II 

108TH CONGRESS 

2D SESSION S. 2375 

To amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from retirement plans during the period that a military reservist 

or national guardsman is called to active duty for an extended period, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 3, 2004 

Mr. HATCH 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 allow penalty-free withdrawals from retirement plans during the 

period that a military reservist or national guardsman 

is called to active duty for an extended period, 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 ‘‘Guardsmen and Re5 servists Financial Relief Act of 2004’’. 
2 

•S 2375 IS 

1 SEC. 2. PENALTY-FREE WITHDRAWALS FROM RETIREMENT 

2 PLANS FOR INDIVIDUALS CALLED TO ACTIVE 

3 DUTY FOR AT LEAST 179 DAYS. 

4 (a) IN GENERAL.—Paragraph (2) of section 72(t) of 

5 the Internal Revenue Code of 1986 (relating to 10-percent 

6 additional tax on early distributions from qualified retire7 ment plans) is amended by adding at the end the following 

8 new subparagraph: 

9 ‘‘(G) DISTRIBUTIONS FROM RETIREMENT

10 PLANS TO INDIVIDUALS CALLED TO ACTIVE

11 DUTY.— 

12 ‘‘(i) IN GENERAL.—Any qualified re13 servist distribution. 

14 ‘‘(ii) AMOUNT DISTRIBUTED MAY BE

15 REPAID.—Any individual who receives a 

16 qualified reservist distribution may, at any 

17 time during the 2-year period beginning on 

18 the day after the end of the active duty pe19 riod, make one or more contributions to an 

20 individual retirement plan of such indi21 vidual in an aggregate amount not to ex22 ceed the amount of such distribution. The 

23 dollar limitations otherwise applicable to 

24 contributions to individual retirement plans 

25 shall not apply to any contribution made 

26 pursuant to the preceding sentence. No de-
3 

•S 2375 IS 

1 duction shall be allowed for any contribu2 tion pursuant to this clause. 

3 ‘‘(iii) QUALIFIED RESERVIST DIS4 TRIBUTION.—For purposes of this sub5 paragraph, the term ‘qualified reservist 

6 distribution’ means any distribution to an 

7 individual if— 

8 ‘‘(I) such distribution is from an 

9 individual retirement plan, or from 

10 amounts attributable to employer con11 tributions made pursuant to elective 

12 deferrals described in subparagraph 

13 (A) or (C) of section 402(g)(3) or sec14 tion 501(c)(18)(D)(iii), 

15 ‘‘(II) such individual was (by rea16 son of being a member of a reserve 

17 component (as defined in section 101 

18 of title 37, United States Code)), or19 dered or called to active duty for a pe20 riod in excess of 179 days or for an 

21 indefinite period, and 

22 ‘‘(III) such distribution is made 

23 during the period beginning on the 

24 date of such order or call and ending 

25 at the close of the active duty period. 
4 

•S 2375 IS 

1 ‘‘(iv) APPLICATION OF SUBPARA2 GRAPH.—This subparagraph applies to in3 dividuals ordered or called to active duty 

4 after September 11, 2001, and before Sep5 tember 12, 2005. In no event shall the 2- 

6 year period referred to in clause (ii) end 

7 before the date which is 2 years after the 

8 date of the enactment of this subpara9 graph.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 401(k)(2)(B)(i) of such Code is 

12 amended by striking ‘‘or’’ at the end of subclause 

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

14 and inserting ‘‘or’’, and by inserting after subclause 

15 (IV) the following new subclause: 

16 ‘‘(V) the date on which a period 

17 referred to in section 

18 72(t)(2)(G)(iii)(III) begins, and’’. 

19 (2) Section 403(b)(11) of such Code is amend20 ed by striking ‘‘or’’ at the end of subparagraph (A), 

21 by striking the period at the end of subparagraph 

22 (B) and inserting ‘‘, or’’, and by inserting after sub23 paragraph (B) the following new subparagraph: 

24 ‘‘(C) for distributions to which section 

25 72(t)(2)(G) applies.’’. 
5 

•S 2375 IS 

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

2 this section shall apply to distributions after September 

3 11, 2001. 

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