[Congressional Record Volume 145, Number 136 (Friday, October 8, 1999)]
[Senate]
[Pages S12321-S12322]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WARNER:
  S. 1714. A bill to amend the Internal Revenue Code of 1986 to allow 
penalty free distribution from qualified retirement plans of 
individuals residing in presidentially declared disaster areas; to the 
Committee on Finance.


             retirement penalty relief for disaster victims

  Mr. WARNER. Mr. President, I introduce a bill to amend the Internal 
Revenue Code of 1986 to allow penalty-free distributions from qualified 
retirement programs of individuals residing in Presidentially declared 
disaster areas.
  I and so many of my colleagues have been visiting our States and 
working with our Governors and State legislators, city councilpersons 
and mayors particularly with regard to the devastation of floods we 
have seen as a consequence of the most recent hurricane.
  I looked into the faces of these suffering people. And one of them--
this was not my idea--one of them came to me with the simplest type of 
request. I thought it merited the attention of the Senate. I put it 
into this bill that I now introduce in the Senate.
  Despite an individual's or family's best efforts to plan for the 
future, sometimes the unexpected strikes--hurricanes and natural 
disasters. When that happens, people need all the tools available to 
rebuild their lives, the lives of their families, and to become an 
integral part of those communities.
  One community, Franklin, VA, which is in the central part of the 
State, in the old rural part of the State, dependent largely on 
agriculture, which has flat land--I say to my distinguished colleague, 
Senator Helms, how badly his State was hit by the same storm--had 18 
inches of rain in less than 2 hours. There is no large riverbed there 
or drainage ditches. And as a result, the water rose in this town up to 
the second level of the stores and the houses. It went into a railyard 
and toppled enormous freight cars, particularly tank cars with 
petroleum. And suddenly this whole community was awash in foul water of 
8 to 10 to 12 feet some places in height. There was no place for the 
water to run off, except gradually over this flat territory.
  These people need to rebuild their lives and their homes. Families 
are faced with repairing and replacing damaged property and lost 
property. Many are forced to draw on savings, including their 
retirement accounts, to meet expenses. However, if they choose to tap 
upon their retirement plans or accounts, they are saddled with a 10-
percent additional Federal tax for early distribution. That was put in 
the law for good reason--to deter people from going into these plans 
where they had some tax benefits. But let's stop to think: That may be 
the only recourse to financial salvation in the wake of an act of God 
Almighty.

  They need help. Taxpayers coping with these disasters should not have 
to face the burden of a Federal tax penalty. This bill is very simple. 
It waives the 10 percent additional tax levied on early distributions 
from qualified retirement plans or retirement accounts for residents of 
federally declared disaster areas--that means the President of the 
United States has declared that county a disaster area--designated 
after July 31, 1999.
  It is my intention that these distributions will be used for the 
repair or replacement of property destroyed or damaged by an unforeseen 
natural disaster or for emergency expenses arising from such a tragic 
event.
  The taxpayer must be a resident of an area declared eligible. I point 
that out: a resident of an area eligible by the President for Federal 
disaster assistance, and the distribution must be taken within 1 year 
of the disaster declaration.
  The current Tax Code waives the 10-percent penalty for distribution 
for certain medical expenses, health insurance premiums for the 
unemployed, higher education expenses, and the purchase of a first 
home. In my view, eliminating this additional tax for individuals and 
families suffering from the effects of unforeseen natural disasters 
makes plain common sense.
  How grateful all of us are for our constituents coming to the great 
city of Washington, DC, and supplying us with

[[Page S12322]]

ideas which probably are before us every day but somehow we overlook 
them.
  Tropical Storm Dennis and Hurricane Floyd have had a devastating 
effect on my State. People in Southside and Tidewater, VA, are 
attempting to rebuild their lives and to recover some of what they 
lost. We should remove any disincentive, any roadblock that may hinder 
rebuilding and recovery.
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