109th CONGRESS
1st Session
H. R. 2177
To amend the Internal Revenue Code of 1986 to permit tax-free distributions
from governmental retirement plans for premiums for health and long-term care
insurance for public safety officers.
IN THE HOUSE OF REPRESENTATIVES
May 5, 2005
Mr. CHOCOLA (for himself, Mr. NEAL of Massachusetts, Mr. SHAW, Mr. MCCRERY,
Mr. CAMP, Mr. RAMSTAD, Mr. SAM JOHNSON of Texas, Mr. ENGLISH of Pennsylvania,
Mr. HAYWORTH, Mr. WELLER, Mr. LEWIS of Kentucky, Mr. FOLEY, Mr. BRADY of Texas,
Mr. REYNOLDS, Mr. RYAN of Wisconsin, Mr. CANTOR, Mr. BEAUPREZ, Ms. HART, Mr.
CARDIN, Mr. LEWIS of Georgia, Mr. MCNULTY, Mr. JEFFERSON, Mr. ACKERMAN, Mr.
ALEXANDER, Mr. BACA, Mr. BACHUS, Mr. BISHOP of New York, Mr. BONILLA, Mr.
BOOZMAN, Mr. BURTON of Indiana, Mr. BUYER, Mr. CARTER, Mr. CONAWAY, Mr. CULBERSON,
Mr. CUNNINGHAM, Mr. DENT, Mr. FERGUSON, Mr. FORD, Mr. GALLEGLY, Mr. GARRETT
of New Jersey, Mr. GERLACH, Mr. GOODE, Mr. GORDON, Ms. HERSETH, Mr. HIGGINS,
Mr. KENNEDY of Minnesota, Mr. KILDEE, Ms. KILPATRICK of Michigan, Mr. KLINE,
Mr. LATHAM, Mr. LYNCH, Mrs. MCCARTHY, Mr. MCGOVERN, Mr. MCHUGH, Mrs. MILLER
of Michigan, Mrs. MYRICK, Mr. NEUGEBAUER, Mr. PENCE, Mr. PITTS, Mr. PORTER,
Mr. ROGERS of Michigan, Ms. ROYBAL-ALLARD, Mr. SHADEGG, Mr. SHIMKUS, Mr. SMITH
of Washington, Mr. TERRY, Mr. THORNBERRY, Mr. VAN HOLLEN, and Mr. WILSON of
South Carolina) 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 permit tax-free distributions
from governmental retirement plans for premiums for health and long-term care
insurance for public safety officers.
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 `Healthcare Enhancement for Local Public Safety
Retirees Act of 2005' or the `HELPS Retirees Act of 2005'.
SEC. 2. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS FOR HEALTH AND
LONG-TERM CARE INSURANCE FOR PUBLIC SAFETY OFFICERS.
(a) In General- Section 402 of the Internal Revenue Code of 1986 (relating
to taxability of beneficiary of employees' trust) is amended by adding at
the end the following new subsection:
`(l) Distributions From Governmental Plans for Health and Long-Term Care Insurance-
`(1) IN GENERAL- In the case of an employee who is an eligible retired public
safety officer who makes the election described in paragraph (6) with respect
to any taxable year of such employee, gross income of such employee for
such taxable year does not include any distribution from an eligible retirement
plan to the extent that the aggregate amount of such distributions does
not exceed the amount paid by such employee for qualified health insurance
premiums of the employee, his spouse, or dependents (as defined in section
152) for such taxable year.
`(2) LIMITATION- The amount which may be excluded from gross income for
the taxable year by reason of paragraph (1) shall not exceed $5,000.
`(3) DISTRIBUTIONS MUST OTHERWISE BE INCLUDIBLE-
`(A) IN GENERAL- An amount shall be treated as a distribution for purposes
of paragraph (1) only to the extent that such amount would be includible
in gross income without regard to paragraph (1).
`(B) APPLICATION OF SECTION 72- Notwithstanding section 72, in determining
the extent to which an amount is treated as a distribution for purposes
of subparagraph (A), the aggregate amounts distributed from an eligible
retirement plan in a taxable year shall be treated as includible in gross
income (without regard to subparagraph (A)) to the extent that such amount
does not exceed the aggregate amount which would have been so includible
if all amounts distributed from all eligible retirement plans were treated
as 1 contract for purposes of determining the inclusion of such distribution
under section 72. Proper adjustments shall be made in applying section
72 to other distributions in such taxable year and subsequent taxable
years.
`(4) DEFINITIONS- For purposes of this subsection--
`(A) ELIGIBLE RETIREMENT PLAN- For purposes of paragraph (1), the term
`eligible retirement plan' means a governmental plan (within the meaning
of section 414(d)) which is described in clause (iii), (iv), (v), or (vi)
of subsection (c)(8)(B).
`(B) ELIGIBLE RETIRED PUBLIC SAFETY OFFICER- The term `eligible retired
public safety officer' means an individual who, by reason of disability
or attainment of normal retirement age, is separated from service as a
public safety officer with the employer who maintains the eligible retirement
plan from which distributions subject to paragraph (1) are made.
`(C) PUBLIC SAFETY OFFICER- The term `public safety officer' shall have
the same meaning given such term by section 1204(8)(A) of the Omnibus
Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796b(8)(A)).
`(D) QUALIFIED HEALTH INSURANCE PREMIUMS- The term `qualified health insurance
premiums' means premiums for coverage for the eligible retired public
safety officer, his spouse, and dependents, by an accident or health insurance
plan or qualified long-term care insurance contract (as defined in section
7702B(b)).
`(5) SPECIAL RULES- For purposes of this subsection--
`(A) DIRECT PAYMENT TO INSURER REQUIRED- Paragraph (1) shall only apply
to a distribution if payment of the premiums is made directly to the provider
of the accident or health insurance plan or qualified long-term care insurance
contract by deduction from a distribution from the eligible retirement
plan.
`(B) RELATED PLANS TREATED AS 1- All eligible retirement plans of an employer
shall be treated as a single plan.
`(A) IN GENERAL- For purposes of paragraph (1), an election is described
in this paragraph if the election is made by an employee after separation
from service with respect to amounts not distributed from an eligible
retirement plan to have amounts from such plan distributed in order to
pay for qualified health insurance premiums.
`(B) SPECIAL RULE- A plan shall not be treated as violating the requirements
of section 401, or as engaging in a prohibited transaction for purposes
of section 503(b), merely because it provides for an election with respect
to amounts that are otherwise distributable under the plan or merely because
of a distribution made pursuant to an election described in subparagraph
(A).
`(7) COORDINATION WITH MEDICAL EXPENSE DEDUCTION- The amounts excluded from
gross income under paragraph (1) shall not be taken into account under section
213.
`(8) COORDINATION WITH DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED
INDIVIDUALS- The amounts excluded from gross income under paragraph (1)
shall not be taken into account under section 162(l).'.
(b) Conforming Amendments-
(1) Section 403(a) of such Code (relating to taxability of beneficiary under
a qualified annuity plan) is amended by inserting after paragraph (1) the
following new paragraph:
`(2) SPECIAL RULE FOR HEALTH AND LONG-TERM CARE INSURANCE- To the extent
provided in section 402(l), paragraph (1) shall not apply to the amount
distributed under the contract which is otherwise includible in gross income
under this subsection.'.
(2) Section 403(b) of such Code (relating to taxability of beneficiary under
annuity purchased by section 501(c)(3) organization or public school) is
amended by inserting after paragraph (1) the following new paragraph:
`(2) SPECIAL RULE FOR HEALTH AND LONG-TERM CARE INSURANCE- To the extent
provided in section 402(l), paragraph (1) shall not apply to the amount
distributed under the contract which is otherwise includible in gross income
under this subsection.'.
(3) Section 457(a) of such Code (relating to year of inclusion in gross
income) is amended by adding at the end the following new paragraph:
`(3) SPECIAL RULE FOR HEALTH AND LONG-TERM CARE INSURANCE- To the extent
provided in section 402(l), paragraph (1) shall not apply to amounts otherwise
includible in gross income under this subsection.'.
(c) Effective Date- The amendments made by this section shall apply to distributions
in taxable years beginning after December 31, 2004.
END
