[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3758 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 3758

 To amend the Internal Revenue Code of 1986 to allow reservists called 
 to active duty for certain purposes to make penalty-free withdrawals 
  from certain retirement plans to the extent of lost income while on 
                              active duty.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 1, 1994

  Mr. Walker introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow reservists called 
 to active duty for certain purposes to make penalty-free withdrawals 
  from certain retirement plans to the extent of lost income while on 
                              active duty.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PENALTY-FREE DISTRIBUTIONS FROM CERTAIN RETIREMENT PLANS FOR 
              RESERVISTS CALLED TO ACTIVE DUTY FOR CERTAIN PURPOSES.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to exceptions to 10-percent additional 
tax on early distributions from qualified retirement plans) is amended 
by adding at the end thereof the following new subparagraph:
                    ``(D) Distributions for reservists serving on 
                active duty for certain purposes.--Any qualified 
                reservist distribution (as defined in paragraph (6)) 
                from an individual retirement plan or from amounts 
                attributable to employer contributions made pursuant to 
                elective deferrals described in subparagraph (A) or (C) 
                of section 402(g)(3) or section 501(c)(18)(D)(iii).''
    (b) Qualified Reservist Distribution.--Subsection (t) of section 72 
of such Code is amended by adding at the end thereof the following new 
paragraph:
            ``(6) Qualified reservist distribution.--For purposes of 
        paragraph (2)(D)--
                    ``(A) In general.--The term `qualified reservist 
                distribution' means any distribution or payment to a 
                qualified reservist during the eligible distribution 
                period.
                    ``(B) Limitation on amount.--Paragraph (2)(D) shall 
                not apply to the extent that the aggregate amount 
                withdrawn during the eligible distribution period 
                exceeds the excess (if any) of--
                            ``(i) the amount earned income which such 
                        individual would have received during the 
                        eligible distribution period but for serving on 
                        active duty as described in subparagraph (C), 
                        over
                            ``(ii) the earned income received during 
                        such period.
                    ``(C) Qualified reservist.--For purposes of this 
                paragraph, the term `qualified reservist' means any 
                member of a reserve component of the Armed Forces of 
                the United States who is called or ordered to active 
                duty in support of a contingency operation (as defined 
                in section 101 of title 10, United States Code).
                    ``(D) Eligible distribution period.--For purposes 
                of this paragraph, the term `eligible distribution 
                period' means the period the individual is serving on 
                active duty as described in subparagraph (C).''
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code is amended by 
        striking ``or'' at the end of subclause (III), by striking 
        ``and'' at the end of subclause (IV) and inserting ``or'', and 
        by inserting after subclause (IV) the following new subclause:
                                    ``(V) the date on which qualified 
                                reservist distributions (as defined in 
                                section 72(t)(6)) are made, and''.
            (2) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (A), by striking the period 
        at the end of subparagraph (B) and inserting ``, or'', and by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) for qualified reservist distributions (as 
                defined in section 72(t)(6)).''
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions after the date of the enactment of this Act.

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