II 

117TH CONGRESS 

1ST SESSION S. 2583 

To amend the Internal Revenue Code of 1986 to provide for rules for 

the use of retirement funds in connection with federally declared disasters. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 3, 2021 

Mr. CASSIDY (for himself and Mr. MENENDEZ) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for rules for the use of retirement funds in connection 

with federally declared disasters. 

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

3 SECTION 1. SPECIAL RULES FOR USE OF RETIREMENT 

4 FUNDS IN CONNECTION WITH QUALIFIED 

5 FEDERALLY DECLARED DISASTERS. 

6 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE7 MENT PLANS.— 

8 (1) IN GENERAL.—Paragraph (2) of section 

9 72(t) of the Internal Revenue Code of 1986 is 


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1 amended by adding at the end the following new 

2 subparagraph: 

3 ‘‘(I) DISTRIBUTIONS FROM RETIREMENT

4 PLANS IN CONNECTION WITH FEDERALLY DE5 CLARED DISASTERS.—Any qualified disaster re6 covery distribution.’’. 

7 (2) QUALIFIED DISASTER RECOVERY DISTRIBU8 TION.—Section 72(t) of such Code is amended by 

9 adding at the end the following new paragraph: 

10 ‘‘(11) QUALIFIED DISASTER RECOVERY DIS11 TRIBUTION.—For purposes of paragraph (2)(I)— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), the term ‘qualified disaster 

14 recovery distribution’ means any distribution 

15 made— 

16 ‘‘(i) on or after the first day of the in17 cident period of a qualified disaster and 

18 before the date that is 180 days after the 

19 applicable date with respect to such dis20 aster, and 

21 ‘‘(ii) to an individual whose principal 

22 place of abode at any time during the inci23 dent period of such qualified disaster is lo24 cated in the qualified disaster area with re25 spect to such qualified disaster and who 


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1 has sustained an economic loss by reason 

2 of such qualified disaster. 

3 ‘‘(B) AGGREGATE DOLLAR LIMITATION.— 

4 ‘‘(i) IN GENERAL.—For purposes of 

5 this subsection, the aggregate amount of 

6 distributions received by an individual 

7 which may be treated as qualified disaster 

8 recovery distributions with respect to any 

9 qualified disaster shall not exceed the ex10 cess (if any) of— 

11 ‘‘(I) $100,000, over 

12 ‘‘(II) the sum of aggregate 

13 amounts treated as qualified disaster 

14 recovery distributions with respect to 

15 such qualified disaster received by 

16 such individual. 

17 ‘‘(ii) TREATMENT OF PLAN DISTRIBU18 TIONS.—If a distribution to an individual 

19 would (without regard to clause (i)) be a 

20 qualified disaster recovery distribution, a 

21 plan shall not be treated as violating any 

22 requirement of this title merely because 

23 the plan treats such distribution as a 

24 qualified disaster recovery distribution, un25 less the aggregate amount of such distribuVerDate Sep 11 2014 16:12 Aug 04, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2583.IS S2583

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1 tions from all plans maintained by the em2 ployer (and any member of any controlled 

3 group which includes the employer) to such 

4 individual exceeds $100,000 with respect 

5 to the same qualified disaster. 

6 ‘‘(iii) CONTROLLED GROUP.—For pur7 poses of clause (ii), the term ‘controlled 

8 group’ means any group treated as a single 

9 employer under subsection (b), (c), (m), or 

10 (o) of section 414. 

11 ‘‘(iv) SPECIAL RULE FOR INDIVIDUALS

12 AFFECTED BY MORE THAN ONE DIS13 ASTER.—The limitation of clause (i) shall 

14 be applied separately with respect to dis15 tributions made with respect to each quali16 fied disaster. 

17 ‘‘(C) AMOUNT DISTRIBUTED MAY BE RE18 PAID.— 

19 ‘‘(i) IN GENERAL.—Any individual 

20 who receives a qualified disaster recovery 

21 distribution may, at any time during the 3- 

22 year period beginning on the day after the 

23 date on which such distribution was re24 ceived, make one or more contributions in 

25 an aggregate amount not to exceed the 


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1 amount of such distribution to an eligible 

2 retirement plan of which such individual is 

3 a beneficiary and to which a rollover con4 tribution of such distribution could be 

5 made under section 402(c), 403(a)(4), 

6 403(b)(8), 408(d)(3), or 457(e)(16), as the 

7 case may be. 

8 ‘‘(ii) TREATMENT OF REPAYMENTS OF

9 DISTRIBUTIONS FROM ELIGIBLE RETIRE10 MENT PLANS OTHER THAN IRAS.—For 

11 purposes of this title, if a contribution is 

12 made pursuant to clause (i) with respect to 

13 a qualified disaster recovery distribution 

14 from a plan other than an individual re15 tirement plan, then the taxpayer shall, to 

16 the extent of the amount of the contribu17 tion, be treated as having received the 

18 qualified disaster recovery distribution in 

19 an eligible rollover distribution (as defined 

20 in section 402(c)(4)) and as having trans21 ferred the amount to the eligible retire22 ment plan in a direct trustee to trustee 

23 transfer within 60 days of the distribution. 

24 ‘‘(iii) TREATMENT OF REPAYMENTS

25 FOR DISTRIBUTIONS FROM IRAS.—For 


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1 purposes of this title, if a contribution is 

2 made pursuant to clause (i) with respect to 

3 a qualified disaster recovery distribution 

4 from an individual retirement plan, then, 

5 to the extent of the amount of the con6 tribution, the qualified disaster recovery 

7 distribution shall be treated as a distribu8 tion described in section 408(d)(3) and as 

9 having been transferred to the eligible re10 tirement plan in a direct trustee to trustee 

11 transfer within 60 days of the distribution. 

12 ‘‘(D) INCOME INCLUSION SPREAD OVER 3- 

13 YEAR PERIOD.— 

14 ‘‘(i) IN GENERAL.—In the case of any 

15 qualified disaster recovery distribution, un16 less the taxpayer elects not to have this 

17 subparagraph apply for any taxable year, 

18 any amount required to be included in 

19 gross income for such taxable year shall be 

20 so included ratably over the 3-taxable year 

21 period beginning with such taxable year. 

22 ‘‘(ii) SPECIAL RULE.—For purposes of 

23 clause (i), rules similar to the rules of sub24 paragraph (E) of section 408A(d)(3) shall 

25 apply. 


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1 ‘‘(E) QUALIFIED DISASTER.—For purposes 

2 of this paragraph and paragraph (8), the term 

3 ‘qualified disaster’ means any disaster with re4 spect to which a major disaster has been de5 clared by the President under section 401 of 

6 the Robert T. Stafford Disaster Relief and 

7 Emergency Assistance Act after December 31, 

8 2020. 

9 ‘‘(F) OTHER DEFINITIONS.—For purposes 

10 of this paragraph and paragraph (8)— 

11 ‘‘(i) QUALIFIED DISASTER AREA.— 

12 ‘‘(I) IN GENERAL.—The term 

13 ‘qualified disaster area’ means, with 

14 respect to any qualified disaster, the 

15 area with respect to which the major 

16 disaster was declared under the Rob17 ert T. Stafford Disaster Relief and 

18 Emergency Assistance Act. 

19 ‘‘(II) EXCEPTIONS.—Such term 

20 shall not include any area which is a 

21 qualified disaster area solely by reason 

22 of section 301 of the Taxpayer Cer23 tainty and Disaster Tax Relief Act of 

24 2020. 


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1 ‘‘(ii) INCIDENT PERIOD.—The term 

2 ‘incident period’ means, with respect to 

3 any qualified disaster, the period specified 

4 by the Federal Emergency Management 

5 Agency as the period during which such 

6 disaster occurred. 

7 ‘‘(iii) APPLICABLE DATE.—The term 

8 ‘applicable date’ means the latest of— 

9 ‘‘(I) the date of the enactment of 

10 this paragraph, 

11 ‘‘(II) the first day of the incident 

12 period with respect to the qualified 

13 disaster, or 

14 ‘‘(III) the date of the disaster 

15 declaration with respect to the quali16 fied disaster. 

17 ‘‘(iv) ELIGIBLE RETIREMENT PLAN.— 

18 The term ‘eligible retirement plan’ shall 

19 have the meaning given such term by sec20 tion 402(c)(8)(B). 

21 ‘‘(G) SPECIAL RULES.— 

22 ‘‘(i) EXEMPTION OF DISTRIBUTIONS

23 FROM TRUSTEE TO TRUSTEE TRANSFER

24 AND WITHHOLDING RULES.—For purposes 

25 of sections 401(a)(31), 402(f), and 3405, 


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1 qualified disaster recovery distributions 

2 shall not be treated as eligible rollover dis3 tributions. 

4 ‘‘(ii) QUALIFIED DISASTER RECOVERY

5 DISTRIBUTIONS TREATED AS MEETING

6 PLAN DISTRIBUTION REQUIREMENTS.— 

7 For purposes this title, a qualified disaster 

8 recovery distribution shall be treated as 

9 meeting the requirements of sections 

10 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 

11 403(b)(11), and 457(d)(1)(A).’’. 

12 (3) EFFECTIVE DATE.—The amendments made 

13 by this subsection shall apply to distributions with 

14 respect to disasters the incident beginning date (as 

15 defined in section 72(t)(11)(F)(i) of the Internal 

16 Revenue Code of 1986, as added by this subsection) 

17 for which is after December 27, 2020. 

18 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR

19 HOME PURCHASES.— 

20 (1) INDIVIDUAL RETIREMENT PLANS.—Para21 graph (8) of section 72(t) of the Internal Revenue 

22 Code of 1986 is amended by adding at the end the 

23 following new subparagraph: 

24 ‘‘(F) RECONTRIBUTIONS.— 

25 ‘‘(i) GENERAL RULE.— 


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1 ‘‘(I) IN GENERAL.—Any indi2 vidual who received a qualified dis3 tribution may, during the applicable 

4 period, make one or more contribu5 tions in an aggregate amount not to 

6 exceed the amount of such qualified 

7 distribution to an eligible retirement 

8 plan (as defined in section 

9 402(c)(8)(B)) of which such indi10 vidual is a beneficiary and to which a 

11 rollover contribution of such distribu12 tion could be made under section 

13 402(c), 403(a)(4), 403(b)(8), or 

14 408(d)(3), as the case may be. 

15 ‘‘(II) TREATMENT OF REPAY16 MENTS.—Rules similar to the rules of 

17 clauses (ii) and (iii) of paragraph 

18 (11)(C) shall apply for purposes of 

19 this subsection. 

20 ‘‘(ii) QUALIFIED DISTRIBUTION.—For 

21 purposes of this subparagraph, the term 

22 ‘qualified distribution’ means any distribu23 tion— 

24 ‘‘(I) which is a qualified first25 time homebuyer distribution, 


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1 ‘‘(II) which was to be used to 

2 purchase or construct a principal resi3 dence in a qualified disaster area, but 

4 which was not so used on account of 

5 the qualified disaster with respect to 

6 such area, and 

7 ‘‘(III) which was received during 

8 the period beginning on the date 

9 which is 180 days before the first day 

10 of the incident period of such qualified 

11 disaster and ending on the date which 

12 is 30 days after the last day of such 

13 incident period. 

14 ‘‘(iii) APPLICABLE PERIOD.—For pur15 poses of this subparagraph, the term ‘ap16 plicable period’ means, in the case of a 

17 principal residence in a qualified disaster 

18 area with respect to any qualified disaster, 

19 the period beginning on the first day of the 

20 incident period of such qualified disaster 

21 and ending on the date which is 180 days 

22 after the applicable date with respect to 

23 such disaster.’’. 

24 (2) QUALIFIED PLANS.—Subsection (c) of sec25 tion 402 of the Internal Revenue Code of 1986 is 


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1 amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(12) RECONTRIBUTIONS OF WITHDRAWALS

4 FOR HOME PURCHASES.— 

5 ‘‘(A) GENERAL RULE.— 

6 ‘‘(i) IN GENERAL.—Any individual 

7 who received a qualified distribution may, 

8 during the applicable period, make one or 

9 more contributions in an aggregate amount 

10 not to exceed the amount of such qualified 

11 distribution to an eligible retirement plan 

12 (as defined in paragraph (8)(B)) of which 

13 such individual is a beneficiary and to 

14 which a rollover contribution of such dis15 tribution could be made under subsection 

16 (c) or section 403(a)(4), 403(b)(8), or 

17 408(d)(3), as the case may be. 

18 ‘‘(ii) TREATMENT OF REPAYMENTS.— 

19 Rules similar to the rules of clauses (ii) 

20 and (iii) of section 72(t)(11)(C) shall apply 

21 for purposes of this subsection. 

22 ‘‘(B) QUALIFIED DISTRIBUTION.—For 

23 purposes of this paragraph, the term ‘qualified 

24 distribution’ means any distribution— 


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1 ‘‘(i) described in section 

2 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but 

3 only to the extent such distribution relates 

4 to financial hardship), or 403(b)(11)(B), 

5 ‘‘(ii) which was to be used to purchase 

6 or construct a principal residence in a 

7 qualified disaster area, but which was not 

8 so used on account of the qualified disaster 

9 with respect to such area, and 

10 ‘‘(iii) which was received during the 

11 period beginning on the date which is 180 

12 days before the first day of the incident pe13 riod of such qualified disaster and ending 

14 on the date which is 30 days after the last 

15 day of such incident period. 

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

17 paragraph— 

18 ‘‘(i) the terms ‘qualified disaster’, 

19 ‘qualified disaster area’, and ‘incident pe20 riod’ have the meaning given such terms 

21 under section 72(t)(11), and 

22 ‘‘(ii) the term ‘applicable period’ has 

23 the meaning given such term under section 

24 72(t)(8)(F).’’. 


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1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to distributions with 

3 respect to disasters the incident beginning date (as 

4 defined in section 72(t)(11)(F)(i) of the Internal 

5 Revenue Code of 1986, as added by subsection (a)) 

6 for which is after December 27, 2020. 

7 (c) LOANS FROM QUALIFIED PLANS.— 

8 (1) IN GENERAL.—Subsection (p) of section 72 

9 of the Internal Revenue Code of 1986 is amended by 

10 adding at the end the following new paragraph: 

11 ‘‘(6) INCREASE IN LIMIT ON LOANS NOT TREAT12 ED AS DISTRIBUTIONS.— 

13 ‘‘(A) IN GENERAL.—In the case of any 

14 loan from a qualified employer plan to a quali15 fied individual made during the applicable pe16 riod— 

17 ‘‘(i) clause (i) of paragraph (2)(A) 

18 shall be applied by substituting ‘$100,000’ 

19 for ‘$50,000’, and 

20 ‘‘(ii) clause (ii) of such paragraph 

21 shall be applied by substituting ‘the 

22 present value of the nonforfeitable accrued 

23 benefit of the employee under the plan’ for 

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1 forfeitable accrued benefit of the employee 

2 under the plan’. 

3 ‘‘(B) DELAY OF REPAYMENT.—In the case 

4 of a qualified individual (with respect to any 

5 qualified disaster) with an outstanding loan on 

6 or after the applicable disaster date from a 

7 qualified employer plan— 

8 ‘‘(i) if the due date pursuant to sub9 paragraph (B) or (C) of paragraph (2) for 

10 any repayment with respect to such loan 

11 occurs during the period beginning on the 

12 first day of the incident period of such 

13 qualified disaster and ending on the date 

14 which is 180 days after the last day of 

15 such incident period, such due date may be 

16 delayed for 1 year, 

17 ‘‘(ii) any subsequent repayments with 

18 respect to any such loan may be appro19 priately adjusted to reflect the delay in the 

20 due date under clause (i) and any interest 

21 accruing during such delay, and 

22 ‘‘(iii) in determining the 5-year period 

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1 riod described in clause (i) may be dis2 regarded. 

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

4 paragraph— 

5 ‘‘(i) QUALIFIED INDIVIDUAL.—The 

6 term ‘qualified individual’ means any indi7 vidual— 

8 ‘‘(I) whose principal place of 

9 abode at any time during the incident 

10 period of any qualified disaster is lo11 cated in the qualified disaster area 

12 with respect to such qualified disaster, 

13 and 

14 ‘‘(II) who has sustained an eco15 nomic loss by reason of such qualified 

16 disaster. 

17 ‘‘(ii) APPLICABLE PERIOD.—The ap18 plicable period with respect to any disaster 

19 is the period— 

20 ‘‘(I) beginning on the applicable 

21 date with respect to such disaster, and 

22 ‘‘(II) ending on the date that is 

23 180 days after such applicable date. 

24 ‘‘(iii) OTHER TERMS.—For purposes 

25 of this paragraph— 


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1 ‘‘(I) the terms ‘applicable date’, 

2 ‘qualified disaster’, ‘qualified disaster 

3 area’, and ‘incident period’ have the 

4 meaning given such terms under sub5 section (t)(11), and 

6 ‘‘(II) the term ‘applicable period’ 

7 has the meaning given such term 

8 under subsection (t)(8).’’. 

9 (2) HOLD HARMLESS.— 

10 (A) IN GENERAL.—A person shall not be 

11 treated as having violated the provisions of title 

12 I of the Employee Retirement Income Security 

13 Act of 1974 solely because— 

14 (i) the person made a plan loan to a 

15 qualified individual (as defined in section 

16 72(p)(6) of the Internal Revenue Code of 

17 1986, as added by paragraph (1)) during 

18 the applicable period (as defined in such 

19 section 72(p)(6)) in compliance with sec20 tion 72(p)(6) of such Code; or 

21 (ii) a qualified individual (as so de22 fined) delayed making a plan loan repay23 ment in compliance with section 72(p)(6) 

24 of such Code. 


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1 (B) PROHIBITED TRANSACTIONS.—A per2 son shall be treated as being exempt from the 

3 requirements of section 406 of the Employee 

4 Retirement Income Security Act of 1974 pursu5 ant to subparagraphs (A) and (E) of section 

6 408(b)(1) of such Act if the person meets the 

7 requirements of clause (i) or (ii) of subpara8 graph (A). 

9 (3) EFFECTIVE DATE.—The amendment made 

10 by paragraph (1) shall apply to loans made with re11 spect to disasters the incident beginning date (as de12 fined in section 72(t)(11)(F)(i) of the Internal Rev13 enue Code of 1986, as added by subsection (a)) for 

14 which is after December 27, 2020. 

15 (d) PROVISIONS RELATING TO PLAN AMEND16 MENTS.— 

17 (1) IN GENERAL.—If this subsection applies to 

18 any amendment to any plan or annuity contract, 

19 such plan or contract shall be treated as being oper20 ated in accordance with the terms of the plan during 

21 the period described in paragraph (2)(B)(i). 

22 (2) AMENDMENTS TO WHICH SUBSECTION AP23 PLIES.— 


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1 (A) IN GENERAL.—This subsection shall 

2 apply to any amendment to any plan or annuity 

3 contract which is made— 

4 (i) pursuant to any amendment made 

5 by this section, or pursuant to any regula6 tion issued by the Secretary or the Sec7 retary of Labor under any amendment 

8 made by this section, and 

9 (ii) on or before the last day of the 

10 second calendar year beginning after the 

11 date of the enactment of this Act, or such 

12 later date as the Secretary may prescribe. 

13 In the case of a governmental plan (as defined 

14 in section 414(d)), clause (ii) shall be applied 

15 by substituting the date which is 2 years after 

16 the date otherwise applied under clause (ii). 

17 (B) CONDITIONS.—This subsection shall 

18 not apply to any amendment unless— 

19 (i) during the period— 

20 (I) beginning on the date that 

21 the amendments made by this section, 

22 or any regulation described in sub23 paragraph (A)(i), take effect (or in 

24 the case of a plan or contract amend25 ment not required by amendments 


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1 made by this section or such regula2 tion, the effective date specified by the 

3 plan), and 

4 (II) ending on the date described 

5 in subparagraph (A)(ii) (or, if earlier, 

6 the date the plan or contract amend7 ment is adopted), 

8 the plan or contract is operated as if such plan 

9 or contract amendment were in effect; and 

10 (ii) such plan or contract amendment 

11 applies retroactively for such period. 

Æ 


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