[Congressional Record Volume 149, Number 42 (Monday, March 17, 2003)]
[Senate]
[Pages S3805-S3806]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. WYDEN:
S. 629. A bill to amend the Internal Revenue Code of 1986 to assist
individuals who have lost their 401(k) savings to make additional
retirement savings through individual retirement account contributions,
and for other purposes; to the Committee on Finance.
Mr. WYDEN. Mr. President, over a year ago the greed of some senior
executives at the Enron corporation finally caught up with them.
Enron's financial house of cards began to tumble, and along with it
went the pensions and retirement dreams of thousands of employees and
investors. Among the employees whose pensions were crushed in Enron's
accounting avalanche were nearly all of Portland General Electric, or
PGE's 2,700 employees in Oregon.
Enron took over PGE in June of 1997, and two years later merged the
PGE employee 401(k) retirement plan into a single plan. That plan
allowed employees to contribute up to 15 percent of their income, with
the company matching in Enron stock. When Enron took over PGE in 1997,
PGE's stock was trading at $27 a share; three years after the merger,
Enron stock was trading at $85 a share, enticing employees to invest
100 percent of their 401(k) money in Enron stock.
Enron's stock had begun to slide in August 2001, and it was not until
October that real panic set in. At that time the captains of the Enron
ship knew it was sinking. In an effort to prevent a massive stock sell-
off, senior executives on the deck locked workers in the boiler room,
preventing them from selling off 401(k) shares while they dumped their
own. By the time the pension lockdown ended, an Enron share was worth
less than ten dollars. In early December, Enron filed for bankruptcy.
Earlier this year Congress enacted significant corporate
accountability legislation so that executives and accountants can no
longer use certified financial statements to play a game of financial
hide-and-seek. But little was done for the workers who were locked in
the boiler room. The purpose of the legislation I am introducing today,
the ``Catch-Up Retirement Savings Act,'' is to give those PGE employees
who were harmed by the greed of Enron executives the opportunity to
catch-up on some of their lost retirement. My bill does two things to
help workers. First, it allows employees to triple the deductible
amount they may otherwise contribute to an IRA, and second, it gives
employees a 50 percent tax credit on the amount they contribute to
their IRA. The tax incentives would be available for five years to
employees whose employer filed for bankruptcy and who was the subject
of an indictment or conviction resulting from business transactions
related to such case, and whose employer matched at least 50 percent of
the employee's contributions to the pension plan.
No act of Congress can ever respond fully to the egregious harm that
has been caused to thousands of Oregonians by the collapse of Enron.
But I believe that something must be done to help recoup some of the
lost pension savings. The ``Catch-Up Lost Retirement Savings Act'' is a
small but important step that Congress should take to help employees to
begin to catch-up on their retirement savings.
I ask unanimous consent that the text of the bill and a chart be
printed in the Record.
There being no objection, the bill and chart were ordered to be
printed in the Record, as follows:
S. 629
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Catch-Up Lost Retirement
Savings Act''.
SEC. 2. ALLOWANCE OF CATCH-UP PAYMENTS.
(a) In General.--Section 219(b)(5) of the Internal Revenue
Code of 1986 (relating to deductible amount) is amended by
redesignating subparagraph (C) as subparagraph (D) and by
inserting after subparagraph (A) the following new
subparagraph:
``(C) Catch-up contributions for certain individuals.--
``(i) In general.--In the case of an eligible individual
who elects to make a qualified retirement contribution in
addition to the deductible amount determined under
subparagraph (A)--
``(I) the deductible amount for any taxable year shall be
increased by an amount equal to 3 times the applicable amount
determined under subparagraph (B) for such taxable year, and
``(I) subparagraph (B) shall not apply.
``(ii) Eligible individual.--For purposes of this
subparagraph, the term `eligible individual' means, with
respect to any taxable year, any individual who was a
qualified participant in a qualified cash or deferred
arrangement (as defined in section 401(k)) of an employer
described in clause (ii) under which the employer matched at
least 50 percent of the employee's contributions to such
arrangement with stock of such employer.
``(iii) Employer described.--An employer is described in
this clause if, in any taxable year preceding the taxable
year described in clause (ii)--
``(I) such employer (or any controlling corporation of such
employer) was a debtor in a case under title 11 of the United
States Code, or similar Federal or State law, and
``(II) such employer (or any other person) was subject to
an indictment or conviction resulting from business
transactions related to such case.
``(iv) Qualified participant.--For purposes of clause (ii),
the term `qualified participant' means any eligible
individual who was a participant in the cash or deferred
arrangement described in clause (i) at least 6 months before
the filing of the case described in clause (iii).
``(v) Termination.--This subparagraph shall not apply to
taxable years beginning after December 31, 2007.''.
(b) Credit Allowed for Catch-Up Contributions.--Subpart A
of part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 (relating to nonrefundable personal
credits) is amended by inserting after section 25B the
following new section:
``SEC. 25C. CERTAIN CATCH-UP IRA CONTRIBUTIONS.
``(a) Allowance of Credit.--In the case of an eligible
individual who makes an election under section 219(b)(5)(C)
for the taxable year, there shall be allowed as a credit
against the tax imposed by this chapter for such taxable year
an amount equal to 50 percent of so much of the qualified
retirement savings contributions of the eligible individual
for the taxable year as do not exceed the increase in the
deductible amount determined under section 219(b)(5)(C) .
``(b) Denial of Double Benefit.--No deduction or other
credit shall be allowed with respect to any contribution to
which a credit is allowed under subsection (a).
``(c) Investment in the Contract.--Notwithstanding any
other provision of law, a qualified retirement savings
contribution shall not fail to be included in determining the
investment in the contract for purposes of section 72 by
reason of the credit under this section.
``(d) Termination.--This section shall not apply to taxable
years beginning after December 31, 2007.''.
(c) Conforming Amendment.--The table of sections for
subpart A of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after
the item relating to section 25B the following new item:
[[Page S3806]]
``Sec. 25C. Certain catch-up IRA contributions.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2002.
____
``Catch-Up'' Savings Amounts Allowed
For Years 2003-2004: IRA Contribution, $3,000; Catch-up
amount, $1,500; and Credit, 50% = $750/year.
For Years 2005: IRA Contribution, $4,000; Catch-up amount,
$1,500; and Credit, 50% = $750/year.
For Years 2006 and 07: IRA Contribution, $4,000; Catch-up
amount, $3,000; and Credit, 50% = $1,500/year.
Total amount from credit for years 2003 through 2007,
assuming maximum amount saved, equals $5,250.
______