Expanding Penalty Free Withdrawal Act

Summary

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.

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Timeline

1. 4 January 2021

   Introduced

   Referred to the House Committee on Ways and Means.

   Source: IntroReferral

2. 4 January 2021

   Introduced

   Introduced in House

   Source: IntroReferral

3. 4 January 2021

   Introduced

   Introduced in House

   Source: IntroReferral

Votes

No vote records are attached yet.

Versions

• Introduced in House · 4 January 2021 · Official file

Documents

3 official files

• Introduced in House (text)

  Introduced in House · EN · 4 January 2021

  ViewDownloadOpen at official source

• Introduced in House (PDF)

  Introduced in House · EN · 4 January 2021

  ViewDownloadOpen at official source

• Introduced in House

  summary · EN · 4 January 2021

  Open at official source

Sponsors

• Rep. Watson Coleman, Bonnie [D-NJ-12] · D · Sponsor
• Rep. Jayapal, Pramila [D-WA-7] · D · Sponsor
• Sheila Jackson Lee · D · Sponsor
• Del. Norton, Eleanor Holmes [D-DC-At Large] · D · Cosponsor
• Mondaire Jones · D · Cosponsor
• Rep. Pingree, Chellie [D-ME-1] · D · Cosponsor
• Sen. Welch, Peter [D-VT] · D · Cosponsor
• Bennie Thompson · D · Cosponsor
• · hswm00 · Standing

Related records

• related to → Expanding Penalty Free Withdrawal Act
• related to ← Expanding Penalty Free Withdrawal Act of 2019