I 

112TH CONGRESS 

1ST SESSION H. R. 3234 

To amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from pension plans for unemployed individuals who have exhausted their rights to unemployment compensation. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 14, 2011 

Mr. PLATTS (for himself and Mr. LYNCH) 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 penalty-free withdrawals from pension plans for unemployed 

individuals who have exhausted their rights to unemployment compensation. 

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 ‘‘Unemployed Worker 

5 Assistance Act of 2011’’. 

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1 SEC. 2. PENALTY-FREE WITHDRAWALS FOR THE UNEM2 PLOYED WHO HAVE EXHAUSTED THEIR 

3 RIGHTS TO UNEMPLOYMENT COMPENSA4 TION. 

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

6 the Internal Revenue Code of 1986 (relating to subsection 

7 not to apply to certain distributions) is amended by adding 

8 at the end the following new subparagraph: 

9 ‘‘(H) DISTRIBUTIONS TO UNEMPLOYED IN10 DIVIDUALS WHO HAVE EXHAUSTED THEIR

11 RIGHTS TO UNEMPLOYMENT COMPENSATION.— 

12 ‘‘(i) IN GENERAL.—Distributions to 

13 an individual after separation from em14 ployment if— 

15 ‘‘(I) such individual exhausted all 

16 rights to unemployment compensation 

17 under any Federal or State unemploy18 ment compensation law with respect 

19 to such separation, and 

20 ‘‘(II) such distribution is made 

21 while such rights are exhausted and 

22 before reemployment or self-employ23 ment. 

24 ‘‘(ii) AMOUNT DISTRIBUTED MAY BE

25 REPAID.— 

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1 ‘‘(I) IN GENERAL.—Any indi2 vidual who receives a qualified dis3 tribution may, at any time during the 

4 5-year period beginning on the day 

5 after the date on which such distribu6 tion was received, make one or more 

7 contributions in an aggregate amount 

8 not to exceed the amount of such dis9 tribution to an eligible retirement plan 

10 of which such individual is a bene11 ficiary and to which a rollover con12 tribution of such distribution could be 

13 made under section 402(c), 403(a)(4), 

14 403(b)(8), 408(d)(3), or 457(e)(16), 

15 as the case may be. 

16 ‘‘(II) TREATMENT OF REPAY17 MENTS OF DISTRIBUTIONS FROM ELI18 GIBLE RETIREMENT PLANS OTHER

19 THAN IRAS.—For purposes of this 

20 title, if a contribution is made pursu21 ant to subclause (I) with respect to a 

22 qualified distribution from an eligible 

23 retirement plan other than an indi24 vidual retirement plan, then the tax25 payer shall, to the extent of the 

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1 amount of the contribution, be treated 

2 as having received the qualified dis3 tribution in an eligible rollover dis4 tribution (as defined in section 

5 402(c)(4)) and as having transferred 

6 the amount to the eligible retirement 

7 plan in a direct trustee to trustee 

8 transfer within 60 days of the dis9 tribution. 

10 ‘‘(III) TREATMENT OF REPAY11 MENTS FOR DISTRIBUTIONS FROM

12 IRAS.—For purposes of this title, if a 

13 contribution is made pursuant to sub14 clause (I) with respect to a qualified 

15 distribution from an individual retire16 ment plan (as defined by section 

17 7701(a)(37)), then, to the extent of 

18 the amount of the contribution, the 

19 qualified distribution shall be treated 

20 as a distribution described in section 

21 408(d)(3) and as having been trans22 ferred to the eligible retirement plan 

23 in a direct trustee to trustee transfer 

24 within 60 days of the distribution. 

25 ‘‘(iii) SPECIAL RULES.— 

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1 ‘‘(I) QUALIFIED DISTRIBUTIONS

2 TREATED AS MEETING PLAN DIS3 TRIBUTION REQUIREMENTS.—For 

4 purposes of this title, a qualified dis5 tribution shall be treated as meeting 

6 the requirements of sections 

7 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 

8 403(b)(11), and 457(d)(1)(A). 

9 ‘‘(II) EXEMPTION OF DISTRIBU10 TIONS FROM TRUSTEE TO TRUSTEE

11 TRANSFER AND WITHHOLDING

12 RULES.—For purposes of sections 

13 401(a)(31), 402(f), and 3405, quali14 fied distributions shall not be treated 

15 as eligible rollover distributions. 

16 ‘‘(iv) DEFINITIONS.—For purposes of 

17 this subparagraph— 

18 ‘‘(I) QUALIFIED DISTRIBU19 TION.—The term ‘qualified distribu20 tion’ means any distribution meeting 

21 the requirements of clause (i). 

22 ‘‘(II) ELIGIBLE RETIREMENT

23 PLAN.—The term ‘eligible retirement 

24 plan’ has the meaning given such 

25 term by section 402(c)(8)(B). 

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1 ‘‘(v) REEMPLOYMENT AND SELF-EM2 PLOYMENT.—Rules similar to the rules of 

3 clauses (ii) and (iii) of subparagraph (D) 

4 shall apply for purposes of this subpara5 graph.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 subsection (a) shall apply to distributions made after the 

8 date of the enactment of this Act. 

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