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S1118................................................by JUDICIARY AND RULES
INDIVIDUAL RETIREMENT ACCOUNTS - Amends existing law to further define
"employee benefit plan"; and to further govern community property interest
in an individual retirement account.
02/12 Senate intro - 1st rdg - to printing
02/13 Rpt prt - to Com/HuRes
02/16 Rpt out - rec d/p - to 2nd rdg
02/19 2nd rdg - to 3rd rdg
02/22 3rd rdg - PASSED - 32-0-3
AYES -- Andreason, Boatright, Branch(Bartlett), Bunderson,
Burtenshaw, Cameron, Danielson, Darrington, Davis, Dunklin, Frasure,
Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough, Lee, Lodge, Noh,
Richardson, Risch, Sandy, Schroeder, Sims, Sorensen, Stegner,
Stennett, Thorne, Wheeler, Whitworth, Williams,
NAYS -- None
Absent and excused -- Brandt, Deide, King-Barrutia
Floor Sponsor -- Bunderson
Title apvd - to House
02/23 House intro - 1st rdg - to Jud
03/20 Rpt out - rec d/p - to 2nd rdg
03/21 2nd rdg - to 3rd rdg
03/26 3rd rdg - PASSED - 62-0-8
AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Boe, Bolz,
Callister, Chase, Clark, Collins, Crow, Deal, Denney, Ellis,
Ellsworth, Eskridge, Field(13), Field(20), Gagner, Gould, Hadley,
Hammond, Hansen, Harwood, Henbest(Farley), Higgins, Hornbeck, Jaquet,
Jones, Kellogg, Kendell, Kunz, Lake, Langford, Mader, Marley,
McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pomeroy,
Raybould, Ridinger, Roberts, Robison, Schaefer, Sellman, Shepherd,
Smith, Smylie, Stevenson, Stone, Tilman, Trail, Wood, Young, Mr.
Speaker
NAYS -- None
Absent and excused -- Bradford, Bruneel, Campbell, Cuddy, Loertscher,
Pischner, Sali, Wheeler
Floor Sponsor -- Sellman
Title apvd - to Senate
03/28 To enrol
Rpt enrol - Pres signed
03/29 Sp signed - to Governor
04/02 Governor signed
Session Law Chapter 288
Effective: 07/01/01
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE SENATE
SENATE BILL NO. 1118
BY JUDICIARY AND RULES COMMITTEE
1 AN ACT
2 RELATING TO RETIREMENT BENEFITS; AMENDING SECTION 11-604A, IDAHO CODE, TO FUR-
3 THER DEFINE "EMPLOYEE BENEFIT PLAN" AND TO FURTHER GOVERN COMMUNITY PROP-
4 ERTY INTEREST IN AN INDIVIDUAL RETIREMENT ACCOUNT AND TO MAKE TECHNICAL
5 CORRECTIONS.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 11-604A, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 11-604A. PENSION MONEY EXEMPT. (1) It is the policy of the state of Idaho
10 to ensure the well-being of its citizens by protecting retirement income to
11 which they are or may become entitled. For that purpose generally and pursuant
12 to the authority granted to the state of Idaho under 11 U.S.C. section
13 522(b)(2), the exemptions in this section relating to retirement benefits are
14 provided.
15 (2) Unless otherwise provided by federal law, any money received by any
16 citizen of the state of Idaho as a pension from the government of the United
17 States, whether the money be in the actual possession of a citizen or be
18 deposited or loaned, shall be exempt from execution, attachment, garnishment,
19 seizure, or other levy by or under any legal process whatever. When a debtor
20 dies, or absconds, and leaves his family any money exempted by this subsec-
21 tion, the money shall be exempt to the family as provided in this subsection.
22 This subsection shall not apply to any child support collection actions, if
23 otherwise permitted by federal law.
24 (3) The right of a person to a pension, annuity, or retirement allowance
25 or disability allowance, or death benefits, or any optional benefit, or any
26 other right accrued or accruing to any citizen of the state of Idaho under any
27 employee benefit plan, and any fund created by the benefit plan or arrange-
28 ment, shall be exempt from execution, attachment, garnishment, seizure, or
29 other levy by or under any legal process whatever. This subsection shall not
30 apply to any child support collection actions, if otherwise permitted by fed-
31 eral law. This subsection shall permit benefits under any such plan or
32 arrangement to be payable to a spouse, former spouse, child, or other depend-
33 ent of a participant in the plan to the extent expressly provided for in a
34 qualified domestic relations order that meets the requirements for those
35 orders under the plan, or, in the case of benefits payable under a plan
36 described in sections 403(b), 408 or 408A of the iInternal rRevenue cCode of
37 1986, as amended, or section 409 of the iInternal rRevenue cCode as in effect
38 before January 1, 1984, to the extent provided in any order issued by a court
39 of competent jurisdiction that provides for maintenance or support. This sub-
40 section shall not prohibit actions against an employee benefit plan or fund
41 for valid obligations incurred by the plan or fund for the benefit of the plan
42 or fund.
43 (4) For the purposes of this section, the term "employee benefit plan"
2
1 means:
2 (a) Assets held, payments made, and amounts payable under a stock bonus,
3 pension, profit-sharing, annuity, or similar plan or contract, providing
4 benefits by reason of age, illness, disability, or length of service;
5 (b) Any plan or arrangement, whether funded by a trust, an annuity con-
6 tract, an insurance contract, or an individual account, that is described
7 in sections 401(a), 403(a), 403(b), 408 or 408A of the iInternal rRevenue
8 cCode of 1986, as amended, or section 409 of the iInternal rRevenue cCode
9 as in effect before January 1, 1984. The term "employee benefit plan" also
10 means any rights accruing on account of money paid currently or in advance
11 pursuant to a college savings program described in chapter 54, title 33,
12 Idaho Code. The term "employee benefit plan" shall not include any
13 employee benefit plan that is established or maintained for its employees
14 by the government of the United States, by the state of Idaho or any
15 political subdivision of the state, or by any agent or instrumentality of
16 any of the foregoing.
17 (5) An employee benefit plan shall be deemed to be a spendthrift trust,
18 regardless of the source of funds, the relationship between the beneficiary
19 and the trustee or custodian of the plan, or the ability of the debtor to
20 withdraw, borrow or otherwise become entitled to benefits from the plan before
21 retirement. This subsection shall permit benefits under any such plan or
22 arrangement to be payable to a spouse, former spouse, child, or other depend-
23 ent of a participant in the plan to the extent expressly provided for in a
24 qualified domestic relations order that meets the requirements for those
25 orders under the plan, or, in the case of benefits payable under a plan
26 described in sections 403(b), 408 or 408A of the iInternal rRevenue cCode of
27 1986, as amended, or section 409 of the iInternal rRevenue cCode as in effect
28 before 1984, to the extent provided in any order issued by a court of compe-
29 tent jurisdiction that provides home maintenance or support.
30 (6) Unless contrary to applicable federal law, nothing contained in sub-
31 section (3), (4) or (5) of this section shall be construed as a termination or
32 limitation of a spouse's community property interest in an individual retire-
33 ment account held in the name of, or on account of, the other spouse, the
34 "account holder spouse". At the death of the non-account holder spouse, the
35 account holder spouse may transfer or distribute the community property inter-
36 est of the non-account holder spouse in the account holder spouse's individual
37 retirement account to the non-account holder spouse's estate, testamentary
38 trust, inter vivos trust, or other successor or successors pursuant to the
39 last will of the non-account holder spouse, or the law of intestate succession
40 if applicable, and that distributee may, but shall not be required to, obtain
41 an order from a court of competent jurisdiction, including a nonjudicial dis-
42 pute resolution agreement, or other order, entered to confirm the distribu-
43 tion. For purposes of subsection (3) of this section, the distributee of the
44 non-account holder spouse's community property interest in an individual
45 retirement account shall be considered a person entitled to the full protec-
46 tion of subsection (3) of this section. The non-account holder spouse's con-
47 sent to a beneficiary designation by the account holder spouse with respect to
48 an individual retirement account shall not, absent clear and convincing evi-
49 dence to the contrary, be deemed a release, gift, relinquishment, termination,
50 limitation or transfer of the non-account holder spouse's community property
51 interest in an individual retirement account. For purposes of this subsection,
52 the term "non-account holder spouse" means the spouse of the person in whose
53 name the individual retirement account is maintained. The term "individual
54 retirement account" includes an individual retirement account and an individ-
55 ual retirement annuity both as described in section 408 of the Internal Reve-
3
1 nue Code of 1986, as amended, a Roth individual retirement account as
2 described in section 408A of the Internal Revenue Code of 1986, as amended,
3 and an individual retirement bond as described in section 409 of the Internal
4 Revenue Code as in effect before January 1, 1984.
STATEMENT OF PURPOSE
RS 11002
11-604A protects certain retirement income of Idaho residents, by
exempting such income from execution, attachment, garnishment,
seizure and so forth. However, college savings programs, described
in 33-5401, Idaho Code, were not clearly covered. Additionally,
there was no clear provision as to treatment of community property
rights of the spouse of the account holder, especially when the
spouse died before the account holder, and it was unclear whether
the spouse of an account holder was protected by this statute in
the same manner as the account holder. Further, since the spouse
was required to consent to a beneficiary designation for the
account, some authorities held that the spouse had released or
gifted his or her interest in the account. Finally, it was unclear
whether the statute covered some more recent variations of the
basic IRA such as individual retirement annuities, Roth IRA's, and
individual retirement bonds. This bill clarifies all the foregoing
to provide: (1) college savings plans are covered; (2) the spouse
retains his or her community interest in the account, which can be
transferred at the death of the spouse pursuant to the will of the
deceased spouse or by intestacy if there is no will; (3) the spouse
is fully protected by the terms of this statute; (4) a consent by
the spouse to a beneficiary designation is not a gift, release, or
waiver, etc.; and, (5) the alternate variations of IRA's are
covered by this statute.
FISCAL NOTE
This bill should have no effect on revenues or expenditures.
CONTACT:
Robert L. Aldridge, Chairman,
Legislation Committee, Taxation, Probate & Trust Section
Idaho Tax & Business Lawyers Association, Inc.
1209 North Eighth Street
Boise, Idaho 83702-4297
Telephone: office: (208) 336-9880 home: (208) 888-4668
Fax: (208) 336-9882
STATEMENT OF PURPOSE/FISCAL NOTE S 1118