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The general topic of this message is Business/Commerce:
Contact Your Federal Officials
Rep. Lynn Jenkins
Sen. Jerry Moran
March 10, 2013
As your constituent and a pilot, I urge you to support this issue.
Unfair taxation of AA employees
I am a Kansas resident and I need your help. As a pilot for American
Airlines, I need your assistance to mitigate the personal financial
effects of our company's recent filing for reorganization under Chapter 11
of the Bankruptcy Code.
One of the most certain outcomes of the Chapter 11 process is the
significant loss of value of our retirement benefits. Our legacy
retirement benefits, particularly the defined benefit (DB) plan, have been
wiped out in the process. Although the employees of American Airlines
applaud the company's effort to freeze the DB plans rather than
terminate the plans and force their liability on the Pension Benefit
Guaranty Corporation the value lost is in the billions of dollars.
The bankruptcy court and the company recognize the significant loss in
value of our retirement and have agreed upon a damage award. While only
worth pennies on the dollar, this award will nevertheless start a new nest
egg for my retirement. However, the Internal Revenue Service currently
views this replacement of a tax-deferred retirement plan with a court
award as a taxable event.
American Airlines is not unique in its seeking protection under Chapter
11; most of the other major carriers have done so in the last decade. What
separates the employees of American from their peers is simply the timing
of the bankruptcy. Congress saw fit to defer taxation of these court
awarded distributions by making them eligible to be rolled into
traditional IRA retirement vehicles (Section 1106, FAA Modernization and
Reform Act of 2012), but only for Chapter 11 filings between 2005 and
2007. Since American Airlines filed in 2011, its employees are ineligible
to maintain the tax-deferred nature of the residual value of their
respective defined benefit plans.
As a champion for your constiuents rights, I ask you to initiate
legislation to provide an equal opportunity to roll the Chapter 11 court
awarded damages settlement into a traditional IRA or other qualified
account the same opportunity the employees of Delta, Northwest and
United received. I am confident that your legislative leadership can
remedy this unequal treatment of American's employees.
The leadership of my union, the Allied Pilots Association, stands ready to
answer any questions you may have about this important issue (contact
Captain Bob Coffman at 406-250-8847). Thank you for your time and
Thank you very much for your prompt attention to this important matter
Topeka , KS