Title: Compassionate Retirement Act of 2021
Policy area: Taxation

Summary:
Kathryn Manginelli Act of 2021 or the Compassionate Retirement Act of 2021
This bill allows premature distributions, without penalty, from tax-exempt retirement plans that are made to an individual who is certified by a physician as terminally ill. It also modifies the definition of terminally ill individual to increase from 24 to 84 the number of months after certification that an individual's illness can reasonably be expected to result in death.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1889 Introduced in Senate (IS)]

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117th CONGRESS
  1st Session
                                S. 1889

To amend the Internal Revenue Code of 1986 to establish an exception to 
the penalty on early distributions from qualified plans for individuals 
               diagnosed with certain terminal illnesses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 27, 2021

 Mr. Burr (for himself and Mr. Bennet) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to establish an exception to 
the penalty on early distributions from qualified plans for individuals 
               diagnosed with certain terminal illnesses.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Kathryn Manginelli Act of 2021'' or 
the ``Compassionate Retirement Act of 2021''.

SEC. 2. EXCEPTION TO PENALTY ON EARLY DISTRIBUTIONS FROM QUALIFIED 
              PLANS FOR INDIVIDUALS WITH A TERMINAL ILLNESS.

    (a) In General.--Section 72(t)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(I) Terminal illness.--
                            ``(i) In general.--Distributions which are 
                        made to the employee who is a terminally ill 
                        individual on or after the date on which such 
                        employee has been certified by a physician as 
                        having a terminal illness.
                            ``(ii) Definition.--For purposes of this 
                        subparagraph, the term `terminally ill 
                        individual' has the same meaning given such 
                        term under section 101(g)(4)(A), except that 
                        `84 months' shall be substituted for `24 
                        months'.
                            ``(iii) Documentation.--For purposes of 
                        this subparagraph, an employee shall not be 
                        considered to be a terminally ill individual 
                        unless such employee furnishes sufficient 
                        evidence in such form and manner as the 
                        Secretary may require.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions after the date of the enactment of this Act.
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