[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3807 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3807

   To amend the Internal Revenue Code of 1986 to allow penalty-free 
      withdrawals from certain retirement plans during periods of 
                             unemployment.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 1996

  Mr. McDermott (for himself, Mr. Gibbons, Mr. Rangel, Mr. Stark, Mr. 
Matsui, Mrs. Kennelly, Mr. Coyne, Mr. Lewis of Georgia, and Mr. Neal of 
Massachusetts) 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 penalty-free 
      withdrawals from certain retirement plans during periods of 
                             unemployment.

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

SECTION 1. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT PENALTY 
              DURING PERIODS OF UNEMPLOYMENT.

    (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 the following new subparagraph:
                    ``(D) Distributions from certain plans during 
                periods of unemployment.--Distributions 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), to 
                an individual after separation from employment if--
                            ``(i) such individual has received 
                        unemployment compensation for 12 consecutive 
                        weeks under any Federal or State unemployment 
                        compensation law by reason of such separation, 
                        and
                            ``(ii) such distributions are made during 
                        the 1-year period beginning on the date of such 
                        separation.
                To the extent provided in regulations, a self-employed 
                individual shall be treated as meeting the requirements 
                of clause (i) if, under Federal or State law, the 
                individual would have received unemployment 
                compensation but for the fact the individual was self-
                employed.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 72(t)(2) of such Code is 
        amended by striking ``or (C)'' and inserting ``, (C) or (D)''.
            (2) Section 401(k)(2)(B)(i) 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 a period 
                                referred to in section 72(t)(2)(D) 
                                begins, and''.
            (3) 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 distributions to which 72(t)(2)(D) 
                applies.''
    (c) Effective Date.--The amendments made by this section shall 
apply to payments and distributions after the date of the enactment of 
this Act.
                                 <all>