WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH), chairman of the Senate Finance Subcommittee on Social Security, and U.S. Sen. Jim Inhofe (R-OK) released the following statements regarding legislation they sponsored being signed into law on Thursday. The bill would enable nearly 100,000 American Airline employees who received lump sum settlements as part of the airline’s 2011 bankruptcy to roll those awards into individual retirement accounts (IRA). Without a legislative fix, nearly 10,000 Ohio workers would be ineligible for the same tax benefits on savings plans that workers at United, Delta, Northwest, and U.S. Airways received.
“This is great news for the nearly 100,000 American Airlines employees who could have lost a significant portion of their retirement savings had action not been taken,” Brown said. “American Airlines employees should have the same deal as everyone else. This law ensures that. I thank Sen. Inhofe for his work on this important bill.”
“I applaud Congress for ending the year by providing American Airline employees with the opportunity to rebuild their future retirement without penalty from the federal government,” Inhofe said. “This new law extends equal treatment to American Airline employees as other airlines that filed for bankruptcy prior to 2007. American Airlines employees more than 5,800 Oklahomans, many of which will be able to benefit from this new law. I appreciate Sen. Brown for his work and support of this legislation.”
Brown and Inhofe introduced S.2614 on July 16. The legislation first passed by unanimous consent in the U.S. Senate on Dec. 10, signaling strong bipartisan support for passage in Congress. All revenue bills must originate in the U.S. House of Representatives, so on Dec. 11 the House passed its companion legislation, H.R. 2591, and the U.S. Senate passed it on Dec. 13.
The Worker, Retiree, and Employer Recovery Act of 2008 allowed employees of air service providers, who filed bankruptcy prior to 2007, to roll up to 90 percent of airline bankruptcy settlements into an individual retirement account without paying tax penalties through April 15, 2013. American Airlines did not declare bankruptcy until Nov. 29, 2011, and had not yet emerged from bankruptcy by April 15, 2013.
By making modifications to the Federal Aviation Modernization and Reform Act of 2012, H.R. 2591 affords American Airlines employees the option to roll over bankruptcy contributions into individual retirement accounts without tax penalties, which is the same treatment extended to employees of other domestic airlines that went bankrupt prior to 2008.