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60-2308. Pension and retirement money exempt, exception; family postsecondary education savings account money exempt, exception; support money held by the Kansas department for children and families exempt. (a) Money received by any debtor as pensioner of the United States within three months next preceding the issuing of an execution, or attachment, or garnishment process, cannot be applied to the payment of the debts of such pensioner when it appears by the affidavit of the debtor or otherwise that such pension money is necessary for the maintenance of the debtor's support or a family support wholly or in part by the pension money. The filing of the affidavit by the debtor, or making proof as provided in this section, shall be prima facie evidence of the necessity of such pension money for such support. It shall be the duty of the court in which such proceeding is pending to release all moneys held by such attachment or garnishment process, immediately upon the filing of such affidavit, or the making of such proof.

(b) Except as provided in subsection (c), any money or other assets payable to a participant or beneficiary from, or any interest of any participant or beneficiary in, a retirement plan which is qualified under sections 401(a), 403(a), 403(b), 408, 408A or 409 of the federal internal revenue code of 1986, and amendments thereto, shall be exempt from any and all claims of creditors of the beneficiary or participant. Any such plan shall be conclusively presumed to be a spendthrift trust under these statutes and the common law of the state.

(c) Any plan or arrangement described in subsection (b) shall not be exempt from the claims of an alternate payee under a qualified domestic relations order. However, the interest of any and all alternate payees under a qualified domestic relations order shall be exempt from any and all claims of any creditor, other than the Kansas department for children and families, of the alternate payee. As used in this subsection, the terms "alternate payee" and "qualified domestic relations order" have the meaning ascribed to them in section 414(p) of the federal internal revenue code of 1986, and amendments thereto.

(d) The provisions of subsections (b) and (c) shall apply to any proceeding which: (1) Is filed on or after July 1, 1986; or (2) was filed on or after January 1, 1986, and is pending or on appeal July 1, 1986.

(e) Money held by the central unit for collection and disbursement of support payments designated pursuant to K.S.A. 39-7,135, and amendments thereto, the Kansas department for children and families, any clerk of a district court or any district court trustee in connection with a court order for the support of any person, whether the money is identified as child support, spousal support, alimony or maintenance, shall be exempt from execution, attachment or garnishment process.

(f) (1) The provisions of this subsection shall apply to any proceeding which:

(A) Is filed on or after January 1, 2002; or

(B) was filed prior to January 1, 2002, and is pending on or on appeal after January 1, 2002.

(2) Except as provided by paragraphs (3) and (4) of this subsection, if the designated beneficiary of a family postsecondary education savings account established pursuant to K.S.A. 75-640 et seq., and amendments thereto, is a lineal descendant of the account owner, all moneys in the account shall be exempt from any claims of creditors of the account owner or designated beneficiary.

(3) The provisions of paragraph (2) of this subsection shall not apply to:

(A) Claims of any creditor of an account owner, as to amounts contributed within a one-year period preceding the date of the filing of a bankruptcy petition under 11 U.S.C. § 101 et seq.; or

(B) claims of any creditor of an account owner, as to amounts contributed within a one-year period preceding an execution on judgment for such claims against the account owner.

(4) The provisions of paragraph (2) of this subsection shall not apply to:

(A) Claims of any creditor of an account owner, as to amounts exceeding $5,000 contributed within a period of time which is more than one year but less than two years preceding the date of the filing of a bankruptcy petition under 11 U.S.C. § 101 et seq.; or

(B) claims of any creditor of an account owner, as to amounts exceeding $5,000 contributed within a period of time which is more than one year but less than two years preceding an execution on judgment for such claims against the account owner.

History: L. 1963, ch. 303, 60-2308; L. 1980, ch. 176, § 5; L. 1986, ch. 220, § 1; L. 1992, ch. 312, § 40; L. 1999, ch. 80, § 1; L. 2001, ch. 195, § 8; L. 2002, ch. 104, § 1; L. 2012, ch. 162, § 79; L. 2014, ch. 115, § 233; July 1.

Source or prior law:

L. 1887, ch. 161, § 1; R.S. 1923, 60-3508.

Cross References to Related Sections:

Benefits and rights under Kansas public employees retirement act exempt, see 74-4923.

Credit and payments under state school retirement system exempt, see 72-5526.

Law Review and Bar Journal References:

"Counselling Debtors on Bankruptcy—Which Chapter to Choose," David J. Berkowitz, 53 J.K.B.A. 272 (1984).

"ERISA Retirement Benefits Under Bankruptcy Law—A Kansas Perspective," Kathy A. Stover, 55 J.K.B.A. No. 8, 18, 19 (1986).

"Survey of Kansas Law: Family Law," Nancy G. Maxwell, 37 K.L.R. 801, 819 (1989).

"Bankruptcy and Divorce in Kansas," J. Scott Pohl and C. J. Wahrman, 29 W.L.J. 551, 593 (1990).

"The Effect of Bankruptcy on Divorce Planning," Brenda J. Bell, Sharon Wright Kellstrom and Anne Burke Miller, 70 J.K.B.A. No. 3, 30 (2001).

"2002 Legislative Wrap-Up," Paul T. Davis, 71 J.K.B.A. No. 7, 15 (2002).

CASE ANNOTATIONS

Prior law cases, see G.S. 1949, 60-3508.

1. Distinction exists between this exemption and the unconstitutional privileges sought to be granted in 17-1725. Neely v. St. Francis Hospital & School of Nursing, 192 K. 716, 721, 722, 391 P.2d 155.

2. 1986 amendments hereto (L. 1986, ch. 220, § 1) inapplicable to garnishment filed previously; IRA not exempt from garnishment under federal law. Bartlett Cooperative Ass'n v. Patton, 239 K. 628, 634, 722 P.2d 551 (1986).

3. Social security disability benefits subject to garnishment for past-due child support; garnishment not precluded by statute. Mariche v. Mariche, 243 K. 547, 552, 758 P.2d 745 (1988).

4. Assets, including I.R.A.s., subject to execution for past-due maintenance owed former spouse, but not attorney fees, other obligations. In re Marriage of Schoneman, 13 K.A.2d 536, 541, 775 P.2d 194 (1989).

5. Social security and veterans disability benefits as exempt from garnishment examined. Younger v. Mitchell, 245 K. 204, 206, 777 P.2d 789 (1989).

6. IRA subject to statute; construed as revocable inter vivos trust subject to rights of nonconsenting surviving spouse. McCarty v. State Bank of Fredonia, 14 K.A.2d 552, 558, 795 P.2d 940 (1990).

7. Kansas exemption for independent retirement accounts (IRAs) not preempted by employee retirement income security act (ERISA). In Re Chadwick, 113 B.R. 540, 544 (1990).

8. Chapter 7 debtor could claim Kansas exemption in individual retirement account (IRA) plan; not preempted by federal law. In Re Galvin, 121 B.R. 79 (1990).

9. Mandatory 401K pension plan was valid spendthrift trust; excluded from bankruptcy estate. In re James, 126 B.R. 360 (1991).

10. Cited municipal pension is marital property for divorce property division purposes. In re Marriage of Sedbrook, 16 K.A.2d 668, 682, 685, 827 P.2d 1222 (1992).

11. Trial court holding allowing social security benefits deposited in certificate of deposit to be garnished reversed. E.W. v. Hall, 260 K. 99, 102, 917 P.2d 854 (1996).

12. Trial court order directing client to pay attorney's lien from unpaid child support settlement affirmed. In re Marriage of Wageman, 25 K.A.2d 682, 683, 968 P.2d 1114 (1998).

13. Any monies held by any district court clerk or trustee or the Department of Social and Rehabilitation Services for the support of any person is exempt from attachment, execution or garnishment. In re Marriage of Phillips, 272 K. 202, 32 P.3d 1128 (2001).

14. Debtor's brokerage account consisting of retirement plan funds did not constitute exempt earnings. In re Carbaugh, 278 B.R. 512, 522 (2002).

15. Mentioned; excluding 401(k) disbursement pre-petition from projected disposable income calculation upheld in bankruptcy case. In re Dethample, 390 B.R. 716, 726 (2008).

16. Section 529 college savings accounts in this case not exempt as pre-bankruptcy planning safe haven. In re Werth, 468 B.R. 412 (Bankr. D. Kan. 2012).

17. Debtor's "inherited individual retirement account" did not constitute a retirement plan under Kansas statute exempting person and retirement money. In re Mosby, 532 B.R. 167, 170 (Bankr. D. Kan. 2015).


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