[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1531 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1531

 To amend the Internal Revenue Code of 1986 to provide a waiver of the 
 early withdrawal penalty for distributions from qualified retirement 
    plans to individuals called to active duty during the national 
  emergency declared by the President on September 14, 2001, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 11, 2001

  Mr. Smith of New Hampshire introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide a waiver of the 
 early withdrawal penalty for distributions from qualified retirement 
    plans to individuals called to active duty during the national 
  emergency declared by the President on September 14, 2001, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Military Call-Up Relief Act''.

SEC. 2. WAIVER OF EARLY WITHDRAWAL PENALTY FOR DISTRIBUTIONS FROM 
              QUALIFIED RETIREMENT PLANS TO INDIVIDUALS CALLED TO 
              ACTIVE DUTY DURING THE NATIONAL EMERGENCY DECLARED BY THE 
              PRESIDENT ON SEPTEMBER 14, 2001.

    (a) Waiver For Certain Distributions.--
            (1) In general.--Section 72(t)(2) of the Internal Revenue 
        Code of 1986 (relating to 10-percent additional tax on early 
        distributions from qualified retirement plans) is amended by 
        adding at the end the following:
                    ``(G) Distributions to individuals performing 
                national emergency active duty.--Any distribution to an 
                individual who, at the time of the distribution, is a 
                member of a reserve component called or ordered to 
                active duty pursuant to a provision of law referred to 
                in section 101(a)(13)(B) of title 10, United States 
                Code, during the period of the national emergency 
                declared by the President on September 14, 2001.''.
            (2) Waiver of underpayment penalty.--Section 6654(e)(3) of 
        such Code (relating to waiver in certain cases) is amended by 
        adding at the end the following:
                    ``(C) Certain early withdrawals from retirement 
                plans.--No addition to tax shall be imposed under 
                subsection (a) with respect to any underpayment to the 
                extent such underpayment was created or increased by 
                any distribution described in section 72(t)(2)(G).''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to distributions made to an individual after 
        September 13, 2001.
    (b) Catch-up Contributions Allowed.--
            (1) Individual retirement accounts.--Section 219(b)(5) of 
        the Internal Revenue Code of 1986 (relating to deductible 
        amount) is amended by adding at the end the following:
                    ``(D) Catch-up contributions for certain 
                distributions.--In the case of an individual who has 
                received a distribution described in section 
                72(t)(2)(G), the deductible amount for any taxable year 
                shall be increased by an amount equal to--
                            ``(i) the aggregate amount of such 
                        distributions (not attributable to earnings) 
                        made with respect to such individual, over
                            ``(ii) the aggregate amount of such 
                        distributions (not attributable to earnings) 
                        previously taken into account under this 
                        subparagraph or section 414(w).''.
            (2) Roth iras.--Section 408A(c) of such Code (relating to 
        treatment of contributions) is amended by redesignating 
        paragraph (7) as paragraph (8) and by inserting after paragraph 
        (6) the following:
            ``(7) Catch-up contributions for certain distributions.--
        Any contribution described in section 219(b)(5)(D) shall not be 
        taken into account for purposes of paragraph (2).''.
            (3) Employer plans.--Section 414 of such Code (relating to 
        definitions and special rules) is amended by adding at the end 
        the following:
    ``(w) Catch-up contributions for certain distributions.--
            ``(1) In general.--An applicable employer plan shall not be 
        treated as failing to meet any requirement of this title solely 
        because the plan permits an applicable participant to make 
        additional elective deferrals in any plan year.
            ``(2) Limitation on amount of additional deferrals.--
                    ``(A) In general.--A plan shall not permit 
                additional elective deferrals under paragraph (1) for 
                any year in an amount greater than the lesser of--
                            ``(i) the applicable dollar amount, or
                            ``(ii) the excess (if any) of--
                                    ``(I) the participant's 
                                compensation (as defined in section 
                                415(c)(3)) for the year, over
                                    ``(II) any other elective deferrals 
                                of the participant for such year which 
                                are made without regard to this 
                                subsection.
                    ``(B) Applicable dollar amount.--For purposes of 
                this paragraph, the applicable dollar amount with 
                respect to a participant shall be an amount equal to--
                            ``(i) the aggregate amount of distributions 
                        described in section 72(t)(2)(G) (not 
                        attributable to earnings) made with respect to 
                        such participant, over
                            ``(ii) the aggregate amount of such 
                        distributions (not attributable to earnings) 
                        previously taken into account under this 
                        subsection or section 219(b)(5)(B).
            ``(3) Treatment of contributions.--Rules similar to the 
        rules of paragraphs (3) and (4) of subsection (v) shall apply 
        with respect to contributions made under this subsection.
            ``(4) Definitions.--For purposes of this subsection, the 
        terms `applicable employer plan' and `elective deferral' have 
        the same meanings given such terms in subsection (v)(6).''.
            (4) Conforming amendment.--Section 414(v)(2)(A)(ii)(II) of 
        such Code (relating to limitation on amount of additional 
        deferrals) is amended by inserting ``(other than deferrals 
        under subsection (w))'' after ``deferrals''.
            (5) Effective date.--The amendments made by this subsection 
        shall apply to contributions in taxable years ending after 
        December 31, 2001.
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