I

103D CONGRESS

2D SESSION H. R. 3758

To amend the Internal Revenue Code of 1986 to allow reservists called

to active duty for certain purposes to make penalty-free withdrawals

from certain retirement plans to the extent of lost income while on

active duty.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 1, 1994

Mr. WALKER 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 allow reservists called to active duty for certain purposes to

make penalty-free withdrawals from certain retirement

plans to the extent of lost income while on active duty.

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

3 SECTION 1. PENALTY-FREE DISTRIBUTIONS FROM CER4 TAIN RETIREMENT PLANS FOR RESERVISTS

5 CALLED TO ACTIVE DUTY FOR CERTAIN

6 PURPOSES.

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

8 the Internal Revenue Code of 1986 (relating to exceptions
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1 to 10-percent additional tax on early distributions from

2 qualified retirement plans) is amended by adding at the

3 end thereof the following new subparagraph:

4 ‘‘(D) DISTRIBUTIONS FOR RESERVISTS

5 SERVING ON ACTIVE DUTY FOR CERTAIN PUR6 POSES.—Any qualified reservist distribution (as

7 defined in paragraph (6)) from an individual re8 tirement plan or from amounts attributable to

9 employer contributions made pursuant to elec10 tive deferrals described in subparagraph (A) or

11 (C) of section 402(g)(3) or section

12 501(c)(18)(D)(iii).’’

13 (b) QUALIFIED RESERVIST DISTRIBUTION.—Sub14 section (t) of section 72 of such Code is amended by add15 ing at the end thereof the following new paragraph:

16 ‘‘(6) QUALIFIED RESERVIST DISTRIBUTION.—

17 For purposes of paragraph (2)(D)—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 reservist distribution’ means any distribution or

20 payment to a qualified reservist during the eli21 gible distribution period.

22 ‘‘(B) LIMITATION ON AMOUNT.—Para23 graph (2)(D) shall not apply to the extent that

24 the aggregate amount withdrawn during the eli-
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1 gible distribution period exceeds the excess (if

2 any) of—

3 ‘‘(i) the amount earned income which

4 such individual would have received during

5 the eligible distribution period but for serv6 ing on active duty as described in subpara7 graph (C), over

8 ‘‘(ii) the earned income received dur9 ing such period.

10 ‘‘(C) QUALIFIED RESERVIST.—For pur11 poses of this paragraph, the term ‘qualified re12 servist’ means any member of a reserve compo13 nent of the Armed Forces of the United States

14 who is called or ordered to active duty in sup15 port of a contingency operation (as defined in

16 section 101 of title 10, United States Code).

17 ‘‘(D) ELIGIBLE DISTRIBUTION PERIOD.—

18 For purposes of this paragraph, the term ‘eligi19 ble distribution period’ means the period the in20 dividual is serving on active duty as described

21 in subparagraph (C).’’

22 (c) CONFORMING AMENDMENTS.—

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

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

25 (III), by striking ‘‘and’’ at the end of subclause (IV)
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1 and inserting ‘‘or’’, and by inserting after subclause

2 (IV) the following new subclause:

3 ‘‘(V) the date on which qualified

4 reservist distributions (as defined in

5 section 72(t)(6)) are made, and’’.

6 (2) Section 403(b)(11) of such Code is amend7 ed by striking ‘‘or’’ at the end of subparagraph (A),

8 by striking the period at the end of subparagraph

9 (B) and inserting ‘‘, or’’, and by inserting after sub10 paragraph (B) the following new subparagraph:

11 ‘‘(C) for qualified reservist distributions

12 (as defined in section 72(t)(6)).’’

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

14 this section shall apply to distributions after the date of

15 the enactment of this Act.

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