I 112th CONGRESS 1st Session H. R. 2262 IN THE HOUSE OF REPRESENTATIVES June 21, 2011 Mr. Paul 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 exclude from gross income amounts distributed from tax-favored accounts during a period of unemployment.

1.

Short title

This Act may be cited as the Unemployment Assistance Act of 2011.

2.

Exclusion from gross income of unemployment distributions from tax-favored accounts

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code is amended by inserting after section 139D the following new section:

139E.

Distributions from tax-favored account during periods of unemployment

(a)

In general

Gross income shall not include any qualified unemployment distribution from a tax-favored account. (b)

Definitions

For purposes of this section— (1)

Qualified unemployment distribution

(A)

In general

The term qualified unemployment distribution means, with respect to an individual, any distribution from a tax-favored account of such individual to the extent such distribution— (i)is made during a period of unemployment which does not exceed 2 years, and (ii)is used during such period by the individual to pay qualified living expenses, qualified health care expenses, or qualified education or job training expenses. (B)

Qualified living expenses

The term qualified living expenses means any of the following expenses of the taxpayer: rent, acquisition indebtedness (as defined in section 164(h)(3)(B)), groceries, repairs with respect to a vehicle or principal residence (within the meaning of section 121) of the taxpayer, and any other such necessary and common expenses of the individuals. Such term shall not include any prepayment of rent or acquisition indebtedness. (C)

Qualified health care expenses

The term qualified health care expenses means amounts paid by such individual for medical care (as defined in section 213(d) for such individual, the spouse of such individual, and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, but only to the extent such amounts are not compensated for by insurance or otherwise. (D)

Qualified education or job training expenses

The term qualified education or job training expenses means any expenses which would (but for subsection (c)) be qualified tuition and related expenses for purposes of section 25A(c) (relating to Lifetime Learning Credit). (2)

Tax-favored account

The term tax-favored account means any of the following: (A)An eligible retirement plan (as defined in section 402(c)(8)(B)). (B)A health savings account described in section 223. (C)A Roth IRA. (D)A qualified tuition program described in section 529. (c)

Amount distributed may be repaid

(1)

In general

Any individual who receives a qualified unemployment distribution may make one or more contributions in an aggregate amount not to exceed the amount of such distribution to a tax-favored account 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), 223(f)(5), or 529(c)(3)(C), as the case may be. (2)

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

For purposes of this title, if a contribution is made pursuant to paragraph (1) with respect to a qualified unemployment 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 unemployment 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. (3)

Treatment of repayments for distributions from IRAs

For purposes of this title, if a contribution is made pursuant to paragraph (1) with respect to a qualified unemployment 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 unemployment 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)

Other tax-favored accounts

For purposes of this title, if a contribution is made pursuant to paragraph (a) with respect to a qualified unemployment distribution— (A)from a health savings account described in section 223, or (B)from a qualified tuition program described in section 529, then, to the extent of the amount of the contribution, the qualified unemployment distribution shall be treated as a distribution described in section 529(c)(3)(C) or 223(f)(5), as the case may be, and as having been transferred to such account or program, as the case may be, within 60 days of the distribution.(d)

Denial of double benefit

Any qualified unemployment distribution with respect to any expense described in (b)(1)(A)(ii) which is excluded from gross income under this section shall not be taken into account in determining any deduction or credit under this chapter relating to such an expense.

. (b)

Clerical amendment

The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139D the following new section: Sec. 139E. Distributions from tax-favored account during periods of unemployment. . (c)

Effective date

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