The issue in this case is whether a judgment debtor's individual retirement account (IRA) is exempt from a judgment creditor's levy of execution to satisfy a judgment.
In 1983 plaintiff obtained a judgment against defendants, jointly and severally, for $63,134.25. The judgment has been unpaid except for $500 obtained from a levy on a bank account of one of the defendants in 1983. Plaintiff has now levied execution on an "IRA Account" of defendant Joseph Ofeck and
when plaintiff made an application for an order directing the bank to pay the proceeds to the sheriff to be applied to the satisfaction of plaintiff's judgment, defendant opposed the application on the grounds that the "IRA Account" was exempt from levied execution by judgment creditors under the Federal Employee Retirement Income Security Act ("ERISA").
Generally, all property of a judgment debtor is subject to levy to satisfy a judgment under the provisions of N.J.S.A. 2A:17-15 et seq. except property reserved under N.J.S.A. 2A:17-19 and property specifically exempted by state or federal legislation. New Jersey has exempted certain governmental pensions from execution. N.J.S.A. 43:13-9; N.J.S.A. 43:18-12; N.J.S.A. 43:10-18.22, 18.71, 105; N.J.S.A. 43:16-7; N.J.S.A. 43:7-13; N.J.S.A. 43:10-57; N.J.S.A. 18A:66-116; N.J.S.A. 43:14-42; N.J.S.A. 43:19-17; N.J.S.A. 43:13-37.5; and 44. The federal government has exempted certain private pensions from execution under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C.A. § 1056(b)(1). However, neither New Jersey nor the federal government has enacted legislation which exempts all pensions or retirement benefits from execution.
Although defendant correctly asserts that ERISA exempts qualifying private pensions from execution except in family support situations such as in Ward v. Ward, 164 N.J. Super. 354 (Ch.Div.1978) and the dicta in Northwest Airlines v. Roemer, 603 F. Supp. 7 (D.Minn.1984) which stated, "[The] only exception to the general rule against garnishment appears to be where a debt is owed to an employee's spouse," defendant's argument presupposes that an "IRA" bank account is a qualified ERISA pension or retirement plan. Defendant relies upon the dicta in Mallory v. Mallory, 179 N.J. Super. 556 (Ch.Div.1981) which provided:
The Congress, in establishing the IRA accounts as part of the comprehensive Employee Retirement Income Security Act (hereinafter ERISA), provided that there was to be no alienation or assignment of benefits, 29 U.S.C.A. § 1056(d)(1). [At 559.]
After a careful reading of ERISA, the court respectfully disagrees with the court's finding in the Mallory case and concludes that individual retirement accounts (IRA) are not pension plans exempted from execution but are merely tax preferred savings accounts whose funds are available to the depositor upon payment of certain penalties.
IRA savings accounts do not meet the following criteria of ERISA-qualified pension or retirement plans:
1. "Pension Plan" is defined by "ERISA" as meaning
(i) provides retirement income to employees, or (ii) results in a deferral of income by employees for periods extending to the termination of covered employment ...