Senator Chuck Grassley (R-IA) introduced S. 220 on January 30, and Representative George Gekas (R-PA) introduced HR 333 on January 31. Both bills extend the bankruptcy protection currently enjoyed by ERISA retirement plans to:
- non-ERISA 403(b) plans
- 457 plans
Currently, creditors cannot attach qualified plan assets, such as 401(k) account balances, while they remain in the plan. Some versions of the bankruptcy reform bills introduced over the past couple of years would have subjected these balances to that risk in the event of participant bankruptcy, subject to certain dollar limits.
The reintroduced bills do contain a provision that would allow creditors to reach IRA assets in excess of $1 million, but excludes amounts attributed to rollovers from employer plans – effectively making the exception moot, James Delaplane, Vice President, Retirement Policy for the Council told PLANSPONSOR.com.
The legislation is expected to be considered on an expedited schedule and should easily pass both the House and Senate. President Bush has already indicated that he will sign the measure.
– Nevin Adams firstname.lastname@example.org
For more on previous bankruptcy reform legislation, see:
« IRS Proposes Regs on Excess Pension Transfers to Health Plans