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1999 SESSION

993348410
HOUSE BILL NO. 2683
Offered January 21, 1999
A BILL to amend and reenact § 34-34 of the Code of Virginia, relating to homestead exemptions; retirement benefit exemptions, individual retirement accounts.
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Patrons-- Puller, Keating, McClure, Moran and O'Brien; Senators: Gartlan, Mims, Ticer and Woods
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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, 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. A retirement plan established pursuant to § 408 of the Internal Revenue Code is exempt to the same extent as that permitted for a qualified plan established pursuant to § 401 of the Internal Revenue Code.

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.