Financial Relief for Feds Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 545 To allow penalty-free distributions from retirement accounts in the case of Federal employees and certain Federal contractors impacted by the Fed- eral Government shutdown. IN THE HOUSE OF REPRESENTATIVES JANUARY 15, 2019 Mr. OLSON (for himself, Mr. BEYER, Mr. PERLMUTTER, Mr. WEBER of Texas, Mr. MCKINLEY, Mr. TRONE, Ms. KENDRA S. HORN of Oklahoma, Mr. ALLRED, Mr. BROWN of Maryland, Mr. COURTNEY, Mr. BABIN, and Mr. GAETZ) introduced the following bill; which was referred to the Com- mittee on Ways and Means, and in addition to the Committee on Over- sight 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 shut- down. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Financial Relief for 4 Feds Act of 2019’’. 5 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 2 •HR 545 IH SEC. 2. TAX-FAVORED WITHDRAWALS FROM RETIREMENT 1 PLANS. 2 (a) IN GENERAL.—Section 72(t) of the Internal Rev- 3 enue Code of 1986 shall not apply to any Federal Govern- 4 ment shutdown distribution. 5 (b) AGGREGATE DOLLAR LIMITATION.— 6 (1) IN GENERAL.—For purposes of this sub- 7 section, the aggregate amount of distributions re- 8 ceived by an individual which may be treated as 9 Federal Government shutdown distributions for any 10 taxable year, and with respect to any Federal appro- 11 priations lapse, shall not exceed the excess (if any) 12 of— 13 (A) the applicable amount, over 14 (B) the aggregate amounts treated as Fed- 15 eral Government shutdown distributions re- 16 ceived by such individual with respect to such 17 Federal appropriations lapse. 18 (2) APPLICABLE AMOUNT.—For purposes of 19 paragraph (1), the applicable amount with respect to 20 an individual is an amount equal to— 21 (A) $4,000, multiplied by 22 (B) the number of 14-day periods begin- 23 ning during any Federal appropriations lapse 24 with respect to such individual. 25 (3) TREATMENT OF PLAN DISTRIBUTIONS.— 26 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 3 •HR 545 IH (A) IN GENERAL.—If a distribution to an 1 individual would (without regard to paragraph 2 (1)) be a Federal Government shutdown dis- 3 tribution, a plan shall not be treated as vio- 4 lating any provision of law merely because the 5 plan treats such distribution as a Federal Gov- 6 ernment shutdown distribution, unless the ag- 7 gregate amount of such distributions from all 8 plans maintained by the employer (and any 9 member of any controlled group which includes 10 the employer) to such individual exceeds the ap- 11 plicable amount with respect to such individual. 12 (B) NO TSP CONDITIONS ON CONTRIBU- 13 TIONS OR DISTRIBUTIONS.—In the case of the 14 Thrift Savings Fund, no limit on the number of 15 distributions made to an individual, or on the 16 amount of contributions which may be made by 17 such individual, shall be imposed solely by rea- 18 son of a distribution which is a Federal Govern- 19 ment shutdown distribution. 20 (4) CONTROLLED GROUP.—For purposes of 21 paragraph (3), the term ‘‘controlled group’’ means 22 any group treated as a single employer under sub- 23 section (b), (c), (m), or (o) of section 414 of the In- 24 ternal Revenue Code of 1986. 25 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 4 •HR 545 IH (c) AMOUNT DISTRIBUTED MAY BE REPAID.— 1 (1) IN GENERAL.—Any individual who receives 2 a Federal Government shutdown distribution may, 3 at any time during the 3-year period beginning on 4 the day after the date on which such distribution 5 was received, make 1 or more contributions in an 6 aggregate amount not to exceed the amount of such 7 distribution to an eligible retirement plan of which 8 such individual is a beneficiary and to which a roll- 9 over contribution of such distribution could be made 10 under section 402(c), 403(a)(4), 403(b)(8), 11 408(d)(3), or 457(e)(16), of the Internal Revenue 12 Code of 1986, as the case may be. 13 (2) TREATMENT OF REPAYMENTS OF DISTRIBU- 14 TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 15 THAN IRAS.—For purposes of the Internal Revenue 16 Code of 1986, if a contribution is made pursuant to 17 paragraph (1) with respect to a Federal Government 18 shutdown distribution from an eligible retirement 19 plan other than an individual retirement plan, then 20 the taxpayer shall, to the extent of the amount of 21 the contribution, be treated as having received the 22 Federal Government shutdown distribution in an eli- 23 gible rollover distribution (as defined in section 24 402(c)(4) of such Code) and as having transferred 25 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 5 •HR 545 IH the amount to the eligible retirement plan in a direct 1 trustee to trustee transfer within 60 days of the dis- 2 tribution. 3 (3) TREATMENT OF REPAYMENTS OF DISTRIBU- 4 TIONS FROM IRAS.—For purposes of the Internal 5 Revenue Code of 1986, if a contribution is made 6 pursuant to paragraph (1) with respect to a Federal 7 Government shutdown distribution from an indi- 8 vidual retirement plan (as defined by section 9 7701(a)(37) of such Code), then, to the extent of the 10 amount of the contribution, the Federal Government 11 shutdown distribution shall be treated as a distribu- 12 tion described in section 408(d)(3) of such Code and 13 as having been transferred to the eligible retirement 14 plan in a direct trustee to trustee transfer within 60 15 days of the distribution. 16 (d) DEFINITIONS.—For purposes of this section— 17 (1) FEDERAL GOVERNMENT SHUTDOWN DIS- 18 TRIBUTION.—The term ‘‘Federal Government shut- 19 down distribution’’ means any distribution by an ap- 20 plicable individual from an eligible retirement plan 21 made during a Federal appropriations lapse with re- 22 spect to such individual. 23 (2) APPLICABLE INDIVIDUAL.—The term ‘‘ap- 24 plicable individual’’ means any individual— 25 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 6 •HR 545 IH (A) who is a Federal employee furloughed 1 due to a Federal appropriations lapse; 2 (B) who is placed on unpaid leave as a 3 Federal contractor, or as an employee of a Fed- 4 eral contractor, due to a Federal appropriations 5 lapse, and whose sole source of earned income 6 (as defined in section 32(c)(2) of the Internal 7 Revenue Code of 1986) would (but for such 8 lapse) be remuneration as such a contractor, or 9 employee thereof; 10 (C) who is an employee of a State or other 11 Federal grantee— 12 (i) whose compensation is advanced or 13 reimbursed in whole or in part by the Fed- 14 eral Government; and 15 (ii) who is furloughed due to a Fed- 16 eral appropriations lapse; or 17 (D) who is furloughed due to a Federal ap- 18 propriations lapse as an employee of the Dis- 19 trict of Columbia Courts, the Public Defender 20 Service for the District of Columbia, or the Dis- 21 trict of Columbia government. 22 Such term shall include any excepted employee or an 23 employee performing emergency work, as such terms 24 are defined by the Office of Personnel Management 25 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 7 •HR 545 IH or the appropriate District of Columbia public em- 1 ployer, as applicable, during a Federal appropria- 2 tions lapse. 3 (3) FEDERAL APPROPRIATION LAPSE.— 4 (A) IN GENERAL.—The term ‘‘Federal ap- 5 propriations lapse’’ means any continuous pe- 6 riod during which there is a lapse in Federal 7 appropriations. 8 (B) PERIOD OF LAPSE.—A period of lapse 9 in Federal appropriations shall not be a Federal 10 appropriations lapse with respect to an indi- 11 vidual for longer than the period during which 12 the individual is furloughed (or on unpaid leave 13 in the case of an individual described in para- 14 graph (2)(B)) due to such lapse. 15 (4) ELIGIBLE RETIREMENT PLAN.—The term 16 ‘‘eligible retirement plan’’ shall have the meaning 17 given such term by section 402(c)(8)(B) of the In- 18 ternal Revenue Code of 1986. 19 (e) INCOME INCLUSION SPREAD OVER 3-YEAR PE- 20 RIOD.— 21 (1) IN GENERAL.—In the case of any Federal 22 Government shutdown distribution, unless the tax- 23 payer elects not to have this paragraph apply for 24 any taxable year, any amount required to be in- 25 VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS 8 •HR 545 IH cluded in gross income for such taxable year shall be 1 so included ratably over the 3-taxable-year period 2 beginning with such taxable year. 3 (2) SPECIAL RULE.—For purposes of para- 4 graph (1), rules similar to the rules of subparagraph 5 (E) of section 408A(d)(3) of the Internal Revenue 6 Code of 1986 shall apply. 7 (f) SPECIAL RULES.— 8 (1) EXEMPTION OF DISTRIBUTIONS FROM 9 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 10 HOLDING RULES.—For purposes of sections 11 401(a)(31), 402(f), and 3405 of the Internal Rev- 12 enue Code of 1986, Federal Government shutdown 13 distributions shall not be treated as eligible rollover 14 distributions. 15 (2) FEDERAL GOVERNMENT SHUTDOWN DIS- 16 TRIBUTIONS TREATED AS MEETING PLAN DISTRIBU- 17 TION REQUIREMENTS.—For purposes the Internal 18 Revenue Code of 1986, a Federal Government shut- 19 down distribution shall be treated as meeting the re- 20 quirements of sections 401(k)(2)(B)(i), 21 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of 22 such Code. 23 Æ VerDate Sep 11 2014 23:55 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H545.IH H545 pbinns on DSK79D2C42PROD with BILLS