II
110th CONGRESS
1st Session
S. 2505
IN THE SENATE OF THE UNITED STATES
December 18, 2007
Ms. Cantwell introduced the following bill; which was read twice and referred to the Committee on Finance
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.
Rollover of amounts received in airline carrier bankruptcy to eligible retirement plans
General rule
If—
a qualified airline employee receives any eligible rollover amount, and
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),
Transfers to Roth IRAs
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—
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
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.
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.
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.
Treatment of eligible rollover amounts and transfers
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).
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.
Definitions and special rules
For purposes of this section—
Eligible rollover amount
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—
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
in respect of the qualified airline employee's interest in—
a bankruptcy claim against the carrier,
any note of the carrier (or any amount paid in lieu of a note being issued), or
any other fixed obligation of the carrier to pay a lump sum amount.
Exception
An eligible rollover amount shall not include any amount payable on the basis of the carrier's future earnings or profits.
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—
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
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.
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—
to the Secretary, the names of the qualified airline employees to whom such amounts were paid, and
to the Secretary and to such employees, the years and the amounts of the payments.
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.