[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5873 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 5873
To provide special rules for retirement accounts and personal casualty
losses with respect to certain major disasters occurring in 2023.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 2, 2023
Ms. Tokuda (for herself and Mr. Case) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To provide special rules for retirement accounts and personal casualty
losses with respect to certain major disasters occurring in 2023.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Natural Disaster Tax Relief Act of
2023''.
SEC. 2. DEFINITIONS.
For purposes of this Act--
(1) Qualified disaster area.--The term ``qualified disaster
area'' means any area with respect to which a major disaster
was declared, during calendar year 2023, by the President under
section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act if the incident period of the disaster
with respect to which such declaration is made begins during
calendar year 2023.
(2) Qualified disaster.--The term ``qualified disaster''
means, with respect to any qualified disaster area, the
disaster by reason of which a major disaster was declared with
respect to such area.
(3) Incident period.--The term ``incident period'' means,
with respect to any qualified disaster, the period specified by
the Federal Emergency Management Agency as the period during
which such disaster occurred (except that for purposes of this
Act such period shall not be treated as ending after January
31, 2024).
SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.
(a) Tax-Favored Withdrawals From Retirement Plans.--
(1) In general.--Section 72(t) of the Internal Revenue Code
of 1986 shall not apply to any qualified disaster distribution.
(2) Aggregate dollar limitation.--
(A) In general.--For purposes of this subsection,
the aggregate amount of distributions received by an
individual which may be treated as qualified disaster
distributions for any taxable year shall not exceed the
excess (if any) of--
(i) $100,000, over
(ii) the aggregate amounts treated as
qualified disaster distributions received by
such individual for all prior taxable years.
(B) Treatment of plan distributions.--If a
distribution to an individual would (without regard to
subparagraph (A)) be a qualified disaster 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 disaster 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
$100,000.
(C) Controlled group.--For purposes of subparagraph
(B), the term ``controlled group'' means any group
treated as a single employer under subsection (b), (c),
(m), or (o) of section 414 of the Internal Revenue Code
of 1986.
(D) Special rule for individuals affected by more
than one disaster.--The limitation of subparagraph (A)
shall be applied separately with respect to
distributions made with respect to each qualified
disaster.
(3) Amount distributed may be repaid.--
(A) In general.--Any individual who receives a
qualified disaster distribution may, at any time during
the 3-year period beginning on the day after the date
on which such distribution was received, make 1 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.
(B) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For
purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to subparagraph (A) with
respect to a qualified disaster 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 disaster 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.
(C) Treatment of repayments of distributions from
iras.--For purposes of the Internal Revenue Code of
1986, if a contribution is made pursuant to
subparagraph (A) with respect to a qualified disaster
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 disaster 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.
(4) Definitions.--For purposes of this subsection--
(A) Qualified disaster distribution.--Except as
provided in paragraph (2), the term ``qualified
disaster distribution'' means any distribution from an
eligible retirement plan made--
(i) on or after the first day of the
incident period of a qualified disaster and
before July 1, 2024, and
(ii) to an individual whose principal place
of abode at any time during the incident period
of such qualified disaster is located in the
qualified disaster area with respect to such
qualified disaster and who has sustained an
economic loss by reason of such qualified
disaster.
(B) Eligible retirement plan.--The term ``eligible
retirement plan'' shall have the meaning given such
term by section 402(c)(8)(B) of the Internal Revenue
Code of 1986.
(5) Income inclusion spread over 3-year period.--
(A) In general.--In the case of any qualified
disaster distribution, unless the taxpayer elects not
to have this paragraph 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 3-
taxable-year period beginning with such taxable year.
(B) Special rule.--For purposes of subparagraph
(A), rules similar to the rules of subparagraph (E) of
section 408A(d)(3) of the Internal Revenue Code of 1986
shall apply.
(6) Special rules.--
(A) 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 disaster
distributions shall not be treated as eligible rollover
distributions.
(B) Qualified disaster distributions treated as
meeting plan distribution requirements.--For purposes
of the Internal Revenue Code of 1986, a qualified
disaster distribution shall be treated as meeting the
requirements of sections 401(k)(2)(B)(i),
403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of such
Code and section 8433(h)(1) of title 5, United States
Code, and, in the case of a money purchase pension
plan, a qualified disaster distribution which is an in-
service withdrawal shall be treated as meeting the
distribution rules of section 401(a) of such Code.
(b) Recontributions of Withdrawals for Home Purchases.--
(1) Recontributions.--
(A) In general.--Any individual who received a
qualified distribution may, during the applicable
period, make 1 or more contributions in an aggregate
amount not to exceed the amount of such qualified
distribution to an eligible retirement plan (as defined
in section 402(c)(8)(B) of the Internal Revenue Code of
1986) 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), or 408(d)(3), of such Code, as the case may
be.
(B) Treatment of repayments.--Rules similar to the
rules of subparagraphs (B) and (C) of subsection (a)(3)
shall apply for purposes of this subsection.
(2) Qualified distribution.--For purposes of this
subsection, the term ``qualified distribution'' means any
distribution--
(A) described in section 401(k)(2)(B)(i)(IV),
403(b)(7)(A)(i)(V), 403(b)(11)(B), or 72(t)(2)(F), of
the Internal Revenue Code of 1986,
(B) which was to be used to purchase or construct a
principal residence in a qualified disaster area, but
which was not so used on account of the qualified
disaster with respect to such area, and
(C) which was received during the period beginning
on the date which is 180 days before the first day of
the incident period of such qualified disaster and
ending on the date which is 30 days after the last day
of such incident period.
(3) Applicable period.--For purposes of this subsection,
the term ``applicable period'' means, in the case of a
principal residence in a qualified disaster area with respect
to any qualified disaster, the period beginning on the first
day of the incident period of such qualified disaster and
ending on June 30, 2024.
(c) Loans From Qualified Plans.--
(1) Increase in limit on loans not treated as
distributions.--In the case of any loan from a qualified
employer plan (as defined under section 72(p)(4) of the
Internal Revenue Code of 1986) to a qualified individual made
during the period beginning on the date of the enactment of
this Act and ending on June 30, 2024--
(A) clause (i) of section 72(p)(2)(A) of such Code
shall be applied by substituting `` $100,000'' for ``
$50,000'', and
(B) clause (ii) of such section shall be applied by
substituting ``the present value of the nonforfeitable
accrued benefit of the employee under the plan'' for
``one-half of the present value of the nonforfeitable
accrued benefit of the employee under the plan''.
(2) Delay of repayment.--In the case of a qualified
individual (with respect to any qualified disaster) with an
outstanding loan (on or after the first day of the incident
period of such qualified disaster) from a qualified employer
plan (as defined in section 72(p)(4) of the Internal Revenue
Code of 1986)--
(A) if the due date pursuant to subparagraph (B) or
(C) of section 72(p)(2) of such Code for any repayment
with respect to such loan occurs during the period
beginning on the first day of the incident period of
such qualified disaster and ending on the date which is
180 days after the last day of such incident period,
such due date shall be delayed for 1 year (or, if
later, until June 30, 2024),
(B) any subsequent repayments with respect to any
such loan shall be appropriately adjusted to reflect
the delay in the due date under subparagraph (A) and
any interest accruing during such delay, and
(C) in determining the 5-year period and the term
of a loan under subparagraph (B) or (C) of section
72(p)(2) of such Code, the period described in
subparagraph (A) of this paragraph shall be
disregarded.
(3) Qualified individual.--For purposes of this subsection,
the term ``qualified individual'' means any individual--
(A) whose principal place of abode at any time
during the incident period of any qualified disaster is
located in the qualified disaster area with respect to
such qualified disaster, and
(B) who has sustained an economic loss by reason of
such qualified disaster.
(d) Provisions Relating to Plan Amendments.--
(1) In general.--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).
(2) Amendments to which subsection applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is
made--
(i) pursuant to any provision of this
section, or pursuant to any regulation issued
by the Secretary or the Secretary of Labor
under any provision of this section, and
(ii) on or before the last day of the first
plan year beginning on or after January 1,
2024, or such later date as the Secretary may
prescribe.
In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of 1986),
clause (ii) shall be applied by substituting the date
which is 2 years after the date otherwise applied under
clause (ii).
(B) Conditions.--This subsection shall not apply to
any amendment unless--
(i) during the period--
(I) beginning on the date that this
section or the regulation described in
subparagraph (A)(i) takes effect (or in
the case of a plan or contract
amendment not required by this section
or such regulation, the effective date
specified by the plan), and
(II) ending on the date described
in subparagraph (A)(ii) (or, if
earlier, the date the plan or contract
amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect, and
(ii) such plan or contract amendment
applies retroactively for such period.
SEC. 4. SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY
LOSSES.
(a) In General.--If an individual has a net disaster loss for any
taxable year--
(1) the amount determined under section 165(h)(2)(A)(ii) of
the Internal Revenue Code of 1986 shall be equal to the sum
of--
(A) such net disaster loss, and
(B) so much of the excess referred to in the matter
preceding clause (i) of section 165(h)(2)(A) of such
Code (reduced by the amount in clause (i) of this
subparagraph) as exceeds 10 percent of the adjusted
gross income of the individual,
(2) in the case of qualified disaster-related personal
casualty losses, section 165(h)(1) of such Code shall be
applied to by substituting ``$500'' for ``$500 ($100 for
taxable years beginning after December 31, 2009)'',
(3) the standard deduction determined under section 63(c)
of such Code shall be increased by the net disaster loss, and
(4) section 56(b)(1)(E) of such Code shall not apply to so
much of the standard deduction as is attributable to the
increase under subparagraph (C) of this paragraph.
(b) Net Disaster Loss.--For purposes of this subsection, the term
``net disaster loss'' means the excess of qualified disaster-related
personal casualty losses over personal casualty gains (as defined in
section 165(h)(3)(A) of the Internal Revenue Code of 1986).
(c) Qualified Disaster-Related Personal Casualty Losses.--For
purposes of this subsection, the term ``qualified disaster-related
personal casualty losses'' means losses described in section 165(c)(3)
of the Internal Revenue Code of 1986 which arise in a qualified
disaster area on or after the first day of the incident period of the
qualified disaster to which such area relates, and which are
attributable to such qualified disaster.
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