I 111th CONGRESS 1st Session H. R. 1629 IN THE HOUSE OF REPRESENTATIVES March 19, 2009 Mr. McCotter (for himself and Mr. Marchant) 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 provide penalty free distributions and loans from certain retirement plans for the purchase and refinancing of principal residences.

1.

Short title

This Act may be cited as the Helping Americans Keep Their Homes Act of 2009.

2.

Modification of waiver of tax on early distributions from certain retirement plans for purchase of principal residence

(a)

Increase in dollar limitation

Clause (i) of section 72(t)(8)(B) of the Internal Revenue Code of 1986 is amended by striking $10,000 and inserting $15,000. (b)

Temporary waiver of first-time homebuyer requirement

Subparagraph (D) of section 72(t)(8) of such Code is amended by adding at the end the following new clause: (iv)

Temporary waiver of first-time homebuyer requirement

In the case of distributions made before January 1, 2011, all individuals shall be treated as first-time homebuyers.. (c)

Expansion of penalty waiver to all qualified retirement plans

Subparagraph (F) of section 72(t)(2) of such Code is amended by striking from an individual retirement plan and inserting from a qualified retirement plan (as defined in section 4974(c)). (d)

Effective date

The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.

3.

Loans from individual retirement plans for refinancing of a principal residence

(a)

In general

Subsection (e) of section 408 of the Internal Revenue Code of 1986 (relating to tax treatment of accounts and annuities) is amended by adding at the end the following new paragraph: (7)

Exception for loans from individual retirement plans for qualified principal residence refinancing

(A)

In general

Paragraphs (2) and (3) of this subsection and section 4975 shall not apply with respect to any qualified principal residence refinancing loan from an individual retirement plan to the individual for whose benefit the plan is maintained to the extent that such loan (when added to the outstanding balance of all other such loans) does not exceed $5,000 reduced by the excess (if any) of— (i)the highest outstanding balance of such loans during the 1-year period ending on the day before the date on which such loan was made, over (ii)the outstanding balance of such loans on the date on which such loan was made. (B)

Qualified principal residence refinancing loan

For purposes of this paragraph, the term qualified principal residence refinancing loan means a loan the proceeds of which are used by the individual for whose benefit the individual retirement plan is established to pay costs associated with the refinancing of indebtedness which is secured by the principal residence (within the meaning of section 121) of the taxpayer (including payment of such indebtedness if such payment is in connection with the refinancing of the remaining indebtedness). (C)

Requirements related to loan repayments

(i)

Requirement that loan be repaid within 5 years

Paragraph (1) shall not apply to any loan unless such loan is required, by its terms, to be repaid within 5 years. (ii)

Requirement of level amortization

Rules similar to the rules of section 72(p)(2)(C) shall apply for purposes of this subsection. (iii)

Failure to repay treated as distribution

A qualified principal residence refinancing loan shall not be treated as a distribution from the individual retirement plan except that any repayment of a qualified principal residence refinancing loan which is not made on the date that such payment is due shall be treated as a distribution from the individual retirement plan on such date. (D)

Termination

Subparagraph (A) shall not apply to any loan made after December 31, 2010. . (b)

Effective date

The amendments made by this section shall apply to loans made after the date of the enactment of this Act.