Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2708 entitled:

begs leave to report as follows:

The purpose of this measure is to exempt Roth individual retirement accounts (IRAs) from the claims of creditors for attachment, execution, seizure, bankruptcy or insolvency laws under 11 U.S.C. §522(b), or any legal process.

Testimony in support of this measure was submitted by a private citizen. Comments on this measure were also submitted by the Department of Taxation.

Your Committee finds that IRAs are valuable financial tools for retirement planning. Both traditional and Roth IRAs allow individuals to enjoy the benefit of tax-deferred growth on their retirement savings year after year. Each type of IRA is utilized differently depending upon an individual's current situation and future needs. However, under the current law, although traditional IRAs are entitled to protection from creditors, pursuant to section 651-24, Hawaii Revised Statutes, it is unclear whether Roth IRAs are afforded the same protection. Therefore, your Committee determines that due to the comparable nature of these types of retirement accounts, clarification within the law is necessary to specifically exclude Roth IRAs from the claims of creditors for attachment, execution, seizure, bankruptcy or insolvency laws under 11 U.S.C. §522(b), or any legal process.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2708 and recommends that it pass Second Reading and be referred to the Committee on Judiciary and Hawaiian Affairs.