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#2225140 - 11/05/19 07:42 PM Garnishment Rule and PERS
LSmith Offline
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LSmith
Joined: Dec 2002
Posts: 703
Is PERS (Public Employee Retirement System) exempt from Garnishment the same as other Federal Benefits such as Social Security and Railroad retirement? I know for a fact that a garnishment or bankruptcy proceeding cannot touch those pension or retirement funds that are being held in trust by the state (i.e. the person’s right to those funds). However, my question is, are those funds still exempt once they are delivered to the retiree.

This is for State of Mississippi. It may apply to all states, I just don't know.

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General Discussion
#2225143 - 11/05/19 08:08 PM Re: Garnishment Rule and PERS LSmith
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,206
Illinois
The garnishment rule only protects federal benefits as defined by 212.2(b)

(b) Funds. Federal benefit payments protected from garnishment pursuant to the following authorities:
(1) SSA benefit payments protected under 42 U.S.C. 407 and 42 U.S.C. 1383(d)(1);
(2) VA benefit payments protected under 38 U.S.C. 5301(a);
(3) RRB benefit payments protected under 45 U.S.C. 231m(a) and 45 U.S.C. 352(e); and
(4) OPM benefit payments protected under 5 U.S.C. 8346 and 5 U.S.C. 8470.

The federal rule does not protect payments made from a state. You should confer with legal counsel to determine if there are additional requirements for protecting state benefits under state law.

For example, in Illinois, although state retirement funds are excluded, the law requires that the bank still hold the funds and it is up to the judgment debtor to petition the court to release the funds back to them.
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#2225466 - 11/12/19 08:35 PM Re: Garnishment Rule and PERS LSmith
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,557
Cape Cod
To be "Protected Funds" under Treasury's Garnishment Regulation at 31 CFR part 212, the funds have to be direct deposited and identified with specific characters ("XX" in position 54 and 55 of the Company Entry Description field and "2" in the Originator Status Code field of the Batch Header records of direct deposit entry.

As Brian notes, state law may add another layer of protection to other funds.
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