II 112th CONGRESS 1st Session S. 1432 IN THE SENATE OF THE UNITED STATES July 27, 2011 Mr. Nelson of Florida 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 modify the exception from the 10-percent penalty for early withdrawals from governmental plans for Federal and State qualified public safety employees.

1.

Modification of exception from 10-percent early withdrawal penalty for Federal and State public safety employees

(a)

Repeal of restriction to defined benefit plans

Subparagraph (A) of section 72(t)(10)(A) of the Internal Revenue Code of 1986 is amended by striking which is a defined benefit plan. (b)

Inclusion of Federal employees

Subparagraph (B) of section 72(t)(10) of such Code is amended to read as follows: (B)

Qualified public safety employee

For purposes of this paragraph, the term qualified public safety employee means any employee of the Government of the United States, a State or political subdivision of a State, or any agency or instrumentality of any of the foregoing who provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of the Government of the United States, or such State or political subdivision, as the case may be. . (c)

Application to annuities commencing before the Pension Protection Act of 2006

Paragraph (10) of section 72(t) is amended by adding at the end the following new subparagraph: (C)

Transitional rule for annuities

Paragraph (4) shall not apply to any modification to a series of substantially equal periodic payments which are made with respect to a qualified public safety employee if such series of payments commenced— (i)before the date of the enactment of the Pension Protection Act of 2006, and (ii)after such qualified public safety employee’s separation from service after attainment of age 50. . (d)

Effective dates

(1)

In general

The amendments made by subsections (a) and (b) shall apply to distributions made after the date of the enactment of the Pension Protection Act of 2006. (2)

Transitional rule for annuities

The amendment made by subsection (c) shall apply to modifications made after the date of the enactment of the Pension Protection Act of 2006.