II 

109TH CONGRESS 

1ST SESSION S. 343 

To provide for qualified withdrawals from the Capital Construction Fund 

for fishermen leaving the industry and for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 10, 2005 

Mr. WYDEN (for himself and Mr. SMITH) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL

To provide for qualified withdrawals from the Capital Construction Fund for fishermen leaving the industry and 

for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Capital Construction 

5 Fund Qualified Withdrawal Act of 2005’’. 
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1 SEC. 2. AMENDMENT OF THE MERCHANT MARINE ACT OF 

2 1936 TO ENCOURAGE RETIREMENT OF CER3 TAIN FISHING VESSELS AND PERMITS. 

4 (a) IN GENERAL.—Section 607(a) of the Merchant 

5 Marine Act, 1936 (46 U.S.C. App. 1177(a)) is amended 

6 by adding at the end the following: ‘‘Any agreement en7 tered into under this section may be modified for the pur8 pose of encouraging the sustainability of the fisheries of 

9 the United States by making the termination and with10 drawal of a capital construction fund a qualified with11 drawal if done in exchange for the retirement of the re12 lated commercial fishing vessels and related commercial 

13 fishing permits.’’. 

14 (b) NEW QUALIFIED WITHDRAWALS.— 

15 (1) IN GENERAL.—Section 607(f)(1) of the 

16 Merchant Marine Act, 1936 (46 U.S.C. App. 

17 1177(f)(1)) is amended— 

18 (A) by striking ‘‘for:’’ and inserting 

19 ‘‘for—’’; 

20 (B) by striking ‘‘vessel’’ in subparagraph 

21 (A) and inserting ‘‘vessel;’’; 

22 (C) by striking ‘‘vessel, or’’ in subpara23 graph (B) and inserting ‘‘vessel;’’; 

24 (D) by striking ‘‘vessel.’’ in subparagraph 

25 (C) and inserting ‘‘vessel;’’; and 
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1 (E) by inserting after subparagraph (C) 

2 the following: 

3 ‘‘(D) the payment of an industry fee au4 thorized by the fishing capacity reduction pro5 gram under section 312(b) of the Magnuson6 Stevens Fishery Conservation and Management 

7 Act (16 U.S.C. 1861a(b)); 

8 ‘‘(E) in the case of any such person or 

9 shareholder for whose benefit such fund was es10 tablished with respect to any vessel operated in 

11 the fisheries of the United States, or any share12 holder of such person, a rollover contribution 

13 (within the meaning of section 408(d)(3) of the 

14 Internal Revenue Code of 1986) to such per15 son’s or shareholder’s individual retirement plan 

16 (as defined in section 7701(a)(37) of such 

17 Code); 

18 ‘‘(F) the payment of the net proceeds de19 posited into the fund from a sale described in 

20 subsection (b)(1)(C)(ii) to a person retiring re21 lated commercial fishing vessels and permits; 

22 ‘‘(G) the acquisition of a vessel monitoring 

23 system as a safety improvement for a fishing 

24 vessel; or 
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1 ‘‘(H) the acquisition or construction of 

2 fishing gear designed to minimize or avoid by3 catch as required under section 301(a)(9) of the 

4 Magnuson-Stevens Fishery Conservation and 

5 Management Act (16 U.S.C. 1851(a)(9)).’’. 

6 (2) REDUCTION PROGRAM SALE PROCEEDS AL7 LOWED IN DETERMINING DEPOSIT CEILING.—Sec8 tion 607(b)(1)(C) of such Act (46 U.S.C. App. 

9 1177(b)(1)(C)) is amended by striking ‘‘or (ii)’’ and 

10 inserting ‘‘(ii) the sale of any agreement vessel or 

11 fishing permit retired through the fishing capacity 

12 reduction program under section 312(b) of the Mag13 nuson-Stevens Fishery Conservation and Manage14 ment Act (16 U.S.C. 1861a(b)), or (iii)’’. 

15 (3) CERTAIN QUALIFIED WITHDRAWALS TREAT16 ED AS WITHDRAWN FROM THE CAPITAL ACCOUNT.—

17 Section 607(e)(2)(B) of such Act (46 U.S.C. App. 

18 1177(e)(2)(B)) is amended by adding at the end 

19 ‘‘unless such portion represents gain from a sale de20 scribed in subsection (b)(1)(C)(ii) and is withdrawn 

21 for any purpose provided under subparagraph (D), 

22 (E), or (F) of subsection (f)(1),’’. 

23 (4) SECRETARY TO ENSURE RETIREMENT OF

24 VESSELS AND PERMITS.—The Secretary of Com25 merce by regulation shall establish procedures to en-
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1 sure that any person making a qualified withdrawal 

2 authorized by section 607(f)(1)(F) of the Merchant 

3 Marine Act, 1936 (46 U.S.C. App. 1177(f)(1)(F)) 

4 retires the related commercial use of fishing vessels 

5 and commercial fishery permits. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) IN GENERAL.—Section 7518(e)(1) of the 

8 Internal Revenue Code of 1986 (relating to purposes 

9 of qualified withdrawals) is amended— 

10 (A) by striking ‘‘for:’’ and inserting 

11 ‘‘for—’’; 

12 (B) by striking ‘‘vessel, or’’ in subpara13 graph (B) and inserting ‘‘vessel;’’; 

14 (C) by striking ‘‘vessel.’’ in subparagraph 

15 (C) and inserting ‘‘vessel;’’; 

16 (D) by inserting after subparagraph (C) 

17 the following: 

18 ‘‘(D) the payment of an industry fee au19 thorized by the fishing capacity reduction pro20 gram under section 312 of the Magnuson-Ste21 vens Fishery Conservation and Management 

22 Act (16 U.S.C. 1861a); 

23 ‘‘(E) in the case of any person or share24 holder for whose benefit such fund was estab25 lished with respect to any vessel operated in the 
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1 fisheries of the United States, or any share2 holder of such person, a rollover contribution 

3 (within the meaning of section 408(d)(3)) to 

4 such person’s or shareholder’s individual retire5 ment plan (as defined in section 7701(a)(37)); 

6 ‘‘(F) the payment of the net proceeds de7 posited into the fund from a sale described in 

8 subsection (a)(1)(C)(ii) to a person retiring re9 lated commercial fishing vessels and permits; 

10 ‘‘(G) the acquisition of a vessel monitoring 

11 system as a safety improvement for a fishing 

12 vessel; or 

13 ‘‘(H) the acquisition or construction of 

14 fishing gear designed to minimize or avoid by15 catch as required under section 301(a)(9) of the 

16 Magnuson-Stevens Fishery Conservation and 

17 Management Act (16 U.S.C. 1851(a)(9)).’’. 

18 (2) REDUCTION PROGRAM SALE PROCEEDS AL19 LOWED IN DETERMINING DEPOSIT CEILING.—Sec20 tion 7518(a)(1)(C) of such Code is amended by 

21 striking ‘‘or’’ at the end of clause (i), by redesig22 nating clause (ii) as clause (iii), and by inserting 

23 after clause (i) the following new clause: 

24 ‘‘(ii) the sale of any agreement vessel 

25 or fishing permit retired through the fish-
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1 ing capacity reduction program under sec2 tion 312(b) of the Magnuson-Stevens Fish3 ery Conservation and Management Act (16 

4 U.S.C. 1861a(b)), or’’. 

5 (3) CERTAIN QUALIFIED WITHDRAWALS TREAT6 ED AS WITHDRAWN FROM THE CAPITAL ACCOUNT.—

7 Section 7718(d)(2)(B) of such Code is amended by 

8 adding at the end ‘‘unless such portion represents 

9 gain from a sale described in subsection (a)(1)(C)(ii) 

10 and is withdrawn for any purpose provided under 

11 subparagraph (D), (E), or (F) of subsection 

12 (e)(1),’’. 

13 (4) SECRETARY TO ENSURE RETIREMENT OF

14 VESSELS AND PERMITS.—The Secretary of the 

15 Treasury by regulation shall establish procedures to 

16 ensure that any person making a qualified with17 drawal authorized by section 7518(e)(1)(F) of the 

18 Internal Revenue Code of 1986 retires the related 

19 commercial use of fishing vessels and commercial 

20 fishery permits referred to therein. 

21 (d) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to withdrawals made after the date 

23 of enactment of this Act.

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