[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1968 Introduced in Senate (IS)]

103d CONGRESS
  2d Session
                                S. 1968

   To amend the Internal Revenue Code of 1986 to permit the tax-free 
 rollover of certain payments made by employers to separated employees.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             March 24 (legislative day, February 22), 1994

  Mr. Breaux (for himself and Mr. Johnston) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to permit the tax-free 
 rollover of certain payments made by employers to separated employees.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TAX-FREE ROLLOVER OF CERTAIN SEPARATION PAYMENTS.

    (a) General Rule.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 137 as section 
138 and by inserting after section 136 the following new section:

``SEC. 137. TAX-FREE ROLLOVER OF CERTAIN SEPARATION PAYMENTS.

    ``(a) General Rule.--If--
            ``(1) an individual receives a qualified separation 
        payment, and
            ``(2) within 60 days after the date on which such 
        individual receives such payment, such individual transfers any 
        portion of such payment to an individual retirement account,
then such payment (to the extent so transferred) shall not be included 
in gross income for the taxable year in which received.
    ``(b) Qualified Separation Payment.--For purposes of this section, 
the term `qualified separation payment' means any payment received by 
an individual if--
            ``(1) such payment was voluntarily paid by such 
        individual's employer on account of such individual's 
        separation from employment before attainment of normal 
        retirement age, and
            ``(2) such separation was in connection with a substantial 
        reduction in the work force of the employer.
    ``(c) Transfer Treated as Rollover Contribution.--For purposes of 
this title, a transfer to an individual retirement account which 
results in an amount being excluded from gross income under subsection 
(a) shall be treated as a rollover contribution described in section 
408(d)(3).''.
    (b) Technical Amendments.--Sections 219(d)(2), 408(a)(1) and 
4973(b)(2)(A) of such Code are each amended by striking ``402(c)'' and 
inserting ``137, 402(c)''.
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 137 and inserting the following:

                              ``Sec. 137. Tax-free rollover of certain 
                                        separation payments.
                              ``Sec. 138. Cross-references to other 
                                        Acts.''.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to payments received on or after January 1, 1993.
            (2) Transitional rule.--In the case of any payment received 
        on or after January 1, 1993, and before the date of the 
        enactment of this Act, the 60-day period referred to in section 
        137(a)(2) of the Internal Revenue Code of 1986 (as added by 
        this section) shall not expire before the date 60 days after 
        the date of the enactment of this Act.

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