| 1 | 1 | | I |
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| 2 | 2 | | 119THCONGRESS |
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| 3 | 3 | | 1 |
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| 4 | 4 | | STSESSION H. R. 2163 |
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| 5 | 5 | | To amend the Internal Revenue Code of 1986 to waive early withdrawal |
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| 6 | 6 | | penalties from retirement accounts for victims of fraud. |
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| 7 | 7 | | IN THE HOUSE OF REPRESENTATIVES |
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| 8 | 8 | | MARCH14, 2025 |
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| 9 | 9 | | Ms. S |
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| 10 | 10 | | TEVENSintroduced the following bill; which was referred to the |
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| 11 | 11 | | Committee on Ways and Means |
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| 12 | 12 | | A BILL |
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| 13 | 13 | | To amend the Internal Revenue Code of 1986 to waive |
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| 14 | 14 | | early withdrawal penalties from retirement accounts for |
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| 15 | 15 | | victims of fraud. |
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| 16 | 16 | | Be it enacted by the Senate and House of Representa-1 |
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| 17 | 17 | | tives of the United States of America in Congress assembled, 2 |
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| 18 | 18 | | SECTION 1. SHORT TITLE. 3 |
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| 19 | 19 | | This Act may be cited as the ‘‘No Penalties for Vic-4 |
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| 20 | 20 | | tims of Fraud Act’’. 5 |
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| 21 | 21 | | SEC. 2. WAIVER OF EARLY WITHDRAWAL PENALTIES FOR 6 |
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| 22 | 22 | | VICTIMS OF FRAUD. 7 |
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| 23 | 23 | | (a) I |
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| 24 | 24 | | NGENERAL.—Section 72(t)(2) of the Internal 8 |
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| 25 | 25 | | Revenue Code of 1986 is amended by adding at the end 9 |
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| 26 | 26 | | the following new subparagraph: 10 |
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| 27 | 27 | | VerDate Sep 11 2014 17:12 Mar 31, 2025 Jkt 059200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2163.IH H2163 |
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| 28 | 28 | | ssavage on LAPJG3WLY3PROD with BILLS 2 |
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| 29 | 29 | | •HR 2163 IH |
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| 30 | 30 | | ‘‘(N) DISTRIBUTIONS FROM RETIREMENT 1 |
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| 31 | 31 | | PLANS IN CASE OF VICTIM OF FRAUD .— 2 |
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| 32 | 32 | | ‘‘(i) I |
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| 33 | 33 | | N GENERAL.—Any distribution 3 |
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| 34 | 34 | | from an applicable eligible retirement plan 4 |
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| 35 | 35 | | to an individual if such distribution is 5 |
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| 36 | 36 | | made on account of the individual being a 6 |
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| 37 | 37 | | victim of fraud. 7 |
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| 38 | 38 | | ‘‘(ii) V |
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| 39 | 39 | | ICTIM OF FRAUD .—For pur-8 |
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| 40 | 40 | | poses of this subparagraph, the term ‘vic-9 |
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| 41 | 41 | | tim of fraud’ means an individual who— 10 |
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| 42 | 42 | | ‘‘(I) submits an application for 11 |
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| 43 | 43 | | waiver to the Secretary (in such time 12 |
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| 44 | 44 | | and manner as the Secretary may pre-13 |
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| 45 | 45 | | scribe) which fulfils the documenta-14 |
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| 46 | 46 | | tion requirement of clause (iii), and 15 |
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| 47 | 47 | | ‘‘(II) is designated as a victim of 16 |
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| 48 | 48 | | fraud by the Secretary. 17 |
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| 49 | 49 | | ‘‘(iii) D |
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| 50 | 50 | | OCUMENTATION REQUIRE -18 |
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| 51 | 51 | | MENT.—The documentation requirement 19 |
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| 52 | 52 | | under this clause is fulfilled if the taxpayer 20 |
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| 53 | 53 | | provides documentation (in such time and 21 |
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| 54 | 54 | | manner as the Secretary may prescribe) 22 |
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| 55 | 55 | | from a law enforcement agency or a court 23 |
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| 56 | 56 | | of competent jurisdiction establishing that 24 |
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| 57 | 57 | | the individual is the victim of a fraudulent 25 |
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| 58 | 58 | | VerDate Sep 11 2014 17:12 Mar 31, 2025 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2163.IH H2163 |
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| 59 | 59 | | ssavage on LAPJG3WLY3PROD with BILLS 3 |
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| 60 | 60 | | •HR 2163 IH |
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| 61 | 61 | | act that resulted in a distribution from an 1 |
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| 62 | 62 | | applicable retirement plan. 2 |
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| 63 | 63 | | ‘‘(iv) A |
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| 64 | 64 | | MOUNT DISTRIBUTED MAY BE 3 |
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| 65 | 65 | | REPAID.—Rules similar to the rules of sub-4 |
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| 66 | 66 | | paragraph (H)(v) shall apply. 5 |
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| 67 | 67 | | ‘‘(v) A |
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| 68 | 68 | | PPLICABLE ELIGIBLE RETIRE -6 |
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| 69 | 69 | | MENT PLAN.—The term ‘applicable eligible 7 |
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| 70 | 70 | | retirement plan’ means an eligible retire-8 |
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| 71 | 71 | | ment plan (as defined in section 9 |
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| 72 | 72 | | 402(c)(8)(B)) other than a defined benefit 10 |
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| 73 | 73 | | plan.’’. 11 |
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| 74 | 74 | | (b) E |
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| 75 | 75 | | FFECTIVEDATE.—The amendment made by 12 |
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| 76 | 76 | | this section shall apply to distributions made after the 13 |
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| 77 | 77 | | date of the enactment of this Act. 14 |
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| 78 | 78 | | SEC. 3. INFORMATION AND OUTREACH. 15 |
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| 79 | 79 | | (a) G |
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| 80 | 80 | | UIDANCE.—Not later than 180 days after the 16 |
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| 81 | 81 | | date of the enactment of this Act, the Secretary of the 17 |
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| 82 | 82 | | Treasury (or the Secretary’s delegate) shall issue guidance 18 |
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| 83 | 83 | | on the process for claiming the waiver of early withdrawal 19 |
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| 84 | 84 | | penalties for victims of fraud under section 72(t)(2)(N) 20 |
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| 85 | 85 | | of the Internal Revenue Code of 1986, as added by section 21 |
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| 86 | 86 | | 2 of this Act. 22 |
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| 87 | 87 | | (b) P |
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| 88 | 88 | | UBLICAWARENESSCAMPAIGN.—As soon as 23 |
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| 89 | 89 | | practicable after the date of the enactment of this Act, 24 |
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| 90 | 90 | | the Secretary of the Treasury (or the Secretary’s delegate) 25 |
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| 91 | 91 | | VerDate Sep 11 2014 17:12 Mar 31, 2025 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2163.IH H2163 |
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| 92 | 92 | | ssavage on LAPJG3WLY3PROD with BILLS 4 |
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| 93 | 93 | | •HR 2163 IH |
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| 94 | 94 | | shall conduct a public awareness campaign to educate the 1 |
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| 95 | 95 | | public about the protections and relief available under sec-2 |
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| 96 | 96 | | tion 72(t)(2)(N) of the Internal Revenue Code of 1986, 3 |
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| 97 | 97 | | as added by section 2 of this Act. 4 |
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| 98 | 98 | | Æ |
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| 99 | 99 | | VerDate Sep 11 2014 17:12 Mar 31, 2025 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H2163.IH H2163 |
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| 100 | 100 | | ssavage on LAPJG3WLY3PROD with BILLS |
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