H. R. 4627
IN THE HOUSE OF REPRESENTATIVES
December 13, 2007
Mr. Fossella introduced the following bill; which was referred to the Committee on Ways and Means
To provide for the penalty-free use of retirement funds for mortgage relief.
This Act may be cited as the
Homeowners’ Assistance Act of
Tax-favored withdrawals from retirement plans for mortgage relief
Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified mortgage relief distribution.
Aggregate dollar limitation
For purposes of this section, the aggregate amount of distributions received by an individual which may be treated as qualified mortgage relief distributions for any taxable year shall not exceed the excess (if any) of—
the aggregate amounts treated as qualified mortgage relief distributions received by such individual for all prior taxable years.
Treatment of plan distributions
If a distribution to an individual would (without regard to paragraph (1)) be a qualified mortgage relief distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified mortgage relief distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $25,000.
For purposes of
paragraph (2), the term
controlled group means any group treated
as a single employer under subsection (b), (c), (m), or (o) of section 414 of
Amount distributed may be repaid
Any individual who receives a qualified mortgage relief distribution may, at any time during the 5-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the Internal Revenue Code of 1986, as the case may be.
Treatment of repayments of distributions from eligible retirement plans other than IRAs
For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified mortgage relief distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified mortgage relief distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
Treatment of repayments for distributions from IRAs
For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified mortgage relief distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified mortgage relief distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
For purposes of this section—
Qualified mortgage relief distribution
Except as provided in subsection (b), the
qualified mortgage relief distribution means any
distribution from an eligible retirement plan made on or after the date of the
enactment of this Act and before January 1, 2010, if—
such distribution is made during any 90-day period beginning on the date of any increase which occurs under the terms of the loan in the interest rate applicable to acquisition indebtedness (as defined in section 163(h)(3)(B) of the Internal Revenue Code of 1986, without regard to clause (ii) thereof) with respect to the principal residence of the taxpayer, and
the adjusted gross income (as defined in section 62 of the such Code) of the taxpayer for the taxable year of such distribution does not exceed $114,000 ($166,000 in the case of a joint return under section 6013 of such Code).
Eligible retirement plan
eligible retirement plan shall have the meaning given such term
by section 402(c)(8)(B) of such Code.
principal residence has the same meaning as when used in section
121 of such Code.
Income inclusion spread over 5 year period for qualified mortgage relief distributions
In the case of any qualified mortgage relief distribution, unless the taxpayer elects not to have this subsection apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 5-taxable year period beginning with such taxable year.
For purposes of paragraph (1), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply.
Exemption of distributions from trustee to trustee transfer and withholding rules
For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified mortgage relief distributions shall not be treated as eligible rollover distributions.
Qualified mortgage relief distributions treated as meeting plan distribution requirements
For purposes of such Code, a qualified mortgage relief distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.
Provisions relating to plan amendments
If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i).
Amendments to which subsection applies
This subsection shall apply to any amendment to any plan or annuity contract which is made—
pursuant to any amendment made by this section, or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under this section, and
on or before the last day of the first plan year beginning on or after January 1, 2010, or such later date as the Secretary of the Treasury may prescribe.
This subsection shall not apply to any amendment unless—
during the period—
beginning on the date the legislative or regulatory amendment described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by such legislative or regulatory amendment, the effective date specified by the plan), and
ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),
such plan or contract amendment applies retroactively for such period.