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2005 SESSION

054330512
HOUSE BILL NO. 1695
AMENDMENT IN THE NATURE OF A SUBSTITUTE
(Proposed by the House Committee on Courts of Justice
on January 17, 2005)
(Patron Prior to Substitute--Delegate Spruill)
A BILL to amend and reenact § 34-34 of the Code of Virginia, relating to certain retirement benefits exempt from creditors.

Be it enacted by the General Assembly of Virginia:

1.  That § 34-34 of the Code of Virginia is amended and reenacted as follows:

§ 34-34. Certain retirement benefits exempt.

A. For the purposes of this section:

"Alternate payee" shall have the same meaning as provided under § 206 of the Employee Retirement Income Security Act of 1974 (ERISA). In the case of a retirement plan that is not subject to ERISA, the term "alternate payee" means an individual who has an interest in a retirement plan pursuant to a judgment, decree, or order, including approval of a property settlement agreement, that would be described in § 206 (d) (3) (B) of ERISA if the retirement plan were subject to ERISA.

"Annual benefit" means an amount payable as an annuity for the lifetime of the individual who claims the exemption provided under this section, assuming that annuity payments will commence upon the individual's attainment of age sixty-five or, if the individual attained age sixty-five on or before the exemption provided under this section is claimed, the individual's age on the date that the exemption is claimed.

"Retirement plan" means a plan, account, or arrangement that is intended to satisfy the requirements of United States Internal Revenue Code §§ 401, 403 (a), 403 (b), 408, 408 A, 409 (as in effect prior to repeal by United States P.L. 98-369), or § 457. Whether a plan, account, or arrangement is intended to satisfy the requirements of one of the foregoing provisions shall be determined based on all of the relevant facts and circumstances including, but not limited to, the issuance of a favorable determination letter by the United States Internal Revenue Service, reports or returns filed with United States or state agencies, and communications from the plan sponsor to participants.

B. The interest of an individual under a retirement plan shall be exempt from creditor process to the extent provided under this section. The exemption provided by this section shall be available whether such individual has an interest in the retirement plan as a participant, beneficiary, contingent annuitant, alternate payee, or otherwise.

C. The exemption provided under subsection B shall not apply to the extent that the interest of the individual in the retirement plan would provide an annual benefit in excess of $17,500 $25,000. If an individual has an interest in more than one retirement plan, the limitation of this subsection C shall be applied as if all such retirement plans constituted a single plan. The amount required to provide an annual benefit of $17,500 $25,000 shall be determined under the following table:

      Attained Age                     Cost of $1
       When Exemption                     of Annual
       Claimed Benefit
             16                              0.1482
             17                              0.1603
             18                              0.1734
             19                              0.1875
             20                              0.2028
             21                              0.2193
             22                              0.2371
             23                              0.2564
             24                              0.2773
             25                              0.2998
             26                              0.3241
             27                              0.3505
             28                              0.3789
             29                              0.4096
             30                              0.4429
             31                              0.4789
             32                              0.5178
             33                              0.5598
             34                              0.6054
             35                              0.6546
             36                              0.7080
             37                              0.7658
             38                              0.8284
             39                              0.8963
             40                              0.9699
             41                              1.0497
             42                              1.1363
             43                              1.2304
             44                              1.3326
             45                              1.4436
             46                              1.5645
             47                              1.6960
             48                              1.8394
             49                              1.9958
             50                              2.1665
             51                              2.3530
             52                              2.5571
             53                              2.7808
             54                              3.0260
             55                              3.2954
             56                              3.5915
             57                              3.9175
             58                              4.2771
             59                              4.6748
             60                              5.1150
             61                              5.6035
             62                              6.1472
             63                              6.7538
             64                              7.4330
             65                              8.1958
             66                              7.9989
             67                              7.8007
             68                              7.6009
             69                              7.3985
             70                              7.1924
             71                              6.9830
             72                              6.7706
             73                              6.5556
             74                              6.3393
             75                              6.1222
             76                              5.9054
             77                              5.6897
             78                              5.4763
             79                              5.2638
             80                              5.0529
             81                              4.8447
             82                              4.6403
             83                              4.4395
             84                              4.2415
             85                              4.0456
             86                              3.8522
             87                              3.6616
             88                              3.4742
             89                              3.2904
             90                              3.1106
             91                              2.9354
             92                              2.7653
             93                              2.6011
             94                              2.4415
             95                              2.2867
             96                              2.1367
             97                              1.9935
             98                              1.8558
             99                              1.7214
            100                              1.5972
            101                              1.4755
            102                              1.3478
            103                              1.2690
            104                              1.1738
            105                              1.0679
            106                              0.7517
            107                              0.0000
            108                              0.0000
            109                              0.0000
            110                              0.0000

For example, the amount required to provide an annual benefit of $17,500 $25,000 to an individual who attained age 60 at the time the exemption provided by this section is claimed is $89,512.50 $127,875 ($17,500 $25,000 times 5.1150).

D. The exemption provided under subsection B shall not apply to amounts contributed to a retirement plan during the fiscal year of the retirement plan that includes the date on which the individual claims the exemption and for the two preceding fiscal years of the retirement plan other than amounts that were exempt from creditor process immediately prior to being contributed to the retirement plan. The exemption provided under subsection B shall not apply to the earnings on contributions described in this subsection.

E. The exemption provided under subsection B shall not apply to claims made against an individual by the alternate payee of such individual or to claims made against such individual by the Commonwealth in administrative actions pursuant to Chapter 19 (§ 63.2-1900 et seq.) of Title 63.2 or any court process to enforce a child or child and spousal support obligation.

F. If two individuals who are married or were married are entitled to claim the exemption provided under subsection B of an interest under the same retirement plan or plans and such individuals are jointly subject to creditor process as to the same debt or obligation and the debt or obligation arose during the marriage, then the exemption provided under subsection B as to such debts or obligations shall not exceed, in the aggregate, the amount that would provide an annual benefit of $17,500 $25,000. The maximum amount that may be exempted shall be allocated among such persons in the same proportion as their respective interests in the retirement plan or plans.

G. The exemption provided under this section must be claimed within the time limits prescribed by § 34-17.

H. A retirement plan established pursuant to §§ 408 and 408 A of the Internal Revenue Code is exempt to the same extent as that permitted under federal law for a qualified plan established pursuant to § 401 of the Internal Revenue Code.

However, an individual who claims an exemption under federal law for any retirement plan established pursuant to §§ 401, 403 (a), 403 (b), 409 or § 457 of the Internal Revenue Code shall not be entitled to claim the exemption under this subsection for a retirement plan established pursuant to § 408 or § 408 A of the Internal Revenue Code.