Bill Text: NJ S2650 | 2012-2013 | Regular Session | Introduced
Bill Title: Provides exceptions to garnish exemption against benefits from State-administered pension systems for certain financial claims under State law.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2013-03-18 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S2650 Detail]
Download: New_Jersey-2012-S2650-Introduced.html
Sponsored by:
Senator KEVIN J. O'TOOLE
District 40 (Bergen, Essex, Morris and Passaic)
SYNOPSIS
Provides exceptions to garnish exemption against benefits from State-administered pension systems for certain financial claims under State law.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the exemption of benefits of the State-administered retirement systems from certain garnishments and amending various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. N.J.S.18A:66-51 is amended to read as follows:
18A:66-51. The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this article, and the moneys in the various funds created under this article, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State of Federal court except, upon the approval by the Internal Revenue Service, to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to section 2 of P.L.1979, c.396 (C.2C:43-3.1) for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a "qualified domestic relations order" as defined in section 414(p) of the federal Internal Revenue Code (26 U.S.C. s.414(p)); or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order, and, except as hereafter in this section and as in this article otherwise provided, shall be unassignable.
Any setoff against a member's pension, annuity or retirement allowance pursuant to this section shall be limited to the maximum amount permitted by law. The Director of the Division of Pensions and Benefits shall promulgate such rules and regulations as may be deemed reasonable and necessary to implement the provisions of this section. The regulations shall be consistent with all federal requirements or limitations regarding any information utilized in any collection or setoff and shall provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient obtained or maintained pursuant to the provisions of this section.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
(cf: P.L.1969, c.98, s.1)
2. Section 41 of P.L.1973, c.140 (C.43:6A-41) is amended to read as follows:
41. The right of a person to a pension, retirement allowance or any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or federal court except, upon the approval by the Internal Revenue Service, to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to section 2 of P.L.1979, c.396 (C.2C:43-3.1) for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a "qualified domestic relations order" as defined in section 414(p) of the federal Internal Revenue Code (26 U.S.C. s.414(p)); or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order, and, except as hereinafter in this section and as in this act otherwise provided, shall be unassignable.
Any setoff against a member's pension, annuity or retirement allowance pursuant to this section shall be limited to the maximum amount permitted by law. The Director of the Division of Pensions and Benefits shall promulgate such rules and regulations as may be deemed reasonable and necessary to implement the provisions of this section. The regulations shall be consistent with all federal requirements or limitations regarding any information utilized in any collection or setoff and shall provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient obtained or maintained pursuant to the provisions of this section.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
(cf: P.L.1981, c.470, s.21)
3. Section 53 of P.L.1954, c.84 (C.43:15A-53) is amended to read as follows:
53. The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or Federal court except to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to section 2 of P.L.1979, c.396 (C.2C:43-3.1) for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a "qualified domestic relations order" as defined in section 414(p) of the federal Internal Revenue Code (26 U.S.C. s.414(p)); or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order, and, except as in this section and in this act otherwise provided, shall be unassignable.
Any setoff against a member's pension, annuity or retirement allowance pursuant to this section shall be limited to the maximum amount permitted by law. The Director of the Division of Pensions and Benefits shall promulgate such rules and regulations as may be deemed reasonable and necessary to implement the provisions of this section. The regulations shall be consistent with all federal requirements or limitations regarding any information utilized in any collection or setoff and shall provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient obtained or maintained pursuant to the provisions of this section.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
(cf: P.L.1969, c.98, s.2)
4. Section 17 of P.L.1944, c.255 (C.43:16A-17) is amended to read as follows:
17. The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process except to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to section 2 of P.L.1979, c.396 (C.2C:43-3.1) for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a "qualified domestic relations order" as defined in section 414(p) of the federal Internal Revenue Code (26 U.S.C. s.414(p)); or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order, and, except as hereinafter in this section and as in this act otherwise provided, shall be unassignable.
Any setoff against a member's pension, annuity or retirement allowance pursuant to this section shall be limited to the maximum amount permitted by law. The Director of the Division of Pensions and Benefits shall promulgate such rules and regulations as may be deemed reasonable and necessary to implement the provisions of this section. The regulations shall be consistent with all federal requirements or limitations regarding any information utilized in any collection or setoff and shall provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient obtained or maintained pursuant to the provisions of this section.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
(cf: P.L.1969, c.98, s.3)
5. Section 45 of P.L.1965, c.89 (C.53:5A-45) is amended to read as follows:
45. The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, any benefit or right accrued or accruing to a person under the provisions of this act and the moneys in the various funds created under this act, shall be exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or Federal court except to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to section 2 of P.L.1979, c.396 (C.2C:43-3.1) for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a "qualified domestic relations order" as defined in section 414(p) of the federal Internal Revenue Code (26 U.S.C. s.414(p)); or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order, and, except as hereinafter in this section and as in this act otherwise provided, shall be unassignable.
Any setoff against a member's pension, annuity or retirement allowance pursuant to this section shall be limited to the maximum amount permitted by law. The Director of the Division of Pensions and Benefits shall promulgate such rules and regulations as may be deemed reasonable and necessary to implement the provisions of this section. The regulations shall be consistent with all federal requirements or limitations regarding any information utilized in any collection or setoff and shall provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient obtained or maintained pursuant to the provisions of this section.
Nothing in this section shall prohibit any person insured under a group insurance policy, pursuant to an arrangement among the insured, the group policyholder and the insurer, from making to any person other than his employer, a gift assignment of the rights and benefits conferred on him by any provision of such policy or by law including specifically but not by way of limitation the right to exercise the conversion privilege and the right to name a beneficiary. Any such assignment, whether made before or after the effective date of this act, shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy in accordance with the terms of the assignment.
(cf: P.L.1969, c.98, s.4)
6. R.S.25:2-1 is amended to read as follows:
25:2-1. Conveyances of personal property in trust for use of persons making them void as to creditors. a. Except as provided in subsection b. of this section, every deed of gift and every conveyance, transfer and assignment of goods, chattels or things in action, made in trust for the use of the person making the same, shall be void as against creditors.
b. Notwithstanding the provisions of any other law to the contrary, any property held in a qualifying trust and any distributions from a qualifying trust, regardless of the distribution plan elected for the qualifying trust, shall be exempt from all claims of creditors and shall be excluded from an estate in bankruptcy, except that:
(1) no exemption shall be allowed for any preferences or fraudulent conveyances made in violation of the "Uniform Fraudulent Transfer Act," R.S.25:2-20 et seq., or any other State or federal law;
(2) no qualifying trust shall be exempt from the claims under any order for child support or spousal support or of an alternate payee under a qualified domestic relations order. However, the interest of any alternate payee under a qualified domestic relations order is exempt from all claims of any creditor of the alternate payee. As used in this paragraph, the terms "alternate payee" and "qualified domestic relations order" have the meanings ascribed to them in section 414(p) of the federal Internal Revenue Code of 1986 (26 U.S.C. s.414(p)); [and]
(3) no qualifying trust shall be exempt from any punitive damages awarded in a civil action arising from manslaughter or murder; and
(4) no exemption shall be allowed for claims by the State of New Jersey against the retirement allowances or return of pension contributions payable to a member or beneficiary of any State-administered retirement system.
For purposes of this section, a "qualifying trust" means a trust created or qualified and maintained pursuant to federal law, including, but not limited to, section 401, 403, 408, 408A, 409, 529 or 530 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.401, 403, 408, 408A, 409, 529 or 530).
(cf: P.L.2001, c.153, s.1)
7. This act shall take effect immediately.
STATEMENT
Currently, the retirement benefits of a member or beneficiary of the Teachers' Pension and Annuity Fund, the Judicial Retirement System, the Public Employees Retirement System, the Police and Firemen's Retirement System, and the State Police Retirement System are generally exempt from any State or municipal tax and from levy and sale, garnishment, attachment or any other process arising out of any State or Federal court and are unassignable.
Under this bill, the right to the retirement benefits remains so exempt except to (1) satisfy a certificate of debt issued by the Director of the New Jersey Division of Taxation pursuant to subsection (c) of N.J.S.A. 54A:9-12; (2) satisfy a debt owed to the Victims of Crime Compensation Agency for the portion of an assessment ordered pursuant to N.J.S.A. 2C:43-3.1 for deposit in the Victims of Crime Compensation Agency account or restitution ordered to be paid to the board pursuant to N.J.S.A. 2C:44-2 for deposit in the Victims of Crime Compensation Agency Account; (3) satisfy a court order for child support, alimony or equitable distribution, including but not limited to a qualified domestic relations order as defined in section 414(p) of the federal Internal Revenue Code; or (4) satisfy an Internal Revenue Service levy or federal criminal restitution order. Regulations promulgated by the Director of the Division of Pensions and Benefits in the Department of the Treasury will provide for (1) due notice to the recipient of the pension, annuity or retirement allowance and procedures to contest the setoff prior to any setoff being imposed, and (2) safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the recipient.
The bill also allows no exemption for claims by the State of New Jersey against the retirement allowances or return of pension
contributions payable to a member or beneficiary of any State-administered retirement system with regard to property held in a qualifying trust and any distributions from a qualifying trust currently exempt from all claims of creditors under N.J.S.A. 25:2-1.
