Madam President, I join my colleague Senator Inhofe in the passage of S. 2614. This legislation corrects a glitch in the law that was doing great harm to 100,000 American Airlines employees,…
Madam President, I join my colleague Senator Inhofe in the passage of S. 2614. This legislation corrects a glitch in the law that was doing great harm to 100,000 American Airlines employees, including approximately 10,000 employees working out of or residing in Ohio. Ninety-five percent of these workers were unionized.
We are talking about pilots, flight attendants, mechanics, ramp workers, and dispatchers, all unionized. Part of the collective bargaining agreement was a defined benefit pension plan. These are plans where you earn benefits through your hard work, and those benefits provide you with annuitized income for life.
When American Airlines went bankrupt, these workers all received a single lump sum payment. For pilots, these payments were as much as $162,000, but the average payment was $120,000. For other workers, these payouts were much, much less.
Now, $162,000 may sound like a lot of money, and it is a lot. But not when it is meant to take the place of your entire pension for what could easily be a 20- or 30-year retirement. What we have done in the past for employees at United, Delta, Northwest, and US Airways is allow them to roll this entire amount over into an Individual Retirement Account or IRA.
It is important to understand what this is. When you roll over, you generally do not pay tax on it until you withdraw it from the new plan. The assets in the account continue to grow tax deferred. Deferred is the operative word.
This does not mean that the employees do not pay taxes. It means they will pay them as they make withdrawals to finance their own retirement. This bill is needed to give the American Airlines' employees that same opportunity. It is a simple fix, and it is the least we can do for workers who work hard and play by the rules, but lost their pensions through no fault of their own.
