|Congressman Eugene J. Keogh of New York|
Section 222.21 (2)(a)(1), Florida Statutes generally provides for the exemption of assets payable to or an interest of an owner, participant, or beneficiary in a "fund or account" that is maintained in accordance with a plan that has been preapproved by the IRS as exempt from taxation under section 401 (a), et seq. of the IRC. Section 401 (a) of the IRC provides for the exemption from taxation of certain retirement plans maintained for the benefits of "employees", which includes "a self-employed individual."
The lower courts had held that the Keogh plan was not exempt on a contention that it was not maintained in accordance with the ERISA provisions (29 U.S.C. sections 1001-1461) in addition to having been "preapproved by the Internal Revenue Service" as required by § 222.21(2)(a)(1), Florida Statutes. The lower courts rejected the debtor's argument that § 222.21 (2)(a)(1), Florida Statutes only required the Keogh plan to qualify under section 401 (a) of the Internal Revenue Code and did not require the additional complaince with ERISA. The lower courts based their decision on the case of Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 124 S.Ct. 1330, 158 L.Ed.2d 40 (2004), which held that the sole shareholder and president of a professional corporation could qualify as a "participant" in an ERISA pension plan as long as the plan cover other employees other than himself or spouse.
The 11th Circuit Court of Appeals reversed the lower courts and held that § 222.21(2)(a)(1) only required the preapproval by the IRS under section 401(a) of the IRC and did not require the additional compliance with ERISA. The court stated that Fla. Stat. § 222.21(2)(b) specifically provides that for the fund to be exempt it need not necessarily be maintained in accordance with a "governing instrument that is covered by any part of [ERISA]...".