I 

109TH CONGRESS 

1ST SESSION H. R. 2174 

To provide for qualified withdrawals from the Capital Construction Fund 

for fishermen leaving the industry and for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2005 

Mrs. CAPPS (for herself, Mr. DEFAZIO, Mr. FARR, Ms. HOOLEY, Mr. FRANK

of Massachusetts, Mr. BLUMENAUER, Ms. LEE, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committee on Armed Services, for a 

period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide for qualified withdrawals from the Capital Construction Fund for fishermen leaving the industry and 

for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes. 

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 ‘‘Capital Construction 

5 Fund Qualified Withdrawal Act of 2005’’. 
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1 SEC. 2. AMENDMENT OF THE MERCHANT MARINE ACT OF 

2 1936 TO ENCOURAGE RETIREMENT OF CER3 TAIN FISHING VESSELS AND PERMITS. 

4 (a) IN GENERAL.—Section 607(a) of the Merchant 

5 Marine Act, 1936 (46 U.S.C. App. 1177(a)) is amended 

6 by adding at the end the following: ‘‘Any agreement en7 tered into under this section may be modified for the pur8 pose of encouraging the sustainability of the fisheries of 

9 the United States by making the termination and with10 drawal of a capital construction fund a qualified with11 drawal if done in exchange for the retirement of the re12 lated commercial fishing vessels and related commercial 

13 fishing permits.’’. 

14 (b) NEW QUALIFIED WITHDRAWALS.— 

15 (1) IN GENERAL.—Section 607(f)(1) of the 

16 Merchant Marine Act, 1936 (46 U.S.C. App. 

17 1177(f)(1)) is amended by— 

18 (A) striking ‘‘for:’’ and inserting ‘‘for—’’; 

19 (B) striking ‘‘vessel’’ in subparagraph (A) 

20 and inserting ‘‘vessel;’’; 

21 (C) striking ‘‘vessel, or’’ in subparagraph 

22 (B) and inserting ‘‘vessel;’’; 

23 (D) striking ‘‘vessel.’’ in subparagraph (C) 

24 and inserting ‘‘vessel;’’; and 

25 (E) inserting after subparagraph (C) the 

26 following: 
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1 ‘‘(D) the payment of an industry fee au2 thorized by the fishing capacity reduction pro3 gram under section 312(b) of the Magnuson4 Stevens Fishery Conservation and Management 

5 Act (16 U.S.C. 1861a(b)); 

6 ‘‘(E) in the case of any such person or 

7 shareholder for whose benefit such fund was es8 tablished with respect to any vessel operated in 

9 the fisheries of the United States, or any share10 holder of such person, a rollover contribution 

11 (within the meaning of section 408(d)(3) of the 

12 Internal Revenue Code of 1986) to such per13 son’s or shareholder’s individual retirement plan 

14 (as defined in section 7701(a)(37) of such 

15 Code); 

16 ‘‘(F) the payment of the net proceeds de17 posited into the fund from a sale described in 

18 subsection (b)(1)(C)(ii) to a person retiring re19 lated commercial fishing vessels and permits; 

20 ‘‘(G) the acquisition of a vessel monitoring 

21 system as a safety improvement for a fishing 

22 vessel; or 

23 ‘‘(H) the acquisition or construction of 

24 fishing gear designed to minimize or avoid by25 catch as required under section 301(a)(9) of the 
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1 Magnuson-Stevens Fishery Conservation and 

2 Management Act (16 U.S.C. 1851(a)(9)).’’. 

3 (2) REDUCTION PROGRAM SALE PROCEEDS AL4 LOWED IN DETERMINING DEPOSIT CEILING.—Sec5 tion 607(b)(1)(C) of such Act (46 U.S.C. App. 

6 1177(b)(1)(C)) is amended by striking ‘‘or (ii)’’ and 

7 inserting ‘‘(ii) the sale of any agreement vessel or 

8 fishing permit retired through the fishing capacity 

9 reduction program under section 312(b) of the Mag10 nuson-Stevens Fishery Conservation and Manage11 ment Act (16 U.S.C. 1861a(b)), or (iii)’’. 

12 (3) CERTAIN QUALIFIED WITHDRAWALS TREAT13 ED AS WITHDRAWN FROM THE CAPITAL ACCOUNT.— 

14 Section 607(e)(2)(B) of such Act (46 U.S.C. App. 

15 1177(e)(2)(B)) is amended by adding at the end 

16 ‘‘unless such portion represents gain from a sale de17 scribed in subsection (b)(1)(C)(ii) and is withdrawn 

18 for any purpose provided under subparagraph (D), 

19 (E), or (F) of subsection (f)(1),’’. 

20 (4) SECRETARY TO ENSURE RETIREMENT OF

21 VESSELS AND PERMITS.—The Secretary of Com22 merce by regulation shall establish procedures to en23 sure that any person making a qualified withdrawal 

24 authorized by section 607(f)(1)(F) of the Merchant 

25 Marine Act, 1936 (46 U.S.C. App. 1177(f)(1)(F)) 
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1 retires the related commercial use of fishing vessels 

2 and commercial fishery permits. 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) IN GENERAL.—Section 7518(e)(1) of the 

5 Internal Revenue Code of 1986 (relating to purposes 

6 of qualified withdrawals) is amended— 

7 (A) by striking ‘‘for:’’ and inserting 

8 ‘‘for—’’; 

9 (B) by striking ‘‘vessel, or’’ in subpara10 graph (B) and inserting ‘‘vessel,’’; 

11 (C) by striking ‘‘vessel.’’ in subparagraph 

12 (C) and inserting ‘‘vessel,’’; 

13 (D) by inserting after subparagraph (C) 

14 the following: 

15 ‘‘(D) the payment of an industry fee au16 thorized by the fishing capacity reduction pro17 gram under section 312 of the Magnuson-Ste18 vens Fishery Conservation and Management 

19 Act (16 U.S.C. 1861a), 

20 ‘‘(E) in the case of any person or share21 holder for whose benefit such fund was estab22 lished with respect to any vessel operated in the 

23 fisheries of the United States, or any share24 holder of such person, a rollover contribution 

25 (within the meaning of section 408(d)(3)) to 
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1 such person’s or shareholder’s individual retire2 ment plan (as defined in section 7701(a)(37)), 

3 ‘‘(F) the payment of the net proceeds de4 posited into the fund from a sale described in 

5 subsection (a)(1)(C)(ii) to a person retiring re6 lated commercial fishing vessels and permits, 

7 ‘‘(G) the acquisition of a vessel monitoring 

8 system as a safety improvement for a fishing 

9 vessel, or 

10 ‘‘(H) the acquisition or construction of 

11 fishing gear designed to minimize or avoid by12 catch as required under section 301(a)(9) of the 

13 Magnuson-Stevens Fishery Conservation and 

14 Management Act (16 U.S.C. 1851(a)(9)).’’. 

15 (2) REDUCTION PROGRAM SALE PROCEEDS AL16 LOWED IN DETERMINING DEPOSIT CEILING.—Sec17 tion 7518(a)(1)(C) of such Code is amended by 

18 striking ‘‘or’’ at the end of clause (i), by redesig19 nating clause (ii) as clause (iii), and by inserting 

20 after clause (i) the following new clause: 

21 ‘‘(ii) the sale of any agreement vessel 

22 or fishing permit retired through the fish23 ing capacity reduction program under sec24 tion 312(b) of the Magnuson-Stevens Fish-
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1 ery Conservation and Management Act (16 

2 U.S.C. 1861a(b)), or’’. 

3 (3) CERTAIN QUALIFIED WITHDRAWALS TREAT4 ED AS WITHDRAWN FROM THE CAPITAL ACCOUNT.— 

5 Section 7718(d)(2)(B) of such Code is amended by 

6 adding at the end ‘‘unless such portion represents 

7 gain from a sale described in subsection (a)(1)(C)(ii) 

8 and is withdrawn for any purpose provided under 

9 subparagraph (D), (E), or (F) of subsection 

10 (e)(1),’’. 

11 (4) SECRETARY TO ENSURE RETIREMENT OF

12 VESSELS AND PERMITS.—The Secretary of the 

13 Treasury by regulation shall establish procedures to 

14 ensure that any person making a qualified with15 drawal authorized by section 7518(e)(1)(F) of the 

16 Internal Revenue Code of 1986 retires the related 

17 commercial use of fishing vessels and commercial 

18 fishery permits referred to therein. 

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

20 this section shall apply to withdrawals made after the date 

21 of enactment of this Act. 

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