[Congressional Record Volume 140, Number 17 (Thursday, February 24, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 24, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                   INVESTMENTS IN RETIREMENT VEHICLES

                                 ______


                       HON. WILLIAM J. JEFFERSON

                              of louisiana

                    in the house of representatives

                      Thursday, February 24, 1994

  Mr. JEFFERSON. Mr. Speaker, today I am introducing legislation to 
correct what I believe to be an unintended consequence of the existing 
provisions of the Tax Code governing investments in retirement 
vehicles. This bill will allow taxpayers who lose their jobs due to 
corporate downsizing to roll over tax-free any lump-sum payment 
received as part of the termination into an individual retirement 
account [IRA] or similar qualified vehicle.
  Without this legislation, many workers, generally 5 to 10 years shy 
or retirement age, will see between 40 to 50 percent of these payments 
eaten up by Federal, State, and local income taxes. Of course, if these 
lump-sum payments are made out of excess funds in a qualified 
retirement plan funded by the employer, this problem does not arise. 
This, however, is not always the case. Given the generally dismal rate 
of underfunded private corporate retirement plans, these payments will 
often come out of the general revenues of the company rather than from 
a qualified plan, and will thus not qualify for the tax-exempt rollover 
provisions that currently exist under the code. I do not believe that 
workers rendered jobless in this manner should have to suffer a penalty 
of this magnitude simply because the employer failed in its 
responsibility to fund adequately the retirement plan.
  I therefore invite my colleagues to join me in cosponsoring this 
legislation, and I respectfully request that this statement be 
officially entered into the Record.

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