HR 1526

112th CONGRESS
1st Session

H. R. 1526

To amend the Internal Revenue Code of 1986 to except from the early distribution penalty certain qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more.

IN THE HOUSE OF REPRESENTATIVES

April 13, 2011

Mr. POSEY introduced the following bill; which was referred to the Committee on Ways and Means

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A BILL

To amend the Internal Revenue Code of 1986 to except from the early distribution penalty certain qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more.

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 `Housing Recovery Act of 2011'.

SEC. 2. EXCEPTION TO EARLY DISTRIBUTION PENALTY FOR DISTRIBUTION TO BUY A RESIDENCE IN FORECLOSURE.

(a) In General- Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

`(H) HOME FORECLOSURE DISTRIBUTION-

`(i) IN GENERAL- Any distribution to an individual to the extent such distribution is used by the individual before the close of the 120th day after the day on which such distribution is received to pay the cost of acquiring (within the meaning of paragraph (8)(C)) a residence which has been in foreclosure for the entire 1-year period ending on the date of such acquisition.

`(ii) REQUIRED 2-YEAR HOLDING PERIOD- If during the 2 year-period beginning on the date of such acquisition the individual disposes of such residence, then the individual shall be treated as having distributed from a qualified retirement plan the amount to which clause (i) applied with respect to such residence in the taxable year of such disposition.

`(iii) INTEREST- Any increase in tax under paragraph (1) by reason of clause (ii) shall include interest at the underpayment rate established under section 6621 on such increase for the period beginning on the due date for filing the return for the taxable year for which clause (i) applied with respect to such residence.'.

(b) Conforming Amendment- Clause (i) of section 401(k)(2)(B) of such Code is amended by striking `or' at the end of subclause (IV), by striking `and' at the end of subclause (V) and inserting `or', and by inserting after subclause (V) the following new subclause:

`(VI) as provided in section 72(t)(2)(H), and'.

(c) Effective Date- The amendment made by this section shall apply to distributions made after the date of the enactment of this Act.

END