I
105TH CONGRESS
1ST SESSION
H. R. 1123
To amend the Internal Revenue Code of 1986 to permit loans from individual
retirement plans for certain first-time homebuyer, education, and medical
emergency expenses.
IN THE HOUSE OF REPRESENTATIVES
MARCH 19, 1997
Mr. ACKERMAN 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 permit
loans from individual retirement plans for certain first-
time homebuyer, education, and medical emergency ex-
penses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘IRA Self-Loan Act’’.
SEC. 2. LOANS FROM INDIVIDUAL RETIREMENT PLANS FOR
CERTAIN 
FIRST-TIME 
HOMEBUYER, 
EDU-
CATION, 
AND 
MEDICAL 
EMERGENCY 
EX-
PENSES.
(a) IN GENERAL.—Section 408(e) of the Internal
Revenue Code of 1986 (relating to tax treatment of ac-
counts and annuities) is amended by adding at the end
thereof the following new paragraph:
‘‘(7) LOANS
USED
FOR
CERTAIN
FIRST-TIME
HOMEBUYER, EDUCATION, AND
MEDICAL
EMER-
GENCY EXPENSES.—
‘‘(A) IN
GENERAL.—Paragraphs (3) and
(4) shall not apply to any qualified loan which
is made, or secured, by an individual retirement
plan.
‘‘(B) QUALIFIED LOAN.—For purposes of
this paragraph, the term ‘qualified loan’ means
a loan which—
‘‘(i) is used within a reasonable period
of time for—
‘‘(I) qualified first-time home-
buyer expenses,
‘‘(II) 
qualified 
education 
ex-
penses, or
‘‘(III) qualified medical emer-
gency expenses.
‘‘(ii) is made by the trustee of an indi-
vidual retirement plan at the direction of
the individual on whose behalf such plan is
established,
‘‘(iii) in the case of a loan for quali-
fied first-time homebuyer expenses, is se-
cured by the dwelling unit,
‘‘(iv) by its terms requires repayment
in full within 5 years after the date such
loan is made (15 years in the case of a
loan for qualified first-time homebuyer ex-
penses),
‘‘(v) by its terms treats any amount
remaining unpaid in the taxable year be-
ginning after the period described in clause
(iv) as distributed in such taxable year to
the individual on whose behalf such plan is
established and subject to section 72(t)(1),
and
‘‘(vi) bears interest from the date of
the loan at a rate not less than the rate for
comparable United States Treasury obliga-
tions on such date.
‘‘(C) QUALIFIED
EXPENSES.—For pur-
poses of this paragraph—
‘‘(i) QUALIFIED
FIRST-TIME
HOME
BUYER EXPENSES.—
‘‘(I) IN
GENERAL.—The term
‘qualified first-time homebuyer ex-
penses’ means qualified acquisition
costs with respect to a principal resi-
dence for a first-time homebuyer.
‘‘(II) QUALIFIED
ACQUISITION
COSTS.—The term ‘qualified acquisi-
tion costs’ means the cost of acquir-
ing, constructing, or reconstructing
the residence. Such terms includes
any usual or reasonable settlement, fi-
nancing, or other closing costs.
‘‘(III) 
FIRST-TIME
HOME-
BUYER.—The term ‘first-time home-
buyer’ means any eligible person, if
such person (and if married such per-
son’s spouse) has never had a present
ownership interest in a principal resi-
dence.
‘‘(IV) PRINCIPAL
RESIDENCE.—
The term ‘principal residence’ has the
same meaning as when used in section
1034.
‘‘(ii) 
QUALIFIED
EDUCATION
EX-
PENSES.—The term ‘qualified education
expenses’ means tuition and fees required
for enrollment or attendance of an eligible
person at an educational organization de-
scribed in section 170(b)(1)(A)(ii).
‘‘(iii) QUALIFIED
MEDICAL
EMER-
GENCY
EXPENSES.—The term ‘qualified
medical emergency expenses’ means any
amount, not compensated for by insurance
or otherwise, which is paid for medical care
(as defined in section 213(d)) of an eligible
person, if such medical care is required by
reason of any disease or accident that
causes hospitalization for more than 30
days.
‘‘(iv) ELIGIBLE
PERSON.—The term
‘eligible person’ means—
‘‘(I) an individual on whose be-
half the individual retirement plan is
established, and
‘‘(II) a spouse, child (as defined
in section 151(c)(3)), or grandchild of
such individual (or of such individ-
ual’s spouse).
‘‘(D) 
AMOUNT
LIMITATION.—Subpara-
graphs (A) and (B) shall not apply to any loan
to the extent such loan (when added to the out-
standing balance of all other loans from the in-
dividual retirement plan) exceeds the lesser of—
‘‘(i) $50,000, reduced by the excess (if
any) of—
‘‘(I) the highest outstanding bal-
ance of loans from the plan during the
1-year period ending on the day be-
fore the date on which such loan was
made, over
‘‘(II) the outstanding balance of
loans from the plan on the date on
which such loan was made, or
‘‘(ii) the greater of—
‘‘(I) one-half of the value of the
plan, or
‘‘(II) $10,000.’’
(b) EXEMPTION FROM TAX ON PROHIBITED TRANS-
ACTIONS.—Subsection (d) of section 4975 of such Code
(relating to exemptions from tax on prohibited trans-
actions) is amended by striking ‘‘or’’ at end of paragraph
(14), by striking the period at the end of paragraph (15)