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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3043 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  1st Session
                                S. 3043

To provide special rules for retirement accounts and personal casualty 
   losses with respect to certain major disasters occurring in 2023.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 16, 2023

Ms. Hirono (for herself and Mr. Schatz) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To provide special rules for retirement accounts and personal casualty 
   losses with respect to certain major disasters occurring in 2023.

    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 ``Natural Disaster Tax Relief Act of 
2023''.

SEC. 2. DEFINITIONS.

    For purposes of this Act--
            (1) Qualified disaster area.--The term ``qualified disaster 
        area'' means any area with respect to which a major disaster 
        was declared, during calendar year 2023, by the President under 
        section 401 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act if the incident period of the disaster 
        with respect to which such declaration is made begins during 
        calendar year 2023.
            (2) Qualified disaster.--The term ``qualified disaster'' 
        means, with respect to any qualified disaster area, the 
        disaster by reason of which a major disaster was declared with 
        respect to such area.
            (3) Incident period.--The term ``incident period'' means, 
        with respect to any qualified disaster, the period specified by 
        the Federal Emergency Management Agency as the period during 
        which such disaster occurred (except that for purposes of this 
        Act such period shall not be treated as ending after January 
        31, 2024).

SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.

    (a) Tax-Favored Withdrawals From Retirement Plans.--
            (1) In general.--Section 72(t) of the Internal Revenue Code 
        of 1986 shall not apply to any qualified disaster distribution.
            (2) Aggregate dollar limitation.--
                    (A) In general.--For purposes of this subsection, 
                the aggregate amount of distributions received by an 
                individual which may be treated as qualified disaster 
                distributions for any taxable year shall not exceed the 
                excess (if any) of--
                            (i) $100,000, over
                            (ii) the aggregate amounts treated as 
                        qualified disaster distributions received by 
                        such individual for all prior taxable years.
                    (B) Treatment of plan distributions.--If a 
                distribution to an individual would (without regard to 
                subparagraph (A)) be a qualified disaster distribution, 
                a plan shall not be treated as violating any 
                requirement of the Internal Revenue Code of 1986 merely 
                because the plan treats such distribution as a 
                qualified disaster distribution, unless the aggregate 
                amount of such distributions from all plans maintained 
                by the employer (and any member of any controlled group 
                which includes the employer) to such individual exceeds 
                $100,000.
                    (C) Controlled group.--For purposes of subparagraph 
                (B), the term ``controlled group'' means any group 
                treated as a single employer under subsection (b), (c), 
                (m), or (o) of section 414 of the Internal Revenue Code 
                of 1986.
                    (D) Special rule for individuals affected by more 
                than one disaster.--The limitation of subparagraph (A) 
                shall be applied separately with respect to 
                distributions made with respect to each qualified 
                disaster.
            (3) Amount distributed may be repaid.--
                    (A) In general.--Any individual who receives a 
                qualified disaster distribution may, at any time during 
                the 3-year period beginning on the day after the date 
                on which such distribution was received, make 1 or more 
                contributions in an aggregate amount not to exceed the 
                amount of such distribution to an eligible retirement 
                plan of which such individual is a beneficiary and to 
                which a rollover contribution of such distribution 
                could be made under section 402(c), 403(a)(4), 
                403(b)(8), 408(d)(3), or 457(e)(16), of the Internal 
                Revenue Code of 1986, as the case may be.
                    (B) Treatment of repayments of distributions from 
                eligible retirement plans other than iras.--For 
                purposes of the Internal Revenue Code of 1986, if a 
                contribution is made pursuant to subparagraph (A) with 
                respect to a qualified disaster distribution from an 
                eligible retirement plan other than an individual 
                retirement plan, then the taxpayer shall, to the extent 
                of the amount of the contribution, be treated as having 
                received the qualified disaster distribution in an 
                eligible rollover distribution (as defined in section 
                402(c)(4) of such Code) and as having transferred the 
                amount to the eligible retirement plan in a direct 
                trustee to trustee transfer within 60 days of the 
                distribution.
                    (C) Treatment of repayments of distributions from 
                iras.--For purposes of the Internal Revenue Code of 
                1986, if a contribution is made pursuant to 
                subparagraph (A) with respect to a qualified disaster 
                distribution from an individual retirement plan (as 
                defined by section 7701(a)(37) of such Code), then, to 
                the extent of the amount of the contribution, the 
                qualified disaster distribution shall be treated as a 
                distribution described in section 408(d)(3) of such 
                Code and as having been transferred to the eligible 
                retirement plan in a direct trustee to trustee transfer 
                within 60 days of the distribution.
            (4) Definitions.--For purposes of this subsection--
                    (A) Qualified disaster distribution.--Except as 
                provided in paragraph (2), the term ``qualified 
                disaster distribution'' means any distribution from an 
                eligible retirement plan made--
                            (i) on or after the first day of the 
                        incident period of a qualified disaster and 
                        before July 1, 2024, and
                            (ii) to an individual whose principal place 
                        of abode at any time during the incident period 
                        of such qualified disaster is located in the 
                        qualified disaster area with respect to such 
                        qualified disaster and who has sustained an 
                        economic loss by reason of such qualified 
                        disaster.
                    (B) Eligible retirement plan.--The term ``eligible 
                retirement plan'' shall have the meaning given such 
                term by section 402(c)(8)(B) of the Internal Revenue 
                Code of 1986.
            (5) Income inclusion spread over 3-year period.--
                    (A) In general.--In the case of any qualified 
                disaster distribution, unless the taxpayer elects not 
                to have this paragraph apply for any taxable year, any 
                amount required to be included in gross income for such 
                taxable year shall be so included ratably over the 3-
                taxable-year period beginning with such taxable year.
                    (B) Special rule.--For purposes of subparagraph 
                (A), rules similar to the rules of subparagraph (E) of 
                section 408A(d)(3) of the Internal Revenue Code of 1986 
                shall apply.
            (6) Special rules.--
                    (A) Exemption of distributions from trustee to 
                trustee transfer and withholding rules.--For purposes 
                of sections 401(a)(31), 402(f), and 3405 of the 
                Internal Revenue Code of 1986, qualified disaster 
                distributions shall not be treated as eligible rollover 
                distributions.
                    (B) Qualified disaster distributions treated as 
                meeting plan distribution requirements.--For purposes 
                of the Internal Revenue Code of 1986, a qualified 
                disaster distribution shall be treated as meeting the 
                requirements of sections 401(k)(2)(B)(i), 
                403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of such 
                Code and section 8433(h)(1) of title 5, United States 
                Code, and, in the case of a money purchase pension 
                plan, a qualified disaster distribution which is an in-
                service withdrawal shall be treated as meeting the 
                distribution rules of section 401(a) of such Code.
    (b) Recontributions of Withdrawals for Home Purchases.--
            (1) Recontributions.--
                    (A) In general.--Any individual who received a 
                qualified distribution may, during the applicable 
                period, make 1 or more contributions in an aggregate 
                amount not to exceed the amount of such qualified 
                distribution to an eligible retirement plan (as defined 
                in section 402(c)(8)(B) of the Internal Revenue Code of 
                1986) of which such individual is a beneficiary and to 
                which a rollover contribution of such distribution 
                could be made under section 402(c), 403(a)(4), 
                403(b)(8), or 408(d)(3), of such Code, as the case may 
                be.
                    (B) Treatment of repayments.--Rules similar to the 
                rules of subparagraphs (B) and (C) of subsection (a)(3) 
                shall apply for purposes of this subsection.
            (2) Qualified distribution.--For purposes of this 
        subsection, the term ``qualified distribution'' means any 
        distribution--
                    (A) described in section 401(k)(2)(B)(i)(IV), 
                403(b)(7)(A)(i)(V), 403(b)(11)(B), or 72(t)(2)(F), of 
                the Internal Revenue Code of 1986,
                    (B) which was to be used to purchase or construct a 
                principal residence in a qualified disaster area, but 
                which was not so used on account of the qualified 
                disaster with respect to such area, and
                    (C) which was received during the period beginning 
                on the date which is 180 days before the first day of 
                the incident period of such qualified disaster and 
                ending on the date which is 30 days after the last day 
                of such incident period.
            (3) Applicable period.--For purposes of this subsection, 
        the term ``applicable period'' means, in the case of a 
        principal residence in a qualified disaster area with respect 
        to any qualified disaster, the period beginning on the first 
        day of the incident period of such qualified disaster and 
        ending on June 30, 2024.
    (c) Loans From Qualified Plans.--
            (1) Increase in limit on loans not treated as 
        distributions.--In the case of any loan from a qualified 
        employer plan (as defined under section 72(p)(4) of the 
        Internal Revenue Code of 1986) to a qualified individual made 
        during the period beginning on the date of the enactment of 
        this Act and ending on June 30, 2024--
                    (A) clause (i) of section 72(p)(2)(A) of such Code 
                shall be applied by substituting ``$100,000'' for 
                ``$50,000'', and
                    (B) clause (ii) of such section shall be applied by 
                substituting ``the present value of the nonforfeitable 
                accrued benefit of the employee under the plan'' for 
                ``one-half of the present value of the nonforfeitable 
                accrued benefit of the employee under the plan''.
            (2) Delay of repayment.--In the case of a qualified 
        individual (with respect to any qualified disaster) with an 
        outstanding loan (on or after the first day of the incident 
        period of such qualified disaster) from a qualified employer 
        plan (as defined in section 72(p)(4) of the Internal Revenue 
        Code of 1986)--
                    (A) if the due date pursuant to subparagraph (B) or 
                (C) of section 72(p)(2) of such Code for any repayment 
                with respect to such loan occurs during the period 
                beginning on the first day of the incident period of 
                such qualified disaster and ending on the date which is 
                180 days after the last day of such incident period, 
                such due date shall be delayed for 1 year (or, if 
                later, until June 30, 2024),
                    (B) any subsequent repayments with respect to any 
                such loan shall be appropriately adjusted to reflect 
                the delay in the due date under subparagraph (A) and 
                any interest accruing during such delay, and
                    (C) in determining the 5-year period and the term 
                of a loan under subparagraph (B) or (C) of section 
                72(p)(2) of such Code, the period described in 
                subparagraph (A) of this paragraph shall be 
                disregarded.
            (3) Qualified individual.--For purposes of this subsection, 
        the term ``qualified individual'' means any individual--
                    (A) whose principal place of abode at any time 
                during the incident period of any qualified disaster is 
                located in the qualified disaster area with respect to 
                such qualified disaster, and
                    (B) who has sustained an economic loss by reason of 
                such qualified disaster.
    (d) Provisions Relating to Plan Amendments.--
            (1) In general.--If this subsection applies to any 
        amendment to any plan or annuity contract, such plan or 
        contract shall be treated as being operated in accordance with 
        the terms of the plan during the period described in paragraph 
        (2)(B)(i).
            (2) Amendments to which subsection applies.--
                    (A) In general.--This subsection shall apply to any 
                amendment to any plan or annuity contract which is 
                made--
                            (i) pursuant to any provision of this 
                        section, or pursuant to any regulation issued 
                        by the Secretary or the Secretary of Labor 
                        under any provision of this section, and
                            (ii) on or before the last day of the first 
                        plan year beginning on or after January 1, 
                        2024, or such later date as the Secretary may 
                        prescribe.
                In the case of a governmental plan (as defined in 
                section 414(d) of the Internal Revenue Code of 1986), 
                clause (ii) shall be applied by substituting the date 
                which is 2 years after the date otherwise applied under 
                clause (ii).
                    (B) Conditions.--This subsection shall not apply to 
                any amendment unless--
                            (i) during the period--
                                    (I) beginning on the date that this 
                                section or the regulation described in 
                                subparagraph (A)(i) takes effect (or in 
                                the case of a plan or contract 
                                amendment not required by this section 
                                or such regulation, the effective date 
                                specified by the plan), and
                                    (II) ending on the date described 
                                in subparagraph (A)(ii) (or, if 
                                earlier, the date the plan or contract 
                                amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect, and
                            (ii) such plan or contract amendment 
                        applies retroactively for such period.

SEC. 4. SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY 
              LOSSES.

    (a) In General.--If an individual has a net disaster loss for any 
taxable year--
            (1) the amount determined under section 165(h)(2)(A)(ii) of 
        the Internal Revenue Code of 1986 shall be equal to the sum 
        of--
                    (A) such net disaster loss, and
                    (B) so much of the excess referred to in the matter 
                preceding clause (i) of section 165(h)(2)(A) of such 
                Code (reduced by the amount in clause (i) of this 
                subparagraph) as exceeds 10 percent of the adjusted 
                gross income of the individual,
            (2) in the case of qualified disaster-related personal 
        casualty losses, section 165(h)(1) of such Code shall be 
        applied to by substituting ``$500'' for ``$500 ($100 for 
        taxable years beginning after December 31, 2009)'',
            (3) the standard deduction determined under section 63(c) 
        of such Code shall be increased by the net disaster loss, and
            (4) section 56(b)(1)(E) of such Code shall not apply to so 
        much of the standard deduction as is attributable to the 
        increase under subparagraph (C) of this paragraph.
    (b) Net Disaster Loss.--For purposes of this subsection, the term 
``net disaster loss'' means the excess of qualified disaster-related 
personal casualty losses over personal casualty gains (as defined in 
section 165(h)(3)(A) of the Internal Revenue Code of 1986).
    (c) Qualified Disaster-Related Personal Casualty Losses.--For 
purposes of this subsection, the term ``qualified disaster-related 
personal casualty losses'' means losses described in section 165(c)(3) 
of the Internal Revenue Code of 1986 which arise in a qualified 
disaster area on or after the first day of the incident period of the 
qualified disaster to which such area relates, and which are 
attributable to such qualified disaster.
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