§ 36.34 — Record of Education Individual Retirement Account
Revised: July 12, 2007
Section 521(c), as amended by BAPCPA, imposes a new filing requirement on all Chapter 13 debtors:
In addition to meeting the requirements under subsection (a), a debtor shall file with the court a record of any interest that a debtor has in an education individual retirement account (as defined in section 530(b)(1) of the Internal Revenue Code of 1986) or under a qualified State tuition program (as defined in section 529(b)(1) of such Code).1
Interim Rule 1007(b)(1)(F) provides that, unless the court orders otherwise, the debtor shall file “a record of any interest that the debtor has in an account or program of the type specified in § 521(c) of the Code.”2 The placement of this new filing requirement in Interim Rule 1007(b)(1) is a little odd because the education IRA requirement was not located by BAPCPA in the list of documents debtors must file under § 521(a)(1)(B). As a consequence, § 521(c) is not subject to the predicate “unless the court orders otherwise.” The Interim Rule adds an escape valve that is absent from the statute.
The new education IRA filing requirement finds its way into Official Form 6 as a modification to “Schedule B—personal property.”3 A new item 11 has been added that reads, “interests in an education IRA as defined in 26 U.S.C. § 530(b)(1) or under a qualified state tuition plan as defined in 26 U.S.C. § 529(b)(1). Give particulars. (File separately the record(s) of any such interest(s). 11 U.S.C. § 521(c); Rule 1007(b).)” The forms drafters expect debtors to satisfy the filing requirement in § 521(c) by listing the interest in an education IRA in Schedule B and by filing separately the record that is actually required by § 521(c).
We can only guess what “record” the statute and Interim Rule contemplate. Does that record include identifying the institution or agency that maintains the IRA or state tuition plan? Would the amount of money in the account or plan be required? What about revealing the owner or beneficiary of the account or plan? Must the record be generated by the financial institution or agency maintaining the account or plan or is it sufficient that the debtor creates the record? There is no guidance in the new Code section or Interim Rule about what constitutes a sufficient record for § 521(c) purposes.
The cross-reference in § 521(c) to § 530(b)(1) of the Internal Revenue Code captures the “Coverdell Education Savings Account.”4 Section 529(b)(1) of the Internal Revenue Code addresses “qualified tuition programs” that are established and maintained by a state or state agency that allow individuals to purchase tuition credits or certificates on behalf of designated beneficiaries for the waiver or payment of higher education expenses. Education individual retirement accounts and qualified state tuition programs are quite specific and should not be confused with the Lifetime Learning Credit5 or Hope Scholarship Credit.6
Interim Rule 1007(c) specifies that the record of an interest in an education IRA or state tuition program shall be filed with the petition or within 15 days thereafter. This is consistent with the time limits for the filing of the schedules in Official Form 6. Including education IRA and state tuition program information on a timely filed Schedule B would partially satisfy the new filing requirements. The note to question 11 on amended Schedule B instructing debtors to file separately the record of any such interest indicates that at least the forms drafters do not believe that scheduling an education IRA or state tuition program in Official Form 6 is enough. To be on the safe side, debtors’ counsel should draft a separate “record” or capture a more official statement from the institution or agency administering the account or program.
If “record” means an official statement from the financial institution maintaining the education IRA or from the agency administering the state tuition program, the 15-day time limit in Interim Rule 1007(c) may not be practical. Interim Rule 1007(c) contemplates that a motion can be filed for an extension of the 15-day deadline.
Section 521(c) requires a record of any “interest” of the debtor in an education individual retirement account or qualified state tuition program. “Interest” could be broad enough to include debtors who are contributors and debtors who are beneficiaries of such an account or program. Education IRAs and state tuition programs are not all the same. The rights of contributors and beneficiaries vary with respect to access to the funds, use of the funds, investment of the funds, etc. That the debtor is prohibited by the account agreement or tuition program from accessing the fund for personal benefit certainly limits the debtor’s “interest,” but a record should still be filed and the account or program should be listed at Line 11 on Schedule B to Official Form 6.
1 11 U.S.C. § 521(c).
2 Interim Bankr. R. 1007(b)(1)(F).
3 See § 35.3 [ Schedule B—Personal Property ] § 36.9 Schedule B—Personal Property.
4 See 26 U.S.C. § 530(b)(1).
5 See 26 U.S.C. § 25A(c).
6 See 26 U.S.C. § 25A(b).