In this sрecial proceeding, petitioner Long Island Jewish Hillside Medical Center (hereinafter LIJ) seeks an order directing respоndent Manufacturers Hanover Trust Co. (hereinafter MHT) to turn over to it certain assets held in three individual retirement accounts in the nаme of Maurice Prendergast.
Petitioner LIJ obtained a judgment against respondent Maurice Prendergast and Margaret Prendergast on June 28, 1985 in the sum of $15,059.46. Petitioner thereafter served a restraining notice and information subpoena on respondent MHT, dated August 23, 1985, tо restrain property held on behalf of Mr. Prendergast. MHT, in response, has restrained $5,909.44, which it holds in three individual retirement accounts on behalf of Maurice Prendergast. On September 9, 1985, petitioner mailed a copy of the restraining notice and a notice to the judgment debtor to Mr. Prendergast pursuant to CPLR 5222 (d) and (e).
Petitioner now seeks an order directing MHT to turn over to it the amounts held in the individual retirement accounts (hereinafter IRAs) on behalf of Maurice Prendergast. Petitioner asserts that IRAs are subject to attaсhment and other enforcement proceedings under CPLR article 52, and that the Employee Retirement Income Security Act оf 1974 (hereinafter ERISA) has not preempted a judgment creditor’s right to enforce judgments against an IRA. (29 USC § 1001 et seq.) Petitioner relies heavily on National Bank v International Bhd. of Elec. Workers Local No. 3 (
Respondent MHT asserts that Retail Shoe (supra) may have
It is well settled that preemption is a question of congressional intent and may be express or implied by the statute’s languаge, structure or purpose. Preemption may occur when Congress expresses an intent to supersede State law in a given field. (Shaw v Delta Air Lines,
An IRA is defined by the Internal Revenue Code as "a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiаries,” and "[t]he interest of an individual in the balance of his account is nonforfeitable.” (26 USC § 408 [a], [a] [4].) In addition, a custodial accоunt "shall be treated as a trust if the assets of such
Congress originally established tax deductible and deferred IRAs in order to ease the tax burden of employees who wеre not covered by a qualified pension plan and to encourage saving for retirement. In order to encourage thе retention of such funds, a tax penalty was established in the event that such funds were withdrawn before a participant reachеd age 59 Yz, was disabled or died. (Pub L 93-406; 1974 US Code, Cong & Admin News 4791.) Beginning in the 1982 tax year, IRAs were extended to employees actively participating in an employer-sponsored pension, profit sharing, savings or other qualified plan. Although IRAs were established under the umbrella of ERISA, they are not qualified pension plans and therefore the funds held in such accounts are not preempted from attachment pursuant to Helmsley-Spear (supra). While ERISA and the Treаsury Department regulations promulgated thereunder protect a participant and his or her beneficiaries in qualified pension plans from the adverse claims of commercial creditors, similar protections have not been enacted for IRAs. (See, 29 USC § 1056 [d]; 26 CFR 1.401[a]-13 [b] [1].) To the extent that an individual’s interest in an IRA is nonforfeitable, this provision must be read as to exempt such accounts from being declared abandoned property or escheating to the State. (See, Abandoned Property Law § 300; Banking Law § 7.)
In the case at bar, the funds held by MHT as custodian of thе IRAs established by Maurice Prendergast are neither preempted nor exempted from attachment by the judgment creditor, as аn IRA is not a qualified pension plan or benefit. (See, Matter of Abrahams v New York State Tax Commit.,
MHT’s request for аn order protecting it from liability is denied. Although this request is premature, this court is preempted from deciding any claims which may be raised by Mr. Prendergast for the breach of fiduciary duties under ERISA. (Retail Shoe Health Commit, v Reminick, supra.) It should be noted, however, that a fiduciary, acting pursuant to
Accordingly, petitioner’s request for an order and judgment directing MHT to turn over the funds held in three IRAs established by the judgment debtor Maurice Prendergast is granted.