Homeownership Opportunity Act

plan unless the individual is eligible to make contributions (other than those described in subparagraph (A)) to such applicable eligible retirement plan. ``(C) Treatment of repayments of distributions from applicable eligible retirement plans other than IRAs.-- If a contribution is made under subparagraph (A) with respect to a distribution from an applicable eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received such distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the applicable eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. ``(D) Applicable eligible retirement plan.--The term `applicable eligible retirement plan' means an eligible retirement plan (as defined in subsection (c)(8)(B)) other than a defined benefit plan. ``(4) Application of section 72.--Rules similar to the rules of section 408(d)(10)(C) shall apply for purposes of this subsection, by taking into account all amounts in the defined contribution plan to which the employee has a nonforfeitable right in lieu of all amounts in all individual retirement plans of the individual. ``(5) Distributions treated as meeting plan distribution requirements.--For purposes of this title-- ``(A) a distribution to which paragraph (1) applies shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A), and ``(B) in the case of a money purchase pension plan, a which is an in-service withdrawal shall be treated as meeting the requirements of section 401(a) applicable to distributions. ``(6) Termination.--This subsection shall not apply to any distributions in taxable years beginning after December 31, 2035.''. (2) Certain annuity plans.--Section 403 of such Code is amended by adding at the end the following new subsection: ``(d) Distributions for a Down Payment or Closing Costs for a Principal Residence.-- ``(1) In general.--Rules similar to the rules of section 402(m) shall apply to distributions under an annuity contract subject to subsection (a) or under an annuity contract described in subsection (b). ``(2) Limitation.--The aggregate amount of distributions received by an individual to which paragraph (1) applies for any taxable year shall not exceed an amount equal to the excess (if any) of-- ``(A) the greater of-- ``(i) $40,000, over ``(ii) an amount equal to 40 percent of the employee's vested account balance in the contract as of the date of distribution, over ``(B) the sum of-- ``(i) the aggregate amount of distributions received by such individual to which paragraph (1) applied for all prior taxable years, plus ``(ii) the aggregate amount of distributions received by such individual to which section 402(m)(1) or 457(e)(19)(A) apply for the taxable year, plus any such amounts for all prior taxable years. ``(3) Termination.--This subsection shall not apply to any distributions in taxable years beginning after December 31, 2035.''. (3) 457(b) plans.--Section 457(e) of such Code is amended by adding at the end the following new paragraph: ``(19) Distributions for a down payment or closing costs for a principal residence.-- ``(A) In general.--Rules similar to the rules of section 402(m) shall apply to distributions under an eligible deferred compensation plan established and maintained by an employer described in paragraph (1)(A). ``(B) Limitation.--The aggregate amount of distributions received by an individual to which subparagraph (A) applies for any taxable year shall not exceed an amount equal to the excess (if any) of-- ``(i) the greater of $40,000 or an amount equal to 40 percent of the employee's vested account balance in the plan as of the date of distribution, over ``(ii) the sum of-- ``(I) the aggregate amount of distributions received by such individual to which subparagraph (A) applied for all prior taxable years, plus ``(II) the aggregate amount of distributions received by such individual to which section 402(m)(1) or 403(d)(1) apply for the taxable year, plus any such amounts for all prior taxable years. ``(C) Termination.--This paragraph shall not apply to any distributions in taxable years beginning after December 31, 2035.''. (b) Effective Date.--The amendments made by this section shall apply to distributions made in taxable years beginning after December 31, 2025. <all>