I 

109TH CONGRESS 

1ST SESSION H. R. 2177 

To amend the Internal Revenue Code of 1986 to permit tax-free distributions 

from governmental retirement plans for premiums for health and longterm care insurance for public safety officers. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2005 

Mr. CHOCOLA (for himself, Mr. NEAL of Massachusetts, Mr. SHAW, Mr. 

MCCRERY, Mr. CAMP, Mr. RAMSTAD, Mr. SAM JOHNSON of Texas, Mr. 

ENGLISH of Pennsylvania, Mr. HAYWORTH, Mr. WELLER, Mr. LEWIS of 

Kentucky, Mr. FOLEY, Mr. BRADY of Texas, Mr. REYNOLDS, Mr. RYAN

of Wisconsin, Mr. CANTOR, Mr. BEAUPREZ, Ms. HART, Mr. CARDIN, Mr. 

LEWIS of Georgia, Mr. MCNULTY, Mr. JEFFERSON, Mr. ACKERMAN, Mr. 

ALEXANDER, Mr. BACA, Mr. BACHUS, Mr. BISHOP of New York, Mr. 

BONILLA, Mr. BOOZMAN, Mr. BURTON of Indiana, Mr. BUYER, Mr. 

CARTER, Mr. CONAWAY, Mr. CULBERSON, Mr. CUNNINGHAM, Mr. DENT, 

Mr. FERGUSON, Mr. FORD, Mr. GALLEGLY, Mr. GARRETT of New Jersey, Mr. GERLACH, Mr. GOODE, Mr. GORDON, Ms. HERSETH, Mr. HIGGINS, Mr. KENNEDY of Minnesota, Mr. KILDEE, Ms. KILPATRICK of 

Michigan, Mr. KLINE, Mr. LATHAM, Mr. LYNCH, Mrs. MCCARTHY, Mr. 

MCGOVERN, Mr. MCHUGH, Mrs. MILLER of Michigan, Mrs. MYRICK, Mr. 

NEUGEBAUER, Mr. PENCE, Mr. PITTS, Mr. PORTER, Mr. ROGERS of 

Michigan, Ms. ROYBAL-ALLARD, Mr. SHADEGG, Mr. SHIMKUS, Mr. 

SMITH of Washington, Mr. TERRY, Mr. THORNBERRY, Mr. VAN

HOLLEN, and Mr. WILSON of South Carolina) 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 

tax-free distributions from governmental retirement plans 

for premiums for health and long-term care insurance 

for public safety officers. 
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Healthcare Enhance5 ment for Local Public Safety Retirees Act of 2005’’ or 

6 the ‘‘HELPS Retirees Act of 2005’’. 

7 SEC. 2. DISTRIBUTIONS FROM GOVERNMENTAL RETIRE8 MENT PLANS FOR HEALTH AND LONG-TERM 

9 CARE INSURANCE FOR PUBLIC SAFETY OFFI10 CERS. 

11 (a) IN GENERAL.—Section 402 of the Internal Rev12 enue Code of 1986 (relating to taxability of beneficiary 

13 of employees’ trust) is amended by adding at the end the 

14 following new subsection: 

15 ‘‘(l) DISTRIBUTIONS FROM GOVERNMENTAL PLANS

16 FOR HEALTH AND LONG-TERM CARE INSURANCE.— 

17 ‘‘(1) IN GENERAL.—In the case of an employee 

18 who is an eligible retired public safety officer who 

19 makes the election described in paragraph (6) with 

20 respect to any taxable year of such employee, gross 

21 income of such employee for such taxable year does 

22 not include any distribution from an eligible retire23 ment plan to the extent that the aggregate amount 

24 of such distributions does not exceed the amount 

25 paid by such employee for qualified health insurance 
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1 premiums of the employee, his spouse, or dependents 

2 (as defined in section 152) for such taxable year. 

3 ‘‘(2) LIMITATION.—The amount which may be 

4 excluded from gross income for the taxable year by 

5 reason of paragraph (1) shall not exceed $5,000. 

6 ‘‘(3) DISTRIBUTIONS MUST OTHERWISE BE IN7 CLUDIBLE.— 

8 ‘‘(A) IN GENERAL.—An amount shall be 

9 treated as a distribution for purposes of para10 graph (1) only to the extent that such amount 

11 would be includible in gross income without re12 gard to paragraph (1). 

13 ‘‘(B) APPLICATION OF SECTION 72.—Not14 withstanding section 72, in determining the ex15 tent to which an amount is treated as a dis16 tribution for purposes of subparagraph (A), the 

17 aggregate amounts distributed from an eligible 

18 retirement plan in a taxable year shall be treat19 ed as includible in gross income (without regard 

20 to subparagraph (A)) to the extent that such 

21 amount does not exceed the aggregate amount 

22 which would have been so includible if all 

23 amounts distributed from all eligible retirement 

24 plans were treated as 1 contract for purposes of 

25 determining the inclusion of such distribution 
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1 under section 72. Proper adjustments shall be 

2 made in applying section 72 to other distribu3 tions in such taxable year and subsequent tax4 able years. 

5 ‘‘(4) DEFINITIONS.—For purposes of this sub6 section— 

7 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—For 

8 purposes of paragraph (1), the term ‘eligible re9 tirement plan’ means a governmental plan 

10 (within the meaning of section 414(d)) which is 

11 described in clause (iii), (iv), (v), or (vi) of sub12 section (c)(8)(B). 

13 ‘‘(B) ELIGIBLE RETIRED PUBLIC SAFETY

14 OFFICER.—The term ‘eligible retired public 

15 safety officer’ means an individual who, by rea16 son of disability or attainment of normal retire17 ment age, is separated from service as a public 

18 safety officer with the employer who maintains 

19 the eligible retirement plan from which distribu20 tions subject to paragraph (1) are made. 

21 ‘‘(C) PUBLIC SAFETY OFFICER.—The term 

22 ‘public safety officer’ shall have the same mean23 ing given such term by section 1204(8)(A) of 

24 the Omnibus Crime Control and Safe Streets 

25 Act of 1968 (42 U.S.C. 3796b(8)(A)). 
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1 ‘‘(D) QUALIFIED HEALTH INSURANCE

2 PREMIUMS.—The term ‘qualified health insur3 ance premiums’ means premiums for coverage 

4 for the eligible retired public safety officer, his 

5 spouse, and dependents, by an accident or 

6 health insurance plan or qualified long-term 

7 care insurance contract (as defined in section 

8 7702B(b)). 

9 ‘‘(5) SPECIAL RULES.—For purposes of this 

10 subsection— 

11 ‘‘(A) DIRECT PAYMENT TO INSURER RE12 QUIRED.—Paragraph (1) shall only apply to a 

13 distribution if payment of the premiums is 

14 made directly to the provider of the accident or 

15 health insurance plan or qualified long-term 

16 care insurance contract by deduction from a 

17 distribution from the eligible retirement plan. 

18 ‘‘(B) RELATED PLANS TREATED AS 1.—All 

19 eligible retirement plans of an employer shall be 

20 treated as a single plan. 

21 ‘‘(6) ELECTION DESCRIBED.— 

22 ‘‘(A) IN GENERAL.—For purposes of para23 graph (1), an election is described in this para24 graph if the election is made by an employee 

25 after separation from service with respect to 
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1 amounts not distributed from an eligible retire2 ment plan to have amounts from such plan dis3 tributed in order to pay for qualified health in4 surance premiums. 

5 ‘‘(B) SPECIAL RULE.—A plan shall not be 

6 treated as violating the requirements of section 

7 401, or as engaging in a prohibited transaction 

8 for purposes of section 503(b), merely because 

9 it provides for an election with respect to 

10 amounts that are otherwise distributable under 

11 the plan or merely because of a distribution 

12 made pursuant to an election described in sub13 paragraph (A). 

14 ‘‘(7) COORDINATION WITH MEDICAL EXPENSE

15 DEDUCTION.—The amounts excluded from gross in16 come under paragraph (1) shall not be taken into 

17 account under section 213. 

18 ‘‘(8) COORDINATION WITH DEDUCTION FOR

19 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN20 DIVIDUALS.—The amounts excluded from gross in21 come under paragraph (1) shall not be taken into 

22 account under section 162(l).’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Section 403(a) of such Code (relating to 

25 taxability of beneficiary under a qualified annuity 
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1 plan) is amended by inserting after paragraph (1) 

2 the following new paragraph: 

3 ‘‘(2) SPECIAL RULE FOR HEALTH AND LONG4 TERM CARE INSURANCE.—To the extent provided in 

5 section 402(l), paragraph (1) shall not apply to the 

6 amount distributed under the contract which is oth7 erwise includible in gross income under this sub8 section.’’. 

9 (2) Section 403(b) of such Code (relating to 

10 taxability of beneficiary under annuity purchased by 

11 section 501(c)(3) organization or public school) is 

12 amended by inserting after paragraph (1) the fol13 lowing new paragraph: 

14 ‘‘(2) SPECIAL RULE FOR HEALTH AND LONG15 TERM CARE INSURANCE.—To the extent provided in 

16 section 402(l), paragraph (1) shall not apply to the 

17 amount distributed under the contract which is oth18 erwise includible in gross income under this sub19 section.’’. 

20 (3) Section 457(a) of such Code (relating to 

21 year of inclusion in gross income) is amended by 

22 adding at the end the following new paragraph: 

23 ‘‘(3) SPECIAL RULE FOR HEALTH AND LONG24 TERM CARE INSURANCE.—To the extent provided in 

25 section 402(l), paragraph (1) shall not apply to 
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1 amounts otherwise includible in gross income under 

2 this subsection.’’. 

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

4 this section shall apply to distributions in taxable years 

5 beginning after December 31, 2004. 

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