Pursuant to the provisions of Title 33 Section 1126, employee benefits which qualify under the Employee Retirement Income Security Act (ERISA) are exempted from claims of creditors to debtors who have applied for bankruptcy on the precondition that the benefits were deposited 120 days prior to the filing for bankruptcy. Hence, under 1226 B, interest of debtors in terms of assets or money payable to a debtor from retirement benefits as stipulated under sections 401, 403, 408 and 409 of the 1986 US Internal Revenue Code (IRC) is exempt from creditor claims. Likewise, benefits from deferred compensation scheme provided for under section 457 of the 1986 US IRC are also exempt.

For the purpose of clarity, however, the aforementioned provisions of the Arizona bankruptcy exemptions for retirement benefits are not applicable under the following conditions:

• When the beneficiary of the retirement plan is an alternate payee as elucidated in section 414 of the 1986 US IRC
• Contributions paid within 120 days before bankruptcy filing
• Assets pertaining to bankruptcy cases filed prior to July 1, 1987.