O’Brien v. AMBS Diagnostics, LLC

Though exempt from federal income tax under 26 USC 529, an education or tuition trust is not designed or used for retirement purposes and so is not exempt from execution on a judgment under CCP 704.115.  Under CCP 704.115, all amounts held, controlled, or in the process of distribution by a private retirement plan are exempt from execution on a judgment.  To be a private retirement plan for these purposes, the plan must be designed and used for retirement purposes.  An education or tuition plan, exempt from federal income tax under 26 USC 529, is not designed or used for retirement purposes, but rather for payment of education costs, so money held in a 529 plan is not exempt from execution.

California Court of Appeal, Second District, Division 2 (Hoffstadt, J.); January 7, 2016 (published April 21, 2016); 2016 WL 94241

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