I

103D CONGRESS

2D SESSION H. R. 4027

To amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from certain retirement plans for the repair or replacement of certain

property damaged in a Presidentially-declared disaster.

IN THE HOUSE OF REPRESENTATIVES

MARCH 11, 1994

Mr. DREIER (for himself, Mr. EVANS, Mr. CALVERT, Mr. COX, Mr. BAKER

of California, Mr. DORNAN, Mr. ROHRABACHER, Mr. MOORHEAD, and

Mr. MCKEON) 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 penalty-free withdrawals from certain retirement plans for

the repair or replacement of certain property damaged

in a Presidentially-declared disaster.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 4027 IH

1 SECTION 1. PENALTY-FREE DISTRIBUTIONS FROM CER2 TAIN RETIREMENT PLANS TO REPAIR OR RE3 PLACE CERTAIN PROPERTY DAMAGED IN

4 PRESIDENTIALLY-DECLARED DISASTERS.

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

6 the Internal Revenue Code of 1986 (relating to exceptions

7 to 10-percent additional tax on early distributions from

8 qualified retirement plans) is amended by adding at the

9 end thereof the following new subparagraph:

10 ‘‘(D) DISTRIBUTIONS FROM CERTAIN RE11 TIREMENT PLANS FOR DISASTER-RELATED EX12 PENSES.—Distributions from an individual re13 tirement plan, or from amounts attributable to

14 employer contributions made pursuant to elec15 tive deferrals described in subparagraph (A) or

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

17 501(c)(18)(D)(iii), which are qualified disaster18 related distributions (as defined in paragraph

19 (6)).’’

20 (b) DEFINITIONS.—Section 72(t) of such Code is

21 amended by adding at the end thereof the following new

22 paragraph:

23 ‘‘(6) QUALIFIED DISASTER-RELATED DISTRIBU24 TIONS.—

25 ‘‘(A) IN GENERAL.—For purposes of para26 graph (2)(D), the term ‘qualified disaster-relat-
3

•HR 4027 IH

1 ed distribution’ means any distribution received

2 by an individual to the extent such distribution

3 is used by such individual before the close of

4 the 60th day after the day on which such dis5 tribution is received to pay for the repair or re6 placement of qualified disaster-damaged prop7 erty which is—

8 ‘‘(i) personal property of such individ9 ual, or

10 ‘‘(ii) a residence of such individual.

11 ‘‘(B) LIMITATIONS.—

12 ‘‘(i) ONLY DISTRIBUTIONS WITHIN

13 FIRST 1 YEAR TO QUALIFY.—Paragraph

14 (2)(D) shall not apply to any distribution

15 made more than 1 year after the date of

16 the determination referred to in subpara17 graph (C)(ii).

18 ‘‘(ii) WITHDRAWALS LIMITED TO UN19 INSURED LOSSES.—Paragraph (2)(D) shall

20 apply to distributions to repair or replace

21 any property—

22 ‘‘(I) only to the extent of the loss

23 sustained with respect to such prop24 erty which is not compensated for by

25 insurance or otherwise, and
4

•HR 4027 IH

1 ‘‘(II) in the case of property cov2 ered by insurance, only if a timely

3 claim is filed for compensation by

4 such insurance on the loss sustained

5 with respect to such property.

6 ‘‘(C) DEFINITIONS.—For purposes of this

7 paragraph—

8 ‘‘(i) DISASTER-DAMAGED PROP9 ERTY.—The term ‘qualified disaster-dam10 aged property’ means property—

11 ‘‘(I) which was located in a disas12 ter area on the date of the determina13 tion referred to in clause (ii),

14 ‘‘(II) which was damaged or de15 stroyed as a result of the disaster oc16 curring in such area, and

17 ‘‘(III) which is not connected

18 with a trade or business or a trans19 action entered into for profit.

20 ‘‘(ii) DISASTER AREA.—The term ‘dis21 aster area’ means an area determined by

22 the President to warrant assistance under

23 the Robert T. Stafford Disaster Relief and

24 Emergency Assistance Act.
5

•HR 4027 IH

1 ‘‘(D) SPECIAL RULES RELATING TO RE2 PLACEMENT OF RESIDENCE.—For purposes of

3 this paragraph—

4 ‘‘(i) CERTAIN COSTS INCLUDED.—The

5 cost of replacing a residence includes any

6 usual or reasonable settlement, financing,

7 or other closing costs.

8 ‘‘(ii) SPECIAL RULE WHERE DELAY IN

9 ACQUISITION.—If any distribution fails to

10 meet the requirements of subparagraph

11 (A) solely by reason of a delay or cancella12 tion of the purchase or construction of a

13 residence, the amount of the distribution

14 may be contributed to an individual retire15 ment plan as provided in section

16 408(d)(3)(A)(i) (determined by substitut17 ing ‘120 days’ for ‘60 days’ in such sec18 tion), except that—

19 ‘‘(I) section 408(d)(3)(B) shall

20 not be applied to such contribution,

21 and

22 ‘‘(II) such amount shall not be

23 taken into account in determining

24 whether section 408(d)(3)(A)(i) ap25 plies to any other amount.’’
6

•HR 4027 IH

1 (c) CONFORMING AMENDMENTS.—

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

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

4 (III), by striking ‘‘and’’ at the end of subclause (IV)

5 and inserting ‘‘or’’, and by inserting after subclause

6 (IV) the following new subclause:

7 ‘‘(V) the date on which qualified

8 disaster-related distributions (as de9 fined in section 72(t)(6)) are made,

10 and’’.

11 (2) Section 403(b)(11) of such Code is amend12 ed by striking ‘‘or’’ at the end of subparagraph (A),

13 by striking the period at the end of subparagraph

14 (B) and inserting ‘‘, or’’, and by inserting after sub15 paragraph (B) the following new subparagraph:

16 ‘‘(C) for qualified disaster-related distribu17 tions (as defined in section 72(t)(6)).’’

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

19 this section shall apply to distributions after December 31,

20 1993, with respect to areas determined after such date

21 to warrant assistance under the Robert T. Stafford Disas22 ter Relief and Emergency Assistance Act.

Æ