More on the Sixth Circuit’s Bankruptcy Decision

A previous post–“403(b) Plans Take a Turn for the Worst in the Sixth Circuit“–discusses the Sixth Circuit’s opinion in Rhiel v. Adams holding that certain 403(b) annuities do not satisfy the trust requirement of section 542(c)(2) of the Bankruptcy Code and that such plans are not exempt from the bankruptcy estate. The reporting of the case has garnered quite a bit of interest from readers, one of which has commented that a substantial number of qualified defined benefit plans do not utilize trusts either, but rather utilize annuity contracts as their funding vehicle under Internal Revenue Code section 404(a)(2). The point being made is that the case could have application to certain defined benefit plans as well, meaning that these types of plans could also be at risk and possibly subject to bankruptcy, at least in the Sixth Circuit. The reader notes that many of the insurance companies which provide these types of defined benefit plans should take note of the case.