To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans.

I 118TH CONGRESS 1ST SESSION H. R. 2637 To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans. IN THE HOUSE OF REPRESENTATIVES APRIL 17, 2023 Mr. SANTOS 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 waive the early withdrawal penalty on certain distributions from qualified retirement plans. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. WAIVER OF EARLY WITHDRAWAL PENALTY ON 3 CERTAIN DISTRIBUTIONS FROM QUALIFIED 4 RETIREMENT PLANS. 5 (a) IN GENERAL.—Section 72(t)(2) of the Internal 6 Revenue Code of 1986 is amended to add at the end the 7 following new subparagraph: 8 ‘‘(O) GENERAL EXEMPTION AMOUNT.— 9 VerDate Sep 11 2014 03:14 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2637.IH H2637 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 2637 IH ‘‘(i) IN GENERAL.—Any distribution 1 (other than a distribution to which para- 2 graph (1) does not apply without regard to 3 this subparagraph) from an applicable eli- 4 gible retirement plan (as defined in sub- 5 paragraph (H)(vi)(I)) of any individual to 6 the extent that such distribution does not 7 exceed the excess of $10,000 over the ag- 8 gregate amount of such distributions made 9 from all such plans of such individual dur- 10 ing the 5-year period ending on the date of 11 such distribution. 12 ‘‘(ii) TREATMENT OF PLAN DISTRIBU- 13 TIONS.—An applicable eligible retirement 14 plan (as defined in subparagraph 15 (H)(vi)(I)) shall not be treated as failing 16 to meet any requirement of this title mere- 17 ly because the plan allows a distribution to 18 an individual, unless the aggregate amount 19 of such distributions (other than distribu- 20 tions allowed without regard to this clause) 21 from all plans maintained by the employer 22 (and any member of any controlled group 23 which includes the employer, determined as 24 provided in subparagraph (H)(iv)(II)) to 25 VerDate Sep 11 2014 03:14 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2637.IH H2637 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 2637 IH such individual during the 5-year period 1 ending on the date of such distribution ex- 2 ceeds $10,000.’’. 3 (b) EFFECTIVE DATE.—The amendment made by 4 this section shall apply to distributions made after the 5 date of the enactment of this Act. 6 Æ VerDate Sep 11 2014 03:14 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H2637.IH H2637 pbinns on DSKJLVW7X2PROD with $$_JOB