December 19, 1994
TO: BOARD OF GOVERNORS No. 125-94
GOVERNMENT AFFAIRS IRA ISSUE GROUP
FEDERAL LEGISLATION COMMITTEE No. 38-94
MEMBERS - ONE PER COMPLEX No. 97-94
PENSION COMMITTEE No. 30-94
PUBLIC INFORMATION COMMITTEE No. 43-94
REGIONAL WORKING GROUPS
SHAREHOLDER COMMUNICATIONS COMMITTEE No. 35-94
TAX COMMITTEE No. 38-94
RE: ADMINISTRATION IRA PROPOSAL
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I am pleased to report that President Clinton announced on December 15 that there will be an
Individual Retirement Account component in the Administration's tax proposals to be submitted to the
Congress. According to the information available at this time, the President's proposal would increase
the income limit from $40,000 to $80,000 for a family to be eligible for a full IRA deduction (with
deductibility phased out at $100,000), and from $25,000 to $50,000 in the case of an individual (phased
out at $70,000). The Administration proposal would also include a type of IRA under which
contributions would not be deductible, but earnings would not be taxed when withdrawn. Qualified
withdrawals from the IRA would not be subject to a 10% penalty if they are used for college education
expenses, purchase of a first home, or financially devastating medical expenses.
In the face of growing policy level support for individual savings vehicles, including the
Administration proposal and the Republican "Contract with America," we would encourage you to
continue your efforts in support of the IRA by writing your own letters to Members of Congress and the
White House and by asking your shareholders to do the same. (Please see Board of Governors
Memorandum No. 121-94 and Members - One per Complex Memorandum No. 92-94, dated December
8, 1994).
We consider the Administration's support as critical to a successful outcome. We will keep you
informed of further developments.
Matthew P. Fink
President