McHugh Introduces Legislation to Help American Workers

by Contributor | August 10, 2008 9:51 pm

Submitted article

Congressman John M. McHugh (R-Pierrepont Manor) announced today that he has introduced legislation to help American workers save money for unexpected expenses or hardship during a period of unemployment or disability.  Congressman McHugh’s legislation, H.R. 6799, the Worker Savings Account Act, is designed to help Americans enhance their personal safety nets as well as save money for their retirement.

“American workers are less likely today to spend their careers with a single employer, particularly as United States companies face increasing global competition.  Additionally, rising energy costs, food prices, and other expenses have made it more difficult for individuals and families to save money for an unexpected layoff,” said Congressman McHugh.  “Workers Savings Accounts give employees the option of saving money tax-free as well as allow employers to contribute to the accounts as well.  This could give families the supplement they need to weather a period of unemployment, particularly in an area like the 23rd Congressional District where five of the 11 counties had unemployment figures over the national average.”

In 2006, 19 million Americans were laid off or discharged from their employment.  A 2005 Government Accountability Office report found that 85 percent of American workers born between 1957 and 1964 were unemployed at least once between 1979 and 2002.  There are a variety of benefits that may be available to Americans to help them during times of unemployment, including Unemployment Compensation (UC).  In December 2007, approximately 2.7 million unemployed workers received UC benefits in a given week, with average benefits totally $281 a week.

Congressman McHugh’s Worker Savings Account program, like traditional Individual Retirement Accounts (IRAs), would have an annual contribution limit of $5,000, indexed to inflation.  Employers would be able to provide matching contributions of up to $5,000 annually.  Contributions to WSAs would be permitted until the account owner actually elects to take Social Security retirement benefits.  At that time, a WSA account owner could choose to roll over their WSA funds into a 401(k) or IRA, adding to their retirement savings.  Prior to a WSA account owner’s decision to take Social Security payments, WSA funds could be withdrawn without penalty and tax-free as long as the owner lost their employment through no fault of their own or they had become disabled.

To encourage lower-income Americans to take advantage of the opportunity to contribute to WSAs, the Worker Savings Account Act would provide a refundable tax credit of up to $1,000 for eligible individuals. This tax credit would be indexed to inflation and recipients could receive up to $5,000 over the course of their career.

Congressman McHugh’s legislation is currently under consideration in the Ways and Means Committee.

Source URL: https://oswegocountytoday.com/community/mchugh-introduces-legislation-to-help-american-workers/

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