II 

112TH CONGRESS 

1ST SESSION S. 1656 

To amend the Internal Revenue Code of 1986 to provide penalty free distributions from certain retirement plans for mortgage payments with respect 

to a principal residence and to modify the rules governing hardship 

distributions. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 5, 2011 

Mr. ISAKSON 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 provide 

penalty free distributions from certain retirement plans 

for mortgage payments with respect to a principal residence and to modify the rules governing hardship distributions. 

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 ‘‘Hardship Outlays to 

5 protect Mortgagee Equity (HOME) Act’’. 


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•S 1656 IS

1 SEC. 2. WAIVER OF TAX ON EARLY DISTRIBUTIONS FROM 

2 CERTAIN RETIREMENT PLANS FOR MORT3 GAGE PAYMENTS WITH RESPECT TO A PRIN4 CIPAL RESIDENCE. 

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

6 the Internal Revenue Code of 1986 is amended by adding 

7 at the end the following new subparagraph: 

8 ‘‘(H) DISTRIBUTIONS FOR PRINCIPAL RES9 IDENCE MORTGAGE PAYMENTS.—Distributions 

10 to an individual which are qualified principal 

11 residence mortgage payment distributions (as 

12 defined in paragraph (9)). Distributions shall 

13 not be taken into account under the preceding 

14 sentence if such distributions are described in 

15 subparagraph (A), (C), (D), (E), or (F) or to 

16 the extent paragraph (1) does not apply to such 

17 distributions by reason of subparagraph (B).’’. 

18 (b) QUALIFIED PRINCIPAL RESIDENCE MORTGAGE

19 PAYMENT DISTRIBUTIONS.—Subsection (t) of section 72 

20 of such Code is amended by redesignating paragraphs (9) 

21 and (10) as paragraphs (10) and (11), respectively, and 

22 by inserting after paragraph (8) the following new para23 graph: 

24 ‘‘(9) QUALIFIED PRINCIPAL RESIDENCE MORT25 GAGE PAYMENT DISTRIBUTIONS.— 


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•S 1656 IS

1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (2)(H), the term ‘qualified principal resi3 dence mortgage payment distribution’ means 

4 any payment or distribution received by an indi5 vidual to the extent such payment or distribu6 tion is used by the individual before the close 

7 of the 120th day after the day on which such 

8 payment or distribution is received to pay quali9 fied mortgage costs with respect to a principal 

10 residence (within the meaning of section 121) 

11 of such individual or the spouse of such indi12 vidual. 

13 ‘‘(B) AGGREGATE LIFETIME DOLLAR LIMI14 TATION.—The aggregate amount of payments 

15 or distributions received by an individual which 

16 may be treated as qualified principal residence 

17 mortgage payment distributions for any taxable 

18 year shall not exceed the excess (if any) of— 

19 ‘‘(i) $50,000, over 

20 ‘‘(ii) the aggregate amounts treated as 

21 qualified principal residence mortgage pay22 ment distributions with respect to such in23 dividual for all prior taxable years. 

24 ‘‘(C) PLAN DOLLAR LIMITATION.—The ag25 gregate amount of payments or distributions reVerDate Mar 15 2010 00:36 Oct 06, 2011 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1656.IS S1656

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•S 1656 IS

1 ceived by an individual which may be treated as 

2 qualified principal residence mortgage payment 

3 distributions with respect to any qualified re4 tirement plan (as defined in section 4974(c)) 

5 for any taxable year shall not exceed one-half 

6 the present value of the nonforfeitable accrued 

7 benefit of the individual under the plan (deter8 mined as of the beginning of such taxable year). 

9 ‘‘(D) QUALIFIED MORTGAGE COSTS.—For 

10 purposes of this paragraph, the term ‘qualified 

11 mortgage costs’ means amounts paid as prin12 cipal or interest on acquisition indebtedness, as 

13 defined in section 163(h)(3)(B), except that— 

14 ‘‘(i) the dollar limitation of clause (ii) 

15 of such section shall not apply, and 

16 ‘‘(ii) any reference to a qualified resi17 dence shall be treated as a reference to the 

18 principal residence referred to in subpara19 graph (A).’’. 

20 (c) CONFORMING AMENDMENTS.— 

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

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

23 (IV), by striking ‘‘and’’ at the end of subclause (V) 

24 and inserting ‘‘or’’, and by adding at the end the fol25 lowing new subclause: 


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•S 1656 IS

1 ‘‘(VI) in the case of a qualified 

2 principal residence mortgage payment 

3 distribution (as defined in section 

4 72(t)(9)), the date of such distribu5 tion, and’’. 

6 (2) Paragraphs (7)(A)(ii) and (11)(C) of sec7 tion 403(b) of such Code are each amended by strik8 ing ‘‘section 72(t)(2)(G)’’ and inserting ‘‘subpara9 graph (G) or (H) of section 72(t)’’. 

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

11 this section shall apply to distributions made in taxable 

12 years ending after the date of the enactment of this Act. 

Æ 


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