Title: To allow penalty-free distributions from retirement accounts in the case of Federal employees and certain Federal contractors impacted by the Federal Government shutdown.
Policy area: Taxation

Summary:
This bill allows certain employees who are not paid during a lapse in federal appropriations to make penalty-free withdrawals from retirement accounts. The bill applies to employees of the federal government, federal contractors, federal grantees, and the District of Columbia.
The withdrawals may not exceed the amount of compensation the individual would have received during the lapse in appropriations if the lapse had not occurred. Any amount of the distribution that is required to be included in gross income for the year may be included ratably over a three-year period.
An individual who makes such a withdrawal may repay the account by making additional contributions within 180 days of the end of the lapse in appropriations.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 766 Introduced in House (IH)]

<DOC>






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 Federal 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 within 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 shutdown.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.

    (a) In General.--Section 72(t) of the Internal Revenue Code of 1986 
shall not apply to any qualified shutdown distribution.
    (b) Aggregate Dollar Limitation.--
            (1) In general.--For purposes of this subsection, the 
        aggregate amount of distributions received by an individual 
        which may be treated as qualified shutdown distributions for 
        any taxable year, and with respect to any Federal 
        appropriations lapse, shall not exceed an amount equal to the 
        compensation the individual would (but for such lapse) have 
        received during such lapse.
            (2) Treatment of plan distributions.--
                    (A) In general.--If a distribution to an individual 
                would (without regard to paragraph (1)) be a qualified 
                shutdown distribution, a plan shall not be treated as 
                violating any provision of law merely because the plan 
                treats such distribution as a qualified shutdown 
                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 the limitation 
                amount with respect to such individual. Plans may 
                require such substantiation and certification of the 
                individual's compensation as may be necessary for 
                purposes of the preceding sentence.
                    (B) No tsp conditions on contributions 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 
                reason of a distribution which is a qualified shutdown 
                distribution.
            (3) Controlled group.--For purposes of paragraph (3), the 
        term ``controlled group'' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal 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 respect to the individual, make 1 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), of the 
        Internal Revenue Code of 1986, as the case may be.
            (2) Treatment of repayments of distributions 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 taxpayer shall, to the extent of the 
        amount of the contribution, be treated as having received the 
        qualified shutdown distribution in an eligible rollover 
        distribution (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 transfer within 60 days of 
        the distribution.
            (3) Treatment of repayments of distributions from 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 individual retirement 
        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 408(d)(3) of such Code and as having been 
        transferred to the eligible retirement plan in a direct trustee 
        to trustee transfer within 60 days of the distribution.
    (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 appropriations lapse with respect to such individual.
            (2) Applicable individual.--The term ``applicable 
        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 Federal 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 Federal 
                        Government, and
                            (ii) who is furloughed due to a Federal 
                        appropriations lapse, or
                    (D) who is furloughed due to a Federal 
                appropriations lapse as an employee of the District of 
                Columbia Courts, the Public Defender Service for the 
                District of Columbia, or the District 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 employer, as applicable, during a Federal 
        appropriations lapse.
            (3) Federal appropriation lapse.--
                    (A) In general.--The term ``Federal appropriations 
                lapse'' means any continuous period 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 individual--
                            (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
                            (ii) unless such period includes the end of 
                        a pay period for which compensation 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 Internal Revenue Code of 1986.
    (e) Income Inclusion Spread Over 3-Year Period.--
            (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 paragraph (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 withholding rules.--For purposes of sections 
        401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 
        1986, qualified shutdown distributions shall not be treated as 
        eligible rollover distributions.
            (2) Qualified shutdown distributions treated as meeting 
        plan distribution requirements.--For purposes of the Internal 
        Revenue Code of 1986, a qualified shutdown distribution 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) 
        of such Code.
                                 <all>