[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4193 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 4193

  To amend the Internal Revenue Code of 1986 to waive the 10-percent 
additional tax on early distributions from section 401(k) plans in the 
    case of hardship of certain employees due to facility closures, 
       employers in bankruptcy, or plan termination proceedings.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 1, 2005

 Mr. Ryan of Ohio 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 waive the 10-percent 
additional tax on early distributions from section 401(k) plans in the 
    case of hardship of certain employees due to facility closures, 
       employers in bankruptcy, or plan termination proceedings.

    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 ``401(k) Penalty Relief Act of 2005''.

SEC. 2. 10-PERCENT ADDITIONAL TAX ON EARLY DISTRIBUTIONS FROM QUALIFIED 
              RETIREMENT PLANS NOT TO APPLY TO CERTAIN HARDSHIP 
              DISTRIBUTIONS FROM SECTION 401(K) PLANS.

    (a) In General.--Subparagraph (A) of section 72(t)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``or'' at the end 
of clause (vi), by striking the period at the end of clause (vii) and 
inserting ``, or'', and by adding at the end the following new clause:
                            ``(viii) made from a cash or deferred 
                        arrangement (as defined in section 401(k)) upon 
                        the hardship of the employee if the adjusted 
                        gross income of the taxpayer for the taxable 
                        year (determined without regard to such 
                        distributions) in which such distribution is 
                        received does not exceed $100,000 ($200,000 in 
                        the case of a joint return) and--
                                    ``(I) the employer maintaining the 
                                plan of which such arrangement is a 
                                part is a debtor in a title 11 or 
                                similar case (as defined in section 
                                368(a)(3)),
                                    ``(II) proceedings have been 
                                commenced under the Employee Retirement 
                                Income Security Act of 1974 to 
                                terminate such plan, or
                                    ``(III) the employee separates from 
                                employment on account of the closure of 
                                a facility of the employer.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions after the date of the enactment of this Act.
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