SENATE BILL REPORT

 

 

                                    SB 6393

 

 

BYSenators Nelson, Talmadge and Newhouse

 

 

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

 

 

Senate Committee on Law & Justice

 

      Senate Hearing Date(s):January 16, 1990

 

Majority Report:  That Substitute Senate Bill No. 6393 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Nelson, Chairman; McCaslin, Vice Chairman; Hayner, Madsen, Newhouse, Niemi, Patrick, Rasmussen, Rinehart, Talmadge, Thorsness.

 

      Senate Staff:Vicki E. Schur (786-7415)

                  February 5, 1990

 

 

          AS REPORTED BY COMMITTEE ON LAW & JUSTICE, JANUARY 16, 1990

 

BACKGROUND:

 

In 1987, the Legislature exempted retirement benefits, such as IRAs, Keoghs, and annuities, from legal attachment or seizure, both inside and outside bankruptcy.  In 1988, the United States Supreme Court held that a similar exemption in a Georgia statute was preempted by the Employment Retirement Income Security Act of 1974 (ERISA) due to its express reference to ERISA.

 

SUMMARY:

 

Express references to ERISA are eliminated and references are added regarding the state's authority, under the federal bankruptcy code, to enact exemptions from bankruptcy.  All retirement plans (whether subject to ERISAct or not) are exempt from execution, attachment, garnishment or seizure.  To accord additional protection, qualified employee benefits are deemed spendthrift trusts which exclude benefits from an individual's estate.

 

Technical corrections clarify that employee benefit plans are liable for their own validly incurred obligations (such as trustee's fees) and that welfare benefits plans are not exempt.

 

 

EFFECT OF PROPOSED SUBSTITUTE:

 

A severability clause is added.

 

Appropriation:    none

 

Revenue:    none

 

Fiscal Note:      available

 

Senate Committee - Testified: Richard Hopp, Washington State Bar Association Ad Hoc Taxation and Creditor-Debtor Committee; Peter Arkison, citizen