in effect under section 219(b)(1)(A), and
(C) аny refund of premiums will be applied before the close of the calendar year following the year of the refund toward the payment of future premiums or the purchase of additional benefits.
(3) Under regulations prescribed by the Secretary [of the Treasury], rules similar to the rules of section 401(a)(9) and the incidental death benefit requirements of section 401(a) shall apply to the distribution of the entire interest of the owner.
(4) The entire interest of the owner is nonforfeitable.
Such term does not include such an annuity contract for any taxable year of the owner in which it is disqualified on the application of subsection (e) or for any subsequent taxable year. For purposes of this subsection, no contract shall be treated as an endowment contract if it matures later than the taxable year in which the individual in whose name such contract is purchased attains age 70 1/2; if it is not for the exclusive benefit of the individual in whose name it is purchased or his beneficiaries; or if the aggregate annual premiums under all such contracts purchased in the name of such individual for any taxable year exceеd the dollar amount in effect under section 219(b)(1)(A).
See 26 U.S.C. § 408(b).
B. Terms of the Allianz Annuity Contract
As a threshold requirement, an individual retirement annuity may not be “transferable” by one owner to another. See 26 U.S.C. § 408(b)(1). The Court has reviewed the Allianz Annuity Contract and Prospectus. The Court notes that, in contrast to § 408(b), the Contract uses the term “transfer” to refer to the Debtor’s ability to “transfer all or part of his annuity into another investment option,” Allianz Annuity Contract at 8, rather than to a transfer in ownership. Even so, the Contract clearly permits Debtor to “change ownership” or “assign” his rights to another party. Allianz Annuity Contract at 12-13. The Contract states in relevant part:
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER: As the Contract Owner, you have all the interest and rights under this Contract. The Contract Owner is the person designated as such on the Issue Date, unless changed.
You may change owners of the Contract at any time by Authorized Request subject to our underwriting rules then in effect.
ASSIGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an assignment of a Contract must be provided to the Service Center. We will not be liable for any payment made or action taken before we record the assignment ... If the Contract is assigned, your rights may only be exercised with the consent оf the assignee of record.
*317 Allianz Annuity Contract at 12-13 (emphasis added).
The Court finds the contractual language dispositive. Because the Contract grants Debtor the explicit right to “change owners” of the Allianz Annuity or “assign” it to another party, the Court finds that the Allianz Annuity does not meet the non-transferability requirement for an individual retirement annuity under I.R.C. § 408(b)(1).
The Allianz Annuity also fails to meet the requirements of I.R.C. § 408(b)(2), which limits premium payments to the amounts set forth in 26 U.S.C. §§ 219(b)(1)(A) and (5)(A).
See
26 U.S.C. § 408(b)(2)(B). As noted previously, the lump sum payment of $33,000.00 exceeds the statutory limit of $4,000 set for the 2005-2007 taxable years.
See
26 U.S.C. §§ 219(b)(l)(A)-(5)(A).
See also In re Rogers,
The Court therefore holds that the Al-lianz Annuity is not exempt under Colo. Rev.Stat. § 13-54-102(l)(s) as an “individual retirement annuity.”
C. Debtor’s Authorities are Inappo-site
The authorities cited by the Debtor are inapposite because they involve assets that are unquestionably “individual retirement accounts” or “individual retirement annuities” as defined by the I.R.C. In particular, Debtor concentrates on the Texas bankruptcy case,
In re Laxson,
Moreover,
In re Laxson
and many of the cited authorities were decided in the late 1980s at a time when the relation between state IRA exemption statutes and ERISA wаs in doubt. In fact, the central holding in
Laxson
was that ERISA did not preempt a Texas statutory exemption for IRAs.
Id.
at 89. The United States Supreme Court clarified the relationship between ERISA and IRAs in
Patterson v. Shumate,
On the issue of whether the Allianz Annuity is exempt under § 13 — 54—102(1)(s) by virtue of being qualified under I.R.C. §§ 408(a) or 408(b), the Court finds the reasoning in
In re Huebner,
IV. “RETIREMENT PLAN” UNDER COLO. REV. STAT. § 13-54-102(1) (s)
Debtor’s remaining argument is that § 13 — 54—102(l)(s) contains a broad exemption for “retirement plans” and that the Allianz Annuity qualifies as a “retirement plan” because the Debtor intended to use the annuity for his retirement. This argument is unavailing.
A. Definition of “Retirement Plan”
The term “retirement plan” appears in the phrase “any pension or
retirement plan
or deferred compensation plan” in the first clause of § 13 — 54—102(l)(s).
Id.
(emphasis added). Colorado courts have yet to interpret the meaning of “retirement plan.” The Court has found only two Colorado cases that mention § 13-54-102(l)(s), and both cases held that its provisions were inapplicable because the parties filed their actions before the effective date of the legislative amendment enacting § 13-54-102(l)(s).
See In re Marriage of LeBlanc,
Because the Court is called upon to interpret a Colorado statute, the Court will apply the canons of statutory construction recognized by Colorado courts. Under the canon of
noscitur a sociis,
the Court looks for common characteristics among the specific items listed in § 13-54-102(l)(s).
See Bedford v. Johnson,
Applying the canon of
noscitur a sociis,
the Court observes that the examples listed in § 13-54-102(l)(s) share the common feature of being either ERISA-qualified, like a company pension, or tax-qualified, like an individual retirement annuity as defined under 26 U.S.C. § 408(b).
See Bedford,
The Court’s interpretation is supported by the legislative history of § 13-54-102(l)(s). The Colorado General Assembly added § 13 — 54—102(l)(s) to existing exemptions by amendments enacted in 1991. See Laws 1991, H.B. 91-1233 §§ 1, 2, eff. May 1, 1991. The section was amended again in 2002, inserting the phrase “any Roth individual retirement account, as defined in 26 U.S.C. sec. 408A.” See Laws 2002, Ch. 154 § 1, eff. May 24, 2002.
The 2002 amendment is significant. The Colorado General Assembly may be presumed to have known that other states have general exemptions for all annuity contracts (Florida is one example, as discussed below). Although the Colorado General Assembly had the opportunity to expand § 13 — 54—102(l)(s) to exempt all annuities, it merely extended the list of exemptions to include Roth IRAs. Roth IRAs, like the other items listed in § 13-54-102(l)(s), share the feature of being tax-qualified.
The Court finds that the Allianz Annuity is neither an ERISA-qualified plan nor a tax-qualified IRA, and does not share the characteristics of the exempt plans listed in § 13-54-102(l)(s).
See Winter,
B. Debtor’s Authorities Are Inappo-site
In support of his interpretation of § 13-54 — 102(l)(s), Debtor cites exemption statutes from Florida, Texas, and Oklahoma.
See
Fla. Stat. Ann. § 22.14 (2006); Texas. Prop.Code § 42.0021 (2005); 36 Okla. Stat. § 4029 (2005). The Court is not persuaded. The language of the Florida, Texas and Oklahoma statutes cited differ significantly from § 13 — 54—102(l)(s). Specifically, the Florida statute contains a specific exemption for proceeds of “annuity contracts.”
See
Fla. Stat. Ann. § 222.14 (2006). That exеmption for “annuity contracts” has been construed broadly to include
all
annuity contracts.
See, e.g., In re Solomon,
C. Colorado’s “Liberal Exemption Laws”
Debtor also asks the Court to take note of Colorado’s “liberal exemption laws” and cites
In re Larson,
D. Debtor’s Intent is Irrelevant
Debtor asserts that he intended to use the Allianz Annuity for his retirement, and therefore, it qualifies as a “retirement plan” under § 13-54-102(l)(s). At trial,
*320
Debtor pointed to various portions of the Allianz Annuity Contract and Prospectus that referred to the annuity contract as a “retirement investment.” In effect, Debt- or argues that an asset may be exempt under § 13-54-102(l)(s) if a debtor
subjectively intends
the asset to be used for retirеment purposes — whether that asset is an annuity, a personal savings account, or other investment vehicle. This interpretation would have the unintended result of undermining the Colorado General Assembly’s apparent purpose in restricting exemptions to the kinds of retirement vehicles listed in § 13-54-102(l)(s). The Court rejects the Debtor’s “subjective intent” argument.
See In re Ellis,
Y. BADGES OF FRAUD
Even if the Allianz Annuity is qualified under the I.R.C. definition of Individual Retirement Annuity or the Colorado exemption statute, the Court finds that there exist in these facts certain “badges of fraud” suggesting Debtor purchased the Allianz Annuity in an attempt to remove assets from his estate that would generally be available for distribution to his creditors.
A. Badges of Fraud — Legal Standard
In
Taylor v. Rupp (In re Taylor),
The Tenth Circuit applied a similar badges of fraud analysis to pre-bankruptcy planning in
Mueller v. Redmond (In re Mueller),
The Court concludes that the badges of fraud in fraudulent transfer cases and pre-bankruptcy planning cases are substantially equivalent for the purposes of the analysis here. Therefore, the Court will apply the badges of fraud as set forth in In re Taylor, In re Mueller, and UFTA to the pre-bankruptcy conduct in this case.
B. Badges of Fraud in Annuity Cases
At the outset, the Court recognizes that a number of courts in other jurisdictions have applied the badges of fraud when *321 reviewing the purchase of annuities or life insurance policies immediately prior to bankruptcy filing.
As mentioned above, the Court has reviewed the Tenth Circuit’s opinion in
In re Mueller,
which involved the purchase of a life insurance policy.
See In re Mueller,
C. Badges of Fraud Applied to Debt- or’s Case
The badges of fraud listed in In re Taylor, In re Mueller and UFTA are nonexclusive. The badges of fraud in this case include the following:
1.Purchase on Eve of Bankruptcy
Debtor purchased the Allianz Annuity on July 15, 2005. He filed for Chapter 7 bankruptcy four days later on July 19, 2005. The timing of Debtor’s purchase is significant. Like the dеbtors in
In re Mueller
and
In re Jennings,
his purchase of the Allianz Annuity on the eve of bankruptcy suggests he had an intent to keep his assets from creditors.
See In re Mueller,
2.Disposed of Last NonExempt Assets
Like the debtor in
In re Mueller,
Debtor used the last funds in his non-exempt brokerage account (left after the transfers to his children’s educational IRAs and home improvements) to purchase the Allianz Annuity.
See, e.g., In re Mueller,
3.Knowledge that Annuity was Not ERISA Qualified
Debtor testified that he knew that the Allianz Annuity was not ERISA-qualified. Further, the letter from his financial advis- or, Mr. Dussex, states that the Allianz Annuity was not ERISA-qualified. The Court also notes that Debtor has a background in finance and reasonably may be presumed to know the difference between ERISA-qualified plans, individual retirement accounts that qualify under the I.R.C., and the annuity contract he purchased from Allianz. In light of his knowledge and the circumstances, the Court cannot find credible the Debtor’s claim that the Allianz Annuity qualified as an individual retirement account under the *322 I.R.C. or was protected as a “retirement plan” under Colorado’s exemption statute.
4.Transfer was to Benefit Insiders
The Allianz Annuity benefits Debtor and his wife, Melody Ann Ludwig, both of whom are insiders.
See, e.g., In re Taylor,
5.Debtor Retained Control of Annuity
Under the terms of his Allianz Annuity Contract and Prospectus, Debtor retains cоntrol over the annuity and may “change owners” or “assign” the annuity at any time.
See, e.g., In re Jennings,
6.Reliance on Counsel is Not a Defense
Debtor testified that he purchased the Allianz Annuity on the advice of counsel. A similar defense was rejected by a Wyoming bankruptcy court in
Royal v. Baker (In Re Baker),
VI. CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that the Objection to the Debtor Stephen Ludwig’s claim of exemption filed by the Chapter 7 Trustee is GRANTED.
Notes
. The Court notes that a Prospectus for the "Montgomery Ward & Co., Inc. Savings and Stock Ownership Plan,” dated April 19, 1984, was attached as an exhibit to Debtor's Objection to Trustee's Motion to Compel Turnover of Property of the Estate, entered January 31, 2006. This document was not offered as an exhibit at trial nor included in the parties’ agreement for the admission of exhibits and so the Court has not considered its contents.