I 111th CONGRESS 2d Session H. R. 5602 IN THE HOUSE OF REPRESENTATIVES June 24, 2010 Mr. Putnam (for himself and Mr. Boustany) 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 for distributions from retirement plans for losses as a result of the explosion on and sinking of the mobile offshore drilling unit Deepwater Horizon, the discharge of oil in the Gulf of Mexico caused by such explosion and sinking, or the effects of such discharge on the economy in the areas affected by such discharge.

1.

Short title

This Act may be cited as the Gulf Coast Access to Savings Act of 2010.

2.

Distributions from retirement plans for losses by reason of Gulf Oil Spill

(a)

In general

Subchapter Y of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part: IV

Gulf Oil Spill

1400V-1.

Special rules for use of retirement funds

(a)

Tax-favored withdrawals from retirement plans

(1)

In general

Section 72(t) shall not apply to any qualified oil spill distribution. (2)

Aggregate dollar limitation

(A)

In general

For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified oil spill distributions for any taxable year shall not exceed the excess (if any) of— (i)$50,000, over (ii)the aggregate amounts treated as qualified oil spill distributions received by such individual for all prior taxable years. (B)

Treatment of plan distributions

If a distribution to an individual would (without regard to subparagraph (A)) be a qualified oil spill distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such distribution as a qualified oil spill distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $50,000. (C)

Controlled group

For purposes of subparagraph (B), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414. (3)

Amount distributed may be repaid

(A)

In general

Any individual who receives a qualified oil spill distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be. (B)

Treatment of repayments of distributions from eligible retirement plans other than IRAs

For purposes of this title, if a contribution is made pursuant to subparagraph (A) with respect to a qualified oil spill distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified oil spill distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (C)

Treatment of repayments for distributions from IRAs

For purposes of this title, if a contribution is made pursuant to subparagraph (A) with respect to a qualified oil spill distribution from an individual retirement plan (as defined by section 7701(a)(37)), then, to the extent of the amount of the contribution, the qualified oil spill distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (4)

Definitions

For purposes of this subsection— (A)

Qualified oil spill distribution

Except as provided in paragraph (2), the term qualified oil spill distribution means any distribution from an eligible retirement plan made on or after April 20, 2010, and before January 1, 2011, to an individual whose principal place of abode on April 20, 2010, is located in the State of Florida, Alabama, Mississippi, Louisiana, or Texas and who has sustained an economic loss as a result of the explosion on and sinking of the mobile off shore drilling unit Deepwater Horizon, the discharge of oil in the Gulf of Mexico caused by such explosion and sinking, or the effects of such discharge on the economy in the areas affected by such discharge. (B)

Eligible retirement plan

The term eligible retirement plan shall have the meaning given such term by section 402(c)(8)(B). (5)

Income inclusion spread over 3-year period

(A)

In general

In the case of any qualified oil spill distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable year period beginning with such taxable year. (B)

Special rule

For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) shall apply. (6)

Special rules

(A)

Exemption of distributions from trustee to trustee transfer and withholding rules

For purposes of sections 401(a)(31), 402(f), and 3405, qualified oil spill distributions shall not be treated as eligible rollover distributions. (B)

Qualified hurricane distributions treated as meeting plan distribution requirements

For purposes this title, a qualified hurricane distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A). (b)

Recontributions of withdrawals for home purchases

(1)

Recontributions

(A)

In general

Any individual who received a qualified distribution may, during the applicable period, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B)) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may be. (B)

Treatment of repayments

Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection. (2)

Qualified distribution

For purposes of this subsection— (A)

In general

The term qualified distribution means any distribution— (i)described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F), (ii)received after October 19, 2009, and before April 20, 2010, and (iii)which was to be used to purchase or construct a principal residence in the State of Florida, Alabama, Mississippi, Louisiana, or Texas Hurricane Katrina disaster area, but which was not so purchased or constructed on account of the explosion on and sinking of the mobile off shore drilling unit Deepwater Horizon or the discharge of oil in the Gulf of Mexico caused by such explosion and sinking. (3)

Applicable period

For purposes of this subsection, the term applicable period means the period beginning on April 20, 2010, and ending on December 31, 2010. (c)

Loans from qualified plans

(1)

Increase in limit on loans not treated as distributions

In the case of any loan from a qualified employer plan (as defined under section 72(p)(4)) to a qualified individual made during the applicable period— (A)clause (i) of section 72(p)(2)(A) shall be applied by substituting $100,000 for $50,000, and (B)clause (ii) of such section shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan for one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan. (2)

Delay of repayment

In the case of a qualified individual with an outstanding loan on or after the qualified beginning date from a qualified employer plan (as defined in section 72(p)(4))— (A)if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) for any repayment with respect to such loan occurs during the period beginning on the qualified beginning date and ending on December 31, 2010, such due date shall be delayed for 1 year, (B)any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and (C)in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2), the period described in subparagraph (A) shall be disregarded. (3)

Qualified individual

For purposes of this subsection, the term qualified individual means any individual whose principal place of abode on April 20, 2010, is located in the State of Florida, Alabama, Mississippi, Louisiana, or Texas and who has sustained an economic loss as a result of the explosion on and sinking of the mobile off shore drilling unit Deepwater Horizon, the discharge of oil in the Gulf of Mexico caused by such explosion and sinking, or the effects of such discharge on the economy in the areas affected by such discharge. (4)

Applicable period; qualified beginning date

For purposes of this subsection— (A)the applicable period is the period beginning on April 20, 2010, and ending on December 31, 2010, and (B)the qualified beginning date is April 20, 2010. (d)

Provisions relating to plan amendments

(1)

In general

If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i). (2)

Amendments to which subsection applies

(A)

In general

This subsection shall apply to any amendment to any plan or annuity contract which is made— (i)pursuant to any provision of this section, or pursuant to any regulation issued by the Secretary or the Secretary of Labor under any provision of this section, and (ii)on or before the last day of the first plan year beginning on or after April 20, 2010, or such later date as the Secretary may prescribe. In the case of a governmental plan (as defined in section 414(d)), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii).(B)

Conditions

This subsection shall not apply to any amendment unless— (i)during the period— (I)beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and (II)ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect, and(ii)such plan or contract amendment applies retroactively for such period.

. (b)

Conforming amendment

The table of sections for subchapter Y of chapter 1 of such Code is amended by adding at the end the following new item: Part IV—Gulf Oil Spill Sec. 1400V-1. Special rules for use of retirement funds. . (c)

Effective date

The amendments made by this Act shall apply to distributions on or after April 20, 2010.