No Penalties for Victims of Fraud Act

HR 2163, the "No Penalties for Victims of Fraud Act," allows individuals who were defrauded out of retirement funds to withdraw money from their retirement plans without incurring the usual early withdrawal penalty. It directly affects people who submit verified documentation (from law enforcement or a court) proving they were victims of fraud resulting in a retirement plan distribution. The bill adds a new IRS waiver provision requiring the Secretary of the Treasury to designate eligible victims and document the fraud, applying only to certain retirement plans (excluding defined benefit plans). The Treasury must issue guidance within 180 days and run a public awareness campaign to explain this relief. The law takes effect after its enactment date.