qualify for exemption under paragraph (3)(C) or
subsection (d)(12) by reason of that 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 sec-
tion 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 de-
posited in such a fund or account not later than
60 days after the distribution of that 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 tax-
ation 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;
(3) by inserting after paragraph (18) the fol-
lowing:
‘‘(19) under subsection (a), of withholding of
income from a debtor’s wages and collection of
amounts withheld, under the debtor’s agreement au-
thorizing that withholding and collection for the ben-
efit of a pension, profit-sharing, stock bonus, or
other plan established under section 401, 403, 408,
408A, 414, 457, or 501(a) 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 with-
held and collected are used solely for payments
relating to a loan from a plan that satisfies the
requirements of section 408(b)(1) of the Em-
ployee Retirement Income Security Act of 1974
or is subject to section 72(p) of the Internal
Revenue Code of 1986; or
‘‘(B) in the case of a loan from a thrift
savings plan described in subchapter III of
chapter 84 of title 5, that satisfies the require-
ments of section 8433(g) of such title;’’; and
100
(4) by adding at the end of the flush material
at the end of the subsection, the following: ‘‘Nothing
in paragraph (19) may be construed to provide that
any loan made under a governmental plan under
section 414(d), or a contract or account under sec-
tion 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 this Act, is
amended by adding at the end 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
‘‘(B) a loan from the thrift savings plan
described in subchapter III of chapter 84 of
title 5, that satisfies the requirements of section
8433(g) of such title.
Nothing in paragraph (18) may be construed to pro-
vide that any loan made under a governmental plan
under section 414(d), or a contract or account under
101
section 403(b), of the Internal Revenue Code of
1986 constitutes a claim or a debt under this title.’’.
(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 re-
quired to repay such loan shall not constitute ‘disposable
income’ under section 1325.’’.
(e) ASSET 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 de-
scribed in section 408 or 408A of the Internal Revenue
Code of 1986, other than a simplified employee pension
under section 408(k) of that Code or a simple retirement
account under section 408(p) of that 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 (which
amount shall be adjusted as provided in section 104 of
this title) in a case filed by an individual debtor, except
102
that such amount may be increased if the interests of jus-
tice so require.’’.
SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK-
RUPTCY.
(a) EXCLUSIONS.—Section 541 of title 11, United
States Code, is amended—
(1) in subsection (b)—
(A) in paragraph (4), by striking ‘‘or’’ at
the end;
(B) by redesignating paragraph (5) as
paragraph (10); and
(C) by inserting after paragraph (4) the
following:
‘‘(5) funds placed in an education individual re-
tirement account (as defined in section 530(b)(1) of
the Internal Revenue Code of 1986) not later than
365 days before the date of filing of the petition,
but—
‘‘(A) only if the designated beneficiary of
such account was a son, daughter, stepson,
stepdaughter, grandchild, or step-grandchild of
the debtor for the taxable year for which funds
were placed in such account;
‘‘(B) only to the extent that such funds—
103
‘‘(i) are not pledged or promised to
any entity in connection with any extension
of credit; and
‘‘(ii) are not excess contributions (as
described in section 4973(e) of the Internal
Revenue Code of 1986); and
‘‘(C) in the case of funds placed in all such
accounts having the same designated bene-
ficiary not earlier than 720 days nor later than
365 days before such date, only so much of
such funds as does not exceed $5,000;
‘‘(6) funds used to purchase a tuition credit or
certificate or contributed to an account in accord-
ance with section 529(b)(1)(A) of the Internal Rev-
enue Code of 1986 under a qualified State tuition
program (as defined in section 529(b)(1) of such
Code) not later than 365 days before the date of fil-
ing of the petition, but—
‘‘(A) only if the designated beneficiary of
the amounts paid or contributed to such tuition
program was a son, daughter, stepson, step-
daughter, grandchild, or step-grandchild of the
debtor for the taxable year for which funds
were paid or contributed;