04/21/1998 01:35 PM Senate L&C

                                                                               
                CSHB 449(STA) - ROTH IRA EXEMPTION                             
                                                                               
                                                                               
CHAIRMAN LEMAN brought CSHB 449(STA) before the committee as the               
next order of business.                                                        
                                                                               
JOE BALASH, staff to Representative Gene Therriault, said that                 
under the Alaska Exemptions Act, certain retirement plans are                  
protected from creditor claims, however, it does so by listing each            
type of retirement plan by reference to the Internal Revenue Code              
section that governs that plan.  HB 449 will expand the list to                
include the newly created Roth IRA.                                            
                                                                               
MR. BALASH pointed out that this new category of IRA has certain               
benefits to those people who would like to set money aside for                 
retirement purposes.  They would no longer be tax exempt accounts              
because the taxes would be paid up front.  He said it is a great               
opportunity to convert all future IRA account earnings into tax                
free income and spread the current tax bite over a four-year                   
period.   However, those Alaskans who take advantage of this are               
removing their assets from the list of those protected under state             
law from creditor claims.                                                      
                                                                               
MR. BALASH related that this option is available only during 1998.             
Beginning in 1999, distributions from IRA accounts that are rolled             
into Roth IRAs will be fully taxed in the year of the roll over.               
In order for Alaskans to maintain their protection, while taking               
advantage of this opportunity, legislation must be passed this                 
session.                                                                       
                                                                               
WILLIS KIRKPATRICK, Director, Division of Banking, Securities and              
Corporations, Department of Commerce & Economic Development,                   
testifying in support of HB 499, said he wanted to stress that                 
those people that are currently in an IRA  (section 408), have the             
opportunity to convert to a 408A.  The investor may not know that              
without this law they are converting from an exempt IRA to one that            
isn't an exempt IRA.  HB 449 will correct that by making them both             
exempt.                                                                        
                                                                               
There being further testimony on HB 449, CHAIRMAN LEMAN asked for              
the pleasure of the committee.                                                 
                                                                               
SENATOR KELLY moved CSHB 449(STA) be passed out of committee with              
individual recommendations.  Hearing no objection, it was so                   
ordered.