To allow penalty-free distributions from retirement accounts

Federal

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

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I 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 Fed- eral 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 with- in 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. TAX-FAVORED WITHDRAWALS FROM RETIRE- 3 MENT PLANS. 4 (a) IN GENERAL.—Section 72(t) of the Internal Rev- 5 enue Code of 1986 shall not apply to any qualified shut- 6 down distribution. 7 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 2 •HR 766 IH (b) AGGREGATE DOLLAR LIMITATION.— 1 (1) IN GENERAL.—For purposes of this sub- 2 section, the aggregate amount of distributions re- 3 ceived by an individual which may be treated as 4 qualified shutdown distributions for any taxable 5 year, and with respect to any Federal appropriations 6 lapse, shall not exceed an amount equal to the com- 7 pensation the individual would (but for such lapse) 8 have received during such lapse. 9 (2) TREATMENT OF PLAN DISTRIBUTIONS.— 10 (A) IN GENERAL.—If a distribution to an 11 individual would (without regard to paragraph 12 (1)) be a qualified shutdown distribution, a plan 13 shall not be treated as violating any provision 14 of law merely because the plan treats such dis- 15 tribution as a qualified shutdown distribution, 16 unless the aggregate amount of such distribu- 17 tions from all plans maintained by the employer 18 (and any member of any controlled group which 19 includes the employer) to such individual ex- 20 ceeds the limitation amount with respect to 21 such individual. Plans may require such sub- 22 stantiation and certification of the individual’s 23 compensation as may be necessary for purposes 24 of the preceding sentence. 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 3 •HR 766 IH (B) NO TSP CONDITIONS ON CONTRIBU- 1 TIONS OR DISTRIBUTIONS.—In the case of the 2 Thrift Savings Fund, no limit on the number of 3 distributions made to an individual, or on the 4 amount of contributions which may be made by 5 such individual, shall be imposed solely by rea- 6 son of a distribution which is a qualified shut- 7 down distribution. 8 (3) CONTROLLED GROUP.—For purposes of 9 paragraph (3), the term ‘‘controlled group’’ means 10 any group treated as a single employer under sub- 11 section (b), (c), (m), or (o) of section 414 of the In- 12 ternal Revenue Code of 1986. 13 (c) AMOUNT DISTRIBUTED MAY BE REPAID.— 14 (1) IN GENERAL.—Any individual who receives 15 a qualified shutdown distribution may, at any time 16 during the 180-day period beginning on the day 17 after the date on which the Federal appropriations 18 lapse to which the distribution relates ends with re- 19 spect to the individual, make 1 or more contribu- 20 tions in an aggregate amount not to exceed the 21 amount of such distribution to an eligible retirement 22 plan of which such individual is a beneficiary and to 23 which a rollover contribution of such distribution 24 could be made under section 402(c), 403(a)(4), 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 4 •HR 766 IH 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal 1 Revenue Code of 1986, as the case may be. 2 (2) TREATMENT OF REPAYMENTS OF DISTRIBU- 3 TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 4 THAN IRAS.—For purposes of the Internal Revenue 5 Code of 1986, if a contribution is made pursuant to 6 paragraph (1) with respect to a qualified shutdown 7 distribution from an eligible retirement plan other 8 than an individual retirement plan, then the tax- 9 payer shall, to the extent of the amount of the con- 10 tribution, be treated as having received the qualified 11 shutdown distribution in an eligible rollover distribu- 12 tion (as defined in section 402(c)(4) of such Code) 13 and as having transferred the amount to the eligible 14 retirement plan in a direct trustee to trustee trans- 15 fer within 60 days of the distribution. 16 (3) TREATMENT OF REPAYMENTS OF DISTRIBU- 17 TIONS FROM IRAS.—For purposes of the Internal 18 Revenue Code of 1986, if a contribution is made 19 pursuant to paragraph (1) with respect to a quali- 20 fied shutdown distribution from an individual retire- 21 ment plan (as defined by section 7701(a)(37) of 22 such Code), then, to the extent of the amount of the 23 contribution, the qualified shutdown distribution 24 shall be treated as a distribution described in section 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 5 •HR 766 IH 408(d)(3) of such Code and as having been trans- 1 ferred to the eligible retirement plan in a direct 2 trustee to trustee transfer within 60 days of the dis- 3 tribution. 4 (d) DEFINITIONS.—For purposes of this section— 5 (1) QUALIFIED SHUTDOWN DISTRIBUTION.— 6 The term ‘‘qualified shutdown distribution’’ means 7 any distribution by an applicable individual from an 8 eligible retirement plan made during a Federal ap- 9 propriations lapse with respect to such individual. 10 (2) APPLICABLE INDIVIDUAL.—The term ‘‘ap- 11 plicable individual’’ means any individual— 12 (A) who is a Federal employee furloughed 13 due to a Federal appropriations lapse, 14 (B) who is placed on unpaid leave as a 15 Federal contractor, or as an employee of a Fed- 16 eral contractor, due to a Federal appropriations 17 lapse, 18 (C) who is an employee of a State or other 19 Federal grantee— 20 (i) whose compensation is advanced or 21 reimbursed in whole or in part by the Fed- 22 eral Government, and 23 (ii) who is furloughed due to a Fed- 24 eral appropriations lapse, or 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 6 •HR 766 IH (D) who is furloughed due to a Federal ap- 1 propriations lapse as an employee of the Dis- 2 trict of Columbia Courts, the Public Defender 3 Service for the District of Columbia, or the Dis- 4 trict of Columbia government. 5 Such term shall include any excepted employee or an 6 employee performing emergency work, as such terms 7 are defined by the Office of Personnel Management 8 or the appropriate District of Columbia public em- 9 ployer, as applicable, during a Federal appropria- 10 tions lapse. 11 (3) FEDERAL APPROPRIATION LAPSE.— 12 (A) IN GENERAL.—The term ‘‘Federal ap- 13 propriations lapse’’ means any continuous pe- 14 riod during which there is a lapse in Federal 15 appropriations. 16 (B) PERIOD OF LAPSE.—A period of lapse 17 in Federal appropriations shall not be a Federal 18 appropriations lapse with respect to an indi- 19 vidual— 20 (i) for longer than the period during 21 which the individual is furloughed (or on 22 unpaid leave in the case of an individual 23 described in paragraph (2)(B)) due to such 24 lapse, and 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 7 •HR 766 IH (ii) unless such period includes the 1 end of a pay period for which compensa- 2 tion was not received by reason of such 3 lapse. 4 (4) ELIGIBLE RETIREMENT PLAN.—The term 5 ‘‘eligible retirement plan’’ shall have the meaning 6 given such term by section 402(c)(8)(B) of the In- 7 ternal Revenue Code of 1986. 8 (e) INCOME INCLUSION SPREAD OVER 3-YEAR PE- 9 RIOD.— 10 (1) IN GENERAL.—In the case of any qualified 11 shutdown distribution, unless the taxpayer elects not 12 to have this paragraph apply for any taxable year, 13 any amount required to be included in gross income 14 for such taxable year shall be so included ratably 15 over the 3-taxable-year period beginning with such 16 taxable year. 17 (2) SPECIAL RULE.—For purposes of para- 18 graph (1), rules similar to the rules of subparagraph 19 (E) of section 408A(d)(3) of the Internal Revenue 20 Code of 1986 shall apply. 21 (f) SPECIAL RULES.— 22 (1) EXEMPTION OF DISTRIBUTIONS FROM 23 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 24 HOLDING RULES.—For purposes of sections 25 VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS 8 •HR 766 IH 401(a)(31), 402(f), and 3405 of the Internal Rev- 1 enue Code of 1986, qualified shutdown distributions 2 shall not be treated as eligible rollover distributions. 3 (2) QUALIFIED SHUTDOWN DISTRIBUTIONS 4 TREATED AS MEETING PLAN DISTRIBUTION RE- 5 QUIREMENTS.—For purposes of the Internal Rev- 6 enue Code of 1986, a qualified shutdown distribu- 7 tion shall be treated as meeting the requirements of 8 sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 9 403(b)(11), and 457(d)(1)(A) of such Code. 10 Æ VerDate Sep 11 2014 02:43 Feb 07, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H766.IH H766 pbinns on DSK79D2C42PROD with BILLS

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