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SEC. 361. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT ADDITIONAL TAX TO PAY FINANCIALLY DEVASTATING MEDICAL EXPENSES.

                                                                                                                                                                                                                                                                                                                        

 Title[ Title III\Subtitle G                                                          Contents

                                                                                                                                                                                                                                                                                                                       

             Subtitle G--IRA Distributions to the Unemployed

    (a) In General.--Section 72(t)(3)(A) is amended by striking ``(B),''.

    (b) Distributions for Payment of Health Insurance Premiums of

Certain Unemployed Individuals.--Paragraph (2) of section 72(t) is

amended by adding at the end the following new subparagraph:

                    ``(D) Distributions to unemployed individuals for

                health insurance premiums.--

                          ``(i) In general.--Distributions from an

                      individual retirement plan to an individual after

                      separation from employment--

                                    ``(I) if such individual has

                                received unemployment compensation for

                                12 consecutive weeks under any Federal

                                or State unemployment compensation law

                                by reason of such separation,

                                    ``(II) if such distributions are

                                made during any taxable year during

                                which such unemployment compensation is

                                paid or the succeeding taxable year, and

                                    ``(III) to the extent such

                                distributions do not exceed the amount

                                paid during the taxable year for

                                insurance described in section

                                213(d)(1)(D) with respect to the

                                individual and the individual's spouse

                                and dependents (as defined in section

                                152).

                          ``(ii) Distributions after reemployment.--

                      Clause (i) shall not apply to any distribution

                      made after the individual has been employed for at

                      least 60 days after the separation from employment

                      to which clause (i) applies.

                          ``(iii) Self-employed individuals.--To the

                      extent provided in regulations, a self-employed

                      individual shall be treated as meeting the

                      requirements of clause (i)(I) if, under Federal or

                      State law, the individual would have received

                      unemployment compensation but for the fact the

                      individual was self-employed.''.

    (c) Conforming Amendment.--Subparagraph (B) of section 72(t)(2) is

amended by striking ``or (C)'' and inserting ``, (C), or (D)''.

    (d) Effective <<NOTE: 26 USC 72 note.>>  Date.--The amendments made

by this section shall apply to distributions after December 31, 1996.

 

                                                                                                                                                                                                                                                                                                                                                                        

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