I

104TH CONGRESS

1ST SESSION H. R. 1148

To amend the Internal Revenue Code of 1986 to permit penalty-free

withdrawals by unemployed individuals from certain retirement plans.

IN THE HOUSE OF REPRESENTATIVES

MARCH 7, 1995

Mr. LAZIO of New York (for himself, Ms. MOLINARI, Mr. FORBES, Mr. TRAFICANT, Mr. KING, Mr. FOX of Pennsylvania, Mr. PACKARD, Mr. SAXTON,

Mr. ACKERMAN, Mrs. MALONEY, Mr. WATT of North Carolina, Ms.

LOFGREN, Mr. LIPINSKI, Mr. HILLIARD, Mr. SERRANO, Mr. MCCRERY,

and Mr. ENGLISH of Pennsylvania) 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 permit

penalty-free withdrawals by unemployed individuals from

certain retirement plans.

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

3 SECTION 1. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE

4 USED WITHOUT PENALTY DURING PERIODS

5 OF UNEMPLOYMENT.

6 (a) IN GENERAL.—Paragraph (2) of section 72(t) of

7 the Internal Revenue Code of 1986 (relating to exceptions

8 to 10-percent additional tax on early distributions from
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1 qualified retirement plans) is amended by adding at the

2 end the following new subparagraph:

3 ‘‘(D) DISTRIBUTIONS FROM CERTAIN

4 PLANS DURING PERIODS OF UNEMPLOYMENT.—

5 Distributions to an individual from an individ6 ual retirement plan, or from amounts attrib7 utable to employer contributions made pursuant

8 to elective deferrals described in subparagraph

9 (A) or (C) of section 402(g)(3) or section

10 501(c)(18)(D)(iii), during a period—

11 ‘‘(i) for which such individual is re12 ceiving unemployment compensation (as

13 defined in section 85(b)), or

14 ‘‘(ii) for which such individual would

15 have been entitled to receive unemployment

16 compensation (as so defined) but for—

17 ‘‘(I) the termination of the period

18 during which such compensation was

19 payable, or

20 ‘‘(II) an exhaustion of such indi21 vidual’s rights to such compensation.

22 The preceding sentence shall apply only to the

23 extent that the amount of the distributions dur24 ing any period do not exceed the reasonable liv25 ing expenses of the taxpayer for such period.’’
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Subparagraph (B) of section 72(t)(2) of

3 such Code is amended by striking ‘‘or (C)’’ and in4 serting ‘‘, (C) or (D)’’.

5 (2) Section 401(k)(2)(B)(i) of such Code is

6 amended by striking ‘‘or’’ at the end of subclause

7 (III), by striking ‘‘and’’ at the end of subclause (IV)

8 and inserting ‘‘or’’, and by inserting after subclause

9 (IV) the following new subclause:

10 ‘‘(V) the date on which a period

11 referred to in section 72(t)(2)(D) be12 gins, and’’.

13 (3) Section 403(b)(11) of such Code is amend14 ed by striking ‘‘or’’ at the end of subparagraph (A),

15 by striking the period at the end of subparagraph

16 (B) and inserting ‘‘, or’’, and by inserting after sub17 paragraph (B) the following new subparagraph:

18 ‘‘(C) for distributions to which 72(t)(2)(D)

19 applies.’’

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to payments and distributions after

22 the date of the enactment of this Act.

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