Train the Future Act

To amend the Internal Revenue Code of 1986 to permit penalty-free in-service retirement distributions for employees serving as mentors. 1. Short title This Act may be cited as the Train the Future Act 2. Encouraging mentors to train the future (a) Early distributions from qualified retirement plans Section 72(t)(2) (1) in subparagraph (A)— (A) by striking or (B) by striking the period at the end of clause (viii) and inserting , or (C) by adding at the end the following new clause: (ix) made to an employee who is serving as a mentor. ; and (2) by adding at the end the following new subparagraph: (H) Distributions to Mentors For purposes of this paragraph, the term mentor (i) has attained 55 years of age, (ii) is not separated from their employment with a company, corporation, or institution of higher education, (iii) in accordance with such requirements and standards as the Secretary determines to be necessary, has substantially reduced their hours of employment with their employer, with the individual to be engaged in mentoring activities described in clause (iv) for not less than 20 percent of the hours of employment after such reduction, and (iv) is responsible for the training and education of employees or students in an area of expertise for which the individual has a professional credential, certificate, or degree. . (b) Distributions during working retirement Paragraph (36) of section 401(a) (36) Distributions during working retirement (A) In general A trust forming part of a pension plan shall not be treated as failing to constitute a qualified trust under this section solely because the plan provides that a distribution may be made from such trust to an employee who— (i) has attained age 62 and who is not separated from employment at the time of such distribution, or (ii) subject to subparagraph (B), is serving as a mentor (as such term is defined in section 72(t)(2)(H)). (B) Limitation on distributions to mentors For purposes of subparagraph (A)(ii), the amount of the distribution made to an employee who is serving as a mentor shall not be greater than the amount equal to the product obtained by multiplying— (i) the amount of the distribution that would have been payable to the employee if such employee had separated from employment instead of reducing their hours of employment with their employer and engaging in mentoring activities, in accordance with clauses (iii) and (iv) of section 72(t)(2)(H), by (ii) the percentage equal to the quotient obtained by dividing— (I) the sum of— (aa) the number of hours per pay period by which the employee's hours of employment are reduced, and (bb) the number of hours of employment that such employee is engaging in mentoring activities, by (II) the total number of hours per pay period worked by the employee before such reduction in hours of employment. . (c) ERISA Subparagraph (A) of section 3(2) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1002(2) , or solely because such distribution is made to an employee who is serving as a mentor (as such term is defined in section 72(t)(2)(H) (d) Application The amendments made by this section shall apply to distributions made in taxable years beginning after December 31, 2015.

Summary: Train the Future Act This bill amends the Internal Revenue Code to allow an early distribution, without penalty, from a qualified retirement plan to an employee who is serving as a mentor. The bill defines "mentor" as a working individual who: (1) has attained age 55; (2) works reduced hours and engages in mentoring activities for at least 20% of such hours; and (3) is responsible for the training and education of employees or students in an area of expertise for which such individual has a professional credential, certificate, or degree.