[Congressional Record Volume 151, Number 159 (Tuesday, December 13, 2005)]
[Senate]
[Page S13504]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LAUTENBERG (for himself and Mr. Smith):
  S. 2086. A bill to amend the Internal Revenue code of 1986 to modify 
the definition of compensation for purposes of determining the limits 
on contributions to individual retirement accounts and annuities, and 
for other purposes; to the Committee on Finance.
  Mr. LAUTENBERG. Mr. President, today I am joined by Senator Smith in 
introducing the IRA Equity Act of 2005, which would allow the disabled 
and those who temporarily leave the workforce to continue to save for 
their retirement.
  We should be encouraging responsible behavior. When those whose 
income is slashed because they become disabled--or because they take 
time off to care for a child, volunteer for a good cause, or go to 
school--want to continue to save for retirement, that is commendable, 
it is responsible, and we ought to do everything we can to make it 
easier.
  Yet today, people who are injured and have their income replaced by 
workers' compensation or Social Security disability suddenly are no 
longer able to contribute to their IRAs. That's because under current 
law, income contributed to IRAs must be ``compensation,'' or earned 
through work. Under the current rules, disability income doesn't 
qualify.
  We know that those who become disabled will still need to support 
themselves in their old age; we know that they may even need to spend 
more because of their disability; and we know that because of their 
disability, they have less earning power and that makes it harder to 
save. So why in the world would we further penalize them for being 
disabled by taking away one of the most effective savings tools they 
have? It just doesn't make any sense.
  My legislation would fix this problem by allowing wage replacement 
income, including Social Security disability and workers' compensation, 
to be contributed to IRAs. Additionally, my legislation would permit 
those who take up to two years away from the workforce to contribute 
earnings from prior years to their IRAs so that they can continue to 
save. Federal law should not force people to break good savings habits.
  In the name of fairness and retirement security, I urge my colleagues 
to support this common-sense legislation.
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