ERISA’s Anti-Alienation Provision Trumps N.Y. CPLR §5205(c)(5): A Second Circuit Clarification

1. Introduction

Case: Office Create Corp. v. Planet Entertainment, LLC, No. 24-1879 (2d Cir. June 10, 2025)
Court: United States Court of Appeals for the Second Circuit
Panel: Judges Calabresi, Chin & Merriam
Key Issue: Whether ERISA’s anti-alienation clause preempts the New York judgment-enforcement “look-back” exception in CPLR §5205(c)(5).

Office Create Corporation (“Office Create”) had a confirmed arbitration award exceeding USD 22 million and sought to satisfy part of that judgment by restraining five Merrill Lynch Retirement Cash Management Accounts (“RCM Accounts”) that it claimed were effectively owned by Steve Grossman, principal of Planet Entertainment, LLC (“Planet”).
Grossman and Planet (collectively, “Appellees”) argued the accounts were protected pension assets covered by the Employee Retirement Income Security Act of 1974 (ERISA). They also contended that ERISA preempts the New York exemption carve-out in CPLR §5205(c)(5) on which Office Create relied.

Procedural Snapshot

District Court (SDNY): Judge Ramos held the RCM Accounts qualified as ERISA pension plans, found ERISA preemption, and denied Office Create’s restraint request.
Appeal: Office Create challenged only the preemption ruling (waiving factual disputes as to ERISA qualification).
Threshold Issue: Appellate jurisdiction was initially uncertain because the district court’s order was “without prejudice” pending an evidentiary hearing. Office Create mooted that concern by withdrawing its hearing request, rendering the order final.

2. Summary of the Judgment

The Second Circuit affirmed the district court. It held unequivocally that:

ERISA’s anti-alienation provision (29 U.S.C. §1056(d)(1)) forbids attachment of pension benefits by creditors.
New York’s CPLR §5205(c)(5), which normally strips the exemption from retirement assets for contributions made within 90 days before the claim was interposed, directly conflicts with ERISA when applied to pension plans.
Under the Supremacy Clause, that state-law exception is therefore preempted “as applied” to ERISA-covered pension accounts.
Because Office Create conceded the accounts were ERISA-qualifying, the funds remain wholly exempt from execution.

3. Analysis

3.1 Precedents Cited & Their Influence

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983): Introduced the “relate-to” test: state laws that have a connection with or reference to an ERISA plan are preempted. The panel invoked Shaw to emphasize the breadth of ERISA §514(a).
Mackey v. Lanier Collection Agency, 486 U.S. 825 (1988): Clarified that while welfare plans lack anti-alienation protection, ERISA pension benefits are untouchable, underscoring Congress’s deliberate choice.
Guidry v. Sheet Metal Workers Nat’l Pension Fund, 493 U.S. 365 (1990): Provided Supreme Court endorsement of a broad, “no-equitable-exceptions” reading of §1056(d)(1). The Second Circuit relied on Guidry to reject Office Create’s policy-based pleas.
Boggs v. Boggs, 520 U.S. 833 (1997): Stressed that pension assets must remain “inviolate until retirement,” illustrating the “special intensity” of Congress’s protection.
Travelers Ins. Co., 514 U.S. 645 (1995): Narrowed ERISA preemption but preserved it for provisions that actually conflict with ERISA’s objectives. The court applied this “modern, functional” test to find direct conflict.
Merrill Lynch, Pierce, Fenner & Smith v. Spenser (SDNY 1986): Early district case holding ERISA preempts CPLR §5205 for pension plans. Though not binding, it provided persuasive analysis mirrored by the panel.
VFS Financing, Inc. v. Elias-Savion-Fox LLC, 73 F. Supp. 3d 329 (SDNY 2014): Office Create’s linchpin. The Second Circuit distinguished it because VFS concerned individual retirement accounts (IRAs), not pension plans—the anti-alienation clause does not cover IRAs.

3.2 Court’s Legal Reasoning

Statutory Text: ERISA §514(a) expressly preempts state laws “relating to” employee benefit plans. CPLR §5205 undeniably “relates to” such plans by dictating when pension assets may be attached.
Anti-Alienation Mandate: Section 1056(d)(1) is “mandatory” and creates a “ban” on assignment or alienation, including involuntary creditor process.
Conflict Analysis: The 90-day look-back exception would allow creditors to do precisely what §1056(d)(1) forbids—levy on plan assets—thus creating an irreconcilable conflict. Under Arizona v. United States (field conflict preemption) and Maryland v. Louisiana, the conflicting state rule must yield.
Policy Considerations: The panel reaffirmed Congress’s overarching goal: safeguard retirement income. Allowing state-law carve-outs would invite a patchwork of creditor remedies, undermining uniform, nationwide plan administration.
Jurisdictional Note: The court expounded on final-order doctrine (Amara v. Cigna; Jewish People for the Betterment of Westhampton Beach), demonstrating that a litigant’s voluntary withdrawal can convert a without-prejudice order into a final, appealable judgment.

3.3 Impact on Future Litigation & Practice

Clarifies Split at Trial-Court Level: Resolves contradictory SDNY rulings by adopting the Merrill line (preemption as to pension plans) and limiting VFS Financing to IRAs.
Practical Effect for Creditors: In the Second Circuit, creditors can no longer invoke CPLR §5205(c)(5) to pierce any ERISA-qualified pension plan—regardless of recency of contributions.
Plan Administrators: Gain additional certainty and uniformity, easing administrative burdens and reinforcing anti-garnishment assurances promised to participants.
State Legislatures & Debtor-Creditor Law: Signals that similar state “look-back” or “fraudulent-transfer” devices targeting pension contributions risk preemption if they conflict with ERISA.
Federal–State Balance: Reaffirms a robust notion of field preemption in the retirement arena, even after Travelers narrowed ERISA preemption in other contexts.

4. Complex Concepts Simplified

ERISA Pension Plan vs. IRA: A pension plan is typically employer-sponsored and subject to ERISA’s strict anti-alienation clause. An individual retirement account (IRA) is set up by an individual; ERISA’s anti-alienation rule does not apply, though other protections (like federal bankruptcy exemptions) may exist.
Anti-Alienation: A legal rule prohibiting the transfer, assignment, or involuntary seizure of retirement benefits before they are distributed to the participant. Think of it as a legal “force field” around pension assets.
Preemption: Under the Supremacy Clause, when federal and state laws conflict, the federal law prevails. ERISA contains an explicit preemption clause (§514(a)).
CPLR §5205(c)(5) Ninety-Day Look-Back: A New York rule stripping judgment-exemption protection from retirement deposits made within 90 days before the creditor’s claim arose—designed to deter last-minute shielding of assets.
Without-Prejudice vs. With-Prejudice Orders: A without-prejudice denial allows the same issue to be re-litigated (not final). A with-prejudice denial ends that dispute; withdrawing further proceedings can convert the former into the latter, enabling appeal.

5. Conclusion

The Second Circuit’s decision cements a straightforward rule: for ERISA-covered pension plans, federal anti-alienation protections are absolute and cannot be eroded by state judgment-enforcement devices, including New York’s 90-day look-back in CPLR §5205(c)(5). By firmly distinguishing pension plans from IRAs and emphasizing congressional intent, the court reinforces nationwide uniformity in retirement-plan administration and provides welcome certainty to plan participants, administrators, and creditors alike.