HOUSE BILL REPORT

SSB 6393

BYSenate Committee on Law & Justice (originally sponsored by Senators Nelson, Talmadge and Newhouse)

Exempting certain retirement benefits from execution, attachment, garnishment, or seizure.

House Committe on Judiciary

Majority Report:  Do pass.  (18)

      Signed by Representatives Appelwick, Chair; Crane, Vice Chair; Padden, Ranking Republican Member; Belcher, Brough, Dellwo, Forner, Hargrove, Inslee, P. King, R. Meyers, Moyer, H. Myers, Schmidt, Scott, D. Sommers, Tate and Wineberry.

House Staff:Regina Jones (786-7191)

AS PASSED HOUSE MARCH 2, 1990

BACKGROUND:

In 1987, the Legislature enacted legislation exempting retirement benefits from legal attachment or seizure, both inside and outside of bankruptcy.  Included in the exemption are benefits under qualified retirement plans, tax shelter annuities and individual retirement accounts.  In 1988, the U.S. Supreme Court held in Mackey v Lanier Collections Agency and Service, Inc. that a similar exemption in a Georgia statute was preempted by the Employment Retirement Income Security Act of 1974 (ERISA) due to the Georgia statute's express reference to ERISA.

SUMMARY:

Express references to ERISA are eliminated.

A policy statement is added referring to the state's authority under the federal Bankruptcy Code to enact exemptions that will be respected in bankruptcy.

Employee retirement plans, whether subject to ERISA or not, are exempt from execution, attachment, garnishment or seizure. Protected employee retirement benefit plans are deemed spendthrift trusts.  As such, benefits are excluded from an individual's estate in bankruptcy.  Protected employee benefit plans remain subject to claims for child support and court orders for spousal maintenance. Any employee benefit plan that is established or maintained for employees by the U.S. government or the state of Washington or any political subdivision is not a employee benefit plan afforded protection.

Technical modifications are made to clarify that employee benefit plans are liable for their own validly incurred obligations, such as trustee's fees, and to eliminate any implication that welfare benefit plans are exempt.

Fiscal Note:      Not Requested.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    Richard Hopp, Washington State Bar Association Ad Hoc Taxation & Debtor-Creditor Committee.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    The bill clarifies that it is the policy of the state to protect retirement benefits from attachment or seizure.  The bill gives private sector employees the same protection presently afforded employees of governmental authorities.

House Committee - Testimony Against:      None.