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S. 1889Senate117th Congress (2021-2023)In Committee

Kathryn Manginelli Act of 2021

Sponsored by Richard BurrSen. Richard Burr (R-NC)
Introduced May 27, 2021

AI-Generated Summary

Updated February 8, 2026 at 3:42 AM UTC

The Kathryn Manginelli Act of 2021 changes the tax code to let people with a terminal illness take money early from their retirement or other qualified plans without paying the usual 10% early‑distribution penalty. It applies to anyone whose plan is subject to the Internal Revenue Code and who is certified by a doctor as terminally ill. The rule updates the definition of a terminal illness to cover a longer time frame, giving more flexibility for those facing serious health challenges.

Key Provisions

  • Adds a new exception to the early‑distribution penalty in Section 72(t)(2) for employees diagnosed as terminally ill, provided a physician’s certification is supplied.
  • Defines “terminally ill individual” using the existing definition in Section 101(g)(4)(A) but extends the qualifying period from 24 months to 84 months.
  • Requires the employee to provide sufficient documentation as the Treasury Secretary may require to prove the terminal‑illness status.
  • Makes the amendment effective for any distributions made after the law’s enactment date.

Legislative Activity

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1 earlier action
SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

May 27, 2021

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SenateIntro Referral

Introduced in Senate

May 27, 2021

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

May 27, 2021

Bill Text

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Introduced in SenateIssued May 27, 2021

II

117th CONGRESS

1st Session

S. 1889

IN THE SENATE OF THE UNITED STATES

May 27, 2021

Mr. Burr (for himself and Mr. Bennet) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to establish an exception to the penalty on early distributions from qualified plans for individuals diagnosed with certain terminal illnesses.

1.

Short title

This Act may be cited as the Kathryn Manginelli Act of 2021 or the Compassionate Retirement Act of 2021.

2.

Exception to penalty on early distributions from qualified plans for individuals with a terminal illness

(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:

(I)

Terminal illness

(i)

In general

Distributions which are made to the employee who is a terminally ill individual on or after the date on which such employee has been certified by a physician as having a terminal illness.

(ii)

Definition

For purposes of this subparagraph, the term terminally ill individual has the same meaning given such term under section 101(g)(4)(A), except that 84 months shall be substituted for 24 months.

(iii)

Documentation

For purposes of this subparagraph, an employee shall not be considered to be a terminally ill individual unless such employee furnishes sufficient evidence in such form and manner as the Secretary may require.

.

(b)

Effective date

The amendment made by this section shall apply to distributions after the date of the enactment of this Act.