II 

108TH CONGRESS 

2D SESSION S. 2316 

To amend the Internal Revenue Code of 1986 to allow penalty-free 

withdrawals from individual retirement plans for adoption expenses. 

IN THE SENATE OF THE UNITED STATES 

APRIL 8, 2004 

Ms. MURKOWSKI (for herself and Ms. LANDRIEU) 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 individual retirement plans 

for adoption expenses. 

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

3 SECTION 1. PENALTY-FREE WITHDRAWALS FROM INDI4 VIDUAL RETIREMENT PLANS FOR ADOPTION 

5 EXPENSES. 

6 (a) SHORT TITLE.—This section may be cited as the 

7 ‘‘Adoption Assistance Act’’. 

8 (b) IN GENERAL.—Paragraph (2) of section 72(t) of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new subparagraph: 
2 

•S 2316 IS 

1 ‘‘(G) QUALIFIED ADOPTION EXPENSES.— 

2 ‘‘(i) IN GENERAL.—Distributions from 

3 an individual retirement plan to the extent 

4 that the amount of such distributions does 

5 not exceed the lesser of— 

6 ‘‘(I) $10,000 for the taxable year 

7 with respect to the adoption of a 

8 child, or 

9 ‘‘(II) the amount determined 

10 under clause (ii). 

11 ‘‘(ii) DETERMINATION OF EXPENSES

12 NOT COVERED BY CREDIT.—The amount 

13 determined under this clause is the excess 

14 (if any) of— 

15 ‘‘(I) the qualified adoption ex16 penses (as defined in section 23(d)) 

17 paid by the taxpayer during the tax18 able year with respect to the adoption 

19 of such child, over 

20 ‘‘(II) the amount of the credit al21 lowable under section 23 for such ex22 penses (determined as if such credit 

23 were allowed for such year without re24 gard to any limitation based on liabil25 ity for tax). 
3 

•S 2316 IS 

1 ‘‘(iii) SPECIAL RULES FOR CHILD

2 WITH SPECIAL NEEDS.—In the case of an 

3 adoption of a child with special needs (as 

4 defined in section 23(d)(3))— 

5 ‘‘(I) subclauses (I) and (II) of 

6 clause (i) shall not apply, and 

7 ‘‘(II) a distribution during the 

8 applicable period from an individual 

9 retirement plan with respect to such 

10 adoption shall not be taken into ac11 count under this subparagraph to the 

12 extent that such distribution, when 

13 added to all other distributions with 

14 respect to such adoption from indi15 vidual retirement plans for the appli16 cable period, exceeds $10,000. 

17 For purposes of subclause (II), the term 

18 ‘applicable period’ means the 3-taxable 

19 year period beginning with the taxable year 

20 in which such adoption becomes final. 

21 ‘‘(iv) ORDERING RULE.—Distributions 

22 shall not be taken into account under 

23 clause (i) if such distributions are de24 scribed in subparagraph (A), (C), (D), (E), 

25 or (F) or to the extent paragraph (1) does 
4 

•S 2316 IS 

1 not apply to such distributions by reason 

2 of subparagraph (B). 

3 ‘‘(v) RECONCILIATION ALLOWED.— 

4 Distributions shall not be taken into ac5 count under this subparagraph for any tax6 able year if such distributions are paid on 

7 or before the day prescribed by law for fil8 ing the taxpayer’s return for such taxable 

9 year into the individual retirement plan 

10 from which such distributions were 

11 made.’’. 

12 (c) EFFECTIVE DATE.—The amendment made by 

13 this section shall apply to distributions after the date of 

14 the enactment of this Act. 

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