A coalition representing employers; the defined contribution plan industry; and the life insurance, mutual fund and securities industries is objecting to efforts by lawmakers to cap the amount of retirement assets that would be protected from creditors during bankruptcy proceedings.
Sens. Charles Grassley, R-Iowa, and Jeff Sessions, R-Ala., are seeking to add a provision that would cap at $1 million the amount of retirement assets that consumers could protect in case of bankruptcy.
Their proposal is intended to ensure individuals cannot shield assets from creditors by stuffing their retirement plans. Age would determine the protected amount. For example, borrowers age 65 could protect $1 million in retirement assets from creditors, but borrowers age 21 could only protect $250,000.
Messrs. Grassley and Sessions added the provision after an earlier one to let banks, credit card companies and other lenders stake claims on borrowers' retirement plan assets to pay off debts in bankruptcy proceedings was struck from the legislation.
