           United States Bankruptcy Appellate Panel

                          FOR THE EIGHTH CIRCUIT

                         ______________

                              No. 97-6034SI




Nadine F. Eilbert,              *
                                *
           Appellant,               *
                                        *
     v.                          *          Appeal from the United States
                                *           Bankruptcy Court for the
David D. Pelican;               *           Southern District of Iowa
Anita L. Shodeen,               *
                                *
           Appellees.             *


                        Submitted: August 20, 1997

                         Filed: October 14, 1997



Before KRESSEL, SCHERMER, and DREHER, Bankruptcy Judges.



KRESSEL, Bankruptcy Judge.



     Nadine F. Eilbert appeals from the bankruptcy court’s1 order

disallowing her claimed exemption in an annuity.      We affirm.




     1
      Russell J. Hill, Chief Judge, United States Bankruptcy
Court for the Southern District of Iowa.

                                        1
                               I. BACKGROUND

     The debtor, Nadine F. Eilbert, is a seventy-seven-year-old widow.

On July 16, 1994, her husband, Raymond E. Eilbert, was involved in an

automobile accident with appellee David Pelican.   Raymond Eilbert was

killed and Pelican sustained severe injuries.   As a result of his

injuries, Pelican sued Raymond Eilbert’s estate and the debtor on August

26, 1994.2

     Raymond’s estate was valued at $1,163,154.13, including $1,051,981

of jointly held property which passed outside of his probate estate.3

     In the fall of 1994, the debtor began to liquidate much of her

property.    Anticipating the entry of a large judgment against her, she

sought to transform her primarily non-exempt assets into exempt property

in the event she filed bankruptcy.   Accordingly, on October 27, 1994,

the debtor used the liquidated proceeds to purchase a single premium

Pinnacle Variable Annuity Contract in the amount of $450,000.

     On November 30, 1995, the jury returned a verdict for




     2
      The debtor was sued because she and her husband were joint
owners of the car Raymond Eilbert was driving.
     3
       According to the report and inventory, Raymond Eilbert
owned $562,065 of property jointly with his daughters and
$489,916 jointly with his wife. The debtor’s property consisted
mainly of bank account balances, farm machinery and tools and
crops.

                                     2
Pelican in the amount of $662,502.06.4   The state court subsequently

entered a judgment against the debtor and her deceased husband’s estate.

On December 4, 1995, the debtor filed her Chapter 7 petition.   On

Schedule C, the debtor claimed as exempt her interest in the annuity

payments and corpus under Iowa Code § 627.6(8)(e).   Pelican and the

Chapter 7 trustee, Anita L. Shodeen, objected to the debtor’s claimed

objection.5

     The bankruptcy court held an evidentiary hearing and subsequently

entered an order sustaining the objections.   The court held that the

debtor’s interest in the annuity payments and corpus was not exempt,

since the payments were not made “on account of” the debtor’s age.      The

court also determined that the debtor had not purchased the annuity with

the intent to hinder, delay or defraud creditors.6   The debtor appealed.




     4
      With pre-petition interest, Pelican’s judgment now stands
at nearly $700,000.
     5
      Pelican also objected to the exemption of other property,
but only the annuity is the subject of this appeal.
     6
      "The facts show that Debtor intended to engage in
legitimate pre-bankruptcy planning. She intended to invest in an
exempt annuity. The fact is that she failed in her lawful
intentions. Viewing her conduct in retrospect does not transform
her intent into fraud.” In re Eilbert, No. 95-3707-CH, slip op.
at 9 (Bankr. S.D. Iowa Mar. 25, 1997). The appellees do not
challenge this finding.

                                    3
                               II. THE ANNUITY

     The debtor purchased her single premium Pinnacle Variable Annuity

Contract for $450,000 on October 27, 1994.       Under the terms of the

annuity, the debtor receives monthly payments at a ten percent annual

return for the duration of her life, with the balance to be divided at

her death between her daughter and one of her sons.

     Pursuant to her directive, the debtor began receiving

disbursements on January 1, 1995.    In 1995, she received a total of

$46,641 in monthly payments.    The annuity averaged a sixteen percent

rate of return in its first year and, notwithstanding the monthly

payments, was valued at $480,820 at the petition date.

     The debtor enjoyed almost unfettered discretion in tailoring the

terms of the annuity.   The enrollment form for the annuity contains a

box in which the applicant is asked to provide a retirement age “in

years.”   The retirement age is the age at which disbursements begin.     In

this case, the debtor left the box blank and instead wrote a date--

January 1, 1995--in the margin.    The retirement age may be changed at

any time before distribution.    Furthermore, the debtor can withdraw the

entire corpus at any time, subject to contractual penalties ranging from

seven to two percent during the first six years.7




     7
      Penalties for early withdrawals are assessed against
principal in the following amounts: Seven percent in the first
year, six percent in the second year, five percent in the third
year, four percent in the fourth year, three percent in the fifth
year, two percent in the sixth year, and no penalty thereafter.

                                      4
                              III. DISCUSSION

     In this appeal, the debtor seeks to exempt both the corpus8 and

payments received under an annuity contract pursuant to Iowa Code §

627.6(8)(e).9   This statute provides an exemption for a debtor’s

interest in “[a] payment or a portion of a payment under a pension,

annuity, or similar plan or contract on account of illness, disability,

death, age or length of service. . . .”   Iowa Code § 627.6(8)(e).   The

debtor argues that her annuity payments are exempt because they are “on

account of” her age.

     The exemptibility of annuities under Iowa Code § 627.6(8)(e) is an

ill-defined area of law of comparatively recent origin.   Over the past

decade, courts have struggled to supply meaning to




     8
      There is some debate regarding a debtor’s entitlement to
exempt corpus under Iowa law. In Huebner v. Farmers State Bank
(In re Huebner), 986 F.2d 1222 (8th Cir. 1993), the debtor sought
to exempt the entire corpus of an annuity from which he had
received no disbursements. The Eighth Circuit disallowed the
debtor’s exemption, stating that Iowa Code § 627.6(8)(e) provides
exemptions only for payments: “In § 627.6(8)(e), the Iowa
Legislature has limited its exemption to ‘rights in’ an annuity
payment. Unlike other states . . . Iowa has no statute granting
an exemption for all or any part of the undistributed corpus of
an annuity contract.” Id. at 1224. While we recognize the
controversy regarding corpus, our resolution of the current
appeal renders this issue moot.
     9
      Under 11 U.S.C. § 522(b), a debtor may utilize either the
federal exemptions listed in § 522(d) or the applicable state
exemptions, unless the state has opted out of the federal scheme.
Iowa has opted out of the federal scheme. See Iowa Code §
627.10. Therefore, the debtor’s entitlement to an exemption in
this case turns on Iowa law.

                                     5
the imprecise phraseology of this provision.    The Bankruptcy Court for

the Northern District of Iowa first addressed the issue in In re

Gilbert, 74 B.R. 1 (Bankr. N.D. Iowa 1985).10

     In In re Gilbert, the debtors purchased an immediate annuity

policy and sought to exempt payments which commenced only one month

after the purchase date.   Defining the issue as “whether the annuity

payments are ‘on account of . . . age,’” the court identified two

possible constructions for the statutory language:

     The vague “on account of” language of Section 627.6(9)(e) could
     be construed in two possible ways. One construction would hold
     the words “on account of” virtually synonymous with “triggered
     by.” Under such a construction an annuity would be exempt if
     payments were commenced because the debtor obtained a specified
     age. . . . Another possible interpretation of the words “on
     account of” is to construe them as meaning “based on.”

Id. at 2.

Citing caselaw endorsing the liberal construction of exemption statutes,

the court adopted the “based upon” analysis and allowed the debtors’

exemption.

     In In re McCabe, 74 B.R. 119 (Bankr. N.D. Iowa 1986), the court

was again called upon to construe Iowa Code § 627.6(9)(e).    In In re

McCabe, the debtors sought to exempt payments from an annuity which

contained no express provision conditioning payment on age, but which

calculated payments based upon the age of the




     10
       “[T]his Court faces a matter of first impression regarding
the interpretation of subparagraph (9)(e).” In re Gilbert, 74
B.R. at 2. Iowa Code § 627.6(9)(e) is the predecessor to the
current exemption statute.

                                    6
annuitants.    Citing In re Gilbert, the court noted the multiple

interpretations of the statutory language.    “[T]he language ‘on account

of’ is capable of several interpretations. . . . [T]he phrase could be

construed to mean ‘triggered by’‚ or could be construed to mean ‘based

upon’. . . .    Any of those definitions are reasonable and are logical

meanings for the phrase ‘on account of.’”    McCabe, 74 B.R. at 120.

Following Gilbert, the court construed the statute in favor of the

debtors and allowed their exemption.11

       Finally, in In re Huebner, 141 B.R. 405 (N.D. Iowa 1992), aff’d,

986 F.2d 1222 (8th Cir. 1993), the court expressly rejected the Gilbert

line of cases and adopted an alternative interpretation.    “[T]his court

respectfully disagrees with the reasoning of Gilbert and the cases

following Gilbert.   This court finds that ‘on account of’ is more

appropriately interpreted to mean ‘triggered by.’”   Huebner, 141 B.R. at

409.

       In Huebner, the debtor purchased two annuity policies ten years

before filing bankruptcy.   At the time of filing, the debtor was sixty-

four-years-old and intended to begin receiving payments when he reached

retirement age.   Notwithstanding the




       11
      See also Production Credit Ass’n v. Lilienthal (Matter of
Lilienthal, 72 B.R. 277, 299 (S.D. Iowa 1987) (affirming
bankruptcy court’s decision that annuity payments which commenced
during debtor’s retirement years satisfied the “on account of
age” requirement, even though the payments were not triggered by
age).

                                     7
debtor’s subjective intent to begin receiving payments at age sixty-

five, the court held that the annuities were not exempt since they were

not “triggered by” the debtor’s age.      “Debtor’s right to payment . . .

is not triggered by any specific event.”     Id.   In reaching its decision,

the court noted that the debtor--not the terms of the annuity contract--

determined the time of disbursement.

     On appeal, the Eighth Circuit affirmed the district court.

“Huebner’s present right to receive annuity payments does not depend

upon his having reached age sixty-five, nor upon the occurrence of any

of the other triggering events enumerated in

§ 627.6(8)(e).”     In re Huebner, 986 F.2d 1222, 1225 (8th Cir. 1993)

(emphasis added).    Furthermore, the court noted that Huebner’s annuity

failed to comport with the statutory framework because the debtor

maintained “unfettered discretion” to control the timing of

disbursements.    “Huebner’s access to and complete control over the

timing of annuity payments mean that any payments received under the

contracts would not be ‘on account of’ his age.”     Id.

     We do not think that the Eighth Circuit’s use of the word

“triggering” was meant to resolve the statutory construction debate.

The court made no reference to the two lines of cases and used the word

“triggering” in reference to all of the events listed in the statute,

not just as a definition of the phrase “on




                                      8
account of.”   Rather, the court focused on a factual inquiry into the

amount of control the debtor exercised over the initial acquisition of

the contract, the amount and timing of the payments, and the right to

exercise control over the corpus.

     The Eight Circuit’s opinion in Huebner requires a two-tiered

analysis.   First, the bankruptcy court must determine if the claimed

exempt asset belongs to the class of exempt investments enumerated in

Iowa Code § 627.6(8)(e).   Iowa Code § 627.6(8)(e) exempts payments

“under a pension, annuity, or similar plan or contract. . . .”     Iowa

Code § 627.6(8)(e) (emphasis added).     Second, if the asset is of the

sort contemplated by Iowa’s exemption statute, then the bankruptcy court

must determine whether the payments are received “on account of illness,

disability, death, age or length of service. . . .”     Iowa Code §

627.6(8)(e)(emphasis added).



                       A. Similar Plan or Contract12

     Under Iowa Code § 627.6(8)(e), payments are exempt only if they

are received pursuant to a “pension, annuity, or similar plan or

contract. . . .”   Iowa Code § 627.6(8)(e) (emphasis added).    The debtor

argues that she satisfies the statutory contingency since her asset is

in the form of an annuity.




     12
      This analysis applies to payments on account of age or
length of service and not necessarily to those made on account of
illness, disability or death.

                                     9
However, “annuity” is a purely generic term which refers to the method

of payment and not to the underlying nature of the asset.

     Determining whether an asset satisfies the “similar plan or

contract” language is a peculiarly factual inquiry.      We mention a number

of factors to be considered, but none are necessarily dispositive nor is

it a matter of counting the factors on either side.      As we mentioned, it

is a factual inquiry depending on the particular payments at issue.



                          1. Contributions Over Time

     Iowa Code § 627.6(8)(e) is primarily designed to protect those

payments which serve as wage substitutes after retirement.       Accordingly,

the statute targets payments received under pensions, annuities, or

“similar” plans or contracts--payments which are the result of periodic

payroll deductions or self-directed contributions.      Iowa’s exemption

statute clearly contemplates an on-going course of investment and

contribution over time.    Therefore, the longer the period of

participation by the debtor, the more likely the investment falls within

the ambit of Iowa Code § 627.6(8)(e).      As a corollary,   the period

between investment and distribution must be of sufficient duration to

convince a court that the debtor’s participation is the result of a

long-standing retirement strategy, not merely a recent change in the

nature of the asset.




                                      10
     Under this test, the debtor’s lump-sum, accelerated investment is

suspect.   In the instant case, the debtor purchased her annuity policy

outright, with one lump payment, when she was already seventy-four-

years-old.   Furthermore, the debtor began drawing upon her investment

less than two months after the purchase date.



                        2. Contributions By Others

     Iowa Code § 627.6(8)(e) contemplates not merely multiple

contributions, but also multiple contributors.     Investments which are

purchased in isolation, outside the context of workplace contributions,

are less likely to qualify as exempt under Iowa Code § 627.6(8)(e).

Therefore, a court may examine the participant base to determine whether

a particular investment satisfies Iowa’s exemption statute.

     In this case, the debtor did not acquire her asset as a member of

an employee pool or in conjunction with employer contributions.     She

purchased an investment to which she alone contributed.



                         3. Return On Investment

     Courts may also look to the debtor’s return when deciding whether

a particular investment satisfies Iowa Code § 627.6(8)(e).     For example,

an investment which returns only the




                                    11
debtor’s initial contribution with earned interest or income--no more

and no less--is more likely to be a non-exempt investment.   By contrast,

investments which compute payments based on the participant’s estimated

life span, but which terminate upon the participant’s death or the

actual life span, more closely resemble the exempt investments

enumerated in Iowa Code § 627.6(8)(e).

     In this case, the terms of the debtor’s annuity entitle her to

recover only her initial investment plus interest at a rate of ten

percent.   The debtor cannot enjoy a windfall if she outlives her life

expectancy, nor will she be penalized if she dies prematurely.



                       4. Control Over Annuity

     Finally, a court should examine the amount of control which the

debtor exercises over the claimed exempt asset.   If, for example, the

investment imposes limitations on the debtor’s right to withdrawal, then

the asset is more likely to fall within the ambit of Iowa Code §

627.6(8)(e).   However, if the debtor has complete discretion to withdraw

the entire corpus, then the contract resembles a non-exempt investment.

     In this case, the terms of the debtor’s annuity were entirely

self-directed.   The debtor designated the date of disbursement and she

enjoyed unfettered discretion to liquidate




                                    12
the corpus at any time, subject only to contractual penalties assessed

against principal.    A contractual or tax penalty is not necessarily a

limitation on withdrawal.



                             B. On Account of Age

     Once the bankruptcy court has made a finding that the claimed

exempt asset falls within the category of investments enumerated in Iowa

Code § 627.6(8)(e), the court must then decide whether payments received

pursuant to the investment are in accordance with specific statutory

contingencies.     To be exempt, payments must be “on account of illness,

disability, death, age or length of service. . . .”     Iowa Code §

627.6(8)(e) (emphasis added).

     The Eighth Circuit’s opinion in Huebner suggests that only those

annuities which contain express contractual language conditioning

payment on the attainment of a specific age will satisfy the “on account

of” requirement:    “Huebner could have invested his savings in retirement

annuities that prevented him from withdrawing funds prior to his

reaching retirement age. . . .”    Huebner, 986 F.2d at 1225.

     In this case, the debtor’s annuity contract contains no language

conditioning payment on the annuitant’s age.     Under the terms of

enrollment, the annuitant was free to begin receiving disbursements at

any age.   Furthermore, the debtor’s annuity




                                      13
payments were not received on account of age, but on a date she

specified herself.      According to her own election, the debtor began

receiving payments on January 1, 1995.      In other words, the debtor did

not begin to receive payments once she attained a specific age (e.g.,

seventy-five), but only on a specific date--January 1, 1995.13



                               IV. CONCLUSION

     Under the Eighth Circuit’s analysis in Huebner and the factors we

have set out, the debtor’s annuity fails to satisfy Iowa Code §

627.6(8)(e).    The debtor’s annuity does not fall within the category of

exemptible investments enumerated in Iowa Code § 627.6(8)(e).

Furthermore, the debtor’s annuity payments were not payable “on account

of” age.    Therefore, we conclude that the debtor’s annuity payments are

not exempt.    Accordingly, the decision of the bankruptcy court is

AFFIRMED.

     A true copy.

              Attest:

                    CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
              EIGHTH CIRCUIT.




     13
      Strictly speaking, the payments which the debtor receives
are not on account of her age or even the date, but on account of
her investment in the annuity See In re Gagne, 166 B.R. 362
(Bankr. D. Minn. 1993) (holding that payments were not on account
of age when they were received under an annuity purchased with
proceeds from insurance policies).

                                       14
