DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT ADDITIONAL TAX TO PAY FINANCIALLY DEVASTATING MEDICAL EXPENSES.

SEC. 361. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT ADDITIONAL TAX TO PAY FINANCIALLY DEVASTATING MEDICAL EXPENSES. (a) In General.— Section 72(t)(3)(A) is amended by striking “(B),”. (b) Distributions for Payment of Health Insurance Premiums of Certain Unemployed Individuals.— Paragraph (2) of section 72(t) is amended by adding at the end the following new subparagraph: “(D) Distributions to unemployed individuals for health insurance premiums.— “(i) In general.— Distributions from an individual retirement plan to an individual after separation from employment— “(I) if such individual has received unemployment compensation for 12 consecutive weeks under any Federal or State unemployment compensation law by reason of such separation, 110 STAT. 2072 “(II) if such distributions are made during any taxable year during which such unemployment compensation is paid or the succeeding taxable year, and “(III) to the extent such distributions do not exceed the amount paid during the taxable year for insurance described in section 213(d)(1)(D) with respect to the individual and the individual’s spouse and dependents (as defined in section 152). “(ii) Distributions after reemployment.— Clause (i) shall not apply to any distribution made after the individual has been employed for at least 60 days after the separation from employment to which clause (i) applies, “(iii) Self-employed individuals.—To the extent provided in regulations, a self-employed individual shall be treated as meeting the requirements of clause (i)(I) if, under Federal or State law, the individual would have received unemployment compensation but for the fact the individual was self-employed.”. (c) Conforming amendment.— Subparagraph (B) of section 72(t)(2) is amended by striking “or (C)” and inserting “, (C), or (D)”. (d) Effective Date.— The amendments made by this section shall apply to distributions after December 31, 1996.