President Bush has signed into law the new bankruptcy legislation: “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, P.L.109-8.”
Here are some helpful links for those trying to understand just what the legislation means for retirement plans:
(1) Memorandum by Mark A. Bogdanowicz of Ice Miller: “Subject: Impact of Bankruptcy Reform Legislation on Qualified Retirement Savings Plan Exclusions/Exemptions.” Excerpt:
BAPCA resolves the uncertainty created by section 522(d)(10)(E) of the Code and the cases construing it. BAPCA makes explicitly clear that all retirement funds that are exempt from taxation under sections 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986 (the “IRC”) (“Qualified Retirement Funds”) are likewise outside the reach of creditors. To the extent that retirement funds do not fall within any of the foregoing tax exemptions, they will only qualify for exemption in bankruptcy if they meet the requirements of 522(d)(10)(E)[9] or an applicable State statute.
(2) Federal Update: Bankruptcy Bill Has Expanded Protections for Pensions (PDF) (National Council on Teacher Retirement). Excerpt:
The House legislative history accompanying S. 256 states that the “intent of section 224 is to expand the protection for tax-favored retirement plans or arrangements that may not be already protected under Bankruptcy Code section 541(c)(2) pursuant to Patterson v. Shumate, 504 U.S. 753 (1992).” House Report 109-31. Senator Orrin Hatch (R-UT) provided similar explanatory language when the Senate passed the bill on March 10. The House and Senate-passed bills are identical so no conference committee is necessary.
(3) Redlined/blacklined versions of the amended Bankruptcy Code:
—Redlined version of the Code by Skadden Arps (last updated March 31, 2005)
—Blacklined version of the Code by Davis, Polk & Wardwell (last updated April 20, 2005)
(4) Also, this summary from Mellon: “Bankruptcy Reform.”
UPDATE: See also CCH’s briefing on Tax Provisions of the New Bankruptcy Reform Act[pdf].