To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans.

Subjects: Taxation

Summary:  <p>This bill allows a waiver of the 10% penalty on premature distributions from tax-exempt retirement plans where such distributions do not exceed the excess of $10,000 over aggregate plan distributions during a specified 5-year period.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2637 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 2637

     To amend the Internal Revenue Code of 1986 to waive the early 
 withdrawal penalty on certain distributions from qualified retirement 
                                 plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 17, 2023

  Mr. Santos 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 waive the early 
 withdrawal penalty on certain distributions from qualified retirement 
                                 plans.

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

SECTION 1. WAIVER OF EARLY WITHDRAWAL PENALTY ON CERTAIN DISTRIBUTIONS 
              FROM QUALIFIED RETIREMENT PLANS.

    (a) In General.--Section 72(t)(2) of the Internal Revenue Code of 
1986 is amended to add at the end the following new subparagraph:
                    ``(O) General exemption amount.--
                            ``(i) In general.--Any distribution (other 
                        than a distribution to which paragraph (1) does 
                        not apply without regard to this subparagraph) 
                        from an applicable eligible retirement plan (as 
                        defined in subparagraph (H)(vi)(I)) of any 
                        individual to the extent that such distribution 
                        does not exceed the excess of $10,000 over the 
                        aggregate amount of such distributions made 
                        from all such plans of such individual during 
                        the 5-year period ending on the date of such 
                        distribution.
                            ``(ii) Treatment of plan distributions.--An 
                        applicable eligible retirement plan (as defined 
                        in subparagraph (H)(vi)(I)) shall not be 
                        treated as failing to meet any requirement of 
                        this title merely because the plan allows a 
                        distribution to an individual, unless the 
                        aggregate amount of such distributions (other 
                        than distributions allowed without regard to 
                        this clause) from all plans maintained by the 
                        employer (and any member of any controlled 
                        group which includes the employer, determined 
                        as provided in subparagraph (H)(iv)(II)) to 
                        such individual during the 5-year period ending 
                        on the date of such distribution exceeds 
                        $10,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after the date of the enactment of this Act.
                                 &lt;all&gt;
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