High court says business owners can be part of retirement plans

THE U.S. Supreme Court today ruled that working small-business owners may legally participate in the retirement plans they sponsor for their employees. The court's unanimous decision reversed lower-court rulings determining that a self-employed owner and plan sponsor was the "employer" and could not receive the benefits of a plan participant under ERISA. "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 in the majority opinion. This decision in Yates v. Hendon means that physician Raymond B. Yates was legally allowed to borrow from his practice's profit-sharing plan and that his subsequent loan repayment could be protected when he was forced into Chapter 7 bankruptcy protection in 1996.