Title: To amend the Internal Revenue Code of 1986 to allow distributions from qualified cash or deferred arrangements in the event that the employer files for chapter 11 bankruptcy and the employee is not regularly scheduled for work or paid.
Policy area: Taxation

Summary:
This bill amends the Internal Revenue Code to permit penalty-free distributions from a tax-preferred pension plan in chapter 11 bankruptcy proceedings on behalf of employees who, at the time of  filing of the chapter 11 petition, are not regularly scheduled to work for the number of hours they are customarily scheduled to work or are not paid on or before the time they are customarily paid.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4181 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 4181

To amend the Internal Revenue Code of 1986 to allow distributions from 
qualified cash or deferred arrangements in the event that the employer 
   files for chapter 11 bankruptcy and the employee is not regularly 
                      scheduled for work or paid.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 9, 2019

 Mr. Griffith 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 allow distributions from 
qualified cash or deferred arrangements in the event that the employer 
   files for chapter 11 bankruptcy and the employee is not regularly 
                      scheduled for work or paid.

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

SECTION 1. DISTRIBUTIONS FROM QUALIFIED CASH OR DEFERRED ARRANGEMENTS 
              ALLOWED IN CHAPTER 11 BANKRUPTCY IF EMPLOYEE NOT 
              REGULARLY SCHEDULED FOR WORK OR PAID.

    (a) In General.--Section 401(k)(2)(B)(i) of the Internal Revenue 
Code of 1986 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 qualified 
                                bankruptcy reorganization delay 
                                distribution (as defined in paragraph 
                                (15)), the beginning of the period 
                                described in paragraph (15)(A)(iii), 
                                and''.
    (b) Qualified Bankruptcy Reorganization Delay Distribution.--
Section 401(k) of such Code is amended by adding at the end the 
following new paragraph:
            ``(15) Qualified bankruptcy reorganization delay 
        distribution.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(B)(i)(VI), the term `qualified bankruptcy 
                reorganization delay distribution' means any 
                distribution to an employee if--
                            ``(i) the employer has filed a case under 
                        chapter 11 of title 11, United States Code, and 
                        is under the jurisdiction of the court in such 
                        case,
                            ``(ii) such employee, at any time after the 
                        filing of such case, is not scheduled to work 
                        for at least the number of hours that such 
                        employee is customarily scheduled to work or is 
                        not paid on or before the time that such 
                        employee is customarily paid, and
                            ``(iii) such distribution is made during 
                        the period beginning with the first time which 
                        is described in clause (ii) with respect to 
                        such employee and ending on the first date 
                        thereafter on which such employee is scheduled 
                        to work for at least the number of hours that 
                        such employee is customarily scheduled to work 
                        and is paid at the time such employee is 
                        customarily paid (or, if earlier, ending on the 
                        date of severance from employment).
                    ``(B) Limitation on distributions.--The aggregate 
                amount of distributions received by any employee which 
                may be treated as qualified bankruptcy reorganization 
                delay distributions with respect to any case described 
                in subparagraph (A)(i) shall not exceed the amount 
                which bears the same proportion to such employee's 
                annual salary as the period beginning with the 
                beginning of the period described in subparagraph 
                (A)(iii) and ending on the date of the distribution 
                bears to a calendar year.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to distributions made after the date of the enactment of 
        this Act.
            (2) Transition.--During the 2-year period beginning with 
        the date of the enactment of this Act, a plan shall not fail to 
        satisfy any provision of the Internal Revenue Code of 1986 
        merely because the terms of the plan do not provide for making 
        qualified bankruptcy reorganization delay distributions (as 
        defined in section 401(k)(15) of such Code, as added by this 
        section) but such plan nonetheless provides for such 
        distributions.
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