Wittman v. Koenig

The Koenigs filed for Chapter 7 bankruptcy protection in 2014, claiming exemptions under Wisconsin’s bankruptcy exemption statute for three annuities then worth a total of $292,185.97. The annuities had been purchased in the approximately 18 months before their bankruptcy petition. Wis. Stat. 815.18(3)(j) fully exempts retirement assets, including annuities, that meet certain requirements. Paragraph (3)(f) protects a broader category of annuities, but the exemption is limited to $150,000, except that the cap is just $4,000 for annuities issued less than 24 months before the debtor claims the exemption. The trustee argued that an annuity, to qualify for the exemption, must comply with 26 U.S.C. 401–09, which generally deal with tax‐deferred “qualified” retirement plans. The Koenigs argued that an annuity is exempt under section 815.18(3)(j) as long as the annuity qualifies for favorable tax treatment under 26 U.S.C. 72, which deals with annuities more generally. The Seventh Circuit affirmed the judgment of the bankruptcy court, in favor of the Koenigs, stating that the key statutory text is ambiguous on the decisive point, and citing the statute’s structure and purpose, along with the legislature’s instruction to construe exemptions in favor of debtors, View "Wittman v. Koenig" on Justia Law