Bill exempting qualified savings plans from creditors' claims goes to governor’s desk

HB 2779 by Rep. John Wray (R-Waxahachie), which expands the assets that are exempt from attachment, execution, or other seizure for a creditor's claim, passed the House and Senate and now goes to Gov. Greg Abbot’s desk.

The bill specifies that a qualified savings plan is exempt from attachment, execution, or other seizure for the satisfaction of debts and defines "qualified savings plan" as any stock bonus, pension, annuity, deferred compensation, profit-sharing, health, education, or similar plan or account, to the extent that the plan or account is exempt from federal income tax or that the federal income tax is deferred.

The exemption also applies to a child support lien for the following: a plan or account established under the prepaid higher education tuition program, including a prepaid tuition contract; a plan or account established under the higher education savings plan, including a savings trust account; and a qualified tuition program of any state that meets the requirements of the federal Internal Revenue Code of 1986.

The exemption does not apply to a person's interest in a retirement plan that was solely an unfunded, unsecured promise by an employer to pay deferred compensation, unless otherwise exempt by law.

The exemption would not apply to property that, as of the bill's effective date, was subject to a voluntary bankruptcy proceeding or to a valid claim of a holder of a final judgment who obtained rights superior to those that would have been held if a bankruptcy petition were pending against the debtor.

The bill passed each chamber by unanimous votes.

Contact Jeff Huffman, Texas Credit Union Association, at 469-385-6488 or [email protected] for more information.