Comments on: Today’s Decision in Rousey v. Jacoway http://www.scotusblog.com/2005/04/todays-decision-in-rousey-v-jacoway/ The Supreme Court of the United States blog Mon, 23 Jan 2012 22:38:26 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Patricia Dilley http://www.scotusblog.com/2005/04/todays-decision-in-rousey-v-jacoway/#comment-6571 Patricia Dilley Mon, 25 Apr 2005 02:23:37 +0000 http://www.scotusblog.com/wp/uncategorized/todays-decision-in-rousey-v-jacoway/#comment-6571 I'm a little late to the fair on this, but just for the record, I think the SC's decision in this case was dead wrong. I wrote an article several years ago that was cited by both sides in their briefs, but that more strongly supported the bankruptcy trustee's argument. I am a pension and Social Security scholar, formerly on the Hill, and I don't think the Court had much to support its holding beyond strong feelings that retirement savings ought to be protected. Fair enough - but IRA's are very often tapped for a variety of purposes long before retirement. Ask anyone who's lost a job recently, for example. The ten percent penalty and tax consequences of taking an IRA distribution into income are a disincentive, certainly - but if you really want to use that money for a house or tuition bills, you can get out of the penalty completely, and even if you don't, it's not a prohibition on spending before retirement in the same way as a qualified retirement plan. Of course, it was all rendered moot by the bankruptcy bill which I believe flatly protects IRA's in the statute - but the Court was wrong on this one. I’m a little late to the fair on this, but just for the record, I think the SC’s decision in this case was dead wrong. I wrote an article several years ago that was cited by both sides in their briefs, but that more strongly supported the bankruptcy trustee’s argument. I am a pension and Social Security scholar, formerly on the Hill, and I don’t think the Court had much to support its holding beyond strong feelings that retirement savings ought to be protected. Fair enough – but IRA’s are very often tapped for a variety of purposes long before retirement. Ask anyone who’s lost a job recently, for example. The ten percent penalty and tax consequences of taking an IRA distribution into income are a disincentive, certainly – but if you really want to use that money for a house or tuition bills, you can get out of the penalty completely, and even if you don’t, it’s not a prohibition on spending before retirement in the same way as a qualified retirement plan.

Of course, it was all rendered moot by the bankruptcy bill which I believe flatly protects IRA’s in the statute – but the Court was wrong on this one.

]]> By: Dave Whalin http://www.scotusblog.com/2005/04/todays-decision-in-rousey-v-jacoway/#comment-6570 Dave Whalin Tue, 05 Apr 2005 15:06:41 +0000 http://www.scotusblog.com/wp/uncategorized/todays-decision-in-rousey-v-jacoway/#comment-6570 As an "aging baby boomer," this may be the most significant decision, affecting the most people, of any decision this term. [I believe this was the correct decision from both a legal and policy perspective--not that my opinion matters.]Although I attempt to follow the SC, I first learned of this case in a September 2004 presentation in which Tom was one of the "faculty." Upon further investigation, my initial reaction was confirmed. I have been astounded that many who work on pension-policy-related issues on Capitol Hill, both staff and lobbyists, were unaware this was pending before the SC. Given the radically increasing workforce mobility and continual shift to defined contribution plans, this is a massive issue affecting tens of millions of Americans and their retirement security/insecurity. Creditors, of course, see this a a huge pot to get their hands on. The other side is that if the creditors end up getting into this pot through legislation (or a change by the Court from this decision) this will diminish the retirement income of future retirees and, as a practical matter, increase governmental expenditures to keep the elderly from starving. People will not let the elderly starve; they will demand governmental suuport. The policy issue is whether creditors receive instant gratification or the taxpayers get a future bill to allow for this instant gratification. As an “aging baby boomer,” this may be the most significant decision, affecting the most people, of any decision this term. [I believe this was the correct decision from both a legal and policy perspective--not that my opinion matters.]Although I attempt to follow the SC, I first learned of this case in a September 2004 presentation in which Tom was one of the “faculty.” Upon further investigation, my initial reaction was confirmed. I have been astounded that many who work on pension-policy-related issues on Capitol Hill, both staff and lobbyists, were unaware this was pending before the SC. Given the radically increasing workforce mobility and continual shift to defined contribution plans, this is a massive issue affecting tens of millions of Americans and their retirement security/insecurity. Creditors, of course, see this a a huge pot to get their hands on. The other side is that if the creditors end up getting into this pot through legislation (or a change by the Court from this decision) this will diminish the retirement income of future retirees and, as a practical matter, increase governmental expenditures to keep the elderly from starving. People will not let the elderly starve; they will demand governmental suuport. The policy issue is whether creditors receive instant gratification or the taxpayers get a future bill to allow for this instant gratification.

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