HR1595

LRB095 22802 HLH 53236 r






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HOUSE RESOLUTION


 
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    WHEREAS, Current federal tax law requires almost all 
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participants in approved 401(k) programs to commence required 
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minimum distributions of savings from these programs during the 
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year after the year in which the participant reaches the age of  
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70 1/2; if these participants do not do so, almost all of them 
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are made to suffer a stiff federal income tax penalty; and 

 
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    WHEREAS, As a federal income tax penalty, a senior citizen 
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subject to the age-70 1/2 law is required to pay a supplemental 
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income tax of 50% upon the amount by which the required minimum 
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disbursement exceeds the actual distribution; and

 
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    WHEREAS, This 50% penalty income tax rate is one of the 
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highest federal income tax rates currently on the books of the 
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federal income tax code, effectively prevents any retired 
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senior-citizen 401(k) participant from maintaining his or her 
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position in a 401(k) plan, and forces him or her to commence 
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liquidating the plan; and  

 
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    WHEREAS, One exception to this minimum distribution 
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requirement applies to most 401(k) participants over the age of 
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70 1/2 who are continuing to work at the place of employment 
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that is the sponsor of the 401(k) plan from which the 
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distribution is being deferred; and  

 

 


 






HR1595
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LRB095 22802 HLH 53236 r




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    WHEREAS, Current financial conditions should lead Congress 
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and the federal government to encourage Americans, including 
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senior citizens, to save as many assets as possible, rather 
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than drawing down existing savings and liquidating their 401(k) 
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plans; therefore, be it

 
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    RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE 
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NINETY-FIFTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we 
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urge the United State Congress to enact a 2-year suspension on 
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that portion of the federal income tax code that requires 
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almost all participants in 401(k) programs to commence required 
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minimum distributions during the year after the year that the 
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participant reaches the age of 70 1/2 or suffer a federal 
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income tax penalty; and be it further

 
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    RESOLVED, That a copy of this Resolution be presented to 
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each member of the Illinois delegation to the U.S. House of 
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Representatives and the U.S. Senate.