The U.S. Supreme Court ruled on Tuesday that small business owners may legally
participate in retirement pension plans set up for their workers.
The unanimous decision, stemming from bankruptcy proceedings against the owner
of a Tennessee medical practice, should help settle conflicts in the federal
court system over the ability of business owners to qualify for employee protections
under the Employee Retirement Income Security Act of 1974, according to the
Dow Jones Newswires.
"If the plan covers one or more employees other than the business owner
and his or her spouse, the working owner may participate on equal terms with
other plan participants," Justice Ruth Bader Ginsburg wrote for the court.
Dow Jones reports that the case, Yates v. Hendon, came to the Supreme
Court after Raymond B. Yates, a Knoxville, Tenn., doctor, was forced into Chapter
7 bankruptcy in 1996. Yates had just repaid $50,467 to his practice's retirement
plan to cover a loan he took against it. His creditors sought the funds in the
A federal bankruptcy court, a federal judge, and the 6th U.S. Circuit Court
of Appeals in Cincinnati all ruled that Yates was an employer, rather than an
employee, and therefore couldn't protect the loan repayment in bankruptcy. But
the Supreme Court reversed all of those those decisions and remanded the case
for further proceedings.