To amend the Internal Revenue Code of 1986 to exclude from gross income certain distributions from qualified retirement plans used for mortgage payments.

SECTION 1. SHORT TITLE; CONSTITUTIONAL AUTHORITY.

    (a) Short Title.--This Act may be cited as the ``Homeowner 
Empowerment Act of 2008''.
    (b) Constitutional Authority To Enact This Legislation.--The 
constitutional authority upon which this Act rests is the power of 
Congress to lay and collect taxes, set forth in article I, section 8 of 
the United States Constitution.

SEC. 2. EXCLUSION FROM GROSS INCOME OF CERTAIN DISTRIBUTIONS FROM 
              QUALIFIED RETIREMENT PLANS USED FOR MORTGAGE PAYMENTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139A the following new section:

``SEC. 139B. CERTAIN DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS USED 
              FOR MORTGAGE PAYMENTS.

    ``(a) In General.--Gross income shall not include a qualified 
mortgage distribution.
    ``(b) Limitation.--Subsection (a) shall not apply to any 
distribution made in any month to the extent that such distribution 
(when added to all other distributions made in such month which are 
taken into account under subsection (a) with respect to any individual) 
exceeds $5,000.
    ``(c) Qualified Mortgage Distribution.--For purposes of this 
section--
            ``(1) In general.--The term `qualified mortgage 
        distribution' means any distribution which is made before 
        January 1, 2010, from an individual retirement plan, or from 
        amounts attributable to employer contributions made pursuant to 
        elective deferrals described in subparagraph (A) or (C) of 
        section 402(g)(3) or section 501(c)(18)(D)(iii), directly by 
        the trustee of the plan to a mortgagee with respect to a 
        qualified mortgage of any individual. Such term shall not 
        include any distribution to the extent that such distribution 
        exceeds the required minimum payment due under the terms of the 
        mortgage.
            ``(2) Qualified mortgage.--The term `qualified mortgage' 
        means any mortgage which is--
                    ``(A) secured by the principal residence (within 
                the meaning of section 121) of the mortgagor, and
                    ``(B) originated before January 1, 2008.
    ``(d) Requirement To Repay Distributions.--For purposes of this 
section--
            ``(1) In general.--The term `qualified mortgage 
        distribution' shall not include any distribution except to the 
        extent that one or more contributions to an individual 
        retirement plan of the taxpayer in an aggregate amount equal to 
        such distribution are made during the 12-year period beginning 
        on the date of such distribution.
            ``(2) Treatment of recontributions.--In the case of any 
        contribution to an individual retirement plan taken into 
        account under paragraph (1)--
                    ``(A) the dollar limitations otherwise applicable 
                to contributions to individual retirement plans shall 
                not apply to such contribution, and
                    ``(B) no deduction shall be allowed for such 
                contribution.
            ``(3) Failure to repay.--In the case of a failure to make 
        the aggregate amount of contributions described in paragraph 
        (1) during the 12-year period described therein with respect to 
        any distribution which would (but for paragraph (1)) be a 
        qualified mortgage distribution, such distribution shall be 
        includible in the gross income of the taxpayer for the taxable 
        year in which such 12-year period ends in lieu of the taxable 
        year in which the distribution was made.''.
    (b) Waiver of 10 Percent Early Withdrawal Penalty Without Regard to 
Repayment Requirement.--Paragraph (2) of section 72(t) is amended by 
adding at the end the following new subparagraph:
                    ``(H) Qualified mortgage distributions.--Any 
                qualified mortgage distribution (as defined in section 
                139B, but without regard to subsection (d) thereof).''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code is amended by 
        striking ``or'' at the end of subclause (IV), by striking 
        ``and'' at the end of subclause (V) and inserting ``or'', and 
        by inserting after subclause (V) the following new subclause:
                                    ``(VI) in the case of a 
                                distribution to which section 139B(a) 
                                applies, the date on which such 
                                distribution is made, and''.
            (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
        inserting ``or 139B(a)'' after ``section 72(t)(2)(G)''.
            (3) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (B), by striking the period 
        at the end of subparagraph (C) and inserting ``, or'', and by 
        inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) for distributions to which section 139B(a) 
                applies.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.

Summary: Homeowner Empowerment Act of 2008 - Amends the Internal Revenue Code to: (1) exclude from gross income distributions from individual retirement plans and other qualified retirement plans for payments on the mortgage of a taxpayer's principal residence; (2) require repayments of amounts distributed from such retirement plans over a 12-year period; and (3) waive the 10% penalty on premature distributions from retirement plans for distributions used to pay a mortgage.