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History
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 61–0
- Ordered to third reading cal.1242
- Committee discharged and committed to rules
- Reported and committed to finance
- Referred to investigations and government operations
- Referred to investigations and government operations
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Relates to lump sum distributions used for the payment of post-secondary education loans
In Assembly Committee · Ways And Means · Sponsor Amy Paulin
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S4827
Title of bill
An act to amend the tax law, in relation to lump sum distributions used for the payment of post-secondary education loans
Purpose
The purpose of this bill is to provide graduates of higher education an opportunity to pay off student debt using early distributions from a retirement account.
Summary of provisions
Section one of the bill exempts early distributions from a retirement account form the separate tax imposed in section 603 as long as those distributions are used for payments for student loan debt.
Section two of the bill would provide that early distributions from a retirement account would be subtracted from federal adjusted gross income when those distributions are used for payments for student loan debt.
Existing law
Under existing tax code, early distributions are taxed under income tax in addition to the separate tax that is applied.
Justification
An option for graduates and anyone looking to help a graduate get out from under the overwhelming debt that has hamstrung an entire generation, this bill would exempt from State tax early distributions from a retirement annuity account those funds which are used for payments to student loan debt. This provision could save the graduate thousands of dollars in interest payments he or she will not have to make, and allow a graduate to leverage a large sum of money that will open up opportunities to settle student debt at a fraction of the overall principal amount. Drastically reducing the graduate's student loan payment, a graduate would then have an opportunity to invest in his or her future, buy a house, or save for another generation's education - to pursue the American dream.
This amendment in the State Tax Law would not create an incentive to cash out a retirement account and forgo planning for the future. These funds carry the existing tax unless used for student loan debt, a recognized crisis facing college graduates all over the State. Further, the federal tax penalty is still in effect as the norm of deterrent from early distribution from the federal government remains in place.
Saving for retirement is important, maybe more now than ever. But for this generation of graduates with crippling student loan debt sometimes reaching six digits, saving for retirement is not an option until these loans are paid off. This bill would provide a small opportunity to do so.
Legislative history
New bill
Fiscal implications
To be determined.
Effective date
Immediately
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.