I 

116TH CONGRESS 

1ST SESSION H. R. 4181 

To amend the Internal Revenue Code of 1986 to allow distributions from 

qualified cash or deferred arrangements in the event that the employer 

files for chapter 11 bankruptcy and the employee is not regularly scheduled for work or paid. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 9, 2019 

Mr. GRIFFITH 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 distributions from qualified cash or deferred arrangements 

in the event that the employer files for chapter 11 bankruptcy and the employee is not regularly scheduled for 

work or paid. 

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


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1 SECTION 1. DISTRIBUTIONS FROM QUALIFIED CASH OR DE2 FERRED ARRANGEMENTS ALLOWED IN CHAP3 TER 11 BANKRUPTCY IF EMPLOYEE NOT REG4 ULARLY SCHEDULED FOR WORK OR PAID. 

5 (a) IN GENERAL.—Section 401(k)(2)(B)(i) of the In6 ternal Revenue Code of 1986 is amended by striking ‘‘or’’ 

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

8 of subclause (V) and inserting ‘‘, or’’, and by inserting 

9 after subclause (V) the following new subclause: 

10 ‘‘(VI) in the case of a qualified 

11 bankruptcy reorganization delay dis12 tribution (as defined in paragraph 

13 (15)), the beginning of the period de14 scribed in paragraph (15)(A)(iii), 

15 and’’. 

16 (b) QUALIFIED BANKRUPTCY REORGANIZATION

17 DELAY DISTRIBUTION.—Section 401(k) of such Code is 

18 amended by adding at the end the following new para19 graph: 

20 ‘‘(15) QUALIFIED BANKRUPTCY REORGANIZA21 TION DELAY DISTRIBUTION.— 

22 ‘‘(A) IN GENERAL.—For purposes of para23 graph (2)(B)(i)(VI), the term ‘qualified bank24 ruptcy reorganization delay distribution’ means 

25 any distribution to an employee if— 


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1 ‘‘(i) the employer has filed a case 

2 under chapter 11 of title 11, United States 

3 Code, and is under the jurisdiction of the 

4 court in such case, 

5 ‘‘(ii) such employee, at any time after 

6 the filing of such case, is not scheduled to 

7 work for at least the number of hours that 

8 such employee is customarily scheduled to 

9 work or is not paid on or before the time 

10 that such employee is customarily paid, 

11 and 

12 ‘‘(iii) such distribution is made during 

13 the period beginning with the first time 

14 which is described in clause (ii) with re15 spect to such employee and ending on the 

16 first date thereafter on which such em17 ployee is scheduled to work for at least the 

18 number of hours that such employee is 

19 customarily scheduled to work and is paid 

20 at the time such employee is customarily 

21 paid (or, if earlier, ending on the date of 

22 severance from employment). 

23 ‘‘(B) LIMITATION ON DISTRIBUTIONS.— 

24 The aggregate amount of distributions received 

25 by any employee which may be treated as qualiVerDate Sep 11 2014 02:38 Aug 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4181.IH H4181

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1 fied bankruptcy reorganization delay distribu2 tions with respect to any case described in sub3 paragraph (A)(i) shall not exceed the amount 

4 which bears the same proportion to such em5 ployee’s annual salary as the period beginning 

6 with the beginning of the period described in 

7 subparagraph (A)(iii) and ending on the date of 

8 the distribution bears to a calendar year.’’. 

9 (c) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—The amendments made by 

11 this section shall apply to distributions made after 

12 the date of the enactment of this Act. 

13 (2) TRANSITION.—During the 2-year period be14 ginning with the date of the enactment of this Act, 

15 a plan shall not fail to satisfy any provision of the 

16 Internal Revenue Code of 1986 merely because the 

17 terms of the plan do not provide for making quali18 fied bankruptcy reorganization delay distributions 

19 (as defined in section 401(k)(15) of such Code, as 

20 added by this section) but such plan nonetheless 

21 provides for such distributions. 

Æ 


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