                                                          FILED
 1                         ORDERED PUBLISHED                FEB 21 2012

 2                                                     SUSAN M SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
                                                         O F TH E N IN TH C IR C U IT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5
 6   In re:                        )      BAP No.      AZ-11-1083-KiWiJu
                                   )
 7   TRAVIS M. HAMLIN and BRITTANY )      Bk. No.      10-18812-GBN
     B. HAMLIN,                    )
 8                                 )
                    Debtors.       )
 9                                 )
                                   )
10   BRIAN J. MULLEN, Chapter 7    )
     Trustee,                      )
11                                 )
                    Appellant,     )
12   v.                            )      O P I N I O N
                                   )
13   TRAVIS M. HAMLIN; BRITTANY    )
     B. HAMLIN,                    )
14                                 )
                    Appellees.     )
15   ______________________________)
16               Argued and Submitted on January 19, 2012,
                             at Phoenix, Arizona
17
                           Filed - February 21, 2012
18
               Appeal from the United States Bankruptcy Court
19                       for the District of Arizona
20       Honorable George B. Nielsen, Bankruptcy Judge, Presiding
21
     Appearances:     Terry A. Dake of Terry A. Dake, Ltd. argued for
22                    appellant, Brian J. Mullen, chapter 7 trustee;
                      Richard W. Hundley of Berens Kozub Kloberdanz &
23                    Blonstein, PLC, argued for appellees, Travis and
                      Brittany Hamlin.
24
25   Before:   KIRSCHER, WILLIAMS,1 and JURY, Bankruptcy Judges.
26
27
          1
            Hon. Patricia C. Williams, Bankruptcy Judge for the
28   Eastern District of Washington, sitting by designation.
 1   KIRSCHER, Bankruptcy Judge:
 2
 3        Appellant, chapter 72 trustee Brian Mullen (“Trustee”),
 4   appeals a bankruptcy court order allowing debtors’ claimed
 5   exemption under § 522(b)(3)(C) for an individual retirement
 6   account (“IRA”) Brittany Hamlin (“Ms. Hamlin”) (collectively
 7   “Debtors”), inherited from her grandmother prepetition.         In this
 8   issue of first impression before a court of appeals within the
 9   Ninth Circuit, we hold that a debtor can exempt funds in an IRA
10   inherited from a non-spouse under § 522(b)(3)(C), and we AFFIRM.
11                  I. FACTUAL AND PROCEDURAL BACKGROUND
12        In their Schedule C, Debtors claimed two IRA accounts
13   exempt under ARIZ . REV . STAT . ANN . (“A.R.S.”) § 33-1126.   The IRA
14   at issue in this appeal was funded by Ms. Hamlin’s grandmother.
15   Trustee does not dispute that the grandmother’s IRA was a
16   properly established retirement account exempt from taxation
17   under IRC § 408.    Shortly after her death in 2004, the
18   grandmother’s IRA funds were transferred via a trustee-to-
19   trustee transfer by RBC Wealth Management, as custodian, to an
20   inherited IRA account for the benefit of Ms. Hamlin (the
21   “Inherited IRA”).    The Inherited IRA was valued at approximately
22   $31,878.32 at the time of petition.
23        Trustee timely objected to Debtors’ claimed exemption,
24   contending that inherited IRAs, unlike traditional IRAs funded
25
          2
26          Unless specified otherwise, all chapter, code, and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
27   and the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
     The Federal Rules of Civil Procedure are referred to as “FRCP.”
28   The Internal Revenue Code is referred to as “IRC.”

                                       -2-
 1   by the debtor, are not exempt.    In their response, Debtors
 2   contended that Trustee failed to cite any Arizona authority
 3   holding that inherited IRA’s are not exempt, but argued that the
 4   Inherited IRA would be exempt under the broad language of A.R.S.
 5   § 33-1126(B).3
 6        The bankruptcy court held an initial hearing on the matter
 7   on September 28, 2010.    It determined that the Inherited IRA was
 8   likely exempt under § 522(b)(3)(C),4 but it requested additional
 9   briefing from the parties on the matter.
10        In their supplemental brief, Debtors contended that the
11   Inherited IRA was exempt under § 522(b)(3)(C) and In re Tabor,
12   433 B.R. 469 (Bankr. M.D. Pa. 2010), aff’d, 10-CV-1580 (M.D. Pa.
13   Dec. 2, 2010).    Debtors argued that Tabor correctly observed
14   Congress’ intent to increase protections afforded debtors for
15   retirement funds with the addition of §§ 522(b)(3)(C),
16   522(b)(4)(C), and 522(d)(12) to the Code in 2005.    Now, debtors
17   in opt-out states like Arizona could apply federal exemptions to
18   IRAs, which also included “trustee-to-trustee” accounts such as
19
20        3
              A.R.S. § 33-1126(B) provides, in relevant part:
21        B.     Any money or other assets payable to a participant in
22               or beneficiary of, or any interest of any participant
                 or beneficiary in, a retirement plan under § 401(a),
23               403(a), 403(b), 408, 408A or 409 . . . of the United
                 States internal revenue code of 1986, as amended, . .
24               . is exempt from all claims of creditors of the
                 beneficiary or participant.
25
          4
26          Section 522(b)(3)(C) provides that a debtor may exempt
     from property of the estate “retirement funds to the extent that
27   those funds are in a fund or account that is exempt from
     taxation under section 401, 403, 408, 408A, 414, 457, or 501(a)
28   of the Internal Revenue Code of 1986.”

                                      -3-
 1   inherited IRAs.
 2        Trustee argued that because Debtors had claimed the
 3   Inherited IRA exempt under A.R.S. § 33-1126(B), that was the
 4   applicable statute here, not § 522(b)(3)(C).   Alternatively, if
 5   § 522(b)(3)(C) did apply, Trustee contended that In re Tabor,
 6   which essentially adopted the reasoning of the Eighth Circuit
 7   BAP in In re Nessa, 426 B.R. 312 (8th Cir. BAP 2010), got it
 8   wrong.   Trustee argued that Congress did not intend to extend
 9   the umbrella of protection for IRA assets beyond the retirees
10   who earned those funds and encouraged the bankruptcy court to
11   adopt the holding of In re Chilton, 426 B.R. 612, 617 (Bankr.
12   E.D. Tex. 2010), rev’d, 444 B.R. 548, 552 (E.D. Tex. 2011),
13   which concluded that funds in an inherited IRA are not exempt
14   under § 522(d)(12) because they are not “retirement funds”
15   intended for the debtor’s retirement (hereinafter “Chilton I”).
16   Trustee contended that the reasoning in Chilton I extended to
17   inherited IRAs under § 522(b)(3)(C) because the language in the
18   two statutes is identical.5
19
20
          5
            The language of § 522(d)(12) is identical to that of
21   § 522(b)(3)(C). Both sections allow an exemption for retirement
     accounts, regardless of whether the debtor claims exemptions
22
     under federal or state law. As a result, the two sections are
23   often analyzed interchangeably. See In re Tabor, 433 B.R. at
     475; In re Thiem, 443 B.R. 832, 842 (Bankr. D. Ariz. 2011); In
24   re Mathusa, 446 B.R. 601, 603 (Bankr. M.D. Fla. 2011); In re
     Kuchta, 434 B.R. 837, 843–44 (Bankr. N.D. Ohio 2010); In re
25   Weilhammer, 2010 WL 3431465, at *4 (Bankr. S.D. Cal. Aug. 30,
26   2010); In re Stephenson, 2011 WL 6152960, at *2 n.2 (E.D. Mich.
     Dec. 12, 2011). We too believe the same analysis applies in
27   determining if funds in an inherited IRA are exempt regardless
     of whether the exemption is claimed under § 522(d)(12) or
28   § 522(b)(3)(C).

                                    -4-
 1        A second hearing on the matter was held on November 2,
 2   2010.    The bankruptcy court rejected the reasoning in Chilton I,
 3   and agreed with the holdings of In re Nessa and In re Tabor that
 4   an inherited IRA from a non-spouse is exempt under
 5   § 522(b)(3)(C) and § 522(b)(4)(C).6       Accordingly, Trustee’s
 6   objection to Debtors’ claimed exemption for the Inherited IRA
 7   was overruled.    However, because the question of whether Ms.
 8   Hamlin had complied with the IRC to maintain the account’s tax
 9   exempt status remained unanswered, which could affect whether it
10   was an exemptible asset, the court was willing to hear further
11   motions on the issue if needed.    The court ordered Debtors to
12   amend their Schedule C to reflect the claimed exemption for the
13   Inherited IRA under § 522(b)(3)(C).       No order was entered, but a
14   minute entry from November 9, 2010 (“November 9 Minute Entry”),
15   states:
16        IT IS ORDERED that the objection is overruled. The
          court will hear a motion to dismiss if needed. An
17        amendment to Schedule C is required. No further
          hearings will be set unless requested.
18
19        Debtors filed their amended Schedule C on November 3, 2010.
20   Thirty days later, Trustee filed an objection to the amended
21   Schedule C.    Trustee, observing that no final order had yet been
22
23
          6
              Section 522(b)(4)(C) provides:
24
          A direct transfer of retirement funds from 1 fund or
25        account that is exempt from taxation under section 401,
26        403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
          Code of 1986, under section 401(a)(31) of the Internal
27        Revenue Code of 1986, or otherwise, shall not cease to
          qualify for exemption under paragraph (3)(C) or subsection
28        (d)(12) by reason of such direct transfer.

                                      -5-
 1   signed, reserved his objection to Debtors’ exemption of the
 2   Inherited IRA pending information on whether appropriate
 3   distributions had been made in order to maintain its tax exempt
 4   status.    Trustee requested an order denying Debtors’ amended
 5   exemption for the Inherited IRA.
 6          The following day, Trustee filed a first amended objection
 7   to the amended Schedule C.    In addition to his prior objection,
 8   Trustee argued that because Debtors had initially sought to
 9   exempt the Inherited IRA under state law and litigated the
10   issue, they should not be allowed to now exempt it under federal
11   law.    Alternatively, Trustee contended that allowance of the
12   amendment be conditioned upon reimbursement to the estate for
13   expenses incurred in litigating the first exemption asserted.
14          In his second amended objection to Debtors’ amended
15   Schedule C filed a few weeks later, Trustee withdrew his first
16   objection that Ms. Hamlin had not maintained the account’s tax
17   exempt status based on documentation establishing that she had
18   taken the required distributions.     However, Trustee still
19   contended that Debtors were not allowed to seek an exemption
20   under federal law after their exemption under state law failed.
21   Debtors rejected Trustee’s arguments.
22           A third hearing on the matter was held on February 4,
23   2011.    The bankruptcy court rejected Trustee’s argument that
24   Debtors were not allowed to amend their Schedule C to exempt the
25   Inherited IRA under § 522(b)(3)(C), especially when the court
26   instructed them to do so.    Nonetheless, the court was willing to
27   consider Trustee’s arguments about Debtors’ eligibility under
28   § 522(b)(3)(C).    Trustee’s counsel responded that he had

                                     -6-
 1   exhausted the § 522 issue at the previous hearing, so he would
 2   not argue it again.   After hearing arguments from the parties on
 3   the issue of reimbursing the estate, the bankruptcy court
 4   overruled Trustee’s second amended objection and determined that
 5   each party would bear its own costs.    The court accepted
 6   Trustee’s offer to lodge a proposed final order on the matter.
 7        On February 9, 2011, the bankruptcy court entered an order
 8   overruling Trustee’s second amended objection to Debtors’
 9   amended Schedule C, and allowing their claimed exemption for the
10   Inherited IRA under § 522(b)(3)(C) (the “February 9 Order”).
11   Trustee timely appealed.
12                              II. JURISDICTION
13        The bankruptcy court had jurisdiction under 28 U.S.C.
14   §§ 157(b)(2)(B) and 1334.    We now address our jurisdiction over
15   this matter.
16        Debtors contend that Trustee’s appeal of whether the
17   Inherited IRA is exempt under § 522(b)(3)(C) is untimely.
18   Specifically, Debtors contend that the bankruptcy court’s ruling
19   on this issue was final when it entered the November 9 Minute
20   Entry.   Debtors argue that the bankruptcy court further showed
21   its intent that its ruling on the issue was final with
22   statements it made at the hearing on November 2, 2010.
23   According to Debtors, the only issues remaining to be decided
24   after the November 9 Minute Entry were the two issues raised in
25   Trustee’s subsequent objections to Debtors’ amended Schedule C -
26   whether Ms. Hamlin took the required distributions to maintain
27   the IRA’s tax exempt status, and whether Trustee was entitled to
28   attorney’s fees and costs as a condition for allowing Debtors to

                                      -7-
 1   exempt the Inherited IRA under § 522(b)(3)(C).    Trustee withdrew
 2   his objection on the first issue, and the bankruptcy court
 3   overruled his request for fees and costs in the February 9
 4   Order.   Therefore, contend Debtors, Trustee’s appeal of the
 5   bankruptcy court’s ruling that the Inherited IRA was exempt
 6   under § 522(b)(3)(C), which is contained in the November 9
 7   Minute Entry, is untimely.    Debtors argue that all Trustee has
 8   timely appealed is the bankruptcy court’s February 9 Order
 9   denying his request for attorney’s fees and costs.
10        We conclude that the November 9 Minute Entry was not a
11   final and appealable order.    A minute entry may constitute a
12   dispositive order for notice of appeal purposes if it: (1)
13   states that it is an order; (2) is mailed to counsel; (3) is
14   signed by the clerk who prepared it; and (4) is entered on the
15   docket sheet.    Kaun v. Lund (In re Lund), 202 B.R. 127, 130 (9th
16   Cir. BAP 1996).    Here, the November 9 Minute Entry was entered
17   on the docket sheet and, under the Local Rules of Bankruptcy
18   Procedure for the District of Arizona, was mailed to counsel.
19   See Local Rule 5005-2(k) (electronic service by the clerk
20   “constitutes service of the pleading, petition, or other
21   document.”).    Furthermore, under the Local Rules, an
22   electronically filed document by the court need not contain the
23   judge’s or clerk’s signature to be official and binding.
24   See Local Rule 5005-2(j) (“Any order or other court-issued
25   document filed electronically without the original signature of
26   a judge or clerk has the same force and effect as if the judge
27   or clerk had signed a paper copy of such order or other
28   court-issued document and it had been entered on the docket

                                     -8-
 1   nonelectronically.    Orders also may be issued as ‘text-only’
 2   entries on the docket, without an attached document.    Such
 3   orders are official and binding.”).
 4        However, the November 9 Minute Entry does not state that it
 5   is an order.   While it does contain dispositive language - “IT
 6   IS ORDERED that the objection is overruled” - it omits any
 7   language allowing the exemption, as opposed to the February 9
 8   Order which expressly overruled Trustee’s objection and allowed
 9   the exemption.   See Brown v. Wilshire Credit Corp. (In re
10   Brown), 484 F.3d 1116, 1121 (9th Cir. 2007).
11        The November 9 Minute Entry also does not clearly evidence
12   the bankruptcy judge’s intention that it be the court’s final
13   act in the matter.    “A disposition is final if it contains ‘a
14   complete act of adjudication,’ that is, a full adjudication of
15   the issues at bar, and clearly evidences the judge’s intention
16   that it be the court’s final act in the matter.”    In re Brown,
17   484 F.3d at 1120 (quoting Slimick v. Silva (In re Slimick), 928
18   F.2d 304, 307 (9th Cir. 1990)) (emphasis in original).
19   “Evidence of intent consists of the Order’s content and the
20   judge’s and parties [sic] conduct.”    Id. (quoting In re Slimick,
21   928 F.2d at 308).    As certain factual issues remained to be
22   determined before the matter was concluded, the court expressed
23   at the November 2 hearing that it was “overrul[ing] the
24   objection to the exemption at this point,” pending further
25   discovery by Trustee and Debtors’ amendment of their Schedule C.
26   Hr’g Tr. (Nov. 2, 2010) at 15:4-6.    Notably, the court never
27   stated at the November 2 hearing that the exemption was allowed,
28   which is consistent with the November 9 Minute Entry.    Moreover,

                                     -9-
 1   after Debtors filed their amended Schedule C, due process
 2   required that any party in interest be given 30 days to
 3   challenge the “new” claimed exemption under § 522(b)(3)(C).
 4   Rule 4003(b).   Finally, the first sentence in Trustee’s amended
 5   objection and first amended objection observed that no signed
 6   order had yet been entered.   Nothing in the February 4, 2011
 7   transcript indicates the bankruptcy court’s disagreement with
 8   that statement.   In fact, the court accepted Trustee’s offer to
 9   lodge a “final” order on the matter.
10        However, it is possible that Trustee waived his argument on
11   appeal that the Inherited IRA was not exempt under
12   § 522(b)(3)(C).   In his subsequent objections to Debtors’
13   amended Schedule C, Trustee did not reassert his argument that
14   the Inherited IRA was not exemptible as a retirement fund.    His
15   focus at that point was whether Ms. Hamlin took the required
16   distributions, and whether he was entitled to attorney’s fees
17   and costs.
18        We believe the February 9 Order included the bankruptcy
19   court’s interlocutory ruling from the November 9 Minute Entry
20   that the Inherited IRA was exempt.    See United States v. 475
21   Martin Lane, 545 F.3d 1134, 1141 (9th Cir. 2008) (under merger
22   rule interlocutory orders entered prior to the judgment merge
23   into the judgment and may be challenged on appeal).
24        Therefore, we conclude that the formally written February 9
25   Order is the final appealable order because it fully adjudicated
26   the issues and clearly evidenced the bankruptcy judge’s
27   intention that it was the court’s final act in the matter.    We
28   further conclude that the court’s interlocutory ruling that the

                                    -10-
 1   Inherited IRA was exempt under § 522(b)(3)(C) merged into the
 2   February 9 Order, thus preserving the issue for appeal.     As a
 3   result, we have jurisdiction under 28 U.S.C. § 158.
 4                                  III. ISSUE
 5          Are funds in an inherited IRA exempt under § 522(b)(3)(C)?
 6                            IV. STANDARD OF REVIEW
 7          We review the bankruptcy court’s conclusions of law and
 8   questions of statutory interpretation de novo.     Clear Channel
 9   Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 32 (9th
10   Cir. BAP 2008).
11                                 V. DISCUSSION
12          By his silence in his opening brief, Trustee has abandoned
13   any argument that he is entitled to reimbursement of attorney’s
14   fees and costs incurred by the estate in litigating Debtors’
15   initial attempt to claim the Inherited IRA exempt under state
16   law.    See Branam v. Crowder (In re Branam), 226 B.R. 45, 55 (9th
17   Cir. BAP 1998), aff’d, 205 F.3d 1350 (9th Cir. 1999) (table).
18   Therefore, the only issue before us is whether funds in an IRA
19   inherited by a non-spouse are exempt under § 522(b)(3)(C).      We
20   conclude that they are.
21   A.     Applicable Law.
22          Upon the filing of a bankruptcy petition, an estate is
23   created consisting of all legal and equitable interests of the
24   debtor in property as of the date of the filing of the petition.
25   § 541(a)(1).    Section 522 allows a debtor to exempt certain
26   property from his or her estate.      Exemptions are to be liberally
27   construed in favor of the debtor who claims the exemption.
28   Arrol v. Broach (In re Arrol), 170 F.3d 934, 937 (9th Cir.

                                       -11-
 1   1999).   A claim of exemption is presumed valid, and the burden
 2   is on the objecting party to prove, by a preponderance of the
 3   evidence, that an exemption is improperly claimed.    Tyner v.
 4   Nicholson (In re Nicholson), 435 B.R. 622, 630 (9th Cir. BAP
 5   2010); Rule 4003(c); § 522(l).
 6        Arizona has opted out of the federal exemption scheme
 7   provided in § 522(d).   See A.R.S. § 33-1133(B).   Therefore,
 8   Arizona debtors are required to take their exemptions under
 9   Arizona law.   However, with the enactment of BAPCPA in 2005,
10   Congress provided that a debtor who elects or is required to
11   take state exemptions is also entitled to exempt “retirement
12   funds to the extent that those funds are in a fund or account
13   that is exempt from taxation under section 401, 403, 408, 408A,
14   414, 457, or 501(a) of the Internal Revenue Code of 1986.”
15   § 522(b)(3)(C).7   As a result, debtors in opt-out states like
16   Arizona are not limited to the IRA exemption provided by state
17   law but may, independent of state law, claim the exemption under
18   § 522(b)(3)(C), subject to any applicable dollar limitation in
19   § 522(n).8   Congress’ intent was to preempt conflicting state
20   exemption laws and “to expand the protection for tax-favored
21   retirement plans or arrangements that may not be already
22
23
          7
            BAPCPA also enacted § 522(d)(12), which is identical to
24   § 522(b)(3)(C), but applies to debtors who live in states that
     have not opted out of the federal exemption scheme. Section
25   522(b)(3)(C) protects retirement funds to the same extent they
26   are protected under § 522(d)(12).
          8
27          Section 522(n) imposes a cap of $1,171,650 on the
     aggregate value of assets that an individual debtor may claim as
28   exempt property under § 522(b)(3)(C).

                                      -12-
 1   protected under [§] 541(c)(2) pursuant to Patterson v. Shumate,
 2   or other state or Federal law.”   H. R. REP . NO . 109-31(I), pt.1
 3   at 63-64 (2005), as reprinted in 2005 U.S.C.C.A.N. (Legislative
 4   History) 88, 132-33.
 5        For an IRA to be exempt under § 522(b)(3)(C), it must meet
 6   only two requirements: “(1) the amount debtor seeks to exempt
 7   must be retirement funds; and (2) the retirement funds must be
 8   in an account that is exempt from taxation under one of the
 9   provisions of the [IRC]” specified in § 522(b)(3)(C).     In re
10   Nessa, 426 B.R. at 314 (applying two-factor test to
11   § 522(d)(12)); In re Johnson, 452 B.R. 804, 806 (Bankr. W.D.
12   Wash. 2011) (same); In re Stephenson, 2011 WL 6152960, at *1
13   (same); Chilton v. Moser (In re Chilton), 444 B.R. 548, 552
14   (E.D. Tex. 2011) (rev’g Chilton I and following Nessa and its
15   progeny) (hereinafter “Chilton II”); In re Kalso, 2011 WL
16   3678326, at *1 (Bankr. E.D. Mich. Aug. 19, 2011); In re Tabor,
17   433 B.R. at 475 (citing Nessa but applying two-factor test to
18   § 522(b)(3)(C)); In re Thiem, 443 B.R. at 842 (same); In re
19   Mathusa, 446 B.R. at 603 (same); In re Clark, 450 B.R. 858, 862
20   (Bankr. W.D. Wis. 2011) (same) (hereinafter “Clark I”), rev’d on
21   other grounds, 2012 WL 233990 (W.D. Wis. Jan. 05, 2012); In re
22   Kuchta, 434 B.R. at 843 (same); In re Weilhammer, 2010 WL
23   3431465, at *2 (same).
24        Whether an inherited IRA satisfies these two prongs has
25   been a subject of great debate, particularly in the past two
26   years.   Nearly all courts that have decided this issue,
27   including the Eighth Circuit BAP, have held that they do.     The
28   cases are not factually distinguishable to the instant case.

                                    -13-
 1   All include a debtor who inherited a non-spouse family member’s
 2   IRA sometime before filing bankruptcy, and each debtor sought to
 3   exempt the IRA under either § 522(b)(3)(C) or § 522(d)(12).
 4   B.   Inherited IRAs are exempt under § 522(b)(3)(C).
 5        Trustee argues that funds in an inherited IRA are not
 6   “retirement funds” within the meaning of the statute because,
 7   under the statute’s plain meaning, the words “retirement funds”
 8   means only those funds that belonged to, or were contributed by,
 9   the debtor in his or her own IRA.     Trustee further contends that
10   because inherited IRAs have absolutely nothing to do with the
11   recipient’s retirement, in the hands of the debtor they are not
12   “retirement funds” protected by the statute.    He suggests we
13   adopt the reasoning of Chilton I and reject Nessa and its
14   progeny that inherited IRAs are exempt under § 522(b)(3)(C), and
15   the corresponding § 522(d)(12).   Although Trustee’s arguments
16   are well reasoned, we decline to follow Chilton I.
17        1.   Funds in an inherited IRA are “retirement funds.”
18        The first step in the inquiry is to determine whether funds
19   in an inherited IRA are “retirement funds” within the meaning of
20   § 522(b)(3)(C).   The Code does not define “retirement funds.”
21        The plain language of a statute is determinative under
22   federal law.   Patterson v. Shumate, 504 U.S. 753, 757 (1992).
23   Section 522(b)(3)(C) requires that the account be comprised of
24   retirement funds; it does not specify that they must be the
25   debtor’s retirement funds.   In re Nessa, 426 B.R. at 314 (but
26   analyzing § 522(d)(12)); accord In re Johnson, 452 B.R. at 808;
27   In re Kuchta, 434 B.R. at 843-44; Chilton II, 444 B.R. at 552;
28   In re Tabor, 433 B.R. at 476; In re Thiem, 443 B.R. at 843-44;

                                    -14-
 1   In re Mathusa, 446 B.R. at 603; In re Kalso, 2011 WL 3678326, at
 2   *2; In re Stephenson, 2011 WL 6152960, at *3 (rev’g bankruptcy
 3   court’s contrary conclusion); In re Weilhammer, 2010 WL 3431465,
 4   at *5.       Limiting the exemption to funds Ms. Hamlin herself
 5   contributed for retirement “would impermissibly limit the
 6   statute beyond its plain language.”       In re Nessa, 426 B.R. at
 7   314.       Even though inherited IRAs do not contain a debtor’s own
 8   retirement funds, they were originally contributed by the
 9   account owner as retirement funds and retained that status when
10   they were transferred via a trustee-to-trustee transfer in
11   compliance with the IRC.       In re Johnson, 452 B.R. at 808.
12          We recognize that two courts have reached a contrary
13   conclusion on this issue: Chilton I, and Clark I.9      The
14
            9
15          Trustee cites to multiple decisions in which courts have
     concluded that funds in inherited IRAs do not qualify as exempt.
16   However, these decisions are distinguishable because the
     question before those courts was whether the debtor could exempt
17   the inherited IRA under state exemption statutes, not the
     Bankruptcy Code, and/or these decisions were rendered pre-BAPCPA
18   and therefore prior to the enactment of either § 522(b)(3)(C) or
19   § 522(d)(12). In re Ard, 435 B.R. 719 (Bankr. M.D. Fla. 2010)
     (holding that an inherited IRA cannot be exempted under Florida
20   law); In re Jarboe, 365 B.R. 717 (Bankr. S.D. Tex. 2007)
     (holding that an inherited IRA cannot be exempted under Texas
21   law); In re Kirchen, 344 B.R. 908 (Bankr. E.D. Wis. 2006)
     (holding that an inherited IRA cannot be exempted under
22
     Wisconsin law and that an inherited IRA does not constitute a
23   retirement benefit nor serve a retirement purpose); In re
     Taylor, 2006 WL 1275400 (Bankr. C.D. Ill. 2006) (construing
24   Illinois statute and determining that different treatment of
     inherited IRAs disqualify them for exemption); In re Navarre,
25   332 B.R. 24 (Bankr. M.D. Ala. 2004) (determining that inherited
26   IRA is “sufficiently different” from traditional IRA as to
     preclude exemption under Alabama law); In re Greenfield, 289
27   B.R. 146 (Bankr. S.D. Cal. 2003) (holding that an inherited IRA
     cannot be exempted under California law); In re Sims, 241 B.R.
28                                                      (continued...)

                                        -15-
 1   bankruptcy court in Chilton I concluded that funds contained in
 2   an inherited IRA are not “retirement funds” within the meaning
 3   of § 522(d)(12) because they “are not funds intended for
 4   retirement purposes but, instead, are distributed to the
 5   beneficiary of the account without regard to age or retirement
 6   status.”    426 B.R. at 618.   The Chilton I court based its
 7   decision primarily on the fact that inherited IRAs are subject
 8   to rules under the IRC that do not apply to traditional IRAs.
 9        Chilton I is no longer good law.     In Chilton II, the United
10   States District Court for the Eastern District of Texas reversed
11   the bankruptcy court and expressly held that funds in an
12   inherited IRA are “retirement funds” within the meaning of the
13   statute, adopting the reasoning set forth in In re Nessa, In re
14   Tabor, In re Kuchta, In re Thiem, and In re Weilhammer.     444
15   B.R. at 552.    Chilton II has been appealed to the Fifth Circuit
16   Court of Appeals and is scheduled for oral argument on February
17   28, 2012.
18        Clark I was decided after the reversal of Chilton I.      In
19   its careful analysis of this issue, the Clark I court started
20   off by noting that the IRAs at issue in Nessa and its progeny
21   dealt with much smaller dollar amounts than what the court had
22   before it.    450 B.R. at 862.   In Clark I, the inherited IRA at
23   issue was valued at nearly $300,000, as compared to $170,000 in
24   Chilton, $105,100 in Tabor, $55,000 in Weilhammer, and $10,700
25   in Thiem.    Id.   The idea of exempting $300,000 from the estate
26
          9
27         (...continued)
     467 (Bankr. N.D. Okla. 1999) (holding that an inherited IRA
28   cannot be exempted under Oklahoma law).

                                      -16-
 1   was troubling to the Clark I court and perhaps influenced its
 2   decision that inherited IRAs do not contain “retirement funds”
 3   within the meaning of § 522(b)(3)(C).    In reaching this
 4   conclusion, the Clark I court reasoned:
 5        The debtors’ Inherited IRA does not contain anyone’s
          ‘retirement funds.’ Ruth Heffron established the
 6        retirement account, and elected her daughter as a
          beneficiary of the account. While living, the funds
 7        in Ms. Heffron’s account were indeed funds for her
          retirement — that is held in anticipation of one day
 8        withdrawing from her occupation. After Ms. Heffon
          passed away, however, the funds passed to her
 9        beneficiary. The funds could no longer be classified
          as anyone’s retirement funds — Ms. Heffron had died
10        and was incapable of retiring further or using the
          funds during her retirement, and her daughter was able
11        (in fact obliged) to take distributions from the
          account while both of the debtors continued to work.
12        Currently, the funds are held in anticipation of no
          person’s retirement and likewise cannot, under the
13        plain meaning of the statute, constitute ‘retirement
          funds.’ They are not segregated to meet the needs of,
14        nor distributed on the occasion of, any person’s
          retirement.
15
16   Id. at 863 (emphasis in original).    Arguably, this same
17   reasoning was rejected by the district court in Chilton II.
18   Furthermore, just prior to oral argument in the instant appeal,
19   Clark I was reversed by the District Court for the Western
20   District of Wisconsin.   2012 WL 233990 (W.D. Wis. Jan. 5, 2012)
21   (hereinafter “Clark II”).   In Clark II, the district court
22   rejected the bankruptcy court’s determination of what
23   constituted “retirement funds” within the meaning of the Code
24   and reasoned that neither § 522(b)(3)(C) nor § 522(d)(12)
25   distinguish between an account accumulated by a decedent and
26   inherited by a debtor and an account made up of contributions by
27   the debtor herself.   Id., at *6.
28        We are persuaded by the reasoning in In re Nessa and its

                                    -17-
 1   progeny that funds in an inherited IRA are “retirement funds”
 2   within the meaning of § 522(b)(3)(C).10   As the Thiem court
 3   observed, while the bankruptcy court in Chilton I warned that
 4   allowing the exemption would mean writing “retirement” out of
 5   “retirement funds,” the Nessa court observed that disallowing
 6   the exemption would be impermissibly writing in “debtor’s”
 7   retirement funds.   In re Thiem, 443 B.R. at 843.   Furthermore,
 8   if the IRA funds are no longer to be considered “retirement
 9   funds” upon the account owner’s passing, we see no reason why
10   the IRC would reference such funds in IRC § 408 - “Individual
11   retirement accounts” - and give them the same tax-exempt status
12   afforded to the original IRA owner.
13
          2.   Funds in an inherited IRA are exempt from taxation
14             under IRC § 408.
15        Next, we must determine whether the retirement funds are in
16   an account exempt from taxation under one of the provisions of
17   the IRC specified in § 522(b)(3)(C).   Trustee is correct that
18   inherited IRAs do receive different treatment under the IRC than
19   “traditional” IRAs that were established and funded by an
20
21        10
            The Weilhammer court noted that it was inclined to adopt
     the reasoning in Chilton I that funds in an inherited IRA may
22
     not be required by the debtor’s own retirement needs. However,
23   Weilhammer went on to note that Chilton I failed to consider or
     discuss the express language of § 522(b)(4)(C). 2010 WL
24   3431465, at *5. Several other courts have criticized Chilton I
     for failing to apply § 522(b)(4)(C) in conjunction with
25   § 522(b)(3)(C) because not considering that statute would render
26   meaningless the inclusive provisions it provides. In re Nessa,
     426 B.R. at 315; In re Tabor, 433 B.R. at 475; In re Thiem, 443
27   B.R. at 843; In re Johnson, 452 B.R. at 807. We find this to be
     a critical element in our analysis as well and discuss it in
28   more detail below.

                                    -18-
 1   individual with his or her employment earnings.    However, this
 2   is a difference without distinction.
 3        An “inherited” IRA is one in which the account beneficiary
 4   acquired the account because of the death of another individual
 5   who was not the beneficiary’s spouse.   IRC § 408(d)(3)(C)(ii).
 6   Beneficiaries of inherited IRAs cannot treat the inherited IRA
 7   as their own.   They cannot make any contributions to the IRA or
 8   roll over any amounts into or out of the account.    They may make
 9   withdrawals at any time, without penalty, but they must begin
10   taking withdrawals of either annual distributions based on life
11   expectancy within one year, or the entire amount within five
12   years, regardless of age or retirement status.11    IRC
13   §§ 401(a)(9)(B)(ii), 402(c)(11)(A)(iii), 408(a)(6); 26 C.F.R.
14   § 1.408-2(b)(7).
15        The bankruptcy courts in Chilton I and Clark I found the
16   distinctions between inherited IRAs and traditional IRAs
17   critical to their determination that inherited IRAs are not
18   funds in an account exempt from taxation.   However, all other
19   courts addressing this issue post-BAPCPA have concluded that
20   these distinctions are irrelevant because IRC § 408(e) provides
21   that “any individual retirement account is exempt from taxation
22
23
24
25        11
            Beneficiaries are, however, allowed to make a
26   trustee-to-trustee transfer as long as the IRA into which
     amounts are being moved is set up and maintained in the name of
27   the deceased IRA owner for the benefit of the beneficiary. IRS
     Publication 17, p. 80 (2011). Trustee does not dispute that is
28   what occurred in this case.

                                    -19-
 1   under [IRC § 408]” (emphasis added).12    The plain meaning of this
 2   language does not limit IRAs to only traditional IRAs; it could
 3   include inherited IRAs, particularly since they are expressly
 4   found in IRC § 408(d)(3)(C)(ii).    In re Nessa, 426 B.R. at 315;
 5   Chilton II, 444 B.R. at 552; In re Johnson, 452 B.R. at 808; In
 6   re Tabor, 433 B.R. at 476; In re Weilhammer, 2010 WL 3431465, at
 7   *5; In re Thiem, 443 B.R. at 845 (IRC provisions ensure that the
 8   original retirement funds will be protected and remain unchanged
 9   in character, e.g., by prohibiting contributions and rollovers
10   to the new account); Clark II, 2012 WL 233990, at *6 (because
11   the principal and interest earnings are exempt from income taxes
12   until they are distributed in either a traditional or inherited
13   IRA, this is sufficient to make them both tax exempt).
14        We, as did the Weilhammer court, expressly reject the
15   bankruptcy court’s assertion in Chilton I that the tax exempt
16   status of inherited IRAs is found in IRC § 402(c)(11),13 which is
17
          12
            This is true, unless the account has ceased to be an IRA
18
     by reason of paragraph (2) or (3), which includes the employee
19   engaging in certain prohibited transactions and borrowing from
     an annuity contract. Neither of those circumstances has been
20   alleged here.
21        13
               IRC § 402(c)(11)(A) provides:
22
          If, with respect to any portion of a distribution from an
23        eligible retirement plan described in paragraph (8)(B)(iii)
          of a deceased employee, a direct trustee-to-trustee
24        transfer is made to an individual retirement plan described
          in clause (i) or (ii) of paragraph (8)(B) established for
25        the purposes of receiving the distribution on behalf of an
26        individual who is a designated beneficiary (as defined by
          section 401(a)(9)(E)) of the employee and who is not the
27        surviving spouse of the employee—

28                                                        (continued...)

                                      -20-
 1   not listed in § 522(b)(3)(C) or the corresponding § 522(d)(12).
 2   In re Weilhammer, 2010 WL 3431465, at *4.     While IRC
 3   § 402(c)(11) provides that trustee-to-trustee transfers from an
 4   employee’s eligible retirement plan to the designated
 5   beneficiary’s account will be treated as an eligible rollover
 6   distribution (and not a taxable one), it further provides that
 7   the individual retirement plan will be treated as an inherited
 8   IRA under IRC § 408 and subject to IRC § 401(a)(9)(B) (which
 9   sets forth the distribution scheme for inherited IRAs).      Nothing
10   in IRC § 402 independently provides for tax-exemption.      In re
11   Weilhammer, 2010 WL 3431465, at *5.
12        Under IRC § 408, an inherited IRA continues the tax-exempt
13   status afforded to the original IRA owner.     Like traditional
14   IRAs, the beneficiary of the inherited IRA is not taxed until
15   the funds are withdrawn.     Thus, despite any differences, both
16   types of accounts are exempt from taxation under IRC § 408,
17   which is all that is required under § 522.     In re Thiem, 443
18   B.R. at 843; In re Tabor, 433 B.R. at 476; In re Stephenson,
19   2011 WL 6152960, at *3.     Here, Ms. Hamlin chose not to withdraw
20   the IRA funds, and instead elected to transfer them via a
21
22        13
               (...continued)
23                 (i) the transfer shall be treated as an eligible
                   rollover distribution,
24
                  (ii) the individual retirement plan shall be treated
25                as an inherited individual retirement account or
26                individual retirement annuity (within the meaning of
                  section 408(d)(3)(C)) for purposes of this title, and
27
                  (iii) section 401(a)(9)(B) (other than clause (iv)
28                thereof) shall apply to such plan.

                                       -21-
 1   trustee-to-trustee transfer.    As a result, these funds are still
 2   exempt under IRC § 408(e).
 3        3.     Section 522(b)(4)(C).
 4        Our conclusion that funds in an inherited IRA are exempt
 5   under § 522(b)(3)(C) is further supported by § 522(b)(4)(C),
 6   which provides, in relevant part:
 7        A direct transfer of retirement funds from 1 fund or
          account that is exempt from taxation under [IRC] . . .
 8        § 408 . . . shall not cease to qualify for exemption
          under paragraph (3)(C) or subsection (d)(12) by reason
 9        of such direct transfer.
10   Chilton I failed to consider § 522(b)(4)(C) in its analysis, but
11   we believe, as have several other courts discussing Chilton I,
12   that § 522(b)(3)(C), or § 522(d)(12), cannot be read in
13   isolation; the entirety of the statute must be considered.    In
14   re Nessa, 426 B.R. at 315; In re Tabor, 433 B.R. at 475; In re
15   Mathusa, 446 B.R. at 604; In re Johnson, 452 B.R. at 809; In re
16   Kuchta, 434 B.R. at 844; In re Stephenson, 2011 WL 6152960, at
17   *3; In re Weilhammer, 2010 WL 3431465, at *5; Chilton II, 444
18   B.R. at 552 (reasoning that § 522(b)(4)(C) provides that
19   transfers of the type creating inherited IRAs do not remove the
20   transfer from eligibility for exemption under § 522(d)(12)).    A
21   common rule of statutory construction is that every provision of
22   a statute should be construed so that no other provision is
23   rendered superfluous or meaningless.   See Kawaauhau v. Geiger,
24   523 U.S. 57, 61-62 (1998).    As we noted above, failing to apply
25   § 522(b)(4)(C) in conjunction with § 522(b)(3)(C) would render
26   that statute meaningless and ignore the inclusive provisions it
27   provides.
28        The plain language of § 522(b)(4)(C) expressly provides

                                     -22-
 1   that direct transfers from one account that is tax-exempt under
 2   IRC § 408 to another are exempt under § 522(b)(3)(C) or
 3   § 522(d)(12).      As the In re Tabor court correctly observed, the
 4   increased protections afforded debtors under § 522(b)(3)(C)
 5   applies not only to accounts created by the debtor, but also
 6   extends to accounts that are transferred directly between
 7   trustees (i.e., inherited accounts) via § 522(b)(4)(C).     In re
 8   Tabor, 433 B.R. at 475.     “Whether or not Congress realized that
 9   inherited accounts were ‘trustee to trustee’ accounts, the
10   language of § 522(b)(4)(C) is unambiguous and applies to
11   inherited accounts whether state or federal exemptions are
12   claimed.”    Id.   The funds in Ms. Hamlin’s grandmother’s IRA were
13   exempt from taxation under IRC § 408, and the direct trustee-to-
14   trustee transfer of those funds did not eliminate Debtors’
15   ability to claim the funds exempt under § 522(b)(3)(C) by virtue
16   of § 522(b)(4)(C).14
17                                VI. CONCLUSION
18        We conclude that funds in an inherited IRA are exempt under
19   § 522(b)(3)(C), subject to any applicable dollar limitation set
20   forth in § 522(n).     Therefore, the bankruptcy court did not err
21   when it overruled Trustee’s second amended objection and allowed
22   Debtors’ claimed exemption for the Inherited IRA under
23   § 522(b)(3)(C).     We AFFIRM.15
24
          14
            Unlike Chilton I, the Clark I court did address
25   § 522(b)(4)(C), but reasoned that it did not apply because the
26   debtor’s inherited IRA did not contain “retirement funds,” 450
     B.R. at 865, a conclusion with which we disagree.
27
          15
               Debtors contend that even if the bankruptcy court erred
28                                                        (continued...)

                                        -23-
 1
 2
 3
 4
 5
 6
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21        15
           (...continued)
     in determining the Inherited IRA was exempt under
22
     § 522(b)(3)(C), then we should determine that it is exempt under
23   the Arizona statute. This issue is not properly before us.
     Although Debtors initially claimed the Inherited IRA exempt
24   under A.R.S. § 33-1126(B), they subsequently filed an amended
     Schedule C to reflect the exemption under § 522(b)(3)(C).
25   Additionally, since Debtors have not cross appealed the
26   February 9 Order, the Panel cannot consider this issue as it
     would modify the order. Ball v. Rodgers, 492 F.3d 1094, 1118
27   (9th Cir. 2007) (although arguments that support a judgment as
     entered can be made without a cross appeal, a cross appeal is
28   required to support a modification of that judgment).

                                   -24-
