[Congressional Record Volume 141, Number 43 (Wednesday, March 8, 1995)]
[Extensions of Remarks]
[Page E554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         IN SUPPORT OF H.R. 1119

                                 ______


                            HON. JIM RAMSTAD

                              of minnesota

                    in the house of representatives

                        Wednesday, March 8, 1995
  Mr. RAMSTAD. Mr. Speaker, last Friday I introduced H.R. 1119 to 
improve section 457 pensions for police officers, firefighters, and 
other public employees.
  Currently, these public servants are not eligible for 401(k) pension 
plans, but may elect to contribute to employee-funded plans governed by 
section 457 of the Internal Revenue Code [IRC]. Unfortunately, these 
deferred compensation plans have been left out of many of the 
improvements that have been made over the years to the more well-known 
401(k) plans.
  My legislation will make three important improvements to 457 pension 
plans. First, it will index the maximum contribution amount to account 
for inflation. While maximum contributions to 401(k) plans are indexed 
for inflation, the maximum contribution for 457 plans is set at $7,500 
a year and can only be increased by Congress.
  Second, H.R. 1119 will allow participants to make a one-time change 
in the date when benefits are received. Currently, participants must 
make an irrevocable, one-time decision about the exact date they want 
to begin receiving benefits. This decision is a difficult one, 
especially for police and other public safety officers, because they 
often retire at relatively young ages and might pursue other careers.
  Third, my bill will allow plans to be cashed out if they contain less 
than $3,500 and have been inactive for at least 2 years. Currently, 
some enroll in 457 plans and find, for one reason or another, that they 
cannot make payments. Maybe they have gotten married, had children or 
bought a home, and simply cannot afford to make the necessary 
contributions. For whatever reason, these accounts can lie dormant for 
long periods of time. Yet, plan administrators must continue to 
maintain records on them. My bill will allow these accounts to be 
cashed out and taxed at the usual rate for income.
  The important changes H.R. 1119 makes to 457 plans will help public 
employees enrolled in these pensions contribute more to their 
retirement savings and better plan for their retirement years. I 
encourage all of my colleagues to cosponsor H.R. 1119.


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