    United States Court of Appeals
               For the Eighth Circuit
           ___________________________

                   No. 13-3682
           ___________________________

             In re: Joseph Matthias Miller

                 lllllllllllllllllllllDebtor

                ------------------------------

                    Terri A. Running

                lllllllllllllllllllllAppellant

                             v.

                 Joseph Matthias Miller

                lllllllllllllllllllllAppellee

                ------------------------------

National Association of Consumer Bankruptcy Attorneys

    lllllllllllllllllllllAmicus on Behalf of Appellee(s)
                          ____________

      Appeal from the United States Bankruptcy
        Appellate Panel for the Eighth Circuit
                   ____________

              Submitted: October 9, 2014
               Filed: February 13, 2015
                    ____________
Before MURPHY, SMITH, and GRUENDER, Circuit Judges.
                           ____________

GRUENDER, Circuit Judge.

       Terri Running, a bankruptcy trustee, appeals from a decision of the Bankruptcy
Appellate Panel (“BAP”) that affirmed the bankruptcy court’s1 conclusion that an
annuity owned by bankruptcy debtor Joseph Miller is exempt from the bankruptcy
estate. We affirm.

       The relevant facts are not in dispute. Miller purchased an annuity from
Minnesota Life Insurance Company (“Minnesota Life”). Under the annuity contract,
Miller agreed to make a lump-sum “Purchase Payment” of $267,319.48 to Minnesota
Life. Miller used funds from his individual retirement account to make this payment.
In return, Minnesota Life agreed to make an annual “Income Payment” of $40,497.95
to Miller for the next eight years. Miller later filed for Chapter 7 bankruptcy and
claimed that the annuity was exempt from the bankruptcy estate. Running objected
to this classification. The bankruptcy court overruled her objection, and the BAP
affirmed. This appeal followed.

      When reviewing an appeal from a decision of the BAP, “we act as a second
reviewing court of the bankruptcy court’s decision, independently applying the same
standard of review as the BAP.” In re Lasowski, 575 F.3d 815, 818 (8th Cir. 2009).
The relevant facts here are not disputed, and we review the bankruptcy court’s
conclusions of law de novo. Id.




      1
       The Honorable Gregory F. Kishel, Chief Judge, United States Bankruptcy
Court for the District of Minnesota.

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        In his bankruptcy petition, Miller identified the funds in his annuity as exempt
from the bankruptcy estate under 11 U.S.C. § 522(b)(3)(C). This exemption allows
a bankruptcy debtor to protect from creditors “retirement funds to the extent that
those funds are in a fund or account that is exempt from taxation under
section . . . 408 . . . of the Internal Revenue Code.” Id. Section 408 of the Internal
Revenue Code, in turn, provides that an individual retirement account and an
individual retirement annuity are exempt from taxation; that is, they are qualified
retirement plans. 26 U.S.C. § 408(a), (b), (e)(1); Griswold v. Comm’r, 85 T.C. 869,
871 (T.C. 1985). Thus, if retirement funds are held in either of these qualified
retirement plans, then the funds can be exempted from creditors’ claims in
bankruptcy. This exemption generally applies even if the debtor transferred the
retirement funds to the qualified retirement plan from another qualified retirement
plan. 11 U.S.C. § 522(b)(4)(C) (“A direct transfer of retirement funds from 1 fund
or account that is exempt from taxation under section . . . 408 . . . shall not cease to
qualify for exemption under [§ 522(b)(3)(C)] . . . by reason of such direct transfer.”);
id. § 522(b)(4)(D) (explaining that § 522(b)(3)(C) applies if “[a]ny distribution
that . . . has been distributed from a fund or account that is exempt from taxation
under section . . . 408 . . . and [] to the extent allowed by law, is deposited in such a
fund or account not later than 60 days after the distribution of such amount”).

       There is no dispute that the funds used to purchase Miller’s annuity were
retirement funds that came from Miller’s individual retirement account, which was
a qualified individual retirement account under 26 U.S.C. § 408(a). If Miller simply
had left these funds in his individual retirement account, there is no question that the
funds would be exempt from the bankruptcy estate. See 11 U.S.C. § 522(b)(3)(C).
However, because Miller used the funds to purchase his annuity, Running contends
that the funds became the property of the bankruptcy estate. Critical to Running’s
argument is her assertion that Miller’s annuity is not a qualified individual retirement
annuity as defined by 26 U.S.C. § 408(b). This provision enumerates several
requirements for an annuity to be a qualified individual retirement annuity, two of

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which are at issue here. First, “[u]nder the contract . . . the premiums are not fixed.”
Id. § 408(b)(2)(A). And second, “[u]nder the contract . . . the annual premium on
behalf of any individual will not exceed the dollar amount in effect under section
219(b)(1)(A) [of the Internal Revenue Code].” Id. § 408(b)(2)(B). This amount was
$6,000 for the taxable year in question. Id. § 219(b)(1)(A), (b)(5)(A), (b)(5)(B).

       Running argues that Miller’s annuity fails both of these requirements. Because
Miller’s annuity contract required him to pay a lump-sum amount to Minnesota Life,
$267,319.48, Running characterizes the annuity’s “premium[]” as “fixed,” in
violation of § 408(b)(2)(A). And because the annuity contract allowed Miller to pay
more than $6,000 in one year for the annuity, Running urges that the annuity’s
“annual premium” exceeds the limit set by §§ 408(b)(2)(B) and 219(b)(1)(A). Miller
responds that the funds he used to purchase the annuity, which came from his
qualified individual retirement account, were not a “premium” subject to § 408(b).

       We conclude that Miller has the better of this argument. A premium does not
include funds, such as Miller’s, that are taken from a qualified individual retirement
account to pay for an individual retirement annuity. Though § 408 does not define
the term “premium,” § 408(b)(2)(B) sets the maximum annual premium by
incorporating the amount from § 219(b)(1)(A). This linkage of statutory provisions
is significant, for it conveys that an annual premium does not encompass funds that
already were contributed to a qualified retirement plan. To explain, § 219(b)(1)(A)
lists the maximum “qualified retirement contribution[]” that is “allowed as a
deduction . . . for the taxable year.” Id. § 219(a), (b)(1)(A). Section 219 defines a
qualified retirement contribution as “any amount paid in cash for the taxable year by
or on behalf of an individual to an individual retirement plan for such individual’s
benefit.” Id. § 219(e)(1). Section 219(b)(1)(A) thus concerns retirement
contributions being made for the first time, not the disposition of retirement
contributions that were made in the past. See also id. § 219(d)(2). By incorporating
this provision, § 408(b)(2)(B) connotes that its annual-premium limitation applies

                                          -4-
only to funds that are being contributed to an individual retirement annuity in the first
instance. It therefore follows that the term “premium” in § 408(b) does not include
funds that are taken from a qualified individual retirement account to purchase an
individual retirement annuity.

       The distinction that § 408 draws between a “rollover contribution” and a
“premium” buttresses this interpretation of § 408(b). As relevant here, § 408(d)(3)
defines a rollover contribution as “any amount paid or distributed out of an individual
retirement account . . . to the individual for whose benefit the account . . . is
maintained . . . [that] is paid into an . . . individual retirement annuity [within sixty
days].” Section 408 makes clear that a rollover contribution is distinct from a
premium. Starting with the obvious, § 408 uses different terms to describe each type
of payment, which, at a minimum, implies that the terms have different meanings. Cf.
United States v. Bean, 537 U.S. 71, 76 n.4 (2002) (“The use of different terms within
related statutes generally implies that different meanings were intended.” (quoting 2A
Norman Singer, Sutherland on Statutes and Statutory Construction § 46:06 (6th ed.
2000)). Furthermore, a rollover contribution can be “any amount,” 26 U.S.C.
§ 408(d)(3)(A), whereas the amount of an annual premium is expressly limited, id.
§ 408(b)(2)(B). Lastly, § 408 provides that “excess contributions” to an individual
retirement annuity each year are taxed but specifically excludes a rollover
contribution from the calculus for determining how much an individual contributed
in excess of “the amount allowable as a deduction under section 219.” See id.
§§ 408(r), 4973(a), (b)(1). For these reasons, a rollover contribution is not a
premium, thus bolstering our conclusion that a premium does not include funds from
a qualified individual retirement account that are used to purchase an individual
retirement annuity.

      Indeed, Running concedes in her brief that “if the Annuity qualifies as an
individual retirement annuity under [§ 408(b)], the proceeds from the sale of the
individual retirement account . . . would qualify as a ‘rollover contribution’ and

                                          -5-
would be tax exempt” and therefore exempt from the bankruptcy estate. To avoid the
effect of this admission, Running simply restates her position that Miller’s annuity
was not a qualified individual retirement annuity because Miller’s lump-sum payment
of $267,319.48 was “fixed” by the annuity contract and exceeded the $6,000 limit for
an annual premium. But this argument assumes that Miller’s payment for his annuity
constituted a premium. Because we rejected this proposition for the reasons outlined
above, Running effectively concedes that Miller’s payment for his annuity using
funds from his qualified individual retirement account was a rollover contribution
under § 408(d)(3).

       The only other court to consider this issue reached a similar conclusion. In In
re LeClair, 461 B.R. 86 (Bankr. D. Mass. 2011), the court considered a bankruptcy
trustee’s argument that the bankruptcy debtor’s payment of $86,000 for an annuity
exceeded the $6,000 limit in § 408(b)(2)(B). Id. at 90. The court agreed with the
bankruptcy trustee that this contribution exceeded the limit from § 408(b)(2)(B) but
reasoned that “[t]he trustee has adduced no evidence that the $86,000 payment was
a cash contribution subject to the $6,000 limitation as opposed to a rollover from
some other retirement vehicle.” Id. at 90-91. The LeClair court therefore recognized,
as we do here, the difference between using funds from a qualified retirement plan to
buy an annuity and paying a premium subject to the limitations of § 408(b). See id.
at 91.

       In support of her contrary position, Running refers us to several cases holding
that an annual premium in excess of § 408(b)(2)(B)’s limit disqualifies an annuity
from being treated as a qualified individual retirement annuity. But Running admitted
during oral argument that none of her favored cases involved the use of funds from
a qualified individual retirement account to pay for the annuity, as this case does. See
In re Cherwenka, 508 B.R. 228, 233, 240-41 (Bankr. N.D. Ga. 2014); In re Ludwig,
345 B.R. 310, 312-13, 317 (Bankr. D. Colo. 2006); In re Rogers, 222 B.R. 348, 349-
50 (Bankr. S.D. Cal. 1998).

                                          -6-
       Running raises one additional argument. She contends that even if Miller’s
use of funds from his qualified individual retirement account complied with § 408(b),
his annuity contract still violates § 408(b)(2)(B) because it does not require Miller to
pay an annual premium. As Running puts it, § 408(b)(2)(B) requires Miller to pay
“multiple, annual premiums” in order for his annuity to be a qualified individual
retirement annuity. We disagree. Section 408(b)(2)(B) merely states that “[u]nder
the contract . . . the annual premium on behalf of any individual will not exceed
[$6,000].” This provision does not mandate the payment of an annual premium for
an unspecified number of years; rather, it requires that the annuity contract limit the
funds being contributed in the first instance. Cf. Sadberry v. Comm’r, 153 F. App’x
336, 340 (5th Cir. 2005) (per curiam) (“Because the [annuity] at issue does not limit
its annual premiums, it does not qualify as an individual retirement annuity according
to the Internal Revenue Code or for a tax-free rollover.”); LeClair, 461 B.R. at 88
(stating that “[t]here have been no other premiums paid” after the initial payment of
$86,000). Miller’s annuity agreement, which modifies his annuity contract,
accomplishes this requirement. The agreement states that Miller’s “annual cash
purchase payment,” i.e. his annual premium, may not exceed, as relevant
here, “$2,000, or such other maximum amount as may be allowed by law.” By
limiting Miller’s ability to pay an annual premium in this manner, his annuity contract
complies with § 408(b)(2)(B).

      For the reasons described above, we affirm.
                      ______________________________




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