HB264 Alabama 2017 Session

Summary

Primary Sponsor

David FaulknerRepresentative

Republican

Session

Regular Session 2017

Title

Trusts, qualified trusts expanded to include certain benefits of qualified pension plans, stock bonus plans, and profit sharing plans, exclusion from federal bankruptcy laws, Sec. 19-3B-508 am'd.

Summary

HB264 expands qualified trusts to include certain pension, stock bonus, and profit-sharing plans and strengthens protections against assignment and bankruptcy for those benefits.

What This Bill Does

It broadens the definition of 'qualified trust' to cover trusts formed as part of qualified pension plans, qualified stock bonus plans, and qualified profit sharing plans. Benefits within these trusts may not be assigned or alienated and are exempt from bankruptcy and insolvency laws, with limited exceptions (such as certain domestic relations orders and qualified loan provisions). It also specifies the types of plans and accounts that fall under this protection and frames the protections as a form of state spendthrift law, while excluding specific Alabama retirement systems from these provisions.

Who It Affects

• Participants and beneficiaries in qualified pension plans, qualified stock bonus plans, profit-sharing plans, and related accounts would have protections against assignment, alienation, and creditors' claims under bankruptcy law.
• Plan sponsors and employers, as well as creditors and debt collectors, are affected by how these protections apply to plan assets; the bill also explicitly excludes Employees' Retirement System of Alabama, Teachers' Retirement System of Alabama, and the Judicial Retirement Fund of Alabama from these provisions.

Key Provisions

• Expands the definition of 'qualified trust' to include trusts formed as part of qualified pension plans, qualified stock bonus plans, and qualified profit sharing plans.
• Benefits from qualified trusts may not be assigned or alienated and are exempt from bankruptcy/insolvency laws, with certain exceptions, and are treated as a state spendthrift trust law.
• Loans secured by a participant's nonforfeitable benefits are not treated as assignments if they meet IRS-related exemption conditions.
• The section lists and includes a wide range of plan types and accounts (e.g., 401(a) trusts, 403(b) accounts, IRAs, Roth IRAs, SEPs, SIMPLE IRAs, 457(b), etc.).
• Excludes the Employees' Retirement System of Alabama, Teachers' Retirement System of Alabama, and the Judicial Retirement Fund of Alabama from these protections.
• Effective date: the act becomes law on the first day of the third month after passage.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Trusts