[Congressional Record Volume 153, Number 194 (Tuesday, December 18, 2007)]
[Senate]
[Pages S15919-S15920]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL:
  S. 2505. A bill to allow employees of a commercial passenger airline 
carrier who receive payments in a bankruptcy proceeding to roll over 
such payments into an individual retirement plan, and for other 
purposes; to the Committee on Finance.
  Ms. CANTWELL. Mr. President, in the wake of the terrorist attacks of 
September 11, 2001, the air travel industry has suffered tremendous 
economic hardship. In particular, airline workers have been forced to 
take cuts in pay and benefits which have dramatically reduced their 
financial security now and in their retirement years.
  Airline pilots and other union airline employees have lost in excess 
of $30 billion in pay and over $7 billion in defined benefit pension 
benefits. In addition, many airline workers have lost their jobs. For 
example, on September 11, 2001, there were 10,500 active Delta pilots. 
Today, there are 6,700.
  Since the attacks, many of our Nation's airlines were forced to file 
for bankruptcy--and terminate or freeze their defined benefit pension 
plans. The largest of these airline bankruptcies involved United 
Airlines, U.S. Airways, Delta Air Lines and Northwest Airlines. In all 
of these bankruptcies, a huge share of the cost savings was borne by 
the airline employees, who suffered massive cuts in pay and benefits.
  In 2001, Congressional relief focused on the airline carriers, 
offering loan packages and other economic relief. In 2004 and 2006, 
Congress provided additional assistance to those airline carriers that 
were able to avoid termination of their defined benefit plans. However, 
past Congressional actions will never restore the lost retirement 
benefits for those airline workers whose defined benefit plans were 
terminated or frozen.
  This is an important point to emphasize. The actions already taken by 
the Congress to provide economic relief to the airlines and to reduce 
their future pension contributions for the continuing plans do not 
restore benefits to those airline workers who lost pension benefits in 
plans that were terminated or frozen.
  Therefore, I rise to introduce the Lost Retirement Savings Act of 
2007 to provide for a retirement savings option to those airline 
workers whose defined benefit plans were terminated or frozen in 
bankruptcy proceedings.
  Under the bill, these airline workers would benefit to the extent 
that they would individually choose to rollover specified bankruptcy 
payments into a traditional or Roth individual retirement account. The 
intent is to provide this retirement savings opportunity only to those 
airline employees for whom the bankruptcies imposed an economic burden 
through the substantial loss of wages and retirement benefits.
  In closing, I urge my Senate colleagues to take a close look at this 
bill and join me in passing this legislation.
  Mr. President, I ask unanimous consent that the text of the bill and 
a bill summary be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2505

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER 
                   BANKRUPTCY TO ELIGIBLE RETIREMENT PLANS.

       (a) General Rule.--If--
       (1) a qualified airline employee receives any eligible 
     rollover amount, and
       (2) the qualified airline employee transfers any portion of 
     such amount to an individual retirement plan (as defined in 
     section 7701(a)(37) of the Internal Revenue Code of 1986) 
     within 180 days of receipt of such amount (or, if later, 
     within 180 days of the date of the enactment of this Act),
     then, except as provided in subsection (b), such amount (to 
     the extent so transferred) shall not be includible in gross 
     income for the taxable year in which paid.
       (b) Transfers to Roth IRAs.--
       (1) In general.--If a transfer described in subsection (a) 
     is made to a Roth IRA (as defined in section 408A of the 
     Internal Revenue Code of 1986), then--
       (A) 50 percent of the portion of any eligible rollover 
     amount so transferred shall be includible in gross income in 
     the first taxable year following the taxable year in which 
     the eligible rollover amount was paid, and
       (B) 50 percent of such portion shall be includible in gross 
     income in the second taxable year following the taxable year 
     in which the eligible rollover amount was paid.
       (2) Election to include in income in year of payment.--
     Notwithstanding paragraph (1), a qualified airline employee 
     may elect to include any portion so transferred in gross 
     income in the taxable year in which the eligible rollover 
     amount was paid.
       (3) Income limitations not to apply.--The limitations 
     described in section 408A(c)(3) of the Internal Revenue Code 
     of 1986 shall not apply to a transfer to which paragraph (1) 
     or (2) applies.
       (c) Treatment of Eligible Rollover Amounts and Transfers.--
       (1) Treatment of eligible rollover amounts for employment 
     taxes.--For purposes of chapter 21 of the Internal Revenue 
     Code of 1986 and section 209 of the Social Security Act, an 
     eligible rollover amount shall not fail to be treated as a 
     payment of wages by the commercial passenger airline carrier 
     to the qualified airline employee in the taxable year of 
     payment because such amount is not includible in gross income 
     by reason of subsection (a) or is includible in income in a 
     subsequent taxable year by reason of subsection (b).
       (2) Treatment of rollovers.--A transfer under subsection 
     (a) shall be treated as a rollover contribution described in 
     section 408(d)(3) of the Internal Revenue Code of 1986, 
     except that in the case of a transfer to which subsection (b) 
     applies, the transfer shall be treated as a qualified 
     rollover contribution described in section 408A(e) of such 
     Code.
       (d) Definitions and Special Rules.--For purposes of this 
     section--
       (1) Eligible rollover amount.--
       (A) In general.--The term ``eligible rollover amount'' 
     means any payment of any money or other property which is 
     payable by a commercial passenger airline carrier to a 
     qualified airline employee--
       (i) under the approval of an order of a Federal bankruptcy 
     court in a case filed after September 11, 2001, and before 
     January 1, 2007, and

[[Page S15920]]

       (ii) in respect of the qualified airline employee's 
     interest in--

       (I) a bankruptcy claim against the carrier,
       (II) any note of the carrier (or any amount paid in lieu of 
     a note being issued), or
       (III) any other fixed obligation of the carrier to pay a 
     lump sum amount.

       (B) Exception.--An eligible rollover amount shall not 
     include any amount payable on the basis of the carrier's 
     future earnings or profits.
       (2) Qualified airline employee.--The term ``qualified 
     airline employee'' means an employee or former employee of a 
     commercial passenger airline carrier who was a participant in 
     a defined benefit plan maintained by the carrier which--
       (A) is a plan described in section 401(a) of the Internal 
     Revenue Code of 1986 which includes a trust exempt from tax 
     under section 501(a) of such Code, and
       (B) was terminated or became subject to the restrictions 
     contained in paragraphs (2) and (3) of section 402(b) of the 
     Pension Protection Act of 2006.
       (3) Reporting requirements.--If a commercial passenger 
     airline carrier pays 1 or more eligible rollover amounts, the 
     carrier shall, within 90 days of such payment (or, if later, 
     within 90 days of the date of the enactment of this Act), 
     report--
       (A) to the Secretary, the names of the qualified airline 
     employees to whom such amounts were paid, and
       (B) to the Secretary and to such employees, the years and 
     the amounts of the payments.
     Such reports shall be in such form, and contain such 
     additional information, as the Secretary of the Treasury may 
     prescribe.
       (e) Effective Date.--This section shall apply to transfers 
     made after the date of the enactment of this Act with respect 
     to eligible rollover amounts paid before, on, or after such 
     date.
                                  ____


           Summary of the Lost Retirement Savings Act of 2007


 Rollover of Distributions Received by Airline Employees in Respect of 
             Bankruptcy Claims, Notes or Fixed Obligations

       If a qualified airline employee transfers any portion of an 
     eligible rollover amount to an individual retirement account 
     (IRA), then the eligible rollover amount to the extent so 
     transferred shall not be includible in gross income for the 
     taxable year in which paid to the qualified airline employee. 
     Further, any such transfer to an IRA which is excluded from 
     gross income shall be treated as a rollover contribution.


                              Definitions

       Qualified airline employee--An employee or former employee 
     of a commercial passenger airline carrier who participated in 
     a qualified defined benefit plan that has been terminated or 
     frozen.
       Eligible rollover amount--Money or other property paid by a 
     commercial passenger airline carrier to a qualified airline 
     employee, in respect of the employee's interest in a 
     bankruptcy claim, note or fixed obligation of the carrier. 
     Such payment must be made under the approval of an order of a 
     Federal bankruptcy court in a case filed after September 11, 
     2001 and before January 1, 2007.


                            Employment Taxes

       Eligible rollover amounts shall be subject to all 
     applicable employment taxes.


                             Roth Election

       A qualified airline employee may elect to transfer any 
     portion of an eligible rollover amount to a Roth IRA. Such 
     transfer may be made without regard to the qualified airline 
     employee's AGI. Any such transfer to a Roth IRA shall be 
     treated as a qualified rollover contribution. To the extent 
     transferred to a Roth IRA, the eligible rollover amount 
     shall, at the election of the qualified airline employee, be 
     includible in gross income entirely in the year of payment or 
     50 percent in the year succeeding the year of payment and 50% 
     in the second year succeeding the year of payment.


                            Transfer Periods

       The transfer of an eligible rollover amount must be made 
     within 180 days after the later of date of payment or date of 
     enactment.


                         Reporting Requirements

       Commercial passenger airline carriers shall report to the 
     Secretary of the Treasury the eligible rollover amounts paid 
     to each qualified airline employee for each year, and shall 
     provide an individual report to each qualified airline 
     employee. Such reports shall be due within 90 days after the 
     later of date of payment or date of enactment.


                             Effective Date

       Transfers made after date of enactment.
                                 ______