HR1595 LRB095 22802 HLH 53236 r

1
HOUSE RESOLUTION

 
2     WHEREAS, Current federal tax law requires almost all
3 participants in approved 401(k) programs to commence required
4 minimum distributions of savings from these programs during the
5 year after the year in which the participant reaches the age of
6 70 1/2; if these participants do not do so, almost all of them
7 are made to suffer a stiff federal income tax penalty; and
 
8     WHEREAS, As a federal income tax penalty, a senior citizen
9 subject to the age-70 1/2 law is required to pay a supplemental
10 income tax of 50% upon the amount by which the required minimum
11 disbursement exceeds the actual distribution; and
 
12     WHEREAS, This 50% penalty income tax rate is one of the
13 highest federal income tax rates currently on the books of the
14 federal income tax code, effectively prevents any retired
15 senior-citizen 401(k) participant from maintaining his or her
16 position in a 401(k) plan, and forces him or her to commence
17 liquidating the plan; and
 
18     WHEREAS, One exception to this minimum distribution
19 requirement applies to most 401(k) participants over the age of
20 70 1/2 who are continuing to work at the place of employment
21 that is the sponsor of the 401(k) plan from which the
22 distribution is being deferred; and
 

 

 

HR1595 - 2 - LRB095 22802 HLH 53236 r

1     WHEREAS, Current financial conditions should lead Congress
2 and the federal government to encourage Americans, including
3 senior citizens, to save as many assets as possible, rather
4 than drawing down existing savings and liquidating their 401(k)
5 plans; therefore, be it
 
6     RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE
7 NINETY-FIFTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we
8 urge the United State Congress to enact a 2-year suspension on
9 that portion of the federal income tax code that requires
10 almost all participants in 401(k) programs to commence required
11 minimum distributions during the year after the year that the
12 participant reaches the age of 70 1/2 or suffer a federal
13 income tax penalty; and be it further
 
14     RESOLVED, That a copy of this Resolution be presented to
15 each member of the Illinois delegation to the U.S. House of
16 Representatives and the U.S. Senate.