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[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Pages S139-S140]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Mrs. Lincoln):
  S. 157. A bill to amend the Internal Revenue Code of 1986 to expand 
the temporary waiver of required minimum distribution rules for certain 
retirement plans and accounts; to the Committee on Finance.
  Ms. SNOWE. Mr. President, today I rise to introduce legislation to 
offer expanded relief to retirees who are forced to take so-called 
required minimum distributions from their retirement accounts. After a 
year in which the Dow Jones Industrial Average fell a staggering 34 
percent, Congress rightly suspended required minimum distribution rules 
for 2009 as part of the Worker, Retiree, and Employer Recovery Act of 
2008. Unfortunately, Congress did not act to suspend the rules for 2008 
or 2010 as I had previously proposed. Consequently, we now find 
ourselves in a situation in which 1 year of relief is insufficient to 
enable retirees to recoup their losses, and I am, therefore, 
introducing the Retirement Account Distribution Improvement Act of 2009 
to allow amounts required to have been distributed in 2008 to be re-
contributed and to waive the rules for 2010. I would like to thank 
Senator Lincoln for cosponsoring this legislation.
  Under current law, individuals who have reached age 70.5 generally 
must begin to withdraw funds from their IRAs or defined contribution 
retirement plans, including 401(k), 403(b), 457, and TSP plans. The 
withdrawals must begin by April 1 of the year after which an individual 
attains age 70.5. Failure to take a required minimum distribution may 
result in a 50 percent excise tax on the difference between what must 
be withdrawn and the amount actually distributed.
  In times that equities markets are rising and retirement account 
balances are growing, required minimum distribution rules are sensible. 
Indeed, they ensure the Government gains revenue after years of tax-
deferred growth. Unfortunately, we are now witnessing unprecedented 
losses in equities markets that have caused many individuals to suffer 
steep losses in their retirement account balances. Notably, 
the American Association of Retired Persons has said that retirement 
accounts have lost as much as $2.3 trillion between September 30, 2007, 
and October 16, 2008. Forcing individuals to prematurely liquidate 
accounts and pay income taxes on the proceeds, as is required under 
current law, instead of allowing them to wait until the market recovers 
and continue to defer tax, simply adds insult to injury. Moreover, 
mandating withdrawals may cause stock prices to fall, hurting other 
investors.

  It is for these reasons that I am today introducing legislation to 
allow individuals who were forced to withdraw funds in 2008 to re-
contribute that money into their accounts by July 1, 2009. Any amounts 
erroneously distributed in early 2009 could also be re-contributed by 
July 1, 2009. Finally, my bill would also waive minimum required 
distributions for 2010.
  Although Congress took a solid first step by suspending minimum 
required distributions for 2009, we must do more. With many predicting 
a multi-year recession, Congress must adopt a longer-term approach to 
helping individuals protect their retirement assets and weather the 
current economic storm. Individuals may require several years to recoup 
losses they have sustained, and by enabling them to keep assets in 
their retirement accounts until 2011, this bill offers them that 
opportunity. At that point, Congress can reevaluate whether the waiver 
of current-law rules should be further extended.
  I urge all Senators to consider the benefits this legislation will 
provide to millions of retirees all across the United States, and I 
look forward to working with my colleagues to enact it in a timely 
manner.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 157

       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 ``Retirement Account 
     Distribution Improvement Act of 2009''.

     SEC. 2. EXPANSION OF WAIVER OF REQUIRED MINIMUM DISTRIBUTION 
                   RULES FROM CERTAIN RETIREMENT PLANS AND 
                   ACCOUNTS.

       (a) In General.--Subparagraph (H) of section 401(a)(9) of 
     the Internal Revenue Code of 1986, as added by the Worker, 
     Retiree, and Employer Recovery Act of 2008, is amended--
       (1) by striking ``for calendar year 2009'' in clause (i) 
     and inserting ``for calendar years 2008, 2009 or 2010'',

[[Page S140]]

       (2) by striking ``2009'' in clause (ii)(I) and inserting 
     ``2010'', and
       (3) by striking ``to calendar year 2009'' in clause 
     (ii)(II) and inserting ``to calendar years 2008, 2009, or 
     2010''.
       (b) Eligible Rollover Distributions.--The last sentence of 
     section 402(c)(4) of the Internal Revenue Code of 1986, as 
     added by the Worker, Retiree, and Employer Recovery Act of 
     2008, is amended by striking ``2009'' and inserting ``2008, 
     2009, or 2010''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2007.
       (2) Recontributions of distributions in 2008 or early 
     2009.--
       (A) In general.--If a person receives 1 or more eligible 
     distributions, the person may, on or before July 1, 2009, 
     make one or more contributions (in an aggregate amount not 
     exceeding all eligible distributions) to an eligible 
     retirement plan 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. For purposes of the 
     preceding sentence, rules similar to the rules of clauses 
     (ii) and (iii) of section 402(c)(11)(A) of such Code shall 
     apply in the case of a beneficiary who is not the surviving 
     spouse of the employee or of the owner of the individual 
     retirement plan.
       (B) Eligible distribution.--For purposes of this 
     paragraph--
       (i) In general.--Except as provided in clause (ii), the 
     term ``eligible distribution'' means an applicable 
     distribution to a person from an individual account or 
     annuity--

       (I) under a plan which is described in clause (iv), and
       (II) from which a distribution would, but for the 
     application of section 401(a)(9)(H) of such Code, have been 
     required to have been made to the individual for 2008 or 
     2009, whichever is applicable, in order to satisfy the 
     requirements of sections 401(a)(9), 404(a)(2), 403(b)(10), 
     408(a)(6), 408(b)(3), and 457(d)(2) of such Code.

       (ii) Eligible distributions limited to required 
     distributions.--The aggregate amount of applicable 
     distributions which may be treated as eligible distributions 
     for purposes of this paragraph shall not exceed--

       (I) for purposes of applying subparagraph (A) to 
     distributions made in 2008, the amount which would, but for 
     the application of section 401(a)(9)(H) of such Code, have 
     been required to have been made to the individual in order to 
     satisfy the requirements of sections 401(a)(9), 404(a)(2), 
     403(b)(10), 408(a)(6), 408(b)(3), and 457(d)(2) of such Code 
     for 2008, and
       (II) for purposes of applying subparagraph (A) to 
     distributions made in 2009, the sum of the amount which 
     would, but for the application of such section 401(a)(9)(H), 
     have been required to have been made to the individual in 
     order to satisfy such requirements for 2009, plus the excess 
     (if any) of the amount described in subclause (I) which may 
     be distributed in 2009 to meet such requirements for 2008 
     over the portion of such amount taken into account under 
     subclause (I) for distributions made in 2008.

       (iii) Applicable distribution.--

       (I) In general.--The term ``applicable distribution'' means 
     a payment or distribution which is made during the period 
     beginning on January 1, 2008, and ending on June 30, 2009.
       (II) Exception for minimum required distributions for other 
     years.--Such term shall not include a payment or distribution 
     which is required to be made in order to satisfy the 
     requirements of section 401(a)(9), 404(a)(2), 403(b)(10), 
     408(a)(6), 408(b)(3), or 457(d)(2) of such Code for a 
     calendar year other than 2008 or 2009.
       (III) Exception for payments in a series.--In the case of 
     any plan described in clause (iv)(I), such term shall not 
     include any payment or distribution made in 2009 which is a 
     payment or distribution described in section 402(c)(4)(A).

       (iv) Plans described.--A plan is described in this clause 
     if the plan is--

       (I) a defined contribution plan (within the meaning of 
     section 414(i) of such Code) which is described in section 
     401, 403(a), or 403(b) of such Code or which is an eligible 
     deferred compensation plan described in section 457(b) of 
     such Code maintained by an eligible employer described in 
     section 457(e)(1)(A)) of such Code, or
       (II) an individual retirement plan (as defined in section 
     7701(a)(37) of such Code).

       (C) 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 payment or 
     distribution from a 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 payment 
     or distribution in an eligible rollover distribution (as 
     defined in section 402(c)(4) of such Code) and as having 
     transferred the amount to the plan in a direct trustee to 
     trustee transfer.
       (D) Treatment of repayments for 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 payment or 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, 
     such payments or distributions shall be treated as a 
     distribution that satisfies subparagraphs (A) and (B) of 
     section 408(d)(3) of such Code and as having been transferred 
     to the individual retirement plan in a direct trustee to 
     trustee transfer.
       (3) Provisions relating to plan or contract amendments.--
       (A) In general.--If this paragraph applies to any pension 
     plan or contract amendment, such pension plan or contract 
     shall be treated as being operated in accordance with the 
     terms of the plan during the period described in subparagraph 
     (B)(ii)(I).
       (B) Amendments to which paragraph applies.--
       (i) In general.--This paragraph shall apply to any 
     amendment to any pension plan or annuity contract which--

       (I) is made by pursuant to the amendments made by this 
     section, and
       (II) is made on or before the last day of the first plan 
     year beginning on or after January 1, 2011.

     In the case of a governmental plan, subclause (II) shall be 
     applied by substituting ``2012'' for ``2011''.
       (ii) Conditions.--This paragraph shall not apply to any 
     amendment unless during the period beginning on January 1, 
     2009, and ending on December 31, 2010 (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.
                                 ______
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