I 
114TH CONGRESS 
2D SESSION 
H. R. 4972 
To amend the Internal Revenue Code of 1986 to expand the availability 
of penalty-free distributions to unemployed individuals from retirement plans. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 15, 2016 
Mrs. WATSON COLEMAN 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 expand 
the availability of penalty-free distributions to unem-
ployed individuals from retirement plans. 
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 ‘‘Expanding Penalty 
Free Withdrawal Act of 2016’’. 
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SEC. 2. EXPANSION OF EXCEPTION FOR PENALTY ON 
EARLY DISTRIBUTIONS TO UNEMPLOYED IN-
DIVIDUALS FROM RETIREMENT PLANS. 
(a) IN GENERAL.—Section 72(t)(2) of such Code is 
amended by adding at the end the following new subpara-
graph: 
‘‘(H) LONG-TERM
UNEMPLOYMENT
DIS-
TRIBUTIONS.— 
‘‘(i) IN
GENERAL.—Distributions to 
an individual after separation from em-
ployment— 
‘‘(I) if such individual has re-
ceived unemployment compensation 
for 26 consecutive weeks under any 
Federal or State unemployment com-
pensation law by reason of such sepa-
ration (or, if less, for the maximum 
period for which unemployment com-
pensation is available under State law 
applicable to the individual), and 
‘‘(II) if such distributions are 
made during any taxable year during 
which such unemployment compensa-
tion is paid or the succeeding taxable 
year. 
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‘‘(ii) DISTRIBUTIONS
AFTER
REEM-
PLOYMENT; 
SELF-EMPLOYED
INDIVID-
UALS.—Rules similar to the rules of 
clauses (ii) and (iii) of subparagraph (D) 
shall apply for purposes of this subpara-
graph. 
‘‘(iii) LIMITATION.—Clause (i) shall 
not apply to any distribution to the extent 
that such distribution exceeds the lesser 
of— 
‘‘(I) $50,000, reduced by the ag-
gregate amount of distributions which 
are described in clause (i) from all 
plans of the individual during the 1- 
year period ending on the day before 
the date on which such distribution 
was made, or 
‘‘(II) the greater of $10,000 or 
one-half of the aggregate fair market 
value (at the time of the distribution) 
of the individual’s qualified retirement 
plans (as defined in section 4974(c)) 
and the nonforfeitable portion the in-
dividual’s defined contribution plans. 
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‘‘(iv) COORDINATION WITH DISTRIBU-
TIONS TO UNEMPLOYED INDIVIDUALS FOR 
HEALTH
INSURANCE
PREMIUMS.—Dis-
tributions shall not be taken into account 
under this subparagraph if such distribu-
tions are described in subparagraph (D).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after Decem-
ber 31, 2016. 
Æ 
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