Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The U.S. Supreme Court on April 4 rendered the following decisions: The justices ruled unanimously that Individual Retirement Accounts (IRAs) are afforded protection under federal bankruptcy law. Rousey v. Jacoway, No. 03-1407. Writing for the court, Justice Clarence Thomas said that a bankrupt couple, Richard and Betty Jo Rousey of Berryville, Ark., was entitled to keep their retirement savings from the hands of creditors. He reasoned that IRAs are benefits tied to a person’s age under the federal statute because a 10% tax penalty is imposed if a person makes withdrawals before reaching the age of 60. “That penalty erects a substantial barrier to early withdrawal,” he wrote. “Funds in a typical savings account, by contrast, can be withdrawn without age-based penalty.” The Rouseys accumulated $55,000 in company-sponsored pension and 401(k) plans at Northrop Grumman Corp. before Richard Rousey took early retirement in 1998. The couple rolled the funds over to IRAs. They filed a Chapter 7 bankruptcy petition, and sought to protect their IRAs, claiming that bankruptcy law allows debtors to protect payments such as pensions that are made on account of age. The bankruptcy trustee, Jill Jacoway, objected, saying that the Rouseys had unlimited access to their IRA money, subject only to the penalty. According to Thomas, however, “The statutes governing IRAs persuade us that the Rouseys’ right to payment from IRAs is causally connected to their age.” The justices ruled, 5-4, that a federal inmate was unable to challenge his sentence as a career criminal because he waited too long to go to state court to overturn his previous convictions. Johnson v. United States, No. 03-9685. The case involved Robert Johnson, who, as a result of pleading guilty to distributing cocaine base, received a longer sentence as a career offender because of earlier state convictions. More than three years after his 1994 conviction, Johnson petitioned the Georgia state court, which reversed seven of his state guilty pleas, ruling that he hadn’t waived his right to an attorney in any of the cases. The career-offender enhancement resulted in a 188-month sentence in prison. Without the enhancement, the sentence would have been 70 to 87 months. Writing for the majority, Justice David H. Souter said that Johnson would have been entitled to contest his federal sentence had he gone to state court promptly. “We think Johnson fell far short of reasonable diligence in challenging the state conviction,” he wrote. Johnson explained that he delayed because he was acting as his own lawyer. In dissent, Justice Anthony M. Kennedy said that the court shouldn’t impose a diligence requirement because the states are capable of doing so themselves. Souter’s opinion was joined by Chief Justice William H. Rehnquist and justices Sandra Day O’Connor, Stephen G. Breyer and Thomas. Kennedy’s dissent was joined by justices John Paul Stevens, Antonin Scalia and Ruth Bader Ginsburg.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.