I 
116TH CONGRESS 
1ST SESSION 
H. R. 766 
To allow penalty-free distributions from retirement accounts in the case of 
Federal employees and certain Federal contractors impacted by the Fed-
eral Government shutdown. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 24, 2019 
Mr. GRAVES of Louisiana introduced the following bill; which was referred to 
the Committee on Ways and Means, and in addition to the Committee 
on Oversight and Reform, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To allow penalty-free distributions from retirement accounts 
in the case of Federal employees and certain Federal 
contractors impacted by the Federal Government shut-
down. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. TAX-FAVORED WITHDRAWALS FROM RETIRE-
MENT PLANS. 
(a) IN GENERAL.—Section 72(t) of the Internal Rev-
enue Code of 1986 shall not apply to any qualified shut-
down distribution. 
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(B) NO TSP CONDITIONS ON CONTRIBU-
TIONS OR DISTRIBUTIONS.—In the case of the 
Thrift Savings Fund, no limit on the number of 
distributions made to an individual, or on the 
amount of contributions which may be made by 
such individual, shall be imposed solely by rea-
son of a distribution which is a qualified shut-
down distribution. 
(3) CONTROLLED
GROUP.—For purposes of 
paragraph (3), the term ‘‘controlled group’’ means 
any group treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 of the In-
ternal Revenue Code of 1986. 
(c) AMOUNT DISTRIBUTED MAY BE REPAID.— 
(1) IN GENERAL.—Any individual who receives 
a qualified shutdown distribution may, at any time 
during the 180-day period beginning on the day 
after the date on which the Federal appropriations 
lapse to which the distribution relates ends with re-
spect to the individual, make 1 or more contribu-
tions 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 contribution of such distribution 
could be made under section 402(c), 403(a)(4), 
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403(b)(8), 408(d)(3), or 457(e)(16), of the Internal 
Revenue Code of 1986, as the case may be. 
(2) TREATMENT OF REPAYMENTS OF DISTRIBU-
TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 
THAN IRAS.—For purposes of the Internal Revenue 
Code of 1986, if a contribution is made pursuant to 
paragraph (1) with respect to a qualified shutdown 
distribution from an eligible retirement plan other 
than an individual retirement plan, then the tax-
payer shall, to the extent of the amount of the con-
tribution, be treated as having received the qualified 
shutdown distribution in an eligible rollover distribu-
tion (as defined in section 402(c)(4) of such Code) 
and as having transferred the amount to the eligible 
retirement plan in a direct trustee to trustee trans-
fer within 60 days of the distribution. 
(3) TREATMENT OF REPAYMENTS OF DISTRIBU-
TIONS FROM IRAS.—For purposes of the Internal 
Revenue Code of 1986, if a contribution is made 
pursuant to paragraph (1) with respect to a quali-
fied shutdown distribution from an individual retire-
ment plan (as defined by section 7701(a)(37) of 
such Code), then, to the extent of the amount of the 
contribution, the qualified shutdown distribution 
shall be treated as a distribution described in section 
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408(d)(3) of such Code and as having been trans-
ferred to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days of the dis-
tribution. 
(d) DEFINITIONS.—For purposes of this section— 
(1) QUALIFIED
SHUTDOWN
DISTRIBUTION.— 
The term ‘‘qualified shutdown distribution’’ means 
any distribution by an applicable individual from an 
eligible retirement plan made during a Federal ap-
propriations lapse with respect to such individual. 
(2) APPLICABLE INDIVIDUAL.—The term ‘‘ap-
plicable individual’’ means any individual— 
(A) who is a Federal employee furloughed 
due to a Federal appropriations lapse, 
(B) who is placed on unpaid leave as a 
Federal contractor, or as an employee of a Fed-
eral contractor, due to a Federal appropriations 
lapse, 
(C) who is an employee of a State or other 
Federal grantee— 
(i) whose compensation is advanced or 
reimbursed in whole or in part by the Fed-
eral Government, and 
(ii) who is furloughed due to a Fed-
eral appropriations lapse, or 
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(D) who is furloughed due to a Federal ap-
propriations lapse as an employee of the Dis-
trict of Columbia Courts, the Public Defender 
Service for the District of Columbia, or the Dis-
trict of Columbia government. 
Such term shall include any excepted employee or an 
employee performing emergency work, as such terms 
are defined by the Office of Personnel Management 
or the appropriate District of Columbia public em-
ployer, as applicable, during a Federal appropria-
tions lapse. 
(3) FEDERAL APPROPRIATION LAPSE.— 
(A) IN GENERAL.—The term ‘‘Federal ap-
propriations lapse’’ means any continuous pe-
riod during which there is a lapse in Federal 
appropriations. 
(B) PERIOD OF LAPSE.—A period of lapse 
in Federal appropriations shall not be a Federal 
appropriations lapse with respect to an indi-
vidual— 
(i) for longer than the period during 
which the individual is furloughed (or on 
unpaid leave in the case of an individual 
described in paragraph (2)(B)) due to such 
lapse, and 
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(ii) unless such period includes the 
end of a pay period for which compensa-
tion was not received by reason of such 
lapse. 
(4) ELIGIBLE RETIREMENT PLAN.—The term 
‘‘eligible retirement plan’’ shall have the meaning 
given such term by section 402(c)(8)(B) of the In-
ternal Revenue Code of 1986. 
(e) INCOME INCLUSION SPREAD OVER 3-YEAR PE-
RIOD.— 
(1) IN GENERAL.—In the case of any qualified 
shutdown distribution, unless the taxpayer elects not 
to have this paragraph apply for any taxable year, 
any amount required to be included in gross income 
for such taxable year shall be so included ratably 
over the 3-taxable-year period beginning with such 
taxable year. 
(2) SPECIAL
RULE.—For purposes of para-
graph (1), rules similar to the rules of subparagraph 
(E) of section 408A(d)(3) of the Internal Revenue 
Code of 1986 shall apply. 
(f) SPECIAL RULES.— 
(1) EXEMPTION
OF
DISTRIBUTIONS
FROM 
TRUSTEE
TO
TRUSTEE
TRANSFER
AND
WITH-
HOLDING
RULES.—For 
purposes 
of 
sections 
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