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Missouri Prisoner’s IRA May be Seized for Incarceration Costs

The Missouri Court of Appeals has held that a trial court erred as a matter of law in finding that a federal statute pre-empted the Missouri Incarceration Reimbursement Act (MIRA) and precluded attachment of a prisoner’s Individual Retirement Account (IRA).

MIRA, §§ 217.825-.841, authorizes the Missouri Department of Corrections to seize prisoner assets to reimburse incarceration costs. The law requires every prisoner to declare his or her assets under oath; that declaration is then forwarded to the state Attorney General with an estimate of the total cost of the prisoner’s incarceration.

After investigating a prisoner’s assets, the Attorney General may file a petition for reimbursement upon a good cause belief that the prisoner has sufficient resources to recover not less than ten percent of the estimated incarceration costs.

Once a MIRA petition is filed the court must issue an order requiring the prisoner to show cause why the petition should not be granted pursuant to § 217.835.2. At a hearing, the state must establish a prima facie case by proving that the prisoner is incarcerated and has assets that could be used for reimbursement; no more than ninety percent of the value of those assets may be paid to the state as reimbursement.

After discovering that Missouri prisoner Mark Bailey had substantial assets, the state brought a MIRA petition. At trial, the Attorney General introduced Bailey’s deposition, in which he admitted to various assets, and a Charles Schwab statement for a “contributory” IRA in Bailey’s name with a balance of $277,877.27.

The trial court entered judgment in favor of the state for a total of $16,575.55, from funds held in Bailey’s bank account and from the sale of his home. The court concluded, however, that Bailey’s IRA was excluded from a MIRA judgment because MIRA is in direct conflict with, and thus pre-empted by, the federal Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1191c. The state appealed.

The Missouri Court of Appeals reversed as to Bailey’s IRA. Observing that ERISA’s anti-alienation provision of 29 U.S.C. § 1056(d) precludes the attachment of employer pension plans, the Court noted that an IRA is not a pension plan. “It is clear,” the appellate court held, that “Congress intended to exclude IRAs from ERISA’s anti-alienation protection in section 1056(d)(1).” Therefore, as the pre-emption language in ERISA did not apply, “MIRA is not pre-empted by ERISA as to IRAs.” See: State ex rel Koster v. Bailey, 493 S.W.3d 423 (Mo. Ct. App. 2016). 

Related legal case

State ex rel Koster v. Bailey


 

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