WASHINGTON, D.C. — U.S. Sen. Jim Inhofe (R-Okla.), a co-chair of the Senate Pilot’s Caucus, today praised the passage of S.2614, legislation that would extend to American Airline employees the option to contribute recently received bankruptcy settlements into retirement accounts without incurring a tax penalty. This provision was made available to employees of other domestic airlines following their bankruptcies but expired before American Airlines filed for bankruptcy in 2011.
Inhofe introduced S.2614 on July 16, 2014, with U.S. Sen. Sherrod Brown (D-Ohio), chairman of the Senate Finance Subcommittee on Social Security. The legislation passed by unanimous consent in the U.S. Senate on Wednesday and now awaits action in the U.S. House of Representatives.
“I applaud my colleagues in the Senate for their strong bipartisan support of S.2614, legislation that will ensure American Airline employees are granted equal rights as other airlines that filed for bankruptcy prior to 2007,” Inhofe said. “The bankruptcy caused those employed by American Airlines to suffer the loss of their earned pensions, and this legislation will give them the opportunity to rebuild their future without penalty from the federal government. I urge the House to quickly pass this bill.”
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, S. 2614 would afford 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. S. 2614 is companion legislation to H.R. 2591.