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2005 SESSION

054249512
HOUSE BILL NO. 1698
Offered January 12, 2005
Prefiled December 22, 2004
A BILL to amend and reenact § 34-34 of the Code of Virginia, relating to exempting retirement benefits from creditors.
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Patron-- Spruill
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Referred to Committee for Courts of Justice
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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. 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 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 to an individual who attained age 60 at the time the exemption provided by this section is claimed is $89,512.50 ($17,500 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. 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.  D. 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.