FAQs. Section 1106 of the FAA Modernization and Reform Act of 2012

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1 Page 1 of 14 February 24, 2012 FAQs Section 1106 of the FAA Modernization and Reform Act of I want to make a rollover contribution to a traditional IRA under Section 1106 of the 2012 Act. Do the normal IRA limits and restrictions apply? No. Under the usual rules that apply to traditional IRAs, an individual s annual contributions are limited to a stated dollar amount, the deductibility of contributions may be limited based on the individual s adjusted gross income and whether the individual is an active participant in a qualified retirement plan, and no contributions may be made by an individual who has attained age 70-1/2. These limits and restrictions do not apply to trustee-to-trustee transfers or rollovers made to a traditional IRA pursuant to Section 1106 of the new Act. 2. What is the deadline for making a trustee-to-trustee transfer or rollover to a traditional IRA under Section 1106 of the new Act? You must make the trustee-to-trustee transfer or rollover to a traditional IRA not later than August 13, What are the advantages of making a trustee-to-trustee transfer or rollover contribution to a traditional IRA, under the new Act? A traditional IRA provides a number of tax advantages. Amounts you contribute as a trustee-to-trustee transfer or rollover to a traditional IRA are excluded from your income and grow tax-deferred until withdrawn in retirement, provided you meet certain conditions. 4. I already have a traditional IRA. Do I need to open another one for this purpose? No. You may make a trustee-to-trustee transfer or rollover to your current traditional IRA, or you may open one or more new traditional IRAs to make the qualifying transfer or rollover. 5. How much may I transfer or roll over to a traditional IRA under the new Act? The total amount that can be transferred or rolled over to a traditional IRA is 90% of the sum of your total airline payment amounts, as shown on

2 Page 2 of 14 all of the IRS Form 8935s you have received from the Company. Most pilots received a Form 8935 in 2009 that detailed the airline payment amounts they were paid in 2006 and 2007, and some pilots received additional Form 8935s in 2009, 2010 and 2011, that detailed the additional airline payment amounts they were paid in those years. 6. I ve misplaced my IRS Form 8935(s). How may I obtain replacement(s)? Send an to esc@united.com using the subject line IRS FORM 8935 and include name, file #, complete mailing address & telephone number. 7. I previously rolled over an airline payment amount to a Roth IRA under WRERA. May I now transfer some or all of those amounts to a traditional IRA under the 2012 Act? Yes. Under the new Act, you may transfer to a traditional IRA some or all of the amounts you previously rolled over to a Roth IRA under WRERA, subject to the 90% rule discussed below. Such a transfer must be a trustee-to-trustee transfer (see FAQ 8, below). This would permit the amounts transferred from the Roth IRA to the traditional IRA to be treated as if they were originally contributed to a traditional IRA. The transfer to the traditional IRA will be deemed to have been made at the time of the rollover to the Roth IRA. The amount you may transfer from the Roth IRA to a traditional IRA is limited to 90% of the total airline payment amounts reported on all of your IRS Form 8935s, as adjusted for gains or losses within the Roth IRA. 8. What is a trustee-to-trustee transfer? In a trustee-to-trustee transfer from your Roth IRA to a traditional IRA, the transfer is made directly from the trustee of the Roth IRA to the trustee of the traditional IRA. You may not take the funds into your possession. 9. Please provide some examples of how much I may roll over or transfer to a traditional IRA. First, you must remember a few simple rules: 1. Your IRS Form 8935s reflect the total airline payment amounts that you received from United. 2. Only 90% of the total amount reported on all of your Form 8935s can be contributed to a traditional IRA under the new Act. However, if you had already made a rollover contribution to a Roth IRA under WRERA, then your aggregate IRA contributions could be 100% of the total airline payment amounts reported on your Form 8935s, if split between the Roth IRA and a traditional IRA (by leaving a minimum of 10% of the total airline payment amounts in the Roth IRA). 3. If you had previously made a rollover to a Roth IRA under WRERA, then when applying the 90% limit on the amount you may transfer or roll over to a traditional IRA and exclude from your income retroactively under the 2012 Act, you must use the value of the Roth IRA funds at the time of your contribution to the Roth IRA, not the current value.

3 Page 3 of 14 See Examples 4 and 5 below on how to adjust for gains and losses when making a trustee-to-trustee transfer from a Roth IRA. All of the following examples assume that you received only one IRS Form 8935 reflecting a total airline payment amount of $100,000 for tax year 2006 (and that you received $0 for every other tax year). Example 1: This example assumes that you did not roll over any portion of your airline payment amount to a Roth IRA under WRERA. You may now roll over up to $90,000 to a traditional IRA under the 2012 Act. You may file an amended federal tax return for 2006 to exclude the $90,000 from your federal income in 2006 and receive a refund of the federal income taxes paid on such amount. Your amended return for 2006 must be filed no later than April 15, Examples 2 through 6 also assume you had previously contributed $60,000 of your $100,000 airline payment amount to a Roth IRA under WRERA. Example 2: If you wish to leave the $60,000 in the Roth IRA, you may now contribute $40,000 to a traditional IRA and claim a corresponding $40,000 exclusion from your federal income for tax year 2006, the year you received your original airline payment amount, as reflected on your IRS Form You would do this by filing an amended federal tax return for tax year 2006 to receive a refund of the applicable federal income taxes. Your amended return for 2006 must be filed no later than April 15, Since you are not transferring any money from the Roth IRA to the traditional IRA, it would not matter if the original $60,000 in the Roth IRA had gained or lost value in this example. Example 3: Assume the $60,000 you contributed to the Roth IRA is currently worth $60,000 (there has been no net gain or loss). You may now make a trustee-to-trustee transfer of as much of that as desired, and still make an additional rollover contribution (from other funds) to a traditional IRA, up to not more than $90,000 in the traditional IRA and not more than $100,000 in both IRAs combined. So, if you elect to make a trustee-to-trustee transfer from the Roth IRA to a traditional IRA in the amount of $40,000, you could still contribute up to an additional $40,000 to the traditional IRA (from other funds), for a combined total of $80,000 in the traditional IRA and $20,000 in the Roth IRA. You would be eligible to exclude $80,000 from your federal income in 2006 by filing an amended federal tax return for tax year 2006, the year you received your original airline payment amount, as reflected on your IRS Form Your amended return for 2006 must be filed no later than April 15, Example 4: Assume the $60,000 you contributed to the Roth IRA is currently worth $50,000 (reflecting a net loss of $10,000), and you wish to transfer 50% of the current Roth IRA balance to a traditional IRA. In this case, you would make a trustee-to-trustee transfer of $25,000 from the Roth IRA to a traditional IRA. In this instance, even though you transferred only $25,000, you would be eligible to exclude $30,000 from your federal income in 2006 (the year you received your original airline payment amount), the amount that was originally contributed to a Roth IRA in respect of the amount you transferred. Additionally, if desired, you could contribute up to an additional $40,000 (from other funds) as a

4 Page 4 of 14 rollover contribution to a traditional IRA and exclude that amount from your 2006 federal income, as well. The math on this is as follows: IRS Form 8935 airline payment amount for tax year 2006: $100,000 Portion of airline payment amount remaining in Roth IRA, after the trustee-to-trustee transfer: $30,000 (worth $25,000 today) Portion of airline payment amount transferred and rolled over to a traditional IRA: $70,000 (worth $65,000 today) Airline payment amount excluded from federal income in 2006 on amended tax return: $70,000 ($30,000 in the trustee-totrustee transfer from the Roth IRA to the traditional IRA + $40,000 in the rollover contribution to the traditional IRA from other funds) Example 5: Assume the $60,000 you contributed to the Roth IRA is currently worth $80,000 (reflecting a net gain of $20,000), and you wish to transfer 50% of the current Roth IRA balance to a traditional IRA. In this instance, you would make a trustee-to-trustee transfer of $40,000 but you would be eligible to exclude from your federal income in 2006 (the year your received your original airline payment amount) only $30,000, the amount that was originally contributed to a Roth IRA in respect of the $40,000 amount you transferred. If desired, you could contribute up to an additional $40,000 (from other funds) as a rollover contribution and exclude that amount from your 2006 federal income as well. The math on this is as follows: IRS Form 8935 airline payment amount for tax year 2006: $100,000 Portion of airline payment amount remaining in Roth IRA, after the trustee-to-trustee transfer: $30,000 (worth $40,000 today) Portion of airline payment amount transferred and rolled over to a traditional IRA: $70,000 (worth $80,000 today) Airline payment amount excluded from federal income in 2006 on amended tax return: $70,000 ($30,000 in the trustee-totrustee transfer from the Roth IRA to the traditional IRA + $40,000 in the rollover contribution to the traditional IRA from other funds) Example 6: Assume, as in example 5, the $60,000 you contributed to the Roth IRA is currently worth $80,000, and because it has increased in value, you do not wish to transfer the gains, but you do want to take advantage of the new Act. In this situation, you would need to perform two separate transactions. In the first transaction, as permitted by current law, you could withdraw principal from your Roth IRA, up to your entire principal amount of $60,000, at any time without penalty. This withdrawal would provide you with other funds from which to make a cash rollover contribution to a traditional IRA under the new Act. Assume you withdraw $40,000 from your Roth IRA for this purpose. In the second transaction, you would make a rollover contribution of $40,000 to a traditional IRA under the new Act. However, since you did not make a trustee-to-trustee transfer to a traditional IRA as permitted under the new Act, you must continue to count toward your rolled over airline payment amounts the $60,000 that you originally contributed to the Roth

5 Page 5 of 14 IRA under WRERA. Thus, the maximum that you could contribute to a traditional IRA under the new Act would be $40,000 ($100,000 total airline payment amount minus the $60,000 previously contributed to the Roth IRA). A rollover of $40,000 will satisfy the 90% limit under the new Act since you will be contributing only 40% of your total airline payment amount to a traditional IRA. In summary, if you withdrew $40,000 from your WRERA Roth IRA and then subsequently used that money to make a rollover contribution to the traditional IRA under the 2012 Act, the math would work as follows: IRS Form 8935 airline payment amount for tax year 2006: $100,000 Portion of airline payment amount contributed to the Roth IRA: $60,000 Portion of airline payment amount rolled over to a traditional IRA: $40,000 Airline payment amount excluded from federal income in 2006 on amended tax return: $40,000 (consisting of the $40,000 rollover contribution to the traditional IRA from other funds ) Note: If you originally contributed 100% of your total airline payment amount (as reported on IRS Form 8935) to a Roth IRA under WRERA, you cannot utilize the option discussed in example 6, as you have no eligible airline payment amount remaining. However, you would be eligible to make a trustee-to-trustee transfer from your Roth IRA to a traditional IRA, as described in examples 2-5 above. 10. I received airline payment amounts in more than one tax year. Can you provide an example of how the rules apply to my situation? Assume you received a total of $100,000 of airline payment amounts over three tax years, and your IRS Form 8935s reflect those amounts as follows: 2006: $80, : $15, : $5,000 Assume further that you had made no rollover to a Roth IRA under WRERA. In this case, the maximum that you can roll over to a traditional IRA in 2012 (by August 13, 2012) and exclude from your federal income in prior tax years is $90,000 (90% of $100,000). If you rolled over the full $90,000 to a traditional IRA, you would have a few choices as to which tax years, and how much in each tax year, you would exclude the $90,000. For example, you could exclude $80,000 in tax year 2006 and $10,000 in tax year Alternatively, you could exclude $5,000 in 2008, $15,000 in 2007 and $70,000 in You might choose the first alternative to limit your amended federal tax returns to two tax years (2006 and 2007). Although the second alternative requires you to file amended returns for three tax years, you might choose this alternative if it allows you to file one or more amended state tax returns that you might not be able to file under the first alternative (due to expiration of the applicable time period for filing state tax returns). Other combinations are also available, though the maximum you may exclude in any one tax year is the airline payment amount you received that tax year.

6 Page 6 of I did NOT previously take advantage of the provisions of WRERA by making a Roth IRA rollover contribution. May I now make a rollover contribution to a Roth IRA? The window for you to make Roth IRA contributions of airline payment amounts, as shown on your Form 8935s, has closed. The new Act does not have any special provisions for Roth IRA rollover contributions. However, under existing tax rules relating to the conversion of traditional IRAs to Roth IRAs, you may be eligible to make a traditional IRA rollover pursuant to the new Act and then convert that amount to a Roth IRA in a subsequent transaction. Please consult a tax advisor to determine your eligibility for this subsequent transaction. 12. I made a rollover contribution to a Roth IRA under WRERA in 2009, and then made a trustee-to-trustee transfer from the Roth IRA to a traditional IRA in 2012, per the new Act. May I later convert my traditional IRA back to a Roth IRA? Yes, but not until after the five-taxable year period beginning with the taxable year in which the trustee-to-trustee transfer was made (per the last sentence of Section 1106(a)(2) of the new Act). In other words, you may convert the traditional IRA back to a Roth IRA on or after January 1, May I roll over shares of another company s stock, or other property, into a traditional IRA? It is our understanding that, other than cash, the only property you may roll over to a traditional IRA under the new Act is the Company stock you received as part of your qualifying airline payment amount. If you are making a trustee-to-trustee transfer from your WRERA Roth IRA, you may liquidate your Roth IRA investments and transfer cash to the traditional IRA or you may transfer investments in-kind, if permitted by both your Roth IRA trustee and traditional IRA trustee. 14.I received shares as part of the equity claim in United s bankruptcy. May I roll over my United common stock shares into a traditional IRA? Yes, but only if these were the exact shares you received as part of your airline payment amount, and also if an in-kind rollover is permitted by your traditional IRA financial institution. Also, for purposes of applying the 90% limit and determining the amount to exclude on a previous year s federal tax return, your bankruptcy equity claim shares will be valued as of the date you received them, as reported on your Form 8935, rather than their fair market value today. Example. Assume that in 2006 you received a bankruptcy equity claim distribution of 1,000 shares of United stock, then worth $30 per share ($30 is used in the example to make the math easier to follow; please reference FAQ 15 for the cost basis of different equity distributions). This distribution would have been reported as an airline payment amount of $30,000 on your Form 8935 (1,000 x $30). Assume that at the time of

7 Page 7 of 14 distribution 300 shares were sold to cover taxes, leaving you with a net distribution of 700 shares. Assume (for purposes of this example) that this is the only airline payment amount you ever received and that you have retained these exact 700 shares of United stock continuously ever since. Assume that United stock is worth $20 per share at the time you wish to make a rollover to a traditional IRA under the 2012 Act. In making such a rollover to a traditional IRA, you would have the following choices: (a) roll over all 700 shares of United stock (valued at $21,000 for purposes of applying the 90% limit and claiming the 2006 income exclusion, even though the actual value at the time of rollover in 2012 is $14,000) plus $6,000 in cash (for a total of $27,000 or 90% of your total airline payment amount of $30,000); (b) roll over $27,000 in cash only (90% of $30,000); or (c) roll over some combination of shares and cash not to exceed the airline payment amount value of $27,000 (90% of your total airline payment of $30,000). If you roll over the maximum allowed, i.e. $27,000 of your $30,000 airline payment amount, then whether it consists of shares plus cash or only cash, you would exclude $27,000 from your federal income in 2006 by filing an amended federal tax return. 15.What was the cost basis per share of the taxable equity? 1 st Distribution 2/10/06 2 nd Distribution 5/3/06 3 rd Distribution 9/22/06 4 th Distribution 4/27/07 5 th Distribution 11/8/07 $31.65 $35.51 $27.52 $42.05 $ The stock ticker symbol at bankruptcy exit was UAUA and now the symbol is UAL. Does that affect my ability to roll over my shares? No. Only the ticker symbol changed. Your shares are now held as UAL shares. 17. May I roll over a combination of cash and my qualifying United shares into a traditional IRA? Yes, if permitted by your traditional IRA trustee/financial institution. In this case, each would be valued as explained in the previous examples. 18. What action must I take to transfer or roll over my qualifying airline payment amount(s) to a traditional IRA? First, ALPA strongly recommends that you consult a tax and/or financial planning advisor before electing to transfer or roll over all or any portion of your qualifying airline payment amount(s). If you decide that making a trustee-to-trustee transfer to a traditional IRA from the Roth IRA you established under WRERA, and/or making a rollover to a traditional IRA, is right for you, your next step is to choose a financial institution. You may need to provide your financial institution with a copy of the IRS Form 8935(s) you received from the Company. You should advise your financial institution that the deposit of funds is to be treated as a rollover under Section 1106 of the 2012 Act. Using this description will assist your financial institution in correctly characterizing the transaction in its recordkeeping system.

8 Page 8 of 14 Finally, you must complete your transfer and/or rollover on or before August 13, In making a trustee-to-trustee transfer or rollover, must I use the same funds I received in my qualifying airline payments? If you are making a trustee-to-trustee transfer from a Roth IRA it must be from your Roth IRA that was previously funded via a rollover contribution pursuant to WRERA. If you are making a rollover contribution to a traditional IRA, you do not need to use the same exact funds you received from the Company whether the funds you received consisted of cash or shares of Company stock. You may make the rollover from other funds that may be available to you. 20.What other funds may be available to me, that I can use to make the rollover to a traditional IRA? You may make a rollover to a traditional IRA, under the 2012 Act, from any other funds available to you, such as the following: Your savings Amounts you receive as a gift Amounts you receive as a loan o You may be able to take a loan (up to the lesser of $50,000 or one-half of your PDAP balance) from your PDAP account. Withdrawal from your PDAP account, if applicable o You can withdraw your Post-tax contributions (including associated earnings) at any time. Earnings will be includable in taxable income and may also be subject to a 10% early distribution penalty if you are under age 59-1/2. o If you are 59-1/2 or older, you can withdraw your Rollover contributions (including associated earnings). Rollover contributions and associated earnings will be includable in taxable income. o If you are 59-1/2 or older, you can withdraw your 401(k) contributions (including associated earnings) but only after you have withdrawn your Rollover contributions, if any. 401 (k) contributions and associated earnings will be includable in taxable income. The above list is provided for information purposes only. ALPA expresses no opinion as to whether any of these options may be appropriate for you. Please consult your tax and/or financial advisor. 21.May I make trustee-to-trustee transfers and rollovers to more than one traditional IRA and/or to more than one traditional IRA financial institution? Yes. You may make trustee-to-trustee transfers and rollovers to any number of traditional IRAs at any number of financial institutions, so long as the total amount you transfer or roll over to a traditional IRA does not

9 Page 9 of 14 exceed 90% of the total airline payment amounts reported to you on your IRS Form 8935s, and the total amount including rollover contributions previously made to a Roth IRA under WRERA does not exceed 100% of the total airline payment amounts reported to you on IRS Form 8935s. (Note that you may have 100% of your airline payment amounts in IRAs only by leaving at least 10% of your airline payment amount(s) in the Roth IRA.) 22. I understand that, if I make a trustee-to-trustee transfer or rollover to a traditional IRA under the 2012 Act, I may exclude from my federal income the amount transferred or rolled over, in the tax year(s) in which I received the airline payment amount(s), and receive a refund of the federal taxes paid on such amount(s). May I also receive a refund of the employment taxes paid on the amounts that are excluded from my federal income in a prior tax year? No. Although the new Act permits you to receive a refund of the federal income taxes with respect to amounts you exclude from your income in a prior tax year, you cannot claim or receive a refund of employment taxes you paid on such amounts. 23. May I also file an amended state tax return(s) and receive a refund of state income taxes I paid? The new Act does not apply to state income tax returns. Therefore, you will be able to file an amended state income tax return to reflect the federal income exclusion only if permitted by applicable state law. The applicable state law would likely need to define income for state income tax purposes based on how it is defined for federal income tax purposes. In addition, the filing must be made before the applicable deadline for filing an amended state tax return. The time period for filing an amended state tax return varies from state to state. States usually allow three years after the original state tax return filing deadline, though some allow longer (e.g., CA, KY, OH, and MI allow four years). If you live in one of the states that permit more than three years, you may wish to consider making your traditional IRA rollover and/or trustee-to-trustee transfer quickly and file your amended state tax return prior to the normal filing deadline. In California, for example, you should have until April 15, 2012 to file an amended state tax return for the year 2007 (four years after April 15, 2008, the original deadline for filing the 2007 state tax return). Regardless of the state you live in, you should consult your tax advisor to determine whether you may file an amended state income tax return(s). 24. Exactly how do I report the exclusion of income on my amended federal tax return? An amended federal tax return is filed using IRS Form 1040X. You may obtain this Form and the related Instructions at However, because the IRS has issued no guidance under the new Act, these documents will provide no information specifically applicable to your right to file an amended return(s) under Section 1106 of the 2012 Act. These FAQs will be updated as soon as we receive any additional information from the IRS.

10 Page 10 of May I file the amended federal tax return, receive my income tax refund, and THEN make my rollover contribution to a traditional IRA? The new Act contains no provision specifically addressing this question, so if you are interested in doing this, please consult your tax advisor. 26. What is the deadline for filing my amended federal tax return(s) under the new Act? April 15, 2013 is the extended deadline for filing your amended federal tax returns with respect to exclusions of income you claim under the new Act for any tax year before The vast majority of airline payment amounts were paid in tax years before For tax years after 2008, the standard deadline for filing amended federal tax returns will be April 15, 2013 or later. 27. Where may I obtain further information? In addition to consulting your tax and/or financial advisor, you may wish to refer to IRS Publication 590, Individual Retirement Arrangements (IRAs), available on the IRS website at What if I make a trustee-to-trustee transfer or rollover contribution to a traditional IRA under the new Act but find that I need the money again soon? May I withdraw the contributions immediately, if needed, without paying the 10% early distribution penalty? What about the earnings? After you make a trustee-to-trustee transfer or rollover contribution to a traditional IRA under the new Act, all normal traditional IRA distribution rules would apply. Generally, this means that, in addition to the normal tax due on the distribution, you will be subject to the 10% early distribution penalty if you take a withdrawal before you reach age 59 ½, except under very limited circumstances. Consult IRS Publication 590 for details. 29. I must sell my current stock investments in a taxable account at a loss in order to obtain the cash to make a traditional IRA rollover under the new Act. After making the rollover I intend to purchase the same stock investments in my traditional IRA. Will my ability to claim a loss on the sale be impacted by the wash sale rules? Ordinarily, if you sell stock in a taxable account at a loss, you will incur a capital loss that you may deduct on your tax return (assuming you are otherwise eligible to claim the capital loss). However, under the wash sale rules, if you sell stock at a loss and within the 30 days before or after the sale you purchase substantially identical stock, even if the purchase is made by your traditional IRA, then your loss could be disallowed. The best course of action to avoid this possibility is either to wait at least 30 days after the sale before purchasing substantially identical stock or to purchase different stock. See IRS Revenue Ruling and consult a tax advisor for details.

11 Page 11 of Are there any special eligibility rules under the new Act? Yes. Under the 2012 Act, the surviving spouse of a qualified airline employee may make trustee-to-trustee transfers and/or rollovers to a traditional IRA to the same extent the qualified airline employee could have done had the qualified airline employee survived. In addition, under the 2012 Act, an individual is not considered a qualified airline employee if he or she had been the CEO or one of the four highest-paid officers of the Company at any time. 31. What is the exact language of Section 1106 of the new Act? SEC ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER BANKRUPTCY. (a) GENERAL RULES. (1) ROLLOVER OF AIRLINE PAYMENT AMOUNT. If a qualified airline employee receives any airline payment amount and transfers any portion of such amount to a traditional IRA within 180 days of receipt of such amount (or, if later, within 180 days of the date of the enactment of this Act), then such amount (to the extent so transferred) shall be treated as a rollover contribution described in section 402(c) of the Internal Revenue Code of A qualified airline employee making such a transfer may exclude from gross income the amount transferred, in the taxable year in which the airline payment amount was paid to the qualified airline employee by the commercial passenger airline carrier. (2) TRANSFER OF AMOUNTS ATTRIBUTABLE TO AIRLINE PAYMENT AMOUNT FOLLOWING ROLLOVER TO ROTH IRA. A qualified airline employee who has contributed an airline payment amount to a Roth IRA that is treated as a qualified rollover contribution pursuant to section 125 of the Worker, Retiree, and Employer Recovery Act of 2008, may transfer to a traditional IRA, in a trustee-to-trustee transfer, all or any part of the contribution (together with any net income allocable to such contribution), and the transfer to the traditional IRA will be deemed to have been made at the time of the rollover to the Roth IRA, if such transfer is made within 180 days of the date of the enactment of this Act. A qualified airline employee making such a transfer may exclude from gross income the airline payment amount previously rolled over to the Roth IRA, to the extent an amount attributable to the previous rollover was transferred to a traditional IRA, in the taxable year in which the airline payment amount was paid to the qualified airline employee by the commercial passenger airline carrier. No amount so transferred to a traditional IRA may be treated as a qualified rollover contribution with respect to a Roth IRA within the 5-taxable year period beginning with the taxable year in which such transfer was made. (3) EXTENSION OF TIME TO FILE CLAIM FOR REFUND. A qualified airline employee who excludes an amount from gross income in a prior taxable year under paragraph (1) or (2) may reflect such exclusion in a claim for refund filed within the period of limitation

12 Page 12 of 14 under section 6511(a) of such Code (or, if later, April 15, 2013). (4) OVERALL LIMITATION ON AMOUNTS TRANSFERRED TO TRADITIONAL IRAS. (A) IN GENERAL. The aggregate amount of airline payment amounts which may be transferred to 1 or more traditional IRAs under paragraphs (1) and (2) with respect to any qualified employee for any taxable year shall not exceed the excess (if any) of (i) 90 percent of the aggregate airline payment amounts received by the qualified airline employee during the taxable year and all preceding taxable years, over (ii) the aggregate amount of such transfers to which paragraphs (1) and (2) applied for all preceding taxable years. (B) SPECIAL RULES. For purposes of applying the limitation under subparagraph (A) (i) any airline payment amount received by the surviving spouse of any qualified employee, and any amount transferred to a traditional IRA by such spouse under subsection (d), shall be treated as an amount received or transferred by the qualified employee, and (ii) any amount transferred to a traditional IRA which is attributable to net income described in paragraph (2) shall not be taken into account. (5) COVERED EXECUTIVES NOT ELIGIBLE TO MAKE TRANSFERS. Paragraphs (1) and (2) shall not apply to any transfer by a qualified airline employee (or any transfer authorized under subsection (d) by a surviving spouse of the qualified airline employee) if at any time during the taxable year of the transfer or any preceding taxable year the qualified airline employee held a position described in subparagraph (A) or (B) of section 162(m)(3) with the commercial passenger airline carrier from whom the airline payment amount was received. (b) TREATMENT OF AIRLINE PAYMENT AMOUNTS AND TRANSFERS FOR EMPLOYMENT TAXES. For purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of the Social Security Act, an airline payment amount shall not fail to be treated as a payment of wages by the commercial passenger airline carrier to the qualified airline employee in the taxable year of payment because such amount is excluded from the qualified airline employee's gross income under subsection (a). (c) DEFINITIONS AND SPECIAL RULES. For purposes of this section (1) AIRLINE PAYMENT AMOUNT.

13 Page 13 of 14 (A) IN GENERAL. The term ``airline payment amount'' means any payment of any money or other property which is payable by a commercial passenger airline carrier to a qualified airline employee (i) under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and (ii) in respect of the qualified airline employee's interest in a bankruptcy claim against the carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. The amount of such payment shall be determined without regard to any requirement to deduct and withhold tax from such payment under sections 3102(a) of the Internal Revenue Code of 1986 and 3402(a) of such Code. (B) EXCEPTION. An airline payment amount shall not include any amount payable on the basis of the carrier's future earnings or profits. (2) QUALIFIED AIRLINE EMPLOYEE. The term ``qualified airline employee'' means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined benefit plan maintained by the carrier which (A) is a plan described in section 401(a) of the Internal Revenue Code of 1986 which includes a trust exempt from tax under section 501(a) of such Code, and (B) was terminated or became subject to the restrictions contained in paragraphs (2) and (3) of section 402(b) of the Pension Protection Act of (3) TRADITIONAL IRA. The term traditional IRA means an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) which is not a Roth IRA. (4) ROTH IRA. The term Roth IRA has the meaning given such term by section 408A(b) of such Code. (d) SURVIVING SPOUSE. If a qualified airline employee died after receiving an airline payment amount, or if an airline payment amount was paid to the surviving spouse of a qualified airline employee in respect of the qualified airline employee, the surviving spouse of the qualified airline employee may take all actions permitted under section 125 of the Worker, Retiree and Employer Recovery Act of 2008, or under this section, to the same extent that the qualified airline employee could have done had the qualified airline employee survived.

14 Page 14 of 14 (e) EFFECTIVE DATE. This section shall apply to transfers made after the date of the enactment of this Act with respect to airline payment amounts paid before, on, or after such date.