H.R. 329 · 119th Congress
Expanding Penalty Free Withdrawal Act
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D
Watson ColemanSponsor3 cosponsors · 3 D
2 signed on when it was introduced; the rest joined later. Cosponsors who withdrew aren't shown.
This bill allows an individual who is unemployed for a certain period of time to take early distributions from a qualified retirement plan without paying an additional tax on such distributions, subject to limitations.
What it does: CRS summary · Introduced in House · Jan 9, 2025
Expanding Penalty Free Withdrawal Act
This bill allows an individual who is unemployed for a certain period of time to take early distributions from a qualified retirement plan without paying an additional tax on such distributions, subject to limitations.
Under current law, a 10% additional tax is imposed on early distributions from a qualified retirement plan unless an exception applies.
This bill expands the list of exceptions to include distributions from a qualified retirement plan made (1) to an individual who is unemployed and receives federal or state unemployment compensation for 26 consecutive weeks (or the maximum number of weeks allowed under state law) and (2) in the same tax year that the unemployment compensation is paid or the following tax year. However, under the bill, the 10% additional tax applies to distributions from a qualified retirement plan made after an individual is employed for at least 60 days following a period of unemployment.
The bill limits the amount that may be distributed to an unemployed individual from a qualified retirement plan free from the 10% additional tax to the lesser of (1) $50,000 in distributions from all of an individual’s qualified plans over a one-year period, or (2) the greater of $10,000 or half the fair market value of an individual’s qualified retirement plans and the nonforfeitable portion of an individual's defined contribution plans.
Written by the nonpartisan Congressional Research Service. All summary versions on Congress.gov
About this bill and sources
Official title: Expanding Penalty Free Withdrawal Act
Latest action (Jan 9, 2025): Referred to the House Committee on Ways and Means.
Policy area: Taxation · Origin: House · Introduced: Jan 9, 2025
Official page on Congress.gov · Bill text (GovInfo) · Status record (XML)
No recorded floor vote found.