STAND. COM. REP. NO. 1174

Honolulu, Hawaii

, 2005

RE: H.B. No. 477

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 477, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO EXEMPTING ROTH INDIVIDUAL RETIREMENT ACCOUNTS FROM ATTACHMENT OR SEIZURE,"

begs leave to report as follows:

The purpose of this measure is to exempt Roth individual retirement accounts (IRAs) from the claims of creditors pursuant to attachment, execution, seizure, the operation of bankruptcy or insolvency laws under title 11 United States Code section 522(b), or under any legal process.

The Representative from the Nineteenth District of the State House of Representatives and the Collection Law Section of the Hawaii State Bar Association opposed the proposed amendments to section 651-124(2), Hawaii Revised Statutes.

Your Committee finds that IRAs are valuable financial tools for retirement planning. Both traditional and Roth IRAs allow individuals to enjoy the benefit of tax-deferred growth on their retirement savings year after year, but each type of IRA is utilized differently depending upon an individual's current situation and future needs.

Your Committee further finds, however, that while both traditional IRAs and Roth IRAs are retirement instruments, only the former is protected from the claims of creditors under current law. This measure corrects this oversight by specifically including retirement funds in a Roth IRA as benefits exempt from attachment or seizure.

Your Committee has amended this measure by:

(1) Deleting language that would have shortened the "look back" period, i.e. the period during which pension contributions are subject to a creditor's claim, from three years before a bankruptcy or civil action filing to one year before a filing; and

(2) Making technical amendments for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 477, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 477, H.D. 1, S.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair