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2007 SESSION


CHAPTER 302
An Act to amend and reenact § 34-34 of the Code of Virginia, relating to the exemption of certain retirement benefits from creditors.
[H 2766]
Approved March 12, 2007

 

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 Except as otherwise provided in this section, the interest of an individual under a retirement plan shall be exempt from creditor process to the same extent provided under this section permitted under federal bankruptcy law for such a plan. 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 $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 $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 $25,000 to an individual who attained age 60 at the time the exemption provided by this section is claimed is $127,875 ($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 D. 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 $25,000 the exemption permitted under federal bankruptcy law for such a plan. The maximum amount that may be exempted exemption permitted under federal bankruptcy law shall be allocated among such persons in the same proportion as their respective interests in the retirement plan or plans.

G E. 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.