To amend the Internal Revenue Code of 1986 to provide that distributions to unemployed individuals from individual retirement accounts will not be subject to the additional tax on early distributions.

Amends the Internal Revenue Code to allow penalty-free distributions from retirement plans to individuals during any period for which such individuals: (1) are receiving unemployment compensation; and (2) would have been entitled to unemployment compensation, but for termination of the period during which compensation was payable or exhaustion of such individual's rights to compensation.