To provide for qualified withdrawals from the Capital Construction Fund for fishermen leaving the industry and for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes.

May 5, 2005

Mrs. CAPPS (for herself, Mr. DEFAZIO, Mr. FARR, Ms. HOOLEY, Mr. FRANK of Massachusetts, Mr. BLUMENAUER, Ms. LEE, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To provide for qualified withdrawals from the Capital Construction Fund for fishermen leaving the industry and for the rollover of Capital Construction Funds to individual retirement plans, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Capital Construction Fund Qualified Withdrawal Act of 2005'.

SEC. 2. AMENDMENT OF THE MERCHANT MARINE ACT OF 1936 TO ENCOURAGE RETIREMENT OF CERTAIN FISHING VESSELS AND PERMITS.

(a) In General- Section 607(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1177(a)) is amended by adding at the end the following: `Any agreement entered into under this section may be modified for the purpose of encouraging the sustainability of the fisheries of the United States by making the termination and withdrawal of a capital construction fund a qualified withdrawal if done in exchange for the retirement of the related commercial fishing vessels and related commercial fishing permits.'.

(b) New Qualified Withdrawals-

(1) IN GENERAL- Section 607(f)(1) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1177(f)(1)) is amended by--

(A) striking `for:' and inserting `for--';

(B) striking `vessel' in subparagraph (A) and inserting `vessel;';

(C) striking `vessel, or' in subparagraph (B) and inserting `vessel;';

(D) striking `vessel.' in subparagraph (C) and inserting `vessel;'; and

(E) inserting after subparagraph (C) the following:

`(D) the payment of an industry fee authorized by the fishing capacity reduction program under section 312(b) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a(b));

`(E) in the case of any such person or shareholder for whose benefit such fund was established with respect to any vessel operated in the fisheries of the United States, or any shareholder of such person, a rollover contribution (within the meaning of section 408(d)(3) of the Internal Revenue Code of 1986) to such person's or shareholder's individual retirement plan (as defined in section 7701(a)(37) of such Code);

`(F) the payment of the net proceeds deposited into the fund from a sale described in subsection (b)(1)(C)(ii) to a person retiring related commercial fishing vessels and permits;

`(G) the acquisition of a vessel monitoring system as a safety improvement for a fishing vessel; or

`(H) the acquisition or construction of fishing gear designed to minimize or avoid by-catch as required under section 301(a)(9) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1851(a)(9)).'.

(2) REDUCTION PROGRAM SALE PROCEEDS ALLOWED IN DETERMINING DEPOSIT CEILING- Section 607(b)(1)(C) of such Act (46 U.S.C. App. 1177(b)(1)(C)) is amended by striking `or (ii)' and inserting `(ii) the sale of any agreement vessel or fishing permit retired through the fishing capacity reduction program under section 312(b) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a(b)), or (iii)'.

(3) CERTAIN QUALIFIED WITHDRAWALS TREATED AS WITHDRAWN FROM THE CAPITAL ACCOUNT- Section 607(e)(2)(B) of such Act (46 U.S.C. App. 1177(e)(2)(B)) is amended by adding at the end `unless such portion represents gain from a sale described in subsection (b)(1)(C)(ii) and is withdrawn for any purpose provided under subparagraph (D), (E), or (F) of subsection (f)(1),'.

(4) SECRETARY TO ENSURE RETIREMENT OF VESSELS AND PERMITS- The Secretary of Commerce by regulation shall establish procedures to ensure that any person making a qualified withdrawal authorized by section 607(f)(1)(F) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1177(f)(1)(F)) retires the related commercial use of fishing vessels and commercial fishery permits.

(c) Conforming Amendments-

(1) IN GENERAL- Section 7518(e)(1) of the Internal Revenue Code of 1986 (relating to purposes of qualified withdrawals) is amended--

(A) by striking `for:' and inserting`for--';

(B) by striking `vessel, or' in subparagraph (B) and inserting `vessel,';

(C) by striking `vessel.' in subparagraph (C) and inserting `vessel,';

(D) by inserting after subparagraph (C) the following:

`(D) the payment of an industry fee authorized by the fishing capacity reduction program under section 312 of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a),

`(E) in the case of any person or shareholder for whose benefit such fund was established with respect to any vessel operated in the fisheries of the United States, or any shareholder of such person, a rollover contribution (within the meaning of section 408(d)(3)) to such person's or shareholder's individual retirement plan (as defined in section 7701(a)(37)),

`(F) the payment of the net proceeds deposited into the fund from a sale described in subsection (a)(1)(C)(ii) to a person retiring related commercial fishing vessels and permits,

`(G) the acquisition of a vessel monitoring system as a safety improvement for a fishing vessel, or

`(H) the acquisition or construction of fishing gear designed to minimize or avoid by-catch as required under section 301(a)(9) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1851(a)(9)).'.

(2) REDUCTION PROGRAM SALE PROCEEDS ALLOWED IN DETERMINING DEPOSIT CEILING- Section 7518(a)(1)(C) of such Code is amended by striking `or' at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause:

`(ii) the sale of any agreement vessel or fishing permit retired through the fishing capacity reduction program under section 312(b) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a(b)), or'.

(3) CERTAIN QUALIFIED WITHDRAWALS TREATED AS WITHDRAWN FROM THE CAPITAL ACCOUNT- Section 7718(d)(2)(B) of such Code is amended by adding at the end `unless such portion represents gain from a sale described in subsection (a)(1)(C)(ii) and is withdrawn for any purpose provided under subparagraph (D), (E), or (F) of subsection (e)(1),'.

(4) SECRETARY TO ENSURE RETIREMENT OF VESSELS AND PERMITS- The Secretary of the Treasury by regulation shall establish procedures to ensure that any person making a qualified withdrawal authorized by section 7518(e)(1)(F) of the Internal Revenue Code of 1986 retires the related commercial use of fishing vessels and commercial fishery permits referred to therein.

(d) Effective Date- The amendments made by this section shall apply to withdrawals made after the date of enactment of this Act.

END