To amend the Internal Revenue Code of 1986 to provide that withdrawals from section 401(k) and similar plans by victims of Presidentially declared disasters shall not be includible in gross income and shall not be subject to the additional tax on early distributions.

September 13, 2005

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

To amend the Internal Revenue Code of 1986 to provide that withdrawals from section 401(k) and similar plans by victims of Presidentially declared disasters shall not be includible in gross income and shall not be subject to the additional tax on early distributions.

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 `Retirement Account Emergency Access Act of 2005'.

SEC. 2. TAX-FREE WITHDRAWALS FROM CERTAIN RETIREMENT PLANS FOR VICTIMS OF PRESIDENTIALLY DECLARED DISASTERS.

(a) In General- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by inserting after section 139A the following new section:

`SEC. 139B. DISTRIBUTIONS FROM CERTAIN RETIREMENT PLANS TO VICTIMS OF PRESIDENTIALLY DECLARED DISASTERS.

`(a) In General- Gross income shall not include any qualified disaster-relief distribution.

`(b) Qualified Disaster-Relief Distribution- For purposes of this section, the term `qualified disaster-relief distribution' means any hardship distribution if--

`(1) the distribution is from a plan pursuant to section 401(k)(2)(B)(i)(IV) or paragraph (7)(A)(ii) or (11)(B) of section 403(b),

`(2) the distribution is to any individual any residence of whom (whether or not owned by the individual) is located in the area of a Presidentially declared disaster (as defined in section 1033(h)(3)), and

`(3) the distribution is received during the 2-year period beginning on the date of the disaster declaration.

`(c) 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 subsection.'.

(b) Clerical Amendment- The table of sections for such part III is amended by inserting after the item relating to section 139A the following new item:

`Sec. 139B. Distributions from certain retirement plans to victims of Presidentially declared disasters'.

(c) Effective Date- The amendments made by this section shall apply to distributions received in taxable years ending after December 31, 2004.

END