[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7185 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 7185
To amend the Internal Revenue Code of 1986 to exclude from gross income
certain retirement plan distributions used for a down payment or
closing costs for a principal residence, and for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
January 21, 2026
Mr. McGuire introduced the following bill; which was referred to the
Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income
certain retirement plan distributions used for a down payment or
closing costs for a principal residence, and for other purposes.
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 ``Home Savings Act''.
SEC. 2. EXCLUSION FROM GROSS INCOME OF RETIREMENT PLAN DISTRIBUTIONS
USED FOR A DOWN PAYMENT OR CLOSING COSTS FOR A PRINCIPAL
RESIDENCE.
(a) In General.--
(1) Defined contribution plans.--Section 402 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(m) Distributions for a Down Payment or Closing Costs for a
Principal Residence.--
``(1) In general.--The gross income of an employee for any
taxable year shall not include any distribution from a defined
contribution plan of such employee to the extent that such
distribution is used for a down payment or closing costs
associated with acquiring a principal residence of--
``(A) the employee, or
``(B) an eligible relative of the employee.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible relative.--The term `eligible
relative' means, with respect to any employee--
``(i) the spouse of the employee, or
``(ii) any child, grandchild, or ancestor
of--
``(I) the employee, or
``(II) the spouse of the employee.
``(B) Defined contribution plan.--The term `defined
contribution plan' has the meaning given the term in
section 414(i).
``(C) Principal residence.--The term `principal
residence' has the same meaning as when used in section
121.
``(3) Application of section 72.--Rules similar to the
rules of section 408(d)(10)(C) shall apply for purposes of this
subsection, by taking into account all amounts in the defined
contribution plan to which the employee has nonforfeitable
right in lieu of all amounts in all individual retirement plans
of the individual.
``(4) Gift tax treatment.--So much of any transfer of a
distribution described in paragraph (1) by the employee to an
eligible relative as is used by such eligible relative for a
down payment or closing costs associated with acquiring a
principal residence of such eligible relative shall not be
treated as a gift for purposes of section 2503(a).
``(5) Termination date.--Paragraph (1) shall not apply to
distributions made in taxable years beginning after December
31, 2030.''.
(2) Certain annuity plans.--Section 403 of such Code is
amended by adding at the end the following new subsection:
``(d) Distributions for a Down Payment or Closing Costs for a
Principal Residence.--
``(1) In general.--The rules of section 402(m) shall apply
to distributions under an annuity plan described in subsection
(a) or an annuity contract described in subsection (b).
``(2) Termination date.--Paragraph (1) shall not apply to
distributions made in taxable years beginning after December
31, 2030.''.
(3) Individual retirement plans.--Section 408(d) of such
Code is amended by adding at the end the following new
paragraph:
``(10) Distributions for a down payment or closing costs
for a principal residence.--
``(A) In general.--The gross income of an
individual for any taxable year shall not include any
distribution from an individual retirement plan of such
individual to the extent that such distribution is used
for a down payment or closing costs associated with
acquiring a principal residence of--
``(i) the individual, or
``(ii) an eligible relative of the
individual.
``(B) Definitions.--For purposes of this
paragraph--
``(i) Eligible relative.--The term
`eligible relative' means, with respect to any
individual--
``(I) the spouse of the individual,
or
``(II) any child, grandchild, or
ancestor of--
``(aa) the individual, or
``(bb) the spouse of the
individual.
``(ii) Individual retirement plan.--The
term `individual retirement plan' has the
meaning given the term in section 7701.
``(iii) Principal residence.--The term
`principal residence' has the same meaning as
when used in section 121.
``(C) Application of section 72.--Notwithstanding
section 72, in determining the extent to which a
distribution is used for a down payment or closing
costs pursuant to subparagraph (A), the entire amount
of the distribution shall be treated as includible in
gross income without regard to such subparagraph to the
extent that such amount does not exceed the aggregate
amount which would have been so includible if all
amounts in all individual retirement plans of the
individual were distributed during such taxable year
and all such plans were treated as 1 contract for
purposes of determining under section 72 the aggregate
amount which would have been so includible. Proper
adjustments shall be made in applying section 72 to
other distributions in such taxable year and subsequent
taxable years.
``(D) Gift tax treatment.--So much of any transfer
of a distribution described in subparagraph (A) by the
individual to an eligible relative as is used by such
eligible relative for a down payment or closing costs
associated with acquiring a principal residence of such
eligible relative shall not be treated as a gift for
purposes of section 2503(a).
``(E) Termination date.--Subparagraph (A) shall not
apply to distributions made in taxable years beginning
after December 31, 2030.''.
(4) 457(b) plans.--Section 457(e) of such Code is amended
by adding at the end the following new paragraph:
``(19) Distributions for a down payment or closing costs
for a principal residence.--
``(A) In general.--The rules of section 402(m)
shall apply to distributions under an eligible deferred
compensation plan established and maintained by an
employer described in paragraph (1)(A).
``(B) Termination date.--Subparagraph (A) shall not
apply to distributions made in taxable years beginning
after December 31, 2030.''.
(b) Effective Date.--The amendments made by this section shall
apply to distributions made in taxable years beginning after December
31, 2025.
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