04/07/1998 03:40 PM Senate STA

                                                                               
Number 348                                                                     
                CSHB 449(STA) - ROSH IRA EXEMPTION                             
                                                                               
CHAIRMAN GREEN brought CSHB 449(STA) before the committee as the               
next order of business.                                                        
                                                                               
JOE BALASH, staff to Representative Gene Therriault who is prime               
sponsor of HB 449, read the following sponsor statement into the               
record:                                                                        
                                                                               
"Under the Alaska Exemptions Act, 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              
governing that plan.  HB 449 will expand the list to include the               
newly created Roth IRA.                                                        
                                                                               
"The 1997 Taxpayer Relief Act passed by Congress created the Roth              
IRA account under Internal Revenue Code section 408A.                          
Contributions and earnings from traditional IRAs can be rolled over            
into a new Roth IRA.  However, when the rollover is done, the taxes            
must be paid on the capital gains realized.  To soften this -                  
potential tax bite, Congress has allowed all of the taxable income             
stemming from rollovers done in 1998 to be spread over a four year             
period.                                                                        
                                                                               
"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.  However, those Alaskans who take advantage of this are            
removing their assets from the list of those protected under state             
law.                                                                           
                                                                               
"This option is available only during 1998.  Beginning in 1999,                
distributions from regular IRA accounts that are rolled into Roth              
IRAs will be fully taxed in the year of the rollover.  In order for            
Alaskans to maintain their protection while taking advantage of                
this opportunity, legislation must be passed this session."                    
                                                                               
Number 320                                                                     
                                                                               
There being no questions or further testimony on HB 449, CHAIRMAN              
GREEN asked for the pleasure of the committee.                                 
                                                                               
SENATOR MACKIE moved CSHB 449(STA) and the accompanying zero fiscal            
note be passed out of committee with individual recommendations.               
Hearing no objection, it was so ordered.