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1999 SESSION


CHAPTER 796
An Act to amend and reenact § 34-34 of the Code of Virginia, relating to homestead exemptions; retirement benefit exemptions; individual retirement accounts.
[H 2683]
Approved March 28, 1999

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 13 (§ 63.1-249 et seq.) of Title 63.1 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. 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.