Homeownership Opportunity Act Introduced

Representatives Greg Steube (R-FL) and Jimmy Panetta (D-CA) have introduced H.R. 10944, the Homeownership Opportunity Act, legislation to allow penalty-free distributions from workplace retirement savings arrangements for down payment and closing costs when purchasing a primary residence.

According to a press release, the bill generally allows up to an aggregate limit equal to the greater of $40,000 or 40 percent of an individual's vested retirement account balance, reduced by prior qualifying distributions. Qualifying distributions would be excluded from gross income. The legislation applies to eligible workplace retirement plans, including 401(k), 403(b), and certain 457 plans. Individuals may recontribute withdrawn funds within three years, including an IRA. The legislation would apply to distributions made in taxable years beginning after December 31, 2025, and sunset after December 31, 2035. The bill has been referred to the House Committee on Ways and Means for further consideration.