Disaster Tax Relief Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 2145 To provide disaster relief. IN THE HOUSE OF REPRESENTATIVES APRIL 9, 2019 Mr. RICE of South Carolina (for himself, Mr. AUSTIN SCOTT of Georgia, Mr. DUNN, and Mr. ROUZER) introduced the following bill; which was re- ferred to the Committee on Ways and Means A BILL To provide disaster relief. 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 ‘‘Disaster Tax Relief 4 Act of 2019’’. 5 SEC. 2. DEFINITIONS. 6 For purposes of this Act— 7 (1) QUALIFIED DISASTER AREA.—The term 8 ‘‘qualified disaster area’’ means any area with re- 9 spect to which a major disaster was declared, during 10 the period beginning on January 1, 2018, and end- 11 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 2 •HR 2145 IH ing on the date of the enactment of this Act, by the 1 President under section 401 of the Robert T. Staf- 2 ford Disaster Relief and Emergency Assistance Act 3 if the incident period of the disaster with respect to 4 which such declaration is made begins after January 5 1, 2018, and before the date of the enactment of 6 this Act. 7 (2) QUALIFIED DISASTER ZONE.—The term 8 ‘‘qualified disaster zone’’ means that portion of any 9 qualified disaster area which is determined by the 10 President to warrant individual or individual and 11 public assistance from the Federal Government 12 under the Robert T. Stafford Disaster Relief and 13 Emergency Assistance Act by reason of the qualified 14 disaster with respect to such disaster area. 15 (3) QUALIFIED DISASTER.—The term ‘‘quali- 16 fied disaster’’ means, with respect to any qualified 17 disaster area, the disaster by reason of which a 18 major disaster was declared with respect to such 19 area. 20 (4) INCIDENT PERIOD.—The term ‘‘incident pe- 21 riod’’ means, with respect to any qualified disaster, 22 the period specified by the Federal Emergency Man- 23 agement Agency as the period during which such 24 disaster occurred. 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 3 •HR 2145 IH SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF 1 RETIREMENT FUNDS. 2 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE- 3 MENT PLANS.— 4 (1) IN GENERAL.—Section 72(t) of the Internal 5 Revenue Code of 1986 shall not apply to any quali- 6 fied disaster distribution. 7 (2) AGGREGATE DOLLAR LIMITATION.— 8 (A) IN GENERAL.—For purposes of this 9 subsection, the aggregate amount of distribu- 10 tions received by an individual which may be 11 treated as qualified disaster distributions for 12 any taxable year shall not exceed the excess (if 13 any) of— 14 (i) $100,000, over 15 (ii) the aggregate amounts treated as 16 qualified disaster distributions received by 17 such individual for all prior taxable years. 18 (B) TREATMENT OF PLAN DISTRIBU- 19 TIONS.—If a distribution to an individual would 20 (without regard to subparagraph (A)) be a 21 qualified disaster distribution, a plan shall not 22 be treated as violating any requirement of the 23 Internal Revenue Code of 1986 merely because 24 the plan treats such distribution as a qualified 25 disaster distribution, unless the aggregate 26 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 4 •HR 2145 IH amount of such distributions from all plans 1 maintained by the employer (and any member 2 of any controlled group which includes the em- 3 ployer) to such individual exceeds $100,000. 4 (C) CONTROLLED GROUP.—For purposes 5 of subparagraph (B), the term ‘‘controlled 6 group’’ means any group treated as a single 7 employer under subsection (b), (c), (m), or (o) 8 of section 414 of the Internal Revenue Code of 9 1986. 10 (D) SPECIAL RULE FOR INDIVIDUALS AF- 11 FECTED BY MORE THAN ONE DISASTER.—The 12 limitation of subparagraph (A) shall be applied 13 separately with respect to distributions made 14 with respect to each qualified disaster. 15 (3) AMOUNT DISTRIBUTED MAY BE REPAID.— 16 (A) IN GENERAL.—Any individual who re- 17 ceives a qualified disaster distribution may, at 18 any time during the 3-year period beginning on 19 the day after the date on which such distribu- 20 tion was received, make one or more contribu- 21 tions in an aggregate amount not to exceed the 22 amount of such distribution to an eligible retire- 23 ment plan of which such individual is a bene- 24 ficiary and to which a rollover contribution of 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 5 •HR 2145 IH such distribution could be made under section 1 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 2 457(e)(16), of the Internal Revenue Code of 3 1986, as the case may be. 4 (B) TREATMENT OF REPAYMENTS OF DIS- 5 TRIBUTIONS FROM ELIGIBLE RETIREMENT 6 PLANS OTHER THAN IRAS.—For purposes of 7 the Internal Revenue Code of 1986, if a con- 8 tribution is made pursuant to subparagraph (A) 9 with respect to a qualified disaster distribution 10 from an eligible retirement plan other than an 11 individual retirement plan, then the taxpayer 12 shall, to the extent of the amount of the con- 13 tribution, be treated as having received the 14 qualified disaster distribution in an eligible roll- 15 over distribution (as defined in section 16 402(c)(4) of such Code) and as having trans- 17 ferred the amount to the eligible retirement 18 plan in a direct trustee to trustee transfer with- 19 in 60 days of the distribution. 20 (C) TREATMENT OF REPAYMENTS OF DIS- 21 TRIBUTIONS FROM IRAS.—For purposes of the 22 Internal Revenue Code of 1986, if a contribu- 23 tion is made pursuant to subparagraph (A) 24 with respect to a qualified disaster distribution 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 6 •HR 2145 IH from an individual retirement plan (as defined 1 by section 7701(a)(37) of such Code), then, to 2 the extent of the amount of the contribution, 3 the qualified disaster distribution shall be treat- 4 ed as a distribution described in section 5 408(d)(3) of such Code and as having been 6 transferred to the eligible retirement plan in a 7 direct trustee to trustee transfer within 60 days 8 of the distribution. 9 (4) DEFINITIONS.—For purposes of this sub- 10 section— 11 (A) QUALIFIED DISASTER DISTRIBU- 12 TION.—Except as provided in paragraph (2), 13 the term ‘‘qualified disaster distribution’’ means 14 any distribution from an eligible retirement 15 plan made after the incident beginning date of 16 a qualified disaster and on or before December 17 31 of the year after the year in which the inci- 18 dent period with respect to the disaster begins, 19 to an individual whose principal place of abode 20 at any time during the incident period of such 21 qualified disaster is located in the qualified dis- 22 aster area with respect to such qualified dis- 23 aster and who has sustained an economic loss 24 by reason of such qualified disaster. 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 7 •HR 2145 IH (B) ELIGIBLE RETIREMENT PLAN.—The 1 term ‘‘eligible retirement plan’’ shall have the 2 meaning given such term by section 3 402(c)(8)(B) of the Internal Revenue Code of 4 1986. 5 (5) INCOME INCLUSION SPREAD OVER 3-YEAR 6 PERIOD.— 7 (A) IN GENERAL.—In the case of any 8 qualified disaster distribution, unless the tax- 9 payer elects not to have this paragraph apply 10 for any taxable year, any amount required to be 11 included in gross income for such taxable year 12 shall be so included ratably over the 3-taxable- 13 year period beginning with such taxable year. 14 (B) SPECIAL RULE.—For purposes of sub- 15 paragraph (A), rules similar to the rules of sub- 16 paragraph (E) of section 408A(d)(3) of the In- 17 ternal Revenue Code of 1986 shall apply. 18 (6) SPECIAL RULES.— 19 (A) EXEMPTION OF DISTRIBUTIONS FROM 20 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 21 HOLDING RULES.—For purposes of sections 22 401(a)(31), 402(f), and 3405 of the Internal 23 Revenue Code of 1986, qualified disaster dis- 24 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 8 •HR 2145 IH tributions shall not be treated as eligible roll- 1 over distributions. 2 (B) QUALIFIED DISASTER DISTRIBUTIONS 3 TREATED AS MEETING PLAN DISTRIBUTION RE- 4 QUIREMENTS.—For purposes of the Internal 5 Revenue Code of 1986, a qualified disaster dis- 6 tribution shall be treated as meeting the re- 7 quirements of sections 401(k)(2)(B)(I), 8 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) 9 of such Code. 10 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR 11 HOME PURCHASES.— 12 (1) RECONTRIBUTIONS.— 13 (A) IN GENERAL.—Any individual who re- 14 ceived a qualified distribution may, during the 15 applicable period, make one or more contribu- 16 tions in an aggregate amount not to exceed the 17 amount of such qualified distribution to an eli- 18 gible retirement plan (as defined in section 19 402(c)(8)(B) of the Internal Revenue Code of 20 1986) of which such individual is a beneficiary 21 and to which a rollover contribution of such dis- 22 tribution could be made under section 402(c), 23 403(a)(4), 403(b)(8), or 408(d)(3), of such 24 Code, as the case may be. 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 9 •HR 2145 IH (B) TREATMENT OF REPAYMENTS.—Rules 1 similar to the rules of subparagraphs (B) and 2 (C) of subsection (a)(3) shall apply for purposes 3 of this subsection. 4 (2) QUALIFIED DISTRIBUTION.—For purposes 5 of this subsection, the term ‘‘qualified distribution’’ 6 means any distribution— 7 (A) described in section 8 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 9 to the extent such distribution relates to finan- 10 cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 11 of the Internal Revenue Code of 1986, 12 (B) which was to be used to purchase or 13 construct a principal residence in a qualified 14 disaster area, but which was not so used on ac- 15 count of the qualified disaster with respect to 16 such area, and 17 (C) which was received on or after the date 18 that is 270 days before the first day of incident 19 period of the disaster, and before the date 20 which is 30 days after the last day of the inci- 21 dent period of such qualified disaster. 22 (3) APPLICABLE PERIOD.—For purposes of this 23 subsection, the term ‘‘applicable period’’ means, with 24 respect to any qualified distribution, the period be- 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 10 •HR 2145 IH ginning on the first day of the incident period of the 1 disaster and ending on the date that is 180 days 2 after the last day of such incident period. 3 (c) LOANS FROM QUALIFIED PLANS.— 4 (1) INCREASE IN LIMIT ON LOANS NOT TREAT- 5 ED AS DISTRIBUTIONS.—In the case of any loan 6 from a qualified employer plan (as defined under 7 section 72(p)(4) of the Internal Revenue Code of 8 1986) to a qualified individual made during the pe- 9 riod beginning on the date of the enactment of this 10 Act and ending on December 31 of the year after 11 the year in which the incident period with respect to 12 the disaster begins— 13 (A) clause (i) of section 72(p)(2)(A) of 14 such Code shall be applied by substituting 15 ‘‘$100,000’’ for ‘‘$50,000’’, and 16 (B) clause (ii) of such section shall be ap- 17 plied by substituting ‘‘the present value of the 18 nonforfeitable accrued benefit of the employee 19 under the plan’’ for ‘‘one-half of the present 20 value of the nonforfeitable accrued benefit of 21 the employee under the plan’’. 22 (2) DELAY OF REPAYMENT.—In the case of a 23 qualified individual (with respect to any qualified 24 disaster) with an outstanding loan on or after the 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 11 •HR 2145 IH incident beginning date (of such qualified disaster) 1 from a qualified employer plan (as defined in section 2 72(p)(4) of the Internal Revenue Code of 1986)— 3 (A) if the due date pursuant to subpara- 4 graph (B) or (C) of section 72(p)(2) of such 5 Code for any repayment with respect to such 6 loan occurs during the period beginning on the 7 incident beginning date of such qualified dis- 8 aster and ending on December 31 of the year 9 after the year in which the incident period with 10 respect to the disaster begins, such due date 11 shall be delayed for 1 year, 12 (B) any subsequent repayments with re- 13 spect to any such loan shall be appropriately 14 adjusted to reflect the delay in the due date 15 under paragraph (1) and any interest accruing 16 during such delay, and 17 (C) in determining the 5-year period and 18 the term of a loan under subparagraph (B) or 19 (C) of section 72(p)(2) of such Code, the period 20 described in subparagraph (A) of this para- 21 graph shall be disregarded. 22 (3) QUALIFIED INDIVIDUAL.—For purposes of 23 this subsection, the term ‘‘qualified individual’’ 24 means any individual— 25 VerDate Sep 11 2014 04:19 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2145.IH H2145 kjohnson on DSK79L0C42 with BILLS 12 •HR 2145 IH (A) whose principal place of abode at any 1 time during the incident period of any qualified 2 disaster is located in the qualified disaster area 3 with respect to such qualified disaster, and 4 (B) who has sustained an economic loss by 5 reason of such qualified disaster. 6 (d) PROVISIONS RELATING TO PLAN AMEND- 7 MENTS.— 8 (1) IN GENERAL.—If this subsection applies to 9 any amendment to any plan or annuity contract, 10 such plan or contract shall be treated as being oper- 11 ated in accordance with the terms of the plan during 12 the period described in paragraph (2)(B)(i). 13 (2) AMENDMENTS TO WHICH SUBSECTION AP- 14 PLIES.— 15 (A) IN GENERAL.—This subsection shall 16 apply to any amendment to any plan or annuity 17 contract which is made— 18 (i) pursuant to any provision of this 19 section, or pursuant to any regulation 20 issued by the Secretary or the Secretary of 21 Labor under any provision of this section, 22 and 23 (i [Text truncated for display. 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