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H0581......................................................by STATE AFFAIRS
BANKRUPTCY - Amends existing law to include 457 plans (deferred
compensation) as being exempt from attachment in bankruptcy proceedings.
01/29 House intro - 1st rdg - to printing
01/30 Rpt prt - to St Aff
02/09 Rpt out - rec d/p - to 2nd rdg
02/10 2nd rdg - to 3rd rdg
02/16 3rd rdg - PASSED - 68-0-2
AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Bedke, Bell,
Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
Crow, Cuddy, Denney, Douglas, Eberle, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones,
Kellogg(Nonini), Kulczyk, Lake, Langford, Langhorst, Martinez,
McGeachin, McKague, Meyer, Miller, Mitchell, Moyle, Naccarato,
Nielsen, Pasley-Stuart, Raybould, Ridinger, Ring, Ringo, Roberts,
Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen,
Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills,
Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Deal, Edmunson
Floor Sponsor - Campbell
Title apvd - to Senate
02/17 Senate intro - 1st rdg - to St Aff
03/02 Rpt out - rec d/p - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/15 3rd rdg - PASSED - 30-0-5
AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw,
Calabretta, Compton, Darrington, Davis, Gannon, Geddes, Goedde, Hill,
Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie,
McWilliams, Noble, Pearce, Richardson, Schroeder, Sorensen, Stegner,
Sweet, Werk
NAYS -- None
Absent and excused -- Brandt, Cameron, Noh, Stennett, Williams
Floor Sponsor - Davis
Title apvd - to House
03/16 To enrol
03/17 Rpt enrol - Sp signed
03/18 Pres signed - To Governor
03/23 Governor signed
Session Law Chapter 167
Effective: 03/23/04
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 581
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO BANKRUPTCY AND PENSION PLANS; AMENDING SECTION 11-604A, IDAHO
3 CODE, TO INCLUDE 457 PLANS AS EXEMPT FROM EXECUTION, ATTACHMENT, GARNISH-
4 MENT, SEIZURE OR OTHER LEVY OR BY ANY OTHER LEVY BY OR UNDER ANY LEGAL
5 PROCESS WHATEVER WITH EXCEPTIONS, TO FURTHER DEFINE THE TERM "EMPLOYEE
6 BENEFIT PLAN," TO DELETE LANGUAGE REGARDING APPLICATION TO CERTAIN
7 EMPLOYEE BENEFIT PLANS, TO PROVIDE PAYMENTS FROM A 457 PLAN UNDER CERTAIN
8 CIRCUMSTANCES AND TO MAKE TECHNICAL CORRECTIONS; AND DECLARING AN EMER-
9 GENCY.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 11-604A, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 11-604A. PENSION MONEY EXEMPT. (1) It is the policy of the state of Idaho
14 to ensure the well-being of its citizens by protecting retirement income to
15 which they are or may become entitled. For that purpose generally and pursuant
16 to the authority granted to the state of Idaho under 11 U.S.C. section
17 522(b)(2), the exemptions in this section relating to retirement benefits are
18 provided.
19 (2) Unless otherwise provided by federal law, any money received by any
20 citizen of the state of Idaho as a pension from the government of the United
21 States, whether the money be in the actual possession of a citizen or be
22 deposited or loaned, shall be exempt from execution, attachment, garnishment,
23 seizure, or other levy by or under any legal process whatever. When a debtor
24 dies, or absconds, and leaves his family any money exempted by this subsec-
25 tion, the money shall be exempt to the family as provided in this subsection.
26 This subsection shall not apply to any child support collection actions, if
27 otherwise permitted by federal law.
28 (3) The right of a person to a pension, annuity, or retirement allowance
29 or disability allowance, or death benefits, or any optional benefit, or any
30 other right accrued or accruing to any citizen of the state of Idaho under any
31 employee benefit plan, and any fund created by the benefit plan or arrange-
32 ment, shall be exempt from execution, attachment, garnishment, seizure, or
33 other levy by or under any legal process whatever. This subsection shall not
34 apply to any child support collection actions, if otherwise permitted by fed-
35 eral law. This subsection shall permit benefits under any such plan or
36 arrangement to be payable to a spouse, former spouse, child, or other depend-
37 ent of a participant in the plan to the extent expressly provided for in a
38 qualified domestic relations order that meets the requirements for those
39 orders under the plan, or, in the case of benefits payable under a plan
40 described in sections 403(b), 408, or 408A or 457 of the Internal Revenue Code
41 of 1986, as amended, or section 409 of the Internal Revenue Code as in effect
42 before January 1, 1984, to the extent provided in any order issued by a court
43 of competent jurisdiction that provides for maintenance or support. This sub-
2
1 section shall not prohibit actions against an employee benefit plan or fund
2 for valid obligations incurred by the plan or fund for the benefit of the plan
3 or fund.
4 (4) For the purposes of this section, the term "employee benefit plan"
5 means:
6 (a) Assets held, payments made, and amounts payable under a stock bonus,
7 pension, profit-sharing, annuity, or similar plan or contract, providing
8 benefits by reason of age, illness, disability, or length of service;
9 (b) Any plan or arrangement, whether funded by a trust, an annuity con-
10 tract, an insurance contract, or an individual account, that is described
11 in sections 401(a), 403(a), 403(b), 408, or 408A or 457 of the Internal
12 Revenue Code of 1986, as amended, or section 409 of the Internal Revenue
13 Code as in effect before January 1, 1984. The term "employee benefit plan"
14 also means any rights accruing on account of money paid currently or in
15 advance pursuant to a college savings program described in chapter 54,
16 title 33, Idaho Code. The term "employee benefit plan" shall not include
17 any employee benefit plan that is established or maintained for its
18 employees by the government of the United States, by the state of Idaho or
19 any political subdivision of the state, or by any agent or instrumentality
20 of any of the foregoing.
21 (5) An employee benefit plan shall be deemed to be a spendthrift trust,
22 regardless of the source of funds, the relationship between the beneficiary
23 and the trustee or custodian of the plan, or the ability of the debtor to
24 withdraw, borrow or otherwise become entitled to benefits from the plan before
25 retirement. This subsection shall permit benefits under any such plan or
26 arrangement to be payable to a spouse, former spouse, child, or other depend-
27 ent of a participant in the plan to the extent expressly provided for in a
28 qualified domestic relations order that meets the requirements for those
29 orders under the plan, or, in the case of benefits payable under a plan
30 described in sections 403(b), 408, or 408A or 457 of the Internal Revenue Code
31 of 1986, as amended, or section 409 of the Internal Revenue Code as in effect
32 before 1984, to the extent provided in any order issued by a court of compe-
33 tent jurisdiction that provides home maintenance or support.
34 (6) Unless contrary to applicable federal law, nothing contained in sub-
35 section (3), (4) or (5) of this section shall be construed as a termination or
36 limitation of a spouse's community property interest in an individual retire-
37 ment account held in the name of, or on account of, the other spouse, the
38 "account holder spouse.". At the death of the non-account nonaccount holder
39 spouse, the account holder spouse may transfer or distribute the community
40 property interest of the non-account nonaccount holder spouse in the account
41 holder spouse's individual retirement account to the non-account nonaccount
42 holder spouse's estate, testamentary trust, inter vivos trust, or other suc-
43 cessor or successors pursuant to the last will of the non-account nonaccount
44 holder spouse, or the law of intestate succession if applicable, and that dis-
45 tributee may, but shall not be required to, obtain an order from a court of
46 competent jurisdiction, including a nonjudicial dispute resolution agreement,
47 or other order, entered to confirm the distribution. For purposes of subsec-
48 tion (3) of this section, the distributee of the non-account nonaccount holder
49 spouse's community property interest in an individual retirement account shall
50 be considered a person entitled to the full protection of subsection (3) of
51 this section. The non-account nonaccount holder spouse's consent to a benefi-
52 ciary designation by the account holder spouse with respect to an individual
53 retirement account shall not, absent clear and convincing evidence to the con-
54 trary, be deemed a release, gift, relinquishment, termination, limitation or
55 transfer of the non-account nonaccount holder spouse's community property
3
1 interest in an individual retirement account. For purposes of this subsection,
2 the term "non-accountnonaccount holder spouse" means the spouse of the person
3 in whose name the individual retirement account is maintained. The term
4 "individual retirement account" includes an individual retirement account and
5 an individual retirement annuity both as described in section 408 of the
6 Internal Revenue Code of 1986, as amended, a Roth individual retirement
7 account as described in section 408A of the Internal Revenue Code of 1986, as
8 amended, and an individual retirement bond as described in section 409 of the
9 Internal Revenue Code as in effect before January 1, 1984.
10 SECTION 2. An emergency existing therefor, which emergency is hereby
11 declared to exist, this act shall be in full force and effect on and after its
12 passage and approval.
STATEMENT OF PURPOSE
RS 13788
The purpose of this legislation is to include government
deferred compensation plan assets (Section 457 plans) in Idaho s
exemption statute for pension plans. The State and various
political subdivisions have had Section 457 plans as
supplemental retirement programs since 1978. A recent bankruptcy
court ruling indicating that Section 457 assets were not exempt
as pension assets under Section 11-607A, Idaho Code, has
necessitated this amendment.
Other amendments include striking language that is inconsistent
with the state policy of protecting retirement income.
FISCAL IMPACT
None
CONTACT
Name: Ben Ysursa
Agency: Secretary of State
Phone 334-2300
CONTACT David High, Deputy
Agency: Attorney General
Phone 334-4148 H 581