GUAM CONGRESSMAN UNDERWOOD HAILS

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CONGRESSMAN ROBERT A. UNDERWOOD Delegate from Guam U.S. House of Representatives Washington, D.C.

NEWS RELEASE May 4, 2001

HOUSE PASSAGE OF RETIREMENT REFORM BILL

Congressman Robert A. Underwood hailed Wednesday's passage of H.R. 10, the Comprehensive Retirement Security and Pension Reform Act of 2001. The bill, which now heads to the Senate, contains provisions that would help employees save for their retirement, permit States, counties and Territories to further enhance their pension programs, and modernize and simplify the administration of public retirement plans.

"This legislation would provide enhanced portability between retirement plans," the Congressman said, adding that employees who leave public service are not generally permitted to rollover their pension plan assets among and/or between defined and deferred compensation plans.

"For example, contributions to a 457 plan must remain in the account until it is distributed to the employee. This proposal would allow rollovers of retirement assets between governmental Section 457 deferred compensation plans and other contributory pension plans, including IRA's, 403(b) and 401 plans when the employee switches jobs."

The Comprehensive Retirement Security and Pension Reform Act amends the Internal Revenue Code with respect to pensions and modernizes governmental 457 Deferred Compensation Plan Rules. "Unlike other salary reduction plans, participants in governmental 457 plans have little flexibility in determining the date of first distribution and in changing their distribution amounts once they have begun. This makes it very difficult for employees to structure the receipt of their payments to meet changing retirement needs," the Congressman said.

The bill also provides support for innovations made by state and local governments to facilitate the operations of public retirement plans. It contains provisions that would strengthen individual retirement savings and increase savings rate by providing greater pension simplification and increased savings for older workers and women. It also updates benefit and contribution limits and provides catch-up contributions. Increased federal restrictions and limits placed on retirement plans have had an adverse effect on the administration of plans and on the improvement of benefits.

"The proposed changes would stimulate increased savings in retirement plans by updating benefit and contribution limits," the Congressman said. "Additionally, this legislation would allow those approaching retirement to have increased retirement savings opportunities. For individuals who have been unable to take advantage of retirement savings vehicles throughout their career due to a lack of disposable income or periods of leave from the workforce, catch-up contributions would provide the opportunity to make up for those past contributions, and would be particularly helpful to women."

For additional information, contact: Cathy Gault at 671-477-4272

Washington office: 2418 Rayburn Office Building Washington, D.C. 20515 Tel: 202-225-1188 Fax: 202-226-0341 Email: guamtodc@mail.house.gov 

Guam office: 120 Fr. Duenas Ave., Ste 107 Hagatna, GU 96932 Tel: 671-477-4272 Fax: 671-477-2587

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