Unemployment Compensation Reform Act of 1985

Unemployment Compensation Reform Act of 1985 - Title I: Amendments to Extended Benefit Program - Amends the Federal-State Extended Unemployment Compensation Act of 1970 to revise trigger provisions for the Federal-State extended unemployment compensation program.

Provides that area triggers for such program shall operate on the basis of rates of insured unemployment and of total unemployment in an area of a State (or in a State), according to specified formulas.

Directs the Secretary of Labor, within six months after enactment of this Act, to compile statistics on the total rate of unemployment on a county-by-county basis.

Title II: Changes to Federal Supplemental Compensation Program - Amends the Federal Supplemental Compensation Act of 1982 to increase the number of weeks for which benefits are payable under the Federal supplemental unemployment compensation program.

Repeals provisions of such Act relating to termination of such program.

Extends such program through specified qualified periods when the national base average unemployment rate exceeds six percent.

Provides that amendments made by this title shall apply to weeks beginning after March 31, 1985.

Sets forth a transitional rule.

Directs the Secretary of Labor to modify program agreements with States in accordance with amendments made by this title.

Title III: Miscellaneous Provisions - Amends the Internal Revenue Code to revise provisions relating to additional tax on certain amounts included in gross income after age 59 1/2 to provide for a waiver of the penalty on withdrawals from an individual retirement plan where the individual has exhausted unemployment benefits.

Amends the Internal Revenue Code (as amended by the Social Security Amendments of 1983) to permit States to deny unemployment compensation benefits in the period between academic terms or years to nonprofessional employees of educational institutions if they have a reasonable assurance of returning to work in the next academic term or year. (Under current law, States are required to deny such benefits to such employees in such cases.)