[Congressional Record Volume 150, Number 116 (Thursday, September 23, 2004)]
[Senate]
[Pages S9614-S9615]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAHAM of Florida (for himself and Mr. Nelson of Florida):
  S. 2835. A bill to amend the internal Revenue Code of 1986 to allow 
penalty free withdrawals from retirement plans for victims of federally 
declared disasters; to the Committee on Finance.
  Mr. GRAHAM of Florida. Mr. President, by now everyone is well aware 
of the destruction Florida has endured over the past 45 days. First, 
Tropical Storm Bonnie struck the panhandle. Then Hurricane Charley 
crashed into Florida's west coast. That was followed by Hurricane 
Frances, which wreaked havoc throughout the State. And last week 
Hurricane Ivan tore through the panhandle. As a result of these storms, 
today 61 of the State's 67 counties have been declared disaster areas.
  Floridians are grateful for the Senate's quick action in providing 
the initial $2 billion in relief funds. They also look forward to the 
Senate's quick consideration of the President's supplemental request 
for additional assistance. As important as this Federal assistance is, 
however, it represents only a fraction of the money needed for 
Florida's families to rebuild.
  The Insurance Information Institute estimates that insurance 
companies will pay out more than the $15.5 billion in insurance claims 
paid as a result of Hurricane Andrew. Of course, that amount is not the 
entirety of losses

[[Page S9615]]

Floridians have suffered. In fact, as a result of the magnitude of the 
claims incurred from Hurricane Andrew Floridians will be responsible 
for a larger share of the losses from these storms than they incurred 
in 1992.
  Many Floridians will face thousands of dollars in out-of-pocket costs 
as a result of these storms. Those families with money in a retirement 
account, e.g. 401(k) or IRA, are quite likely to be forced to look to 
that money to rebuild their homes and their lives. Doing so, however, 
will come at a significant cost. First, any funds withdrawn are subject 
to the income tax. That's appropriate, since these funds have not been 
taxed previously.
  In addition to the income tax due on these withdrawals, taxpayers 
under age 59\1/2\ will face a 10 percent penalty for early withdrawal. 
Under normal circumstances this penalty serves a very worthwhile 
purpose. It encourages workers to leave funds in their retirement 
accounts for their intended purposes. The situation in Florida is far 
from normal, however, and in this instance the penalty serves as a 
``ransom'' imposed by the Federal government on workers access to funds 
in times of desperation.
  The bill I am introducing today with Senator Nelson is a small but 
important step that we can take to help Floridians help themselves. It 
waives the 10 percent penalty for families that have suffered a loss as 
a result of a disaster. Although it was inspired by the storms that 
have ravaged our State, it is not exclusive to the victims of these 
storms.
  The penalty waiver is available to any taxpayer who suffered a loss 
as a result of a major disaster declared under the Robert T. Stafford 
Disaster Relief Act. To qualify for this relief the taxpayer must have 
sustained a loss that has not been compensated by insurance or 
otherwise. The bill also gives taxpayers a five-year window within 
which they can reinvest these funds for their retirement.
  Mr. KENNEDY. Mr. President, one of the greatest domestic challenges 
facing our country today is the soaring cost of health care. It's a 
serious problem for millions of families. But when the chief income 
earner in a family suddenly becomes unemployed, the problem can be 
critical, and we give a helping hand. We give them the opportunity to 
continue their coverage through their employer for a reasonable period. 
Families who lost loved ones on September 11, deserve the same 
opportunity until they can land on their feet again.
  The Continuing Care for Recovering Families Act I am introducing 
today with Senator Lautenberg and Senator Clinton recognizes that many 
of the September 11 families are still struggling to recover and we 
have an obligation to assist them.
  Some of the families have found ways to cover their health costs by 
purchasing private insurance or obtaining grant assistance on their 
own. For others, employers have agreed to provide coverage. For still 
other families, however, the safety net is about to fall apart, because 
their coverage is about to expire under COBRA--the temporary low--cost 
continuation of coverage available under current Federal law for those 
who change their job, lose their job or for families that lose their 
chief income earner through death.
  The Continuing Care for Recovering Families Act will give spouses and 
children of victims of September 11 the ability to purchase or continue 
to purchase coverage under COBRA indefinitely, as long as they enroll 
within 120 days after passage of the Act or 120 days after they lose 
their COBRA coverage. Eligibility for the program would expire only if 
they enroll in a private insurance plan or become eligible for 
Medicare.
  The families of September 11 have shown great courage and 
extraordinary resilience. But we still have much more to do to help 
them on their long and arduous road to recovery, and I hope very much 
that we can pass this legislation this year. It will only affect a 
small number of families. But for them, it will make a world of a 
difference.
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