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Legislative Update on IRAs, Fairness for Victims Act

Posted by State Senator Jim Sullivan on Jan. 26, 2010 | 4 comments

Sullivan, Tort, Fairness for Victims Act, Senate Judiciary, Intentional Harm, IRA, Roth IRA

IRA Testimony

I recently testified before the Senate Committee on Veterans and Military Affairs, Biotechnology, and Financial Institutions on a bill I authored that is designed to bring Wisconsin in line with most other states in the nation regarding IRA withdrawals and conversions. Below is my testimony:

Regarding Senate Bill 439: Adoption of provisions related to IRAs and the Heroes Earnings Assistance and Relief Tax Act of 2008

January 20, 2010

Good morning and thank you for hearing testimony regarding this very important and timely issue regarding individual retirement accounts.  Wisconsin’s individual income tax statutes have not been amended to recognize the elimination of the $100,000 income limit in the Internal Revenue Code, beginning in tax year 2010.  Many citizens will be affected if this important provision is not amended to comply with federal regulations. 

Senate Bill 439 makes several changes to state income and franchise tax laws to conform with changes made at the federal level to the Internal Revenue Code. It allows taxpayers who have adjusted gross incomes over $100,000 to convert amounts from a traditional IRA to a Roth IRA without incurring penalties.

The bill also adopts federal changes that were made as part of the Heroes Earnings Assistance and Relief Tax Act of 2008, including making permanent the provision that allows Guard members and U.S. military reserves to make withdrawals from an IRA without penalty if they are called to active duty for more than 179 days.  In addition, SB 439 allows military death benefits to be added to a Roth IRA notwithstanding the annual contribution limit that would otherwise apply, and allows reservists called to active duty to withdraw funds from their health flexible spending account without incurring penalties.  This bill excludes from gross income any state or local bonus payment made to military families if their payment is related to their service in a combat zone.

In the past couple months, I have heard from constituents, financial planners, CPAs, and tax attorneys regarding the urgency of adopting these provisions.  I am very pleased to tell you that this legislation has support from the Wisconsin Bankers Association, Community Bankers of Wisconsin, JP Morgan Chase, the State Bar of Wisconsin and Thrivent Financial for Lutherans.  I urge you to support this legislation.

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Fairness for Victims Act Update

The Fairness for Victims Act, Senate Bill 182, is one step closer to becoming law. The Fairness for Victims Act passed in the Assembly on January 19, and in the Senate in October 2009.

Right now, if you are injured as a result of another person’s negligence, you have three years to file a lawsuit. But if someone hurts you in an intentional act, you only have two years to take action. That means if you slip on your neighbor’s walk, you have a three-year window to file suit. But if your neighbor punches you in the face, you have only two years.

I authored the Fairness for Victims Act because it seems counterintuitive to essentially cut a break to a wrongdoer in the case of intentional harm. This bill will level the playing field by giving victims of intentional and unintentional acts three years to file suit.