I 
110TH CONGRESS 
2D SESSION 
H. R. 5822 
To amend the Internal Revenue Code of 1986 to waive the 10 percent 
penalty on withdrawals from qualified retirement plans upon receipt 
of notice of foreclosure on a principal residence. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 16, 2008 
Mr. CARDOZA 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 10 percent penalty on withdrawals from qualified 
retirement plans upon receipt of notice of foreclosure 
on a principal residence. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. WAIVER OF 10 PERCENT PENALTY ON WITH-
DRAWALS FROM QUALIFIED RETIREMENT 
PLANS UPON RECEIPT OF NOTICE OF FORE-
CLOSURE ON A PRINCIPAL RESIDENCE. 
(a) IN GENERAL.—Paragraph (2) of section 72(t) of 
the Internal Revenue Code of 1986 (relating to subsection 
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not to apply to certain distributions) is amended by adding 
at the end the following new subparagraph: 
‘‘(H) QUALIFIED FORECLOSURE DISTRIBU-
TIONS.—Distributions to an individual which 
are qualified foreclosure distributions (as de-
fined in paragraph (11)). Distributions shall 
not be taken into account under the preceding 
sentence if such distributions are described in 
subparagraph (A), (C), (D), (E), (F), or (G) or 
to the extent paragraph (1) does not apply to 
such distributions by reason of subparagraph 
(B).’’. 
(b) QUALIFIED FORECLOSURE DISTRIBUTIONS.— 
Subsection (t) of section 72 of such Code (relating to 10 
percent additional tax on early distributions from qualified 
retirement plans) is amended by adding at the end the 
following new paragraph: 
‘‘(11) QUALIFIED
FORECLOSURE
DISTRIBU-
TIONS.—For purposes of paragraph (2)(H)— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
foreclosure distribution’ means any payment or 
distribution received after July 31, 2007, and 
before January 1, 2011, by an individual after 
the individual has received a foreclosure notice 
relating to any mortgage on the principal resi-
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dence (within the meaning of section 121) of 
the individual. 
‘‘(B) LIMITATION.—The amount of pay-
ments or distributions received by an individual 
which may be treated as qualified foreclosure 
distributions for any taxable year shall not ex-
ceed the excess (if any) of— 
‘‘(i) $30,000, over 
‘‘(ii) the aggregate amounts treated as 
qualified foreclosure distributions with re-
spect to such individual for all prior tax-
able years. 
‘‘(C) AMOUNT DISTRIBUTED MAY BE RE-
PAID.— 
‘‘(i) IN
GENERAL.—Any individual 
who receives a qualified foreclosure dis-
tribution may, at any time during the 5- 
year period beginning on the day after the 
date on which such distribution was re-
ceived, make one or more contributions in 
an aggregate amount not to exceed the 
amount of such distribution to an eligible 
retirement plan of which such individual is 
a beneficiary and to which a rollover con-
tribution of such distribution could be 
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section 7701(a)(37)), then, to the extent of 
the amount of the contribution, the quali-
fied foreclosure distribution shall be treat-
ed as a distribution described in section 
408(d)(3) and as having been transferred 
to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days 
of the distribution. 
‘‘(D) INCOME INCLUSION SPREAD OVER 5- 
YEAR PERIOD.— 
‘‘(i) IN GENERAL.—In the case of any 
qualified foreclosure distribution, unless 
the taxpayer elects not to have this sub-
paragraph apply for any taxable year, any 
amount required to be included in gross in-
come for such taxable year shall be so in-
cluded ratably over the 5-taxable-year pe-
riod beginning with such taxable year. 
‘‘(ii) SPECIAL RULE.—For purposes of 
clause (i), rules similar to the rules of sub-
paragraph (E) of section 408A(d)(3) shall 
apply. 
‘‘(E) SPECIAL RULES.— 
‘‘(i) EXEMPTION
OF
DISTRIBUTIONS 
FROM
TRUSTEE
TO
TRUSTEE
TRANSFER 
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AND WITHHOLDING RULES.—For purposes 
of sections 401(a)(31), 402(f), and 3405, 
qualified foreclosure distributions shall not 
be treated as eligible rollover distributions. 
‘‘(ii) QUALIFIED
FORECLOSURE
DIS-
TRIBUTIONS TREATED AS MEETING PLAN 
DISTRIBUTION REQUIREMENTS.—For pur-
poses this title, a qualified foreclosure dis-
tribution shall be treated as meeting the 
requirements of sections 401(k)(2)(B)(i), 
403(b)(7)(A)(ii), 
403(b)(11), 
and 
457(d)(1)(A).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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