I 

116TH CONGRESS 

1ST SESSION H. R. 766 

To allow penalty-free distributions from retirement accounts in the case of 

Federal employees and certain Federal contractors impacted by the Federal Government shutdown. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 24, 2019 

Mr. GRAVES of Louisiana introduced the following bill; which was referred to 

the Committee on Ways and Means, and in addition to the Committee 

on Oversight and Reform, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To allow penalty-free distributions from retirement accounts 

in the case of Federal employees and certain Federal 

contractors impacted by the Federal Government shutdown. 

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

3 SECTION 1. TAX-FAVORED WITHDRAWALS FROM RETIRE4 MENT PLANS. 

5 (a) IN GENERAL.—Section 72(t) of the Internal Rev6 enue Code of 1986 shall not apply to any qualified shut7 down distribution. 


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1 (b) AGGREGATE DOLLAR LIMITATION.— 

2 (1) IN GENERAL.—For purposes of this sub3 section, the aggregate amount of distributions re4 ceived by an individual which may be treated as 

5 qualified shutdown distributions for any taxable 

6 year, and with respect to any Federal appropriations 

7 lapse, shall not exceed an amount equal to the com8 pensation the individual would (but for such lapse) 

9 have received during such lapse. 

10 (2) TREATMENT OF PLAN DISTRIBUTIONS.— 

11 (A) IN GENERAL.—If a distribution to an 

12 individual would (without regard to paragraph 

13 (1)) be a qualified shutdown distribution, a plan 

14 shall not be treated as violating any provision 

15 of law merely because the plan treats such dis16 tribution as a qualified shutdown distribution, 

17 unless the aggregate amount of such distribu18 tions from all plans maintained by the employer 

19 (and any member of any controlled group which 

20 includes the employer) to such individual ex21 ceeds the limitation amount with respect to 

22 such individual. Plans may require such sub23 stantiation and certification of the individual’s 

24 compensation as may be necessary for purposes 

25 of the preceding sentence. 


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1 (B) NO TSP CONDITIONS ON CONTRIBU2 TIONS OR DISTRIBUTIONS.—In the case of the 

3 Thrift Savings Fund, no limit on the number of 

4 distributions made to an individual, or on the 

5 amount of contributions which may be made by 

6 such individual, shall be imposed solely by rea7 son of a distribution which is a qualified shut8 down distribution. 

9 (3) CONTROLLED GROUP.—For purposes of 

10 paragraph (3), the term ‘‘controlled group’’ means 

11 any group treated as a single employer under sub12 section (b), (c), (m), or (o) of section 414 of the In13 ternal Revenue Code of 1986. 

14 (c) AMOUNT DISTRIBUTED MAY BE REPAID.— 

15 (1) IN GENERAL.—Any individual who receives 

16 a qualified shutdown distribution may, at any time 

17 during the 180-day period beginning on the day 

18 after the date on which the Federal appropriations 

19 lapse to which the distribution relates ends with re20 spect to the individual, make 1 or more contribu21 tions in an aggregate amount not to exceed the 

22 amount of such distribution to an eligible retirement 

23 plan of which such individual is a beneficiary and to 

24 which a rollover contribution of such distribution 

25 could be made under section 402(c), 403(a)(4), 


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1 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal 

2 Revenue Code of 1986, as the case may be. 

3 (2) TREATMENT OF REPAYMENTS OF DISTRIBU4 TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER

5 THAN IRAS.—For purposes of the Internal Revenue 

6 Code of 1986, if a contribution is made pursuant to 

7 paragraph (1) with respect to a qualified shutdown 

8 distribution from an eligible retirement plan other 

9 than an individual retirement plan, then the tax10 payer shall, to the extent of the amount of the con11 tribution, be treated as having received the qualified 

12 shutdown distribution in an eligible rollover distribu13 tion (as defined in section 402(c)(4) of such Code) 

14 and as having transferred the amount to the eligible 

15 retirement plan in a direct trustee to trustee trans16 fer within 60 days of the distribution. 

17 (3) TREATMENT OF REPAYMENTS OF DISTRIBU18 TIONS FROM IRAS.—For purposes of the Internal 

19 Revenue Code of 1986, if a contribution is made 

20 pursuant to paragraph (1) with respect to a quali21 fied shutdown distribution from an individual retire22 ment plan (as defined by section 7701(a)(37) of 

23 such Code), then, to the extent of the amount of the 

24 contribution, the qualified shutdown distribution 

25 shall be treated as a distribution described in section 


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1 408(d)(3) of such Code and as having been trans2 ferred to the eligible retirement plan in a direct 

3 trustee to trustee transfer within 60 days of the dis4 tribution. 

5 (d) DEFINITIONS.—For purposes of this section— 

6 (1) QUALIFIED SHUTDOWN DISTRIBUTION.— 

7 The term ‘‘qualified shutdown distribution’’ means 

8 any distribution by an applicable individual from an 

9 eligible retirement plan made during a Federal ap10 propriations lapse with respect to such individual. 

11 (2) APPLICABLE INDIVIDUAL.—The term ‘‘ap12 plicable individual’’ means any individual— 

13 (A) who is a Federal employee furloughed 

14 due to a Federal appropriations lapse, 

15 (B) who is placed on unpaid leave as a 

16 Federal contractor, or as an employee of a Fed17 eral contractor, due to a Federal appropriations 

18 lapse, 

19 (C) who is an employee of a State or other 

20 Federal grantee— 

21 (i) whose compensation is advanced or 

22 reimbursed in whole or in part by the Fed23 eral Government, and 

24 (ii) who is furloughed due to a Fed25 eral appropriations lapse, or 


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1 (D) who is furloughed due to a Federal ap2 propriations lapse as an employee of the Dis3 trict of Columbia Courts, the Public Defender 

4 Service for the District of Columbia, or the Dis5 trict of Columbia government. 

6 Such term shall include any excepted employee or an 

7 employee performing emergency work, as such terms 

8 are defined by the Office of Personnel Management 

9 or the appropriate District of Columbia public em10 ployer, as applicable, during a Federal appropria11 tions lapse. 

12 (3) FEDERAL APPROPRIATION LAPSE.— 

13 (A) IN GENERAL.—The term ‘‘Federal ap14 propriations lapse’’ means any continuous pe15 riod during which there is a lapse in Federal 

16 appropriations. 

17 (B) PERIOD OF LAPSE.—A period of lapse 

18 in Federal appropriations shall not be a Federal 

19 appropriations lapse with respect to an indi20 vidual— 

21 (i) for longer than the period during 

22 which the individual is furloughed (or on 

23 unpaid leave in the case of an individual 

24 described in paragraph (2)(B)) due to such 

25 lapse, and 


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1 (ii) unless such period includes the 

2 end of a pay period for which compensa3 tion was not received by reason of such 

4 lapse. 

5 (4) ELIGIBLE RETIREMENT PLAN.—The term 

6 ‘‘eligible retirement plan’’ shall have the meaning 

7 given such term by section 402(c)(8)(B) of the In8 ternal Revenue Code of 1986. 

9 (e) INCOME INCLUSION SPREAD OVER 3-YEAR PE10 RIOD.— 

11 (1) IN GENERAL.—In the case of any qualified 

12 shutdown distribution, unless the taxpayer elects not 

13 to have this paragraph apply for any taxable year, 

14 any amount required to be included in gross income 

15 for such taxable year shall be so included ratably 

16 over the 3-taxable-year period beginning with such 

17 taxable year. 

18 (2) SPECIAL RULE.—For purposes of para19 graph (1), rules similar to the rules of subparagraph 

20 (E) of section 408A(d)(3) of the Internal Revenue 

21 Code of 1986 shall apply. 

22 (f) SPECIAL RULES.— 

23 (1) EXEMPTION OF DISTRIBUTIONS FROM

24 TRUSTEE TO TRUSTEE TRANSFER AND WITH25 HOLDING RULES.—For purposes of sections 


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1 401(a)(31), 402(f), and 3405 of the Internal Rev2 enue Code of 1986, qualified shutdown distributions 

3 shall not be treated as eligible rollover distributions. 

4 (2) QUALIFIED SHUTDOWN DISTRIBUTIONS

5 TREATED AS MEETING PLAN DISTRIBUTION RE6 QUIREMENTS.—For purposes of the Internal Rev7 enue Code of 1986, a qualified shutdown distribu8 tion shall be treated as meeting the requirements of 

9 sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 

10 403(b)(11), and 457(d)(1)(A) of such Code. 

Æ 


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