H.R. 7185

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7185 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 7185

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

January 21, 2026

Mr. McGuire 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 ``Home Savings 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 of such employee to the extent that such 
distribution is used for a down payment or closing costs 
associated with acquiring a principal residence of--
``(A) the employee, or
``(B) an eligible relative of the employee.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible relative.--The term `eligible 
relative' means, with respect to any employee--
``(i) the spouse of the employee, or
``(ii) any child, grandchild, or ancestor 
of--
``(I) the employee, or
``(II) the spouse of the employee.
``(B) Defined contribution plan.--The term `defined 
contribution plan' has the meaning given the term in 
section 414(i).
``(C) Principal residence.--The term `principal 
residence' has the same meaning as when used in section 
121.
``(3) 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 nonforfeitable 
right in lieu of all amounts in all individual retirement plans 
of the individual.
``(4) Gift tax treatment.--So much of any transfer of a 
distribution described in paragraph (1) by the employee to an 
eligible relative as is used by such eligible relative for a 
down payment or closing costs associated with acquiring a 
principal residence of such eligible relative shall not be 
treated as a gift for purposes of section 2503(a).
``(5) Termination date.--Paragraph (1) shall not apply to 
distributions made in taxable years beginning after December 
31, 2030.''.
(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.--The rules of section 402(m) shall apply 
to distributions under an annuity plan described in subsection 
(a) or an annuity contract described in subsection (b).
``(2) Termination date.--Paragraph (1) shall not apply to 
distributions made in taxable years beginning after December 
31, 2030.''.
(3) Individual retirement plans.--Section 408(d) of such 
Code is amended by adding at the end the following new 
paragraph:
``(10) Distributions for a down payment or closing costs 
for a principal residence.--
``(A) In general.--The gross income of an 
individual for any taxable year shall not include any 
distribution from an individual retirement plan of such 
individual to the extent that such distribution is used 
for a down payment or closing costs associated with 
acquiring a principal residence of--
``(i) the individual, or
``(ii) an eligible relative of the 
individual.
``(B) Definitions.--For purposes of this 
paragraph--
``(i) Eligible relative.--The term 
`eligible relative' means, with respect to any 
individual--
``(I) the spouse of the individual, 
or
``(II) any child, grandchild, or 
ancestor of--
``(aa) the individual, or
``(bb) the spouse of the 
individual.
``(ii) Individual retirement plan.--The 
term `individual retirement plan' has the 
meaning given the term in section 7701.
``(iii) Principal residence.--The term 
`principal residence' has the same meaning as 
when used in section 121.
``(C) Application of section 72.--Notwithstanding 
section 72, in determining the extent to which a 
distribution is used for a down payment or closing 
costs pursuant to subparagraph (A), the entire amount 
of the distribution shall be treated as includible in 
gross income without regard to such subparagraph to the 
extent that such amount does not exceed the aggregate 
amount which would have been so includible if all 
amounts in all individual retirement plans of the 
individual were distributed during such taxable year 
and all such plans were treated as 1 contract for 
purposes of determining under section 72 the aggregate 
amount which would have been so includible. Proper 
adjustments shall be made in applying section 72 to 
other distributions in such taxable year and subsequent 
taxable years.
``(D) Gift tax treatment.--So much of any transfer 
of a distribution described in subparagraph (A) by the 
individual to an eligible relative as is used by such 
eligible relative for a down payment or closing costs 
associated with acquiring a principal residence of such 
eligible relative shall not be treated as a gift for 
purposes of section 2503(a).
``(E) Termination date.--Subparagraph (A) shall not 
apply to distributions made in taxable years beginning 
after December 31, 2030.''.
(4) 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.--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) Termination date.--Subparagraph (A) shall not 
apply to distributions made in taxable years beginning 
after December 31, 2030.''.
(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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