| 12 | 13 | | A BILL TO BE ENTITLED 1 |
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| 13 | 14 | | AN ACT TO INCREASE PROTECTIONS FOR FUNDS HELD IN EDUCATION SAVINGS 2 |
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| 14 | 15 | | AND INVESTMENT ACCOUNTS AND ABLE ACCOUNTS FROM CLAIMS OF 3 |
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| 15 | 16 | | CREDITORS AND OTHER JUDGMENTS. 4 |
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| 16 | 17 | | The General Assembly of North Carolina enacts: 5 |
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| 17 | 18 | | SECTION 1.(a) Article 16 of Chapter 1C of the General Statutes is amended by 6 |
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| 18 | 19 | | adding the following new section to read: 7 |
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| 19 | 20 | | "§ 1C-1601.5. Certain tax-advantaged accounts exempt. 8 |
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| 20 | 21 | | (a) For purposes of this section, the following definitions shall apply: 9 |
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| 21 | 22 | | (1) Qualifying account. – Any of the following: 10 |
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| 22 | 23 | | a. An education savings and investment plan account qualified under 11 |
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| 23 | 24 | | section 529 of the Internal Revenue Code. 12 |
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| 24 | 25 | | b. An ABLE account qualified under section 529A of the Internal 13 |
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| 25 | 26 | | Revenue Code. 14 |
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| 26 | 27 | | (2) Qualifying purpose. – Any of the following: 15 |
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| 27 | 28 | | a. For education savings and investment plan accounts, any purpose 16 |
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| 28 | 29 | | permitted under section 529 of the Internal Revenue Code. 17 |
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| 29 | 30 | | b. For ABLE accounts, any purpose permitted under section 529A of the 18 |
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| 30 | 31 | | Internal Revenue Code. 19 |
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| 31 | 32 | | (b) Notwithstanding any other provision of law, including G.S. 1C-1601(e), funds 20 |
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| 32 | 33 | | located in a qualifying account or withdrawn from the account and used for a qualifying purpose 21 |
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| 33 | 34 | | shall not be subject to liens, attachment, garnishment, levy, seizure, any involuntary sale or 22 |
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| 34 | 35 | | assignment by operation or execution of law, or the enforcement of any other judgment or claim 23 |
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| 35 | 36 | | to pay any debt or liability of any account owner, beneficiary, or contributor to an account. 24 |
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| 36 | 37 | | (c) Nothing in this section shall be construed to do any of the following: 25 |
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| 37 | 38 | | (1) Prohibit the distribution of funds from an ABLE account following the death 26 |
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| 38 | 39 | | of the account owner under G.S. 147-86.73(e) or section 529A of the Internal 27 |
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| 39 | 40 | | Revenue Code. 28 |
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| 40 | 41 | | (2) Limit the enforcement of judgments or claims on funds that meet any of the 29 |
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| 41 | 42 | | following criteria: 30 |
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| 42 | 43 | | a. Were not used for a qualifying purpose. 31 |
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| 43 | 44 | | b. Were deposited into a qualifying account as a result of fraud, 32 |
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| 44 | 45 | | intentional wrongdoing, or other violation of law." 33 |
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| 45 | 46 | | SECTION 1.(b) G.S. 1C-1601(a)(10) is repealed. 34 |
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| 46 | 47 | | SECTION 2. This act becomes effective September 1, 2025, and applies to actions 35 |
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| 47 | 48 | | filed on or after that date. 36 |
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