I

103D CONGRESS

1ST SESSION H. R. 338

To amend the Internal Revenue Code of 1986 to permit penalty-free withdrawals from individual retirement plans for the acquisition of a first

home.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mrs. ROUKEMA 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 from individual retirement plans

for the acquisition of a first home.

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 INDIVIDUAL RETIRE4 MENT PLANS MAY BE USED WITHOUT PEN5 ALTY TO PURCHASE FIRST HOMES.

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 thereof the following new subparagraph:

3 ‘‘(D) DISTRIBUTIONS FROM CERTAIN

4 PLANS FOR FIRST HOME PURCHASES.—Dis5 tributions to an individual from an individual

6 retirement plan which are qualified first-time

7 homebuyer distributions (as defined in para8 graph (6)).’’

9 (b) QUALIFIED FIRST-TIME HOMEBUYER DISTRIBU10 TIONS.—Section 72(t) of such Code is amended by adding

11 at the end thereof the following new paragraph:

12 ‘‘(6) QUALIFIED FIRST-TIME HOMEBUYER DIS13 TRIBUTIONS.—For purposes of paragraph (2)(D)—

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

15 first-time homebuyer distribution’ means any

16 payment or distribution received by an individ17 ual to the extent such payment or distribution

18 is used by the individual before the close of the

19 60th day after the day on which such payment

20 or distribution is received to pay qualified ac21 quisition costs with respect to a principal resi22 dence of a first-time homebuyer who is such in23 dividual or the spouse, child, or grandchild of

24 such individual.
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1 ‘‘(B) QUALIFIED ACQUISITION COSTS.—

2 For purposes of this paragraph, the term

3 ‘qualified acquisition costs’ means the costs of

4 acquiring, constructing, or reconstructing a res5 idence. Such term includes any usual or reason6 able settlement, financing, or other closing

7 costs.

8 ‘‘(C) FIRST-TIME HOMEBUYER; OTHER

9 DEFINITIONS.—For purposes of this para10 graph—

11 ‘‘(i) FIRST-TIME HOMEBUYER.—The

12 term ‘first-time homebuyer’ means any in13 dividual if—

14 ‘‘(I) such individual (and if mar15 ried, such individual’s spouse) had no

16 present ownership interest in a prin17 cipal residence during the 3-year pe18 riod ending on the date of acquisition

19 of the principal residence to which

20 this paragraph applies, and

21 ‘‘(II) subsection (a)(6), (h), or

22 (k) of section 1034 did not suspend

23 the running of any period of time

24 specified in section 1034 with respect

25 to such individual on the day before
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1 the date the distribution is applied

2 pursuant to subparagraph (A)(ii).

3 ‘‘(ii) PRINCIPAL RESIDENCE.—The

4 term ‘principal residence’ has the same

5 meaning as when used in section 1034.

6 ‘‘(iii) DATE OF ACQUISITION.—The

7 term ‘date of acquisition’ means the date—

8 ‘‘(I) on which a binding contract

9 to acquire the principal residence to

10 which subparagraph (A) applies is en11 tered into, or

12 ‘‘(II) on which construction or re13 construction of such a principal resi14 dence is commenced.

15 ‘‘(D) SPECIAL RULE WHERE DELAY IN AC16 QUISITION.—If any distribution from any indi17 vidual retirement plan fails to meet the require18 ments of subparagraph (A) solely by reason of

19 a delay or cancellation of the purchase or con20 struction of the residence, the amount of the

21 distribution may be contributed to an individual

22 retirement plan as provided in section

23 408(d)(3)(A)(i) (determined by substituting

24 ‘120 days’ for ‘60 days’ in such section), except

25 that—
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1 ‘‘(i) section 408(d)(3)(B) shall not be

2 applied to such contribution, and

3 ‘‘(ii) such amount shall not be taken

4 into account in determining whether sec5 tion 408(d)(3)(A)(i) applies to any other

6 amount.’’

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

8 this section shall apply to payments and distributions after

9 the date of the enactment of this Act.

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