HouseH.R. 10944119th Congress
Homeownership Opportunity Act
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10944 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 10944
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 29, 2026
Mr. Steube (for himself, Mr. Panetta, and Mr. Carey) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Homeownership Opportunity Act''.
SEC. 2. EXCLUSION FROM GROSS INCOME OF RETIREMENT PLAN DISTRIBUTIONS
USED FOR A DOWN PAYMENT OR CLOSING COSTS FOR A PRINCIPAL
RESIDENCE.
(a) In General.--
(1) Defined contribution plans.--Section 402 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(m) Distributions for a Down Payment or Closing Costs for a
Principal Residence.--
``(1) In general.--The gross income of an employee for any
taxable year shall not include any distribution from a defined
contribution plan (as defined in section 414(i)) of such
employee to the extent that such distribution is used for a
down payment or closing costs associated with acquiring a
principal residence (within the meaning of section 121) of the
employee.
``(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, or
``(ii) an amount equal to 40 percent of the
employee's vested account balance in the plan
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 403(d)(1) or 457(e)(19)(A) apply
for the taxable year, plus any such amounts for
all prior taxable years.
``(3) Amount distributed may be repaid.--
``(A) In general.--Any individual who receives a
distribution to which paragraph (1) applies may, at any
time during the 3-year period beginning on the day
after the date on which such distribution was received,
make one or more contributions in an aggregate amount
not to exceed the amount of such distribution to an
applicable eligible retirement plan of which such
individual is a beneficiary and to which a rollover
contribution of such distribution could be made under
section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or
457(e)(16), as the case may be, except that such a
contribution may only be made to an individual
retirement plan if the individual has separated from
employment with the employer maintaining the plan from
which the distribution was made.
``(B) Limitation on contributions to applicable
eligible retirement plans other than IRAs.--The
aggregate amount of contributions made by an individual
under subparagraph (A) to any applicable eligible
retirement plan which is not an individual retirement
plan shall not exceed the aggregate amount of
distributions which are made from such plan to such
individual to which paragraph (1) applied. Subparagraph
(A) shall not apply to contributions to any applicable
eligible retirement plan which is not an individual
retirement 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.
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