Entrust Learning Center > Professional Resources > 9th Circuit Appeals Court Finds That A Keogh Plan Cannot Be Part Of A Bankruptcy Estate

9th Circuit Appeals Court Finds That A Keogh Plan Cannot Be Part Of A Bankruptcy Estate

In an important decision regarding the access of assets by creditors of pension plan funds, the 9th Circuit Court of Appeals found that a participant's account in a Keogh plan could not be considered part of a bankruptcy estate when the participant filed

1/26/99

The plan was established by Southern California Permanente Medical Group for it's partner physicians. The plan is an ERISA Qualified Plan. The salient provisions of the court findings included: The plan was a valid spendthrift trust, with an anti-alienation provision which under Section 401(a) (13) of the IRS Code stated that none of the benefits, payments, proceeds or claims of any participant or beneficiary shall be subject to any creditors; that the plan was not subject to the control of the participant, as the medical group created and administered the plan, and that the participant could not amend or terminate the plan; and the participant had no access to his plan assets until retirement or termination.

Arguments by the state of California attempting to include part of the account under state law, were rejected, as the court found that having found that it was not subject to inclusion, the arguments that part of the assets were includable, were effectively moot. (See: In re Moses, 9th Circuit, Nos. 98-55029, and 98-55086, 1/26/99).

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