Emergency Relief for Federal Contractors Act of 2019

II 116TH CONGRESS 1ST SESSION S. 469 To allow penalty-free distributions from retirement accounts in the case of certain Federal contractors impacted by Federal Government shutdowns. IN THE SENATE OF THE UNITED STATES FEBRUARY 13, 2019 Ms. CORTEZ MASTO (for herself, Mrs. MURRAY, Mr. WYDEN, Ms. KLO- BUCHAR, Mrs. FEINSTEIN, Ms. SMITH, Mr. BROWN, Mr. CASEY, Mr. VAN HOLLEN, Mr. MENENDEZ, Ms. DUCKWORTH, Mr. BLUMENTHAL, Mr. KAINE, and Ms. ROSEN) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To allow penalty-free distributions from retirement accounts in the case of certain Federal contractors impacted by Federal Government shutdowns. 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 ‘‘Emergency Relief for 4 Federal Contractors Act of 2019’’. 5 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 469 IS 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 section, 7 the aggregate amount of distributions received by an 8 individual which may be treated as Federal govern- 9 ment shutdown distributions for any taxable year 10 shall not exceed $30,000. 11 (2) TREATMENT OF PLAN DISTRIBUTIONS.—If 12 a distribution to an individual would (without regard 13 to paragraph (1)) be a Federal government shut- 14 down distribution, a plan shall not be treated as vio- 15 lating any provision of law merely because the plan 16 treats such distribution as a Federal government 17 shutdown distribution, unless the aggregate amount 18 of such distributions from all plans maintained by 19 the employer (and any member of any controlled 20 group which includes the employer) to such indi- 21 vidual for any taxable year exceeds $30,000. 22 (3) CONTROLLED GROUP.—For purposes of 23 paragraph (2), the term ‘‘controlled group’’ means 24 any group treated as a single employer under sub- 25 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 469 IS section (b), (c), (m), or (o) of section 414 of the In- 1 ternal Revenue Code of 1986. 2 (c) AMOUNT DISTRIBUTED MAY BE REPAID.— 3 (1) IN GENERAL.—Any individual who receives 4 a Federal government shutdown distribution may, at 5 any time during the 3-year period beginning on the 6 day after the date on which such distribution was re- 7 ceived, make 1 or more contributions in an aggre- 8 gate amount not to exceed the amount of such dis- 9 tribution to an eligible retirement plan of which such 10 individual is a beneficiary and to which a rollover 11 contribution of such distribution could be made 12 under section 402(c), 403(a)(4), 403(b)(8), 13 408(d)(3), or 457(e)(16) of the Internal Revenue 14 Code of 1986. 15 (2) TREATMENT OF REPAYMENTS OF DISTRIBU- 16 TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 17 THAN IRAS.—For purposes of the Internal Revenue 18 Code of 1986, if a contribution is made pursuant to 19 paragraph (1) with respect to a Federal government 20 shutdown distribution from an eligible retirement 21 plan other than an individual retirement plan, then 22 the taxpayer shall, to the extent of the amount of 23 the contribution, be treated as having received the 24 Federal government shutdown distribution in an eli- 25 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 469 IS gible rollover distribution (as defined in section 1 402(c)(4) of such Code) and as having transferred 2 the amount to the eligible retirement plan in a direct 3 trustee to trustee transfer within 60 days of the dis- 4 tribution. 5 (3) TREATMENT OF REPAYMENTS OF DISTRIBU- 6 TIONS FROM IRAS.—For purposes of the Internal 7 Revenue Code of 1986, if a contribution is made 8 pursuant to paragraph (1) with respect to a Federal 9 government shutdown distribution from an indi- 10 vidual retirement plan (as defined by section 11 7701(a)(37) of such Code), then, to the extent of the 12 amount of the contribution, the Federal government 13 shutdown distribution shall be treated as a distribu- 14 tion described in section 408(d)(3) of such Code and 15 as having been transferred to the eligible retirement 16 plan in a direct trustee to trustee transfer within 60 17 days of the distribution. 18 (d) DEFINITIONS.—For purposes of this section— 19 (1) FEDERAL GOVERNMENT SHUTDOWN DIS- 20 TRIBUTION.—The term ‘‘Federal government shut- 21 down distribution’’ means any distribution which 22 is— 23 (A) received by an applicable individual 24 from an eligible retirement plan; and 25 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 469 IS (B) made during a Federal appropriations 1 lapse with respect to such individual. 2 (2) APPLICABLE INDIVIDUAL.—The term ‘‘ap- 3 plicable individual’’ means any individual— 4 (A) who is a Federal contractor or an em- 5 ployee of a Federal contractor and is placed on 6 unpaid leave or working without pay due to a 7 Federal appropriations lapse, 8 (B) who is an employee of a State or other 9 Federal grantee whose compensation is ad- 10 vanced or reimbursed in whole or in part by the 11 Federal Government, and is furloughed, work- 12 ing without pay, or working with a decrease in 13 pay due to a Federal appropriations lapse, or 14 (C) who is an employee of the District of 15 Columbia Courts, the Public Defender Service 16 for the District of Columbia, or the District of 17 Columbia government and is furloughed or 18 working without pay due to a Federal appro- 19 priations lapse. 20 (3) FEDERAL APPROPRIATIONS LAPSE.— 21 (A) IN GENERAL.—The term ‘‘Federal ap- 22 propriations lapse’’ means any continuous pe- 23 riod of at least 2 weeks during which there is 24 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 469 IS a lapse in Federal appropriations (including a 1 partial lapse). 2 (B) PERIOD OF LAPSE.—A period of lapse 3 in Federal appropriations shall not be a Federal 4 appropriations lapse with respect to an indi- 5 vidual for longer than the period during which 6 the individual is furloughed, on unpaid leave, or 7 performing work without pay due to such lapse. 8 (4) ELIGIBLE RETIREMENT PLAN.—The term 9 ‘‘eligible retirement plan’’ has the meaning given 10 such term by section 402(c)(8)(B) of the Internal 11 Revenue Code of 1986. 12 (e) INCOME INCLUSION SPREAD OVER 3-YEAR PE- 13 RIOD.— 14 (1) IN GENERAL.—Unless the taxpayer elects 15 not to have this paragraph apply for any taxable 16 year, any amount required to be included in gross 17 income for such taxable year with respect to any 18 Federal government shutdown distribution shall be 19 so included ratably over the 3-taxable-year period 20 beginning with such taxable year. 21 (2) SPECIAL RULE.—For purposes of para- 22 graph (1), rules similar to the rules of subparagraph 23 (E) of section 408A(d)(3) of the Internal Revenue 24 Code of 1986 shall apply. 25 VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 469 IS (f) SPECIAL RULES.— 1 (1) EXEMPTION OF DISTRIBUTIONS FROM 2 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 3 HOLDING RULES.—For purposes of sections 4 401(a)(31), 402(f), and 3405 of the Internal Rev- 5 enue Code of 1986, a Federal government shutdown 6 distribution shall not be treated as an eligible roll- 7 over distribution. 8 (2) FEDERAL GOVERNMENT SHUTDOWN DIS- 9 TRIBUTIONS TREATED AS MEETING PLAN DISTRIBU- 10 TION REQUIREMENTS.—For purposes of the Internal 11 Revenue Code of 1986, a Federal government shut- 12 down distribution shall be treated as meeting the re- 13 quirements of sections 401(k)(2)(B)(i), 14 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of 15 such Code. 16 Æ VerDate Sep 11 2014 01:15 Feb 22, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S469.IS S469 pamtmann on DSKBFK8HB2PROD with BILLS