Senate Bill No. 599

(By Senator Plymale)

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[Introduced February 22, 1999;

referred to the Committee on the Judiciary.]

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A BILL to amend article eight, chapter thirty-eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section fourteen-a; and to amend and reenact section four, article ten of said chapter, all relating to exempting a debtor's interest in certain retirement plans from the claims of creditors.

Be it enacted by the Legislature of West Virginia:
That article eight, chapter thirty-eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section fourteen-a; and that section four, article ten of said chapter be amended and reenacted, all to read as follows:
ARTICLE 8. EXEMPTIONS FROM LEVY.
§38-8-14a. Exemption for retirement plans.
(a) A debtor's interest in or right, whether vested or not, to the assets held in or to receive pensions, annuities, benefits, distributions, refunds of contributions, or other payments under a retirement plan is exempt from judgment, attachment, execution, distress for rent, and seizure for the satisfaction of debts if the plan: (i) Is intended in good faith to qualify as a retirement plan under applicable provisions of the Internal Revenue Code of 1986, as now or hereafter amended; or (ii) is a public employee pension plan created under the West Virginia code, as now or hereafter amended.
(b) "Retirement plan" includes the following:
(1) A stock bonus, pension, profit sharing, annuity, or similar plan or arrangement, including a retirement plan for self-employed individuals or a simplified employee pension plan;
(2) A government or church retirement plan or contract;
(3) An individual retirement annuity or individual retirement account; and
(4) A public employee pension plan created under the West Virginia code, as now or hereafter amended.
(c) A retirement plan that is: (i) Intended in good faith to qualify as a retirement plan under the applicable provisions of the Internal Revenue Code of 1986, as now or hereafter amended; or ii) a government established public employee pension plan is conclusively presumed to be a spendthrift trust.
(d) This section shall not apply to a "qualified domestic relations order" as defined in section 206 (d) of the Employment Retirement Security Act of 1974, as now or hereafter amended or in section 414 (p) of the Internal Revenue Code of 1986, as now or hereafter amended.
ARTICLE 10. FEDERAL TAX LIENS; ORDERS AND DECREES IN BANKRUPTCY.
§38-10-4. Exemptions of property in bankruptcy proceedings.
Pursuant to the provisions of 11 U.S.C. 522(b)(1), this state specifically does not authorize debtors who are domiciled in this state to exempt the property specified under the provisions of 11 U.S.C. 522(d).
Any person who files a petition under the federal bankruptcy law may exempt from property of the estate in a bankruptcy proceeding the following property:
(a) The debtor's interest, not to exceed fifteen thousand dollars in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence or in a burial plot for the debtor or a dependent of the debtor.
(b) The debtor's interest, not to exceed two thousand four hundred dollars in value, in one motor vehicle.
(c) The debtor's interest, not to exceed four hundred dollars in value in any particular item, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops or musical instruments, that are held primarily for the personal, family or household use of the debtor or a dependent of the debtor: Provided, That the total amount of personal property exempted under this subsection shall not exceed eight thousand dollars.
(d) The debtor's interest, not to exceed one thousand dollars in value, in jewelry held primarily for the personal, family or household use of the debtor or a dependent of the debtor.
(e) The debtor's interest, not to exceed in value eight hundred dollars plus any unused amount of the exemption provided under subsection (a) of this section in any property.
(f) The debtor's interest, not to exceed one thousand five hundred dollars in value, in any implements, professional books or tools of the trade of the debtor or the trade of a dependent of the debtor.
(g) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
(h) The debtor's interest, not to exceed in value eight thousand dollars less any amount of property of the estate transferred in the manner specified in 11 U.S.C. 542(d), in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
(i) Professionally prescribed health aids for the debtor or a dependent of the debtor.
(j) The debtor's right to receive:
(1) A social security benefit, unemployment compensation or a local public assistance benefit;
(2) A veterans' benefit;
(3) A disability, illness or unemployment benefit;
(4) Alimony, support or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(5) A payment under a stock bonus, pension, profit sharing, annuity or similar plan or contract on account of illness, disability, death, age or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless:
(A) Such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose;
(B) Such payment is on account of age or length of service; and
(C) Such plan or contract does not qualify under Section 401(a), 403(a), 403(b), 408 or 409 of the Internal Revenue Code of 1954.
(5)A payment or distribution under a retirement plan as defined in West Virginia code section fourteen-a, article eight, chapter thirty-eight.
(k) The debtor's right to receive, or property that is traceable to:
(1) An award under a crime victim's reparation law;
(2) A payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(3) A payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual's death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(4) A payment, not to exceed fifteen thousand dollars on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent;
(5) A payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(6) Payments made to the prepaid tuition trust fund on behalf of any beneficiary.
This section shall not be construed to affect the applicability of any provision of the federal bankruptcy law other than 11 U.S.C. 552(d).
(l) A debtor's interest in a right, whether vested or not, to the assets held in or to receive pensions, annuities, benefits, distributions, or other payments under a retirement plan as defined in West Virginia code section fourteen-a, article eight, chapter thirty-eight.

NOTE: The purpose of this bill is to protect the owner or beneficiary of a qualified retirement plan from having a creditor attach, levy upon or otherwise take his retirement for the payment of debts.

Strike-throughs indicate language which would be stricken from the present law, and underscoring indicates new language that would be added.