S.Amdt. 4303

SA 4303, submitted by Mr. Hawley, aims to change the Internal Revenue Code of 1986 to allow individuals to use funds from retirement plans for first-time home purchases without those distributions being included in their gross income.

The amendment adds provisions that allow these tax-free distributions to be used for qualified acquisition costs (which include the costs of acquiring, constructing, or reconstructing a residence, as well as reasonable settlement, financing, or closing costs).

The funds must be used before the close of the 120th day after the distribution is received. This benefit applies if the home is for a first-time homebuyer who is:

• The individual receiving the distribution.
• The spouse of that individual.
• Any child, grandchild, or ancestor of the individual or their spouse.

The amendment modifies several sections of the tax code to include:

• General retirement plans.
• Qualified cash or deferred arrangements.
• Annuities and governmental annuities.
• Individual retirement accounts.
• Deferred compensation plans for tax-exempt organizations and state and local governments.