Amends the Internal Revenue Code to: (1) exempt qualified disaster-relief distributions from the ten percent penalty on premature distributions from tax-exempt retirement plans; and (2) allow repayment of such distributions to the retirement plan within five years after the date of such distribution. Defines a "qualified disaster-relief distribution" as a distribution to an individual who has sustained a loss in excess of $100 from a major disaster declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act if such distribution is made within one year after the disaster declaration and the distribution does not exceed the amount of the loss and is not covered by insurance or otherwise.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2835 Introduced in Senate (IS)]
108th CONGRESS
2d Session
S. 2835
To amend the Internal Revenue Code of 1986 to allow penalty free
withdrawals from retirement plans for victims of federally declared
natural disasters.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 23, 2004
Mr. Graham of Florida (for himself and Mr. Nelson of Florida)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow penalty free
withdrawals from retirement plans for victims of federally declared
natural disasters.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. PENALTY FREE WITHDRAWALS FROM RETIREMENT PLANS FOR VICTIMS
OF FEDERALLY DECLARED NATURAL DISASTERS.
(a) In General.--Paragraph (2) of section 72(t) of the Internal
Revenue Code of 1986 (relating to 10-percent additional tax on early
distributions from qualified retirement plans) is amended by adding at
the end the following new subparagraph:
``(G) Distributions from retirement plans to
victims of federally declared natural disasters.--
``(i) In general.--Any qualified disaster-
relief distribution.
``(ii) Amount distributed may be repaid.--
Any individual who receives a qualified
disaster-relief distribution may, at any time
during the 5-year period beginning on the day
after the date on which such distribution was
made, make one or more contributions to an
individual retirement plan of such individual
in an aggregate amount not to exceed the amount
of such distribution. The dollar limitations
otherwise applicable to contributions to
individual retirement plans shall not apply to
any contribution made pursuant to the preceding
sentence. No deduction shall be allowed for any
contribution pursuant to this clause.
``(iii) Qualified disaster-relief
distribution.--For purposes of this
subparagraph, the term `qualified disaster-
relief distribution' means any distribution to
an individual who has sustained a loss in
excess of $100 as a result of a major disaster
declared under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act--
``(I) if such distribution is made
during the 1-year period beginning on
the date such declaration is made, and
``(II) to the extent such
distribution does not exceed the amount
of such loss and is not compensated for
by insurance or otherwise.
For purposes of subclause (II), the amount of
any loss shall be determined using the greater
of the fair market value of the property on the
day before the date of such disaster or the
adjusted basis of the property as provided in
section 1011.''.
(b) Exemption of Distributions From Withholding.--Paragraph (4) of
section 402(c) of the Internal Revenue Code of 1986 (relating to
eligible rollover distribution) is amended by striking ``and'' at the
end of subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, and'', and by inserting at the end
the following new subparagraph:
``(D) any qualified disaster-relief distribution
(within the meaning of section 72(t)(2)(G)).''.
(c) Conforming Amendments.--
(1) Section 401(k)(2)(B)(i) of the Internal Revenue Code of
1986 is amended by striking ``or'' at the end of subclause
(III), by striking ``and'' at the end of subclause (IV) and
inserting ``or'', and by inserting after subclause (IV) the
following new subclause:
``(V) the date on which a period
referred to in section
72(t)(2)(G)(iii)(I) begins (but only to
the extent provided in section
72(t)(2)(G)), and''.
(2) Section 403(b)(7)(A)(ii) of such Code is amended by
inserting ``sustains a loss as a result of a major disaster
declared under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (but only to the extent provided in
section 72(t)(2)(G)),'' before ``or''.
(3) Section 403(b)(11) of such Code is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) for distributions to which section
72(t)(2)(G) applies.''.
(d) Effective Date.--The amendments made by this section shall
apply to distributions received in taxable years beginning after
December 31, 2003.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR 9/24/2004 S9614-9615)
Read twice and referred to the Committee on Finance.
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