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Compliance March 6, 2002
457 Plan Balance Shielded from Bankruptcy Estate
June 3, 2002 (PLANSPONSOR.com) - A participant's
account balance in a 457-government retirement plan can be
held back from the person's bankruptcy estate, a federal
judge ruled.
Reported by Fred Schneyer
According to a BNA news report, US District Judge John Elfvin decided that Terri Maurer’s $1,000 plan balance was exempt from her bankruptcy filing under New York’s Debtor and Creditor Law.
Under New York law, for a retirement plan to be exempt, it must: be a stock bonus, pension, profit sharing, or similar plan or contract, involving a debtor’s right to receive or interest in payments to be made on account of illness, disability, death, age or length of service that fails to satisfy Section 282(2)(e)’s exception.
The Section 282(2)(e) exception includes qualified 457 plans, the court said.
After Maurer filed for bankruptcy under Chapter 7 of the Bankruptcy Code, the bankruptcy trustee, John Ring, objected to Maurer’s claimed exemption of the money in the deferred compensation plan.
The US Bankruptcy Court for the Western District of New York overruled the trustee’s objection and the trustee appealed to the district court.
The case is Ring v. Maurer (In re Maurer), W.D.N.Y., No. 01-CV-0718E, 5/13/02.