The
Bankruptcy Abuse and Consumer Protection Act of 2001 (H.R. 333) includes
several measures that, if enacted, would be welcome news to plan sponsors.
These measures would:
exempt
from discharge in bankruptcy any loan from a pension, profit sharing,
stock bonus or other qualified plan; and
extend
ERISA´s anti-alienation protection to all tax-qualified retirement savings
vehicles.
However,
the legislation would also impose a $1 million limit on the assets in an IRA or
a Roth IRA that could be protected from an individual´s
creditors. The assets protected by this limit would not include rollovers from
qualified plans.
The
bankruptcy reform legislation is virtually identical to H.R. 2415, a bill that
passed the House of Representatives last October by a voice vote and then
passed the Senate Dec. 7 by a 70-28 margin. President Clinton "pocket vetoed"
that legislation on Dec. 19, claiming that it favored credit card companies and
banks and would have hurt consumers trying to discharge their debts. (A
president can "pocket veto" a bill sent to the White House in the last days of
a congressional session by simply not signing it after Congress has adjourned, killing
the bill.)
The
House passed H.R. 333 March 1, by a vote of 306-108. The bill went on to the
Senate, where it was passed, 83-15. The Senate version, S. 420, includes
provisions related to paying court-ordered judgments and giving consumers the
right to make complaints against forceful lenders, which are not included in
the House bill. The two measures will be reconciled in conference, the first
legislation in the 107th Senate to go to conference.
After being thwarted by President
Clinton several times during his presidency, the prospects for enactment of a
bankruptcy reform law now look rosy. According to experts, passing a reform
bill is a priority of the Republican leadership in Congress, and President Bush
is unlikely to oppose the legislation.
From
The 401(k) Handbook, ©Thompson Publishing Group, Inc.