Exclusion of Rollover Distributions from Unemployment Offsets

§ 3304. Approval of State laws(a) RequirementsThe Secretary of Labor shall approve any State law submitted to him, within 30 days of such submission, which he finds provides that—(1) all compensation is to be paid through public employment offices or such other agencies as the Secretary of Labor may approve; (2) no compensation shall be payable with respect to any day of unemployment occurring within 2 years after the first day of the first period with respect to which contributions are required; (3) all money received in the unemployment fund shall (except for refunds of sums erroneously paid into such fund and except for refunds paid in accordance with the provisions of section 3305(b)) immediately upon such receipt be paid over to the Secretary of the Treasury to the credit of the Unemployment Trust Fund established by section 904 of the Social Security Act (42 U.S.C. 1104); (4) all money withdrawn from the unemployment fund of the State shall be used solely in the payment of unemployment compensation, exclusive of expenses of administration, and for refunds of sums erroneously paid into such fund and refunds paid in accordance with the provisions of section 3305(b); except that—(A) an amount equal to the amount of employee payments into the unemployment fund of a State may be used in the payment of cash benefits to individuals with respect to their disability, exclusive of expenses of administration; (B) the amounts specified by section 903 (c)(2) or 903(d)(4) of the Social Security Act may, subject to the conditions prescribed in such section, be used for expenses incurred by the State for administration of its unemployment compensation law and public employment offices; (C) nothing in this paragraph shall be construed to prohibit deducting an amount from unemployment compensation otherwise payable to an individual and using the amount so deducted to pay for health insurance, or the withholding of Federal, State, or local individual income tax, if the individual elected to have such deduction made and such deduction was made under a program approved by the Secretary of Labor; (D) amounts shall be deducted from unemployment benefits and used to repay overpayments as provided in section 303(g) of the Social Security Act; (E) amounts may be withdrawn for the payment of short-time compensation under a short-time compensation program (as defined under section 3306(v)); (F) amounts may be withdrawn for the payment of allowances under a self-employment assistance program (as defined in section 3306(t)); and (G) with respect to amounts of covered unemployment compensation debt (as defined in section 6402(f)(4)) collected under section 6402(f)—(i) amounts may be deducted to pay any fees authorized under such section; and