Amends the Internal Revenue Code to allow: (1) a rollover contribution to an individual retirement account from a State or local government deferred compensation plan (section 457 plan); and (2) such an entity to maintain a 401k plan.
[Congressional Bills 106th Congress]
[From the U.S. Government Printing Office]
[H.R. 554 Introduced in House (IH)]
106th CONGRESS
1st Session
H. R. 554
To amend the Internal Revenue Code of 1986 to allow rollover
contributions to individual retirement plans from deferred compensation
plans maintained by States and local governments and to allow State and
local governments to maintain 401(k) plans.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 3, 1999
Mr. McNulty introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow rollover
contributions to individual retirement plans from deferred compensation
plans maintained by States and local governments and to allow State and
local governments to maintain 401(k) plans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. ROLLOVER CONTRIBUTIONS FROM DEFERRED COMPENSATION PLANS OF
STATE AND LOCAL GOVERNMENTS.
(a) Rollovers From Section 457 Plans.--
(1) In general.--Section 457(e) of the Internal Revenue
Code of 1986 (relating to other definitions and special rules)
is amended by adding at the end the following:
``(16) Rollover amounts.--
``(A) General rule.--In the case of an eligible
deferred compensation plan of an eligible employer
described in paragraph (1)(A), if--
``(i) any portion of the balance to the
credit of an employee in such plan is paid to
such employee in a rollover distribution (other
than a distribution described in subsection
(d)(1)(A)(iii) or in subparagraph (A) or (B) of
section 402(c)(4)),
``(ii) the employee transfers any portion
of the property such employee receives in such
distribution to an individual retirement plan
(as defined in section 7701(a)(37)), and
``(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property
distributed,
then such distribution (to the extent so transferred)
shall not be includible in gross income for the taxable
year in which paid.
``(B) Certain rules made applicable.--Rules similar
to the rules of section 401(a)(31), paragraphs (2),
(3), (5), (6), (7), and (9) of section 402(c), and
section 402(f) shall apply for purposes of subparagraph
(A).''.
(2) Distribution requirements.--Section 457(d)(1)(A) of
such Code (relating to distribution requirements) is amended by
inserting ``except as provided in subsection (e)(16),'' after
``(A)''.
(3) Conforming amendments.--
(A) Section 72(o)(4) of such Code is amended--
(i) by striking ``and 408(d)(3)'' and
inserting ``408(d)(3), and 457(e)(16)'',
(ii) by inserting ``or excludable'' after
``deductible'' each place it appears, and
(iii) in the heading by inserting ``or
Excludable'' after ``Deductible''.
(B) Section 219(d)(2) of such Code is amended by
striking ``or 408(d)(3)'' and inserting ``408(d)(3), or
457(e)(16)''.
(C) Section 401(a)(31)(B) of such Code is amended
by striking ``and 403(a)(4)'' and inserting ``,
403(a)(4), and 457(e)(16)''.
(D) Paragraph (4) of section 402(c) of such Code is
amended by inserting ``or in an eligible deferred
compensation plan (as defined in section 457(b)) of an
eligible employer described in section 457(e)(1)(A)''
after ``qualified trust''.
(E) Section 408(a)(1) of such Code is amended by
striking ``or 403(b)(8)'' and inserting ``, 403(b)(8),
or 457(e)(16)''.
(F) Section 408(d)(3)(A)(ii) of such Code is
amended by striking ``or'' after ``501(a)'' and
inserting a comma, and by inserting ``, or from an
eligible deferred compensation plan described in
section 457(b)'' after ``contribution)''.
(G) The first sentence of subsection (e) of section
408A of such Code is amended--
(i) by inserting ``, from an eligible
deferred compensation plan (as defined in
section 457(b)),'' after ``account'', and
(ii) by inserting before the period the
following: ``or in the case of such eligible
deferred compensation plan section
457(e)(16)''.
(H) Subparagraphs (A) and (B) of section 415(b)(2)
of such Code are each amended by striking ``and
408(d)(3)'' and inserting ``408(d)(3), and
457(e)(16)''.
(I) Section 4973(b)(1)(A) of such Code is amended
by striking ``or 408(d)(3)'' and inserting ``408(d)(3),
or 457(e)(16)''.
(b) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 1998.
SEC. 2. STATE AND LOCAL GOVERNMENTS ELIGIBLE UNDER SECTION 401(K).
(a) In General.--Subparagraph (B) of section 401(k)(4) of the
Internal Revenue Code of 1986 (relating to eligibility of State and
local governments and tax-exempt organizations) is amended by striking
clause (ii) and redesignating clause (iii) as clause (ii).
(b) Conforming Amendment.--Clause (i) of section 401(k)(4)(B) of
such Code is amended by striking ``Except as provided in clause (ii),
any'' and inserting ``Any''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 1998.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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