HR 175 117th Congress House Taxation Employee benefits and pensions Income tax deferral Income tax exclusion Income tax rates Unemployment

Expanding Penalty Free Withdrawal Act

Introduced: January 4, 2021 Introduced by: Watson Coleman, Bonnie Democratic · New Jersey See on congress.gov

Everywhere this bill has been 2 steps

Introduced

In committee

Reported out

Passed House

Passed Senate

To President

Became law

Jan 4, 2021

Referred to the House Committee on Ways and Means.

Jan 4, 2021

Introduced in House

Plain-English summary Congressional Research Service

Expanding Penalty Free Withdrawal Act

This bill expands the exceptions in the Internal Revenue Code that permit penalty-free distributions to unemployed individuals from retirement plans.

The 10% additional tax on early distributions from retirement plans does not apply to an individual after separation from employment if (1) the individual has received federal or state unemployment compensation for 26 consecutive weeks or, if less, the maximum period available under state law; and (2) the distributions are made during the year or the succeeding year in which the compensation is paid.

The exception is limited to the lesser of (1) $50,000 from all plans of the individual over a one-year period, or (2) the greater of $10,000 or one-half of the fair market value of the individual's retirement plans and the nonforfeitable portion of the individual's defined contribution plans.

The exception does not apply to distributions that are (1) included in the existing exception for distributions to unemployed individuals for health insurance premiums, or (2) are made after the individual has been employed for at least 60 days after the separation.

What's happening now January 4, 2021

Referred to the House Committee on Ways and Means.

Committees of jurisdiction 1