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October 9, 1997

Amendment would reinstate TIAA-CREF's tax exempt status

New York Senators Daniel Patrick Moynihan and Alfonse D'Amato have introduced an amendment to the 1998 federal budget bill that seeks to reinstate tax exempt status for TIAA-CREF's pension plan.

The U.S. House of Representatives and Senate removed the tax exemption in the budget they sent to President Bill Clinton in early August. According to TIAA-CREF, the action by Congress upped the tax bill for 280,000 retired employees of institutions of higher learning and reduced the pensions of nearly 1.9 million future retirees.

Even though the Moynihan/D'Amato amendment may sound like good news, Pitt faculty and staff should not get too excited, according to Louis Tronzo, University consultant for Federal Governmental Relations.

"It's not going to go anywhere," Tronzo said.

According to Tronzo, the amendment is not likely to move because TIAA-CREF is not anxious to go back through the legislative process again. TIAA-CREF officials could not be reached for comment despite repeated phone calls.

"The withdrawal or ending of the TIAA exemption has opened up new vistas for the TIAA folks that I think they would like to investigate in terms of new business opportunities," Tronzo said.

Since the budget bill was signed by President Clinton on Aug. 5, TIAA-CREF has introduced a service that allows members to transfer funds from individual retirement accounts into their TIAA-CREF account. Under the old rules, that was forbidden.

Tronzo also thinks that Sen. William Roth, chair of the Senate finance committee, and Rep. Bill Archer, chair of the House ways and means committee, are unlikely to open up a tax bill for the TIAA-CREF amendment.

"Maybe next session," Tronzo said. "Maybe. A lot is going to depend on if TIAA wants it or not."

–Mike Sajna

Filed under: Feature,Volume 30 Issue 4

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