Waiver of early withdrawal penalties for victims of fraud

(a) In general Section 72(t)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (N) Distributions from retirement plans in case of victim of fraud (i) In general Any distribution from an applicable eligible retirement plan to an individual if such distribution is made on account of the individual being a victim of fraud. (ii) Victim of fraud For purposes of this subparagraph, the term victim of fraud means an individual who— (I) submits an application for waiver to the Secretary (in such time and manner as the Secretary may prescribe) which fulfils the documentation requirement of clause (iii), and (II) is designated as a victim of fraud by the Secretary. (iii) Documentation requirement The documentation requirement under this clause is fulfilled if the taxpayer provides documentation (in such time and manner as the Secretary may prescribe) from a law enforcement agency or a court of competent jurisdiction establishing that the individual is the victim of a fraudulent act that resulted in a distribution from an applicable retirement plan. (iv) Amount distributed may be repaid Rules similar to the rules of subparagraph (H)(v) shall apply. (v) Applicable eligible retirement plan The term applicable eligible retirement plan means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan.. (b) Effective date The amendment made by this section shall apply to distributions made after the date of the enactment of this Act.