Latta introduces the Individual Recovery Assistance Act

Waives the 10% penalty on distributions from qualified retirement plans for:

-Mortgage payments on a primary residence – to include principal, interest, escrow for real estate taxes and property insurance and mortgage insurance
-Job loss - the individual must have received unemployment compensation for 12 consecutive weeks under any Federal or State unemployment law
-These two exceptions shall apply to distributions on or after the date of the enactment of the Act for a 1 year time period.

Under current law, the 10% penalty is waived for distributions from tax-qualified employer-sponsored retirement plans if the distribution is:
-Made on or after the date on which the employee attains 59 ½
-Made to the beneficiary on or after the death of the employee
-Attributable to the employee being disabled
-Part of a series of equal periodic payments made for the life of the employee or beneficiary
-Made to an employee after separation from service after attainment of age 55
-Dividends paid with respect to stock of a corporation with are described in section 404(k)
-Made on account of a levy under section 6331 on the qualified retirement plan
-Medical expenses in excess of 7.5% of adjusted gross income
-Payments to an alternate payee under a qualified domestic relations order (QDRO)
-Distributions from retirement plans to individuals called to active duty

Under current law, the 10% penalty also is waived for distributions from Individual Retirement Accounts for:
Distributions to unemployed individuals for health insurance premiums if they are unemployed for 12 consecutive weeks
Higher education expenses
Up to $10,000 for a first-time home purchase

Increases the age from 70 ½ to 75 for individuals to withdraw monies before they are penalized for required distributions
This change includes distributions for charitable purposes

This legislation includes the following retirement plans:
401(k), 403(b), and other tax-qualified retirement plans
Annuity plans
Individual Retirement Accounts (IRAs)

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HR 2331 Final.pdf37.72 KB
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