2023 Texas Statutes › Property Code › Title 5 - Exempt Property and Liens › Subtitle A - Property Exempt From Creditors' Claims › Chapter 42 - Personal Property › Section 42.0021. Additional Exemption for Certain Savings Plans

Sec. 42.0021.  ADDITIONAL EXEMPTION FOR CERTAIN SAVINGS PLANS.  (a)  In this section, "qualified savings plan" means any stock bonus, pension, annuity, deferred compensation, profit-sharing, health, education, or similar plan or account, to the extent the plan or account is exempt from federal income tax or to the extent federal income tax on a person's interest in the plan or account is deferred until actual payment of benefits to the person.  A plan or account that is subject to federal income tax is considered to be exempt from federal income tax for purposes of this section if the plan or account is subject to the tax solely under Sections 511 through 514, Internal Revenue Code of 1986.  The term includes:
(1)  a retirement plan sponsored by a private employer, government, or church;
(2)  a retirement plan for self-employed individuals;
(3)  a simplified employee pension plan;
(4)  an individual retirement account or annuity, including an inherited individual retirement account or annuity;
(5)  a Roth IRA, including an inherited Roth IRA;
(6)  a health savings account;
(7)  a Coverdell education savings account;
(8)  a plan or account established under Subchapter F, Chapter 54, Education Code, including a prepaid tuition contract;
(9)  a plan or account established under Subchapter G, Chapter 54, Education Code, including a savings trust account;
(10)  a qualified tuition program of any state that meets the requirements of Section 529, Internal Revenue Code of 1986;
(11)  a qualified ABLE program of any state that meets the requirements of Section 529A, Internal Revenue Code of 1986; and
(12)  an annuity or similar contract purchased with assets distributed from a plan or account described by this subsection.
(b)  In addition to the exemption prescribed by Section 42.001 and except as provided by this section, a person's interest in and right to receive payments from a qualified savings plan, whether vested or not, is exempt from attachment, execution, and seizure for the satisfaction of debts.
(c)  An interest or right in a qualified savings plan that was acquired by reason of the death of another person, whether as an owner, participant, beneficiary, survivor, coannuitant, heir, or legatee, is exempt to the same extent that the interest or right of the decedent was exempt on the date of the decedent's death.
(d)   Contributions to a qualified savings plan that are excess contributions under Section 4973,  Internal Revenue Code of 1986, and any accrued earnings on such contributions are not exempt under this section unless otherwise exempt by law.
(e)  Amounts distributed from a qualified savings plan are exempt from attachment, execution, and seizure for a creditor's claim for 60 days after the date of distribution. If the amounts qualify as a rollover contribution under the Internal Revenue Code of 1986, whether taxable or nontaxable, the amounts will continue to be exempt thereafter under this section.
(f)  A person's interest in a retirement plan that is solely an unfunded, unsecured promise by an employer to pay deferred compensation is not exempt under this section unless otherwise exempt by law.
(g)  A person is not prohibited by this section from granting a valid and enforceable security interest in the person's interest in or right to receive payments from a qualified savings plan to the extent permitted by, and in accordance with, the Internal Revenue Code of 1986 and the terms of the qualified savings plan to secure a loan to the person from the qualified savings plan. The person's interest in or right to receive payments from the plan is subject to attachment, execution, and seizure for the satisfaction of the security interest or lien granted by the person to secure the loan.
(h)  If any provision of this section is held invalid or preempted by federal law, in whole or in part or in certain circumstances, the remaining provisions of this section remain in effect, to the maximum extent permitted by law.
(i)  A reference in this section to the Internal Revenue Code of 1986 or a specific provision of the Internal Revenue Code of 1986 includes a subsequent amendment of that code or of the substance of that provision.
Added by Acts 1987, 70th Leg., ch. 376, Sec. 1, eff. Sept. 1, 1987.  Amended by Acts 1989, 71st Leg., ch. 1122, Sec. 1, eff. Sept. 1, 1989;  Acts 1995, 74th Leg., ch. 963, Sec. 1, eff. Aug. 28, 1995;  Acts 1999, 76th Leg., ch. 106, Sec. 1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch. 130 (H.B. 330), Sec. 2, eff. May 24, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 933 (S.B. 1810), Sec. 1, eff. June 17, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 91 (S.B. 649), Sec. 2, eff. September 1, 2013.
Acts 2019, 86th Leg., R.S., Ch. 320 (H.B. 2779), Sec. 1, eff. September 1, 2019.