Congress Proposes Tax-Free Retirement Withdrawals to Help Families Pay for New Homes
To amend the Internal Revenue Code of 1986 to exclude from gross income certain retirement plan distributions used for a down payment or closing costs for a principal residence, and for other purposes.
Renters who have retirement savings could use this new tax break to finally afford a down payment and transition to homeownership. However, the bill could also push up home prices by increasing the number of buyers in the market, which could make renting even harder for those who don't have retirement savings to tap. The net effect for renters as a whole is uncertain — it helps some while potentially hurting others.
Referred to the House Committee on Ways and Means.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
No votes have been recorded for this legislation yet.
Rep. John McGuire (R-Va.) introduced the Home Savings Act, which would amend the tax code to allow penalty-free withdrawals from 401(k) accounts for down payments or closing costs. The bill also allows gifting these funds to relatives tax-free for the same purpose.
Introduced by Rep. John McGuire, the Home Savings Act would eliminate the 10% early withdrawal penalty for 401(k) funds used for primary residence costs. The bill faces an uncertain future in Congress as it currently lacks co-sponsors and broad administration backing.
Document Type
Congressional Bill
Official Title
To amend the Internal Revenue Code of 1986 to exclude from gross income certain retirement plan distributions used for a down payment or closing costs for a principal residence, and for other purposes.
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