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ICI Supports IRA Asset Provisions Included in Bankruptcy Reform Legislation
Washington, DC, March 26, 2003 - The Institute supports bankruptcy reform legislation that was recently passed by the House of Representatives. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2003 (H.R. 975) provides uniform nationwide treatment of IRA assets in bankruptcy proceedings whereas state bankruptcy laws currently vary with respect to IRA assets. H.R. 975 is very similar to the bankruptcy reform bill passed by the House last November, but not considered by the Senate.
The bill also includes a $1 million cap on the amount of assets held in an IRA (excluding SIMPLE IRAs) that would be exempt from creditors in bankruptcy. This provision, included in last year’s legislation, would only apply to direct contributions to the IRA and would not apply to rollovers from qualified employer-sponsored retirement plans or the earnings on rollover amounts. The legislation also includes protections for amounts placed in Coverdell education savings accounts as well as Section 529 programs.