TREAD Act

I 116TH CONGRESS 1ST SESSION H. R. 3287 To amend the Internal Revenue Code of 1986 to provide for permanent disaster relief. IN THE HOUSE OF REPRESENTATIVES JUNE 13, 2019 Mr. RICE of South Carolina introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide for permanent 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 ‘‘Tax Relief and Expe- 4 dited Assistance for Disasters Act of 2019’’ or the 5 ‘‘TREAD Act’’. 6 SEC. 2. DEFINITIONS. 7 For purposes of this Act— 8 (1) QUALIFIED DISASTER AREA.— 9 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 2 •HR 3287 IH (A) IN GENERAL.—The term ‘‘qualified 1 disaster area’’ means any area with respect to 2 which a major disaster was declared on or after 3 January 1, 2018, by the President under sec- 4 tion 401 of the Robert T. Stafford Disaster Re- 5 lief and Emergency Assistance Act if the inci- 6 dent period of the disaster with respect to 7 which such declaration is made begins on or 8 after January 1, 2018. 9 (B) EXCEPTION.—Such term shall not in- 10 clude the California wildfire disaster area (as 11 defined in section 20101 of subdivision 2 of di- 12 vision B of the Bipartisan Budget Act of 2018). 13 (2) QUALIFIED DISASTER ZONE.—The term 14 ‘‘qualified disaster zone’’ means that portion of any 15 qualified disaster area which is determined by the 16 President to warrant individual or individual and 17 public assistance from the Federal Government 18 under the Robert T. Stafford Disaster Relief and 19 Emergency Assistance Act by reason of the qualified 20 disaster with respect to such disaster area. 21 (3) QUALIFIED DISASTER.—The term ‘‘quali- 22 fied disaster’’ means, with respect to any qualified 23 disaster area, the disaster by reason of which a 24 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 3 •HR 3287 IH major disaster was declared with respect to such 1 area. 2 (4) INCIDENT PERIOD.—The term ‘‘incident pe- 3 riod’’ means, with respect to any qualified disaster, 4 the period specified by the Federal Emergency Man- 5 agement Agency as the period during which such 6 disaster occurred. 7 SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF 8 RETIREMENT FUNDS. 9 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE- 10 MENT PLANS.— 11 (1) IN GENERAL.—Section 72(t)(2) of the In- 12 ternal Revenue Code of 1986 is amended by adding 13 at the end the following new subparagraph: 14 ‘‘(H) DISTRIBUTIONS FROM RETIREMENT 15 PLANS IN CONNECTION WITH FEDERALLY DE- 16 CLARED DISASTERS.—Any qualified disaster 17 distribution.’’. 18 (2) QUALIFIED DISASTER DISTRIBUTION.—Sec- 19 tion 72(t) of such Code is amended by adding at the 20 end the following new paragraph: 21 ‘‘(11) QUALIFIED DISASTER DISTRIBUTIONS.— 22 For purposes of paragraph (2)(H)— 23 ‘‘(A) IN GENERAL.—Except as provided in 24 paragraph (2), the term ‘qualified disaster dis- 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 4 •HR 3287 IH tribution’ means any distribution from an eligi- 1 ble retirement plan made after the incident be- 2 ginning date of a qualified disaster and on or 3 before December 31 of the year after the year 4 in which the incident period with respect to the 5 disaster begins, to an individual whose principal 6 place of abode at any time during the incident 7 period of such qualified disaster is located in 8 the qualified disaster area with respect to such 9 qualified disaster and who has sustained an 10 economic loss by reason of such qualified dis- 11 aster. 12 ‘‘(B) LIMITATION.— 13 ‘‘(i) IN GENERAL.—The aggregate 14 amount of distributions received by an in- 15 dividual which may be treated as qualified 16 disaster distributions for any taxable year 17 shall not exceed the excess (if any) of— 18 ‘‘(I) $100,000, over 19 ‘‘(II) the aggregate amounts 20 treated as qualified disaster distribu- 21 tions received by such individual for 22 all prior taxable years. 23 ‘‘(ii) TREATMENT OF PLAN DISTRIBU- 24 TIONS.—If a distribution to an individual 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 5 •HR 3287 IH would (without regard to clause (i)) be a 1 qualified disaster distribution, a plan shall 2 not be treated as violating any requirement 3 of this title merely because the plan treats 4 such distribution as a qualified disaster 5 distribution, unless the aggregate amount 6 of such distributions from all plans main- 7 tained by the employer (and any member 8 of any controlled group which includes the 9 employer) to such individual exceeds 10 $100,000. 11 ‘‘(iii) CONTROLLED GROUP.—For pur- 12 poses of clause (ii), the term ‘controlled 13 group’ means any group treated as a single 14 employer under subsection (b), (c), (m), or 15 (o) of section 414. 16 ‘‘(iv) SPECIAL RULE FOR INDIVIDUALS 17 AFFECTED BY MORE THAN ONE DIS- 18 ASTER.—The limitation of clause (i) shall 19 be applied separately with respect to dis- 20 tributions made with respect to each quali- 21 fied disaster. 22 ‘‘(C) AMOUNT DISTRIBUTED MAY BE RE- 23 PAID.— 24 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 6 •HR 3287 IH ‘‘(i) IN GENERAL.—Any individual 1 who receives a qualified disaster distribu- 2 tion may, at any time during the 3-year 3 period beginning on the day after the date 4 on which such distribution was received, 5 make one or more contributions in an ag- 6 gregate amount not to exceed the amount 7 of such distribution to an eligible retire- 8 ment plan of which such individual is a 9 beneficiary and to which a rollover con- 10 tribution of such distribution could be 11 made under section 402(c), 403(a)(4), 12 403(b)(8), 408(d)(3), or 457(e)(16), as the 13 case may be. 14 ‘‘(ii) TREATMENT OF REPAYMENTS OF 15 DISTRIBUTIONS FROM ELIGIBLE RETIRE- 16 MENT PLANS OTHER THAN IRAS.—If a 17 contribution is made pursuant to clause (i) 18 with respect to a qualified disaster dis- 19 tribution from an eligible retirement plan 20 other than an individual retirement plan, 21 then the taxpayer shall, to the extent of 22 the amount of the contribution, be treated 23 as having received the qualified disaster 24 distribution in an eligible rollover distribu- 25 VerDate Sep 11 2014 20:20 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 7 •HR 3287 IH tion (as defined in section 402(c)(4) of 1 such Code) and as having transferred the 2 amount to the eligible retirement plan in a 3 direct trustee to trustee transfer within 60 4 days of the distribution. 5 ‘‘(iii) TREATMENT OF REPAYMENTS 6 OF DISTRIBUTIONS FROM IRAS.—If a con- 7 tribution is made pursuant to clause (i) 8 with respect to a qualified disaster dis- 9 tribution from an individual retirement 10 plan, then, to the extent of the amount of 11 the contribution, the qualified disaster dis- 12 tribution shall be treated as a distribution 13 described in section 408(d)(3) and as hav- 14 ing been transferred to the eligible retire- 15 ment plan in a direct trustee to trustee 16 transfer within 60 days of the distribution. 17 ‘‘(D) INCOME INCLUSION SPREAD OVER 3- 18 YEAR PERIOD.— 19 ‘‘(i) IN GENERAL.—In the case of any 20 qualified disaster distribution, unless the 21 taxpayer elects not to have this paragraph 22 apply for any taxable year, any amount re- 23 quired to be included in gross income for 24 such taxable year shall be so included rat- 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 8 •HR 3287 IH ably over the 3-taxable-year period begin- 1 ning with such taxable year. 2 ‘‘(ii) SPECIAL RULE.—For purposes of 3 clause (i), rules similar to the rules of sec- 4 tion 408A(d)(3)(E) shall apply. 5 ‘‘(E) SPECIAL RULES.— 6 ‘‘(i) EXEMPTION OF DISTRIBUTIONS 7 FROM TRUSTEE TO TRUSTEE TRANSFER 8 AND WITHHOLDING RULES.—For purposes 9 of sections 401(a)(31), 402(f), and 3405, 10 qualified disaster distributions shall not be 11 treated as eligible rollover distributions. 12 ‘‘(ii) QUALIFIED DISASTER DISTRIBU- 13 TIONS TREATED AS MEETING PLAN DIS- 14 TRIBUTION REQUIREMENTS.—A qualified 15 disaster distribution shall be treated as 16 meeting the requirements of sections 17 401(k)(2)(B)(I), 403(b)(7)(A)(ii), 18 403(b)(11), and 457(d)(1)(A). 19 ‘‘(F) DISASTER DEFINITIONS.—Any term 20 which is used in this paragraph and is also de- 21 fined in section 2 of the Tax Relief and Expe- 22 dited Assistance for Disasters Act of 2019 shall 23 have the meaning given such term in such sec- 24 tion.’’. 25 VerDate Sep 11 2014 20:20 Jun 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 9 •HR 3287 IH (b) RECONTRIBUTIONS OF WITHDRAWALS FOR 1 HOME PURCHASES.— 2 (1) RECONTRIBUTIONS.— 3 (A) IN GENERAL.—Any individual who re- 4 ceived a qualified distribution may, during the 5 applicable period, make one or more contribu- 6 tions in an aggregate amount not to exceed the 7 amount of such qualified distribution to an eli- 8 gible retirement plan (as defined in section 9 402(c)(8)(B) of the Internal Revenue Code of 10 1986) of which such individual is a beneficiary 11 and to which a rollover contribution of such dis- 12 tribution could be made under section 402(c), 13 403(a)(4), 403(b)(8), or 408(d)(3), of such 14 Code, as the case may be. 15 (B) TREATMENT OF REPAYMENTS.—Rules 16 similar to the rules of subparagraphs (B) and 17 (C) of subsection (a)(3) shall apply for purposes 18 of this subsection. 19 (2) QUALIFIED DISTRIBUTION.—For purposes 20 of this subsection, the term ‘‘qualified distribution’’ 21 means any distribution— 22 (A) described in section 23 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 24 to the extent such distribution relates to finan- 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 10 •HR 3287 IH cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 1 of the Internal Revenue Code of 1986, 2 (B) which was to be used to purchase or 3 construct a principal residence in a qualified 4 disaster area, but which was not so used on ac- 5 count of the qualified disaster with respect to 6 such area, and 7 (C) which was received on or after the date 8 that is 270 days before the first day of incident 9 period of the disaster, and before the date 10 which is 30 days after the last day of the inci- 11 dent period of such qualified disaster. 12 (3) APPLICABLE PERIOD.—For purposes of this 13 subsection, the term ‘‘applicable period’’ means, with 14 respect to any qualified distribution, the period be- 15 ginning on the first day of the incident period of the 16 disaster and ending on the date that is 180 days 17 after the last day of such incident period. 18 (c) LOANS FROM QUALIFIED PLANS.— 19 (1) IN GENERAL.—Section 72(p) of the Internal 20 Revenue Code of 1986 is amended by adding at the 21 end the following new paragraph: 22 ‘‘(6) INCREASE IN LIMIT ON LOANS NOT TREAT- 23 ED AS DISTRIBUTIONS.— 24 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 11 •HR 3287 IH ‘‘(A) IN GENERAL.—In the case of any 1 loan from a qualified employer plan to a quali- 2 fied individual made during the period begin- 3 ning on the first date of the incident period and 4 ending on December 31 of the year after the 5 year in which such first date of the incident pe- 6 riod occurs— 7 ‘‘(i) clause (i) of paragraph (2)(A) 8 shall be applied by substituting ‘$100,000’ 9 for ‘$50,000’, and 10 ‘‘(ii) clause (ii) of such paragraph 11 shall be applied by substituting ‘the 12 present value of the nonforfeitable accrued 13 benefit of the employee under the plan’ for 14 ‘one-half of the present value of the non- 15 forfeitable accrued benefit of the employee 16 under the plan’. 17 ‘‘(B) DELAY OF REPAYMENT.—In the case 18 of a qualified individual (with respect to any 19 qualified disaster) with an outstanding loan 20 during or after the incident period (of such 21 qualified disaster) from a qualified employer 22 plan— 23 ‘‘(i) if the due date pursuant to sub- 24 paragraph (B) or (C) of paragraph (2) for 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 12 •HR 3287 IH any repayment with respect to such loan 1 occurs during the period beginning on the 2 incident beginning date of such qualified 3 disaster and ending on December 31 of the 4 year after the year in which the incident 5 period with respect to the disaster begins, 6 such due date shall be delayed for 1 year, 7 ‘‘(ii) any subsequent repayments with 8 respect to any such loan shall be appro- 9 priately adjusted to reflect the delay in the 10 due date under clause (i) and any interest 11 accruing during such delay, and 12 ‘‘(iii) in determining the 5-year period 13 and the term of a loan under subpara- 14 graph (B) or (C) of paragraph (2), the pe- 15 riod described in clause (i) of this subpara- 16 graph shall be disregarded. 17 ‘‘(C) QUALIFIED INDIVIDUAL.—For pur- 18 poses of this paragraph, the term ‘qualified in- 19 dividual’ means any individual— 20 ‘‘(i) whose principal place of abode at 21 any time during the incident period of any 22 qualified disaster is located in the qualified 23 disaster area with respect to such qualified 24 disaster, and 25 VerDate Sep 11 2014 01:19 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3287.IH H3287 lotter on DSKBCFDHB2PROD with BILLS 13 •HR 3287 IH ‘‘(ii) who has sustained an economic 1 loss by reason of such qualified disaster. 2 ‘‘(D) DISASTER DEFINITIONS.—Any term 3 which used in this paragraph and is also de- 4 fined in section 2 of the Tax Relief and Expe- 5 dited Assistance for Disasters Act of 2019 shall 6 have the meaning given such term in such sec- 7 tion.’’. 8 (d) PROVISIONS RELATING TO PLAN AMEND- 9 MENTS.— 10 (1) IN GENERAL.—If this subsection applies to 11 any amendment to any plan or annuity contract, 12 such plan or contract shal [Text truncated for display. 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