Alaska State Legislature
News from the House Majority

Jerry Ritter, House Majority Press Secretary
State Capitol
Juneau, AK 99801
Phone: (907) 465-3804
web site: http://www.akrepublicans.org
Actuality line: 1-800-478-6540

Senate Passes Measure to Benefit IRA Holders

Opportunity to Convert IRA Earnings to Tax-free Status

For Immediate Release: May 6, 1998 Contact: Rep. Gene Therriault at (907) 465-4797.

Juneau -- The Alaska Senate today unanimously passed House Bill 449, which permits Alaskans to receive the full benefits from Roth IRA accounts.

The 1997 Tax Relief Act created the new "Roth IRA" that contains significant advantages for individuals trying to save for retirement. However, unlike traditional IRA accounts, the new Roth IRAs are not protected from creditors by Alaskan law. Adding to this problem is the one year window of opportunity congress allowed for rolling traditional IRAs into the new Roth IRA structure and spreading the federal tax consequence over a four year period.

Passage of House Bill 449 corrects this problem by extending the existing statutory protection offered to other retirement accounts to the new "Roth IRA" mechanism, doing so in a timely manner so individuals can roll over an existing IRA account with a minimum loss to federal taxes.

"This is a great opportunity to convert all future IRA account earnings into tax-free income and spread the current tax bite over four years," said Representative Gene Therriault (R-Fairbanks), sponsor of HB 449. "Under this measure, any such conversions will continue to be protected against creditors," Therriault said.

The conversion option is only available in 1998. Beginning in 1999, distributions from regular IRA accounts which are rolled into Roth IRAs will be fully taxed in the year of the rollover.

HB 449 now goes to the governor for signature.

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