PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.(a) In General.—Section 522 of title 11, United States Code, is amended—(1) in subsection (b)—(A) in paragraph (2)—119 STAT. 63(i) in subparagraph (A), by striking “and” at the end; (ii) in subparagraph (B), by striking the period at the end and inserting “; and”; (iii) by adding at the end the following:“(C) retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.”; and(iv) by striking “(2)(A) any property” and inserting:“(3) Property listed in this paragraph is—“(A) any property”;(B) by striking paragraph (1) and inserting:“(2) Property listed in this paragraph is property that is specified under subsection (d), unless the State law that is applicable to the debtor under paragraph (3)(A) specifically does not so authorize.”;(C) by striking “(b) Notwithstanding” and inserting “(b)(1) Notwithstanding”;(D) by striking “paragraph (2)” each place it appears and inserting “paragraph (3)”;(E) by striking “paragraph (1)” each place it appears and inserting “paragraph (2)”; (F) by striking “Such property is—”; and(G) by adding at the end the following:“(4) For purposes of paragraph (3)(C) and subsection (d)(12), the following shall apply:“(A) If the retirement funds are in a retirement fund that has received a favorable determination under section 7805 of the Internal Revenue Code of 1986, and that determination is in effect as of the date of the filing of the petition in a case under this title, those funds shall be presumed to be exempt from the estate. “(B) If the retirement funds are in a retirement fund that has not received a favorable determination under such section 7805, those funds are exempt from the estate if the debtor demonstrates that—“(i) no prior determination to the contrary has been made by a court or the Internal Revenue Service; and “(ii)(I) the retirement fund is in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986; or“(II) the retirement fund fails to be in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986 and the debtor is not materially responsible for that failure.“(C) A direct transfer of retirement funds from 1 fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986, under section 401(a)(31) of the Internal Revenue Code of 1986, or otherwise, shall not cease to qualify for exemption under paragraph (3)(C) or subsection (d)(12) by reason of such direct transfer.“(D)(i) Any distribution that qualifies as an eligible rollover distribution within the meaning of section 402(c) of the Internal Revenue Code of 1986 or that is described in clause (ii) shall 119 STAT. 64 not cease to qualify for exemption under paragraph (3)(C) or subsection (d)(12) by reason of such distribution.“(ii) A distribution described in this clause is an amount that—“(I) has been distributed from a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986; and “(II) to the extent allowed by law, is deposited in such a fund or account not later than 60 days after the distribution of such amount.”; and(2) in subsection (d)—(A) in the matter preceding paragraph (1), by striking “subsection (b)(1)” and inserting “subsection (b)(2)”; and(B) by adding at the end the following:“(12) Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.”.(b) Automatic Stay.—Section 362(b) of title 11, United States Code, is amended—(1) in paragraph (17), by striking “or” at the end;(2) in paragraph (18), by striking the period and inserting a semicolon; and(3) by inserting after paragraph (18) the following:“(19) under subsection (a), of withholding of income from a debtor’s wages and collection of amounts withheld, under the debtor’s agreement authorizing that withholding and collection for the benefit of a pension, profit-sharing, stock bonus, or other plan established under section 401, 403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue Code of 1986, that is sponsored by the employer of the debtor, or an affiliate, successor, or predecessor of such employer—“(A) to the extent that the amounts withheld and collected are used solely for payments relating to a loan from a plan under section 408(b)(1) of the Employee Retirement Income Security Act of 1974 or is subject to section 72(p) of the Internal Revenue Code of 1986; or“(B) a loan from a thrift savings plan permitted under subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title;but nothing in this paragraph may be construed to provide that any loan made under a governmental plan under section 414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title;”.(c) Exceptions To Discharge.—Section 523(a) of title 11, United States Code, as amended by section 215, is amended by inserting after paragraph (17) the following:“(18) owed to a pension, profit-sharing, stock bonus, or other plan established under section 401, 403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue Code of 1986, under—“(A) a loan permitted under section 408(b)(1) of the Employee Retirement Income Security Act of 1974, or subject to section 72(p) of the Internal Revenue Code of 1986; or 119 STAT. 65“(B) a loan from a thrift savings plan permitted under subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title;but nothing in this paragraph may be construed to provide that any loan made under a governmental plan under section 414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title; or”.(d) Plan Contents.—Section 1322 of title 11, United States Code, is amended by adding at the end the following:“(f) A plan may not materially alter the terms of a loan described in section 362(b)(19) and any amounts required to repay such loan shall not constitute ‘disposable income’ under section 1325.”.(e) Asset Limitation.—(1) Limitation.—Section 522 of title 11, United States Code, is amended by adding at the end the following:“(n) For assets in individual retirement accounts described in section 408 or 408A of the Internal Revenue Code of 1986, other than a simplified employee pension under section 408(k) of such Code or a simple retirement account under section 408(p) of such Code, the aggregate value of such assets exempted under this section, without regard to amounts attributable to rollover contributions under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed $1,000,000 in a case filed by a debtor who is an individual, except that such amount may be increased if the interests of justice so require.”.(2) Adjustment of dollar amounts.—Paragraphs (1) and (2) of section 104(b) of title 11, United States Code, are amended by inserting “522(n),” after “522(d),”.