I
119THCONGRESS
1
STSESSION H. R. 329
To amend the Internal Revenue Code of 1986 to expand the availability
of penalty-free distributions to unemployed individuals from retirement plans.
IN THE HOUSE OF REPRESENTATIVES
JANUARY9, 2025
Mrs. W
ATSONCOLEMAN(for herself, Mrs. CHERFILUS-MCCORMICK, and Ms.
N
ORTON) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to expand
the availability of penalty-free distributions to unem-
ployed individuals from retirement plans.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Expanding Penalty 4
Free Withdrawal Act’’. 5
VerDate Sep 11 2014 22:12 Feb 04, 2025 Jkt 059200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H329.IH H329
ssavage on LAPJG3WLY3PROD with BILLS 2
•HR 329 IH
SEC. 2. EXPANSION OF EXCEPTION FOR PENALTY ON 1
EARLY DISTRIBUTIONS TO UNEMPLOYED IN-2
DIVIDUALS FROM RETIREMENT PLANS. 3
(a) I
NGENERAL.—Section 72(t)(2) of the Internal 4
Revenue Code of 1986 is amended by adding at the end 5
the following new subparagraph: 6
‘‘(N) L
ONG-TERM UNEMPLOYMENT DIS -7
TRIBUTIONS.— 8
‘‘(i) I
N GENERAL.—Distributions to 9
an individual after separation from em-10
ployment— 11
‘‘(I) if such individual has re-12
ceived unemployment compensation 13
for 26 consecutive weeks under any 14
Federal or State unemployment com-15
pensation law by reason of such sepa-16
ration (or, if less, for the maximum 17
period for which unemployment com-18
pensation is available under State law 19
applicable to the individual), and 20
‘‘(II) if such distributions are 21
made during any taxable year during 22
which such unemployment compensa-23
tion is paid or the succeeding taxable 24
year. 25
VerDate Sep 11 2014 22:12 Feb 04, 2025 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H329.IH H329
ssavage on LAPJG3WLY3PROD with BILLS 3
•HR 329 IH
‘‘(ii) DISTRIBUTIONS AFTER REEM -1
PLOYMENT; SELF-EMPLOYED INDIVID -2
UALS.—Rules similar to the rules of 3
clauses (ii) and (iii) of subparagraph (D) 4
shall apply for purposes of this subpara-5
graph. 6
‘‘(iii) L
IMITATION.—Clause (i) shall 7
not apply to any distribution to the extent 8
that such distribution exceeds the lesser 9
of— 10
‘‘(I) $50,000, reduced by the ag-11
gregate amount of distributions which 12
are described in clause (i) from all 13
plans of the individual during the 1- 14
year period ending on the day before 15
the date on which such distribution 16
was made, or 17
‘‘(II) the greater of $10,000 or 18
one-half of the aggregate fair market 19
value (at the time of the distribution) 20
of the individual’s qualified retirement 21
plans (as defined in section 4974(c)) 22
and the nonforfeitable portion the in-23
dividual’s defined contribution plans. 24
VerDate Sep 11 2014 22:12 Feb 04, 2025 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H329.IH H329
ssavage on LAPJG3WLY3PROD with BILLS 4
•HR 329 IH
‘‘(iv) COORDINATION WITH DISTRIBU -1
TIONS TO UNEMPLOYED INDIVIDUALS FOR 2
HEALTH INSURANCE PREMIUMS .—Dis-3
tributions shall not be taken into account 4
under this subparagraph if such distribu-5
tions are described in subparagraph (D).’’. 6
(b) E
FFECTIVEDATE.—The amendments made by 7
this section shall apply to distributions made after Decem-8
ber 31, 2024. 9
Æ
VerDate Sep 11 2014 22:12 Feb 04, 2025 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H329.IH H329
ssavage on LAPJG3WLY3PROD with BILLS