Section 1 Short title
This Act may be cited as the “Kathryn Manginelli Act of 2021” or the “Compassionate Retirement Act of 2021”.
Kathryn Manginelli Act of 2021
A BILL
To amend the Internal Revenue Code of 1986 to establish an exception to the penalty on early distributions from qualified plans for individuals diagnosed with certain terminal illnesses.
Sec. 2 Exception to penalty on early distributions from qualified plans for individuals with a terminal illness
In general— Section 72(t)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(I) Terminal illness
“(i) In general—Distributions which are made to the employee who is a terminally ill individual on or after the date on which such employee has been certified by a physician as having a terminal illness.
“(ii) Definition—For purposes of this subparagraph, the term terminally ill individual has the same meaning given such term under section 101(g)(4)(A), except that “84 months” shall be substituted for “24 months”.
“(iii) Documentation—For purposes of this subparagraph, an employee shall not be considered to be a terminally ill individual unless such employee furnishes sufficient evidence in such form and manner as the Secretary may require.”
Effective date— The amendment made by this section shall apply to distributions after the date of the enactment of this Act.