H.B. 3234 78(R)    BILL ANALYSIS


H.B. 3234
By: Smith, Todd
Pensions & Investments
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

Currently investments made by Texans in Texas' two 529 plans enjoy
protection from creditors.  The number 529 refers to the section of the
Internal Revenue Code that allows funds contributed to such a state plan
to grow tax free and to be spent on the child's education without any tax.
This protection is in place in order to allow a person's child to attend
college even if that person becomes bankrupt.  Although this is allowed
for Texans investing in Texas' 529 plans, there is no similar protection
for Texans investing in 529 plans of other states.   

HB 3234 will give creditor protection to funds placed by a Texan into any
529 plan in any state. 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1.  Amends Chapter 42, Title 5, Property Code, by adding Section
42.0022, as follows: 
 
Section 42.0022.  Additional Exemption for College Savings Plan.  (a)
Provides that in addition to the exemption prescribed by Section 42.001, a
person's right to the assets held in or to receive payments under any fund
or plan established under Chapter 54F, Education Code, any fund or plan
established under Chapter 54G, Education Code, or any qualified tuition
program of any state meeting the requirements of Section 529 of the
Internal Revenue Code of 1986, is exempt from attachment, execution, and
seizure for the satisfaction of debts.  Provides that if this subsection
is held invalid or preempted by federal law in whole or in part or in
certain circumstances, the subsection remains in effect in all other
respects to the maximum extent permitted by law. 
 
SECTION 2.  

            (a)  Effective date:  September 1, 2003.

 (b)  Makes application of this Act prospective.

EFFECTIVE DATE

September 1, 2003.