To amend the Internal Revenue Code of 1986 to exempt disaster relief distributions from retirement plans from the penalty for early withdrawal.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Affordable Homeowners Insurance Act 
of 2007''.

SEC. 2. DISTRIBUTIONS FROM RETIREMENT PLANS FOR DISASTER RELIEF NOT 
              SUBJECT TO PENALTY FOR EARLY WITHDRAWAL.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to subsection not to apply to certain 
distributions) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Distributions from retirement plans for 
                disaster relief.--
                            ``(i) In general.--Any qualified disaster 
                        relief distribution.
                            ``(ii) Aggregate dollar limitation.--For 
                        purposes of this subparagraph, the aggregate 
                        amount of distributions received by an 
                        individual which may be treated as qualified 
                        disaster relief distributions for any taxable 
                        year shall not exceed the excess (if any) of--
                                    ``(I) $100,000, over
                                    ``(II) the aggregate amounts 
                                treated as qualified disaster relief 
                                distributions received by such 
                                individual for all prior taxable years.
                            ``(iii) Treatment of plan distributions.--
                        If a distribution to an individual would be a 
                        qualified disaster relief distribution, a plan 
                        shall not be treated as violating any 
                        requirement of this title merely because the 
                        plan treats such distribution as a qualified 
                        disaster relief distribution, unless the 
                        aggregate amount of such distributions from all 
                        plans maintained by the employer (and any 
                        member of any controlled group which includes 
                        the employer) to such individual exceeds 
                        $100,000. For purposes of the preceding 
                        sentence, the term `controlled group' means any 
                        group treated as a single employer under 
                        subsection (b), (c), (m), or (o) of section 
                        414.
                            ``(iv) Amount distributed may be repaid.--
                                    ``(I) In general.--Any individual 
                                who receives a qualified disaster 
                                relief distribution may, at any time 
                                during the 3-year period beginning on 
                                the day after the date on which such 
                                distribution was received, 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 
                                contribution of such distribution could 
                                be made under section 402(c), 
                                403(a)(4), 403(b)(8), 408(d)(3), or 
                                457(e)(16), as the case may be.
                                    ``(II) Treatment of repayments of 
                                distributions from eligible retirement 
                                plans other than iras.--For purposes of 
                                this title, if a contribution is made 
                                pursuant to subparagraph (A) with 
                                respect to a qualified disaster relief 
                                distribution from an eligible 
                                retirement plan other than an 
                                individual retirement plan, then the 
                                taxpayer shall, to the extent of the 
                                amount of the contribution, be treated 
                                as having received the qualified 
                                disaster relief distribution in an 
                                eligible rollover distribution (as 
                                defined in section 402(c)(4)) and as 
                                having transferred the amount to the 
                                eligible retirement plan in a direct 
                                trustee to trustee transfer within 60 
                                days of the distribution.
                                    ``(III) Treatment of repayments for 
                                distributions from iras.--For purposes 
                                of this title, if a contribution is 
                                made pursuant to subparagraph (A) with 
                                respect to a qualified disaster relief 
                                distribution from an individual 
                                retirement plan (as defined by section 
                                7701(a)(37)), then, to the extent of 
                                the amount of the contribution, the 
                                qualified disaster relief distribution 
                                shall be treated 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.
                            ``(v) Qualified disaster relief 
                        distribution.--For purposes of this 
                        subparagraph, the term `qualified disaster 
                        relief distribution' means a distribution 
                        made--
                                    ``(I) within 1 year after the date 
                                on which a major disaster is declared 
                                under section 401 of the Robert T. 
                                Stafford Disaster Assistance Relief and 
                                Emergency Assistance Act,
                                    ``(II) on account of such disaster, 
                                and
                                    ``(III) to an individual whose 
                                principal place of abode is in the area 
                                with respect to which such disaster was 
                                declared and who has sustained an 
                                economic loss by reason of such 
                                disaster.
                            ``(vi) Income inclusion spread over 3-year 
                        period.--
                                    ``(I) In general.--In the case of 
                                any qualified disaster relief 
                                distribution, unless the taxpayer 
                                elects not to have this clause 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.
                                    ``(II) Applicable rules.--For 
                                purposes of subclause (I), rules 
                                similar to the rules of subparagraph 
                                (E) of section 408A(d)(3) shall 
                                apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to disasters declared after the date of the enactment of 
this Act.
    (c) Provisions Relating to Plan Amendments.--
            (1) In general.--If this subsection applies to any 
        amendment to any plan or annuity contract, such plan or 
        contract shall be treated as being operated in accordance with 
        the terms of the plan during the period described in paragraph 
        (2)(B)(i).
            (2) Amendments to which subsection applies.--
                    (A) In general.--This subsection shall apply to any 
                amendment to any plan or annuity contract which is 
                made--
                            (i) pursuant to any provision of this 
                        section, or pursuant to any regulation issued 
                        by the Secretary of the Treasury or the 
                        Secretary of Labor under any provision of this 
                        section, and
                            (ii) on or before the last day of the first 
                        plan year beginning on or after January 1, 
                        2009, or such later date as the Secretary may 
                        prescribe.
                In the case of a governmental plan (as defined in 
                section 414(d)), clause (ii) shall be applied by 
                substituting the date which is 2 years after the date 
                otherwise applied under clause (ii).
                    (B) Conditions.--This subsection shall not apply to 
                any amendment unless--
                            (i) during the period--
                                    (I) beginning on the date that this 
                                section or the regulation described in 
                                subparagraph (A)(i) takes effect (or in 
                                the case of a plan or contract 
                                amendment not required by this section 
                                or such regulation, the effective date 
                                specified by the plan), and
                                    (II) ending on the date described 
                                in subparagraph (A)(ii) (or, if 
                                earlier, the date the plan or contract 
                                amendment is adopted),
                        the plan or contract is operated as if such 
                        plan or contract amendment were in effect; and 
                        such plan or contract amendment applies 
                        retroactively for such period.

Summary: Affordable Homeowners Insurance Act of 2007 - Amends the Internal Revenue Code to exempt distributions from retirement plans for disaster relief from the penalty for premature retirement plan withdrawals.