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To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans.

12/15/2023, 3:56 PM

Summary of Bill HR 2637

Bill 118 HR 2637, also known as the "Early Withdrawal Penalty Waiver Act," aims to amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans. The bill specifically targets individuals who are facing financial hardship and need to access their retirement funds before reaching the age of 59 and a half.

Under current law, individuals who withdraw funds from their retirement accounts before reaching the age of 59 and a half are subject to a 10% early withdrawal penalty in addition to regular income taxes. This penalty is meant to discourage individuals from tapping into their retirement savings prematurely.

However, the Early Withdrawal Penalty Waiver Act seeks to provide relief to individuals who are experiencing financial difficulties by waiving the 10% penalty on certain distributions from qualified retirement plans. This waiver would apply to individuals who can demonstrate a qualifying financial hardship, such as medical expenses, job loss, or other unforeseen circumstances. By waiving the early withdrawal penalty, the bill aims to provide individuals with greater flexibility and access to their retirement savings during times of need. Proponents of the bill argue that this change would help individuals weather financial crises without incurring additional penalties that could further deplete their retirement funds. Overall, Bill 118 HR 2637 seeks to provide relief to individuals facing financial hardships by waiving the early withdrawal penalty on certain distributions from qualified retirement plans. The bill aims to strike a balance between encouraging responsible retirement savings and providing individuals with necessary financial support during difficult times.

Congressional Summary of HR 2637

This bill allows a waiver of the 10% penalty on premature distributions from tax-exempt retirement plans where such distributions do not exceed the excess of $10,000 over aggregate plan distributions during a specified 5-year period.

Current Status of Bill HR 2637

Bill HR 2637 is currently in the status of Bill Introduced since April 17, 2023. Bill HR 2637 was introduced during Congress 118 and was introduced to the House on April 17, 2023.  Bill HR 2637's most recent activity was Referred to the House Committee on Ways and Means. as of April 17, 2023

Bipartisan Support of Bill HR 2637

Total Number of Sponsors
1
Democrat Sponsors
0
Republican Sponsors
1
Unaffiliated Sponsors
0
Total Number of Cosponsors
0
Democrat Cosponsors
0
Republican Cosponsors
0
Unaffiliated Cosponsors
0

Policy Area and Potential Impact of Bill HR 2637

Primary Policy Focus

Taxation

Alternate Title(s) of Bill HR 2637

To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans.
To amend the Internal Revenue Code of 1986 to waive the early withdrawal penalty on certain distributions from qualified retirement plans.

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