This bill extends to all domestic corporations (including S corporations) the deferral of tax on certain sales of employer stock to employee stock ownership plans (ESOPs) and reduces certain retirement-related excise taxes.
Specifically, the bill reduces excise tax rates of certain excess accumulations in tax-exempt retirement plans and on failures to take required minimum distributions from such plans. It also allows employers who establish a tax-exempt 403(b) pension plan to participate in a multiple employer plan.
The bill extends the tax credit for small employer pension plan startup costs to employers that join an existing plan.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8606 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 8606
To defer the tax of certain sales of employer stock and reduce certain
retirement-related excise taxes, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 16, 2020
Mr. Kind (for himself, Mr. Kelly of Pennsylvania, and Mr. Smith of
Missouri) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Education and Labor, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To defer the tax of certain sales of employer stock and reduce certain
retirement-related excise taxes, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. DEFERRAL OF TAX FOR CERTAIN SALES OF EMPLOYER STOCK TO
EMPLOYEE STOCK OWNERSHIP PLAN SPONSORED BY S CORPORATION.
(a) In General.--Section 1042(c)(1)(A) of the Internal Revenue Code
of 1986 is amended by striking ``domestic C corporation'' and inserting
``domestic corporation''.
(b) Effective Date.--The amendment made by this section shall apply
to sales after the date of the enactment of this Act.
SEC. 2. REDUCTION IN EXCISE TAX ON CERTAIN ACCUMULATIONS IN QUALIFIED
RETIREMENT PLANS.
(a) In General.--Subsection (a) of section 4974 of the Internal
Revenue Code of 1986 is amended by striking ``50 percent'' and
inserting ``25 percent''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2019.
SEC. 3. REDUCTION IN EXCISE TAX ON FAILURES TO TAKE REQUIRED MINIMUM
DISTRIBUTIONS.
(a) In General.--Section 4974 of the Internal Revenue Code of 1986,
as amended by section 2 of this Act, is further amended by adding at
the end the following new subsection:
``(e) Reduction of Tax in Certain Cases.--
``(1) Reduction.--In the case of a taxpayer who--
``(A) corrects, during the correction window, a
shortfall of distributions from an individual
retirement plan which resulted in imposition of a tax
under subsection (a), and
``(B) submits a return, during the correction
window, reflecting such tax (as modified by this
subsection),
the first sentence of subsection (a) shall be applied by
substituting `10 percent' for `25 percent'.
``(2) Correction window.--For purposes of this subsection,
the term `correction window' means the period of time beginning
on the date on which the tax under subsection (a) is imposed
with respect to a shortfall of distributions from an individual
retirement plan, and ending on the earlier of--
``(A) the date on which the Secretary initiates an
audit, or otherwise demands payment, with respect to
the shortfall of distributions, or
``(B) the last day of the second taxable year that
begins after the end of the taxable year in which the
tax under subsection (a) is imposed.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SECTION 4. MULTIPLE EMPLOYER 403(B) PLANS.
(a) In General.--Section 403(b) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(15) Multiple employer plans.--
``(A) In general.--Except in the case of a church
plan, this subsection shall not be treated as failing
to apply to an annuity contract solely by reason of
such contract being purchased under a plan maintained
by more than 1 employer.
``(B) Treatment of employers failing to meet
requirements of plan.--
``(i) In general.--In the case of a plan
maintained by more than 1 employer, this
subsection shall not be treated as failing to
apply to an annuity contract held under such
plan merely because of one or more employers
failing to meet the requirements of this
subsection if such plan satisfies rules similar
to the rules of section 413(e)(2) with respect
to any such employer failure.
``(ii) Additional requirements in case of
non-governmental plans.--A plan shall not be
treated as meeting the requirements of this
subparagraph unless the plan meets the
requirements of subparagraph (A) or (B) of
section 413(e)(1), except in the case of a
multiple employer plan maintained solely by any
of the following: A State, a political
subdivision of a State, or an agency or
instrumentality of any one or more of the
foregoing.''.
(b) Annual Registration for 403(b) Multiple Employer Plan.--Section
6057 of such Code is amended by redesignating subsection (g) as
subsection (h) and by inserting after subsection (f) the following new
subsection:
``(g) 403(b) Multiple Employer Plans Treated as One Plan.--In the
case of annuity contracts to which this section applies and to which
section 403(b) applies by reason of the plan under which such contracts
are purchased meeting the requirements of paragraph (15) thereof, such
plan shall be treated as a single plan for purposes of this section.''.
(c) Annual Information Returns for 403(b) Multiple Employer Plan.--
Section 6058 of the Internal Revenue Code of 1986 is amended by
redesignating subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
``(f) 403(b) Multiple Employer Plans Treated as One Plan.--In the
case of annuity contracts to which this section applies and to which
section 403(b) applies by reason of the plan under which such contracts
are purchased meeting the requirements of paragraph (15) thereof, such
plan shall be treated as a single plan for purposes of this section.''.
(d) Amendments to Employee Retirement and Income Security Act of
1974.--
(1) Treated as pooled employer plan.--
(A) In general.--Section 3(43)(A) of the Employee
Retirement and Income Security Act of 1974 is amended--
(i) in clause (ii), by striking ``section
501(a) of such Code or'' and inserting ``501(a)
of such Code, a plan that consists of contracts
described in section 403(b) of such Code, or'';
and
(ii) in the flush text at the end, by
striking ``the plan.'' and inserting ``the
plan, but such term shall include any program
(other than a governmental plan) maintained for
the benefit of the employees of more than 1
employer that consists of contracts described
in section 403(b) of such Code and that meets
the requirements of subparagraph (A) or (B) of
section 413(e)(1) of such Code.''.
(B) Conforming amendments.--Sections
3(43)(B)(v)(II) and 3(44)(A)(i)(I) of such Act are each
amended by striking ``section 401(a) of such Code or''
and inserting ``401(a) of such Code, a plan that
consists of contracts described in section 403(b) of
such Code, or''.
(2) Fiduciaries.--Section 3(43)(B)(ii) of such Act is
amended--
(A) by striking ``trustees meeting the requirements
of section 408(a)(2) of the Internal Revenue Code of
1986'' and inserting ``trustees (or other fiduciaries
in the case of a plan that consists of contracts
described in section 403(b) of the Internal Revenue
Code of 1986) meeting the requirements of section
408(a)(2) of such Code'', and
(B) by striking ``holding'' and inserting ``holding
(or causing to be held under the terms of a plan
consisting of such contracts)''.
(e) Regulations Relating to Plan Termination.--The Secretary of the
Treasury (or the Secretary's designee) shall prescribe such regulations
as may be necessary to clarify the treatment of a plan termination by
an employer in the case of plans to which section 403(b)(15) of such
Code applies.
(f) Modification of Model Plan Language.--
(1) Plan notifications.--The Secretary of the Treasury (or
the Secretary's designee) shall modify the model plan language
published under section 413(e)(5) of the Internal Revenue Code
of 1986 to include language which notifies participating
employers which are exempt from tax under section 501(a) of
such Code that the plan is subject to the Employee Retirement
and Income Security Act of 1974 and that such employer is a
plan sponsor with respect to its employees participating in the
multiple employer plan and, as such, has certain fiduciary
duties with respect to the plan and to its employees.
(2) Model plans for multiple employer 403(b) non-
governmental plans.--For plans to which section 403(b)(15)(A)
of the Internal Revenue Code of 1986 applies (other than a plan
maintained for its employees by a State, a political
subdivision of a State, or an agency or instrumentality of any
one or more of the foregoing) the Secretary shall publish model
plan language similar to model plan language published under
section 413(e)(5) of such Code.
(g) No Inference With Respect to Church Plans.--Regarding any
application of section 403(b) of the Internal Revenue Code of 1986 to
an annuity contract purchased under a church plan (as defined in
section 414(e) of such Code) maintained by more than 1 employer, or to
any application of rules similar to section 413(e) of such Code to such
a plan, no inference shall be made from section 403(b)(15)(A) of such
Code (as added by this Act) not applying to such plans.
(h) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2020.
(2) Rule of construction.--Nothing in the amendments made
by subsection (a) shall be construed as limiting the authority
of the Secretary of the Treasury or the Secretary's delegate
(determined without regard to such amendment) to provide for
the proper treatment of a failure to meet any requirement
applicable under such Code with respect to one employer (and
its employees) in the case of a plan to which section
403(b)(15) applies.
SEC. 5. APPLICATION OF CREDIT FOR SMALL EMPLOYER PENSION PLAN STARTUP
COSTS TO EMPLOYERS WHICH JOIN AN EXISTING PLAN.
(a) In General.--Section 45E(d)(3)(A) of the Internal Revenue Code
of 1986 is amended by striking ``effective'' and inserting ``effective
with respect to the eligible employer''.
(b) Effective Date.--The amendment made by this section shall apply
to eligible employer plans which become effective with respect to the
eligible employer after the date of the enactment of this Act.
SEC. 6. HARMONIZATION OF TREATMENT OF IRAS WITH EMPLOYER PLANS.
(a) Statute of Limitations.--Section 6501(l) of the Internal
Revenue Code of 1986 is amended--
(1) in paragraph (1), by inserting ``(other than with
respect to an individual retirement plan)'' after ``section
4975'', and
(2) by adding at the end the following new paragraph:
``(4) Individual retirement plans.--For purposes of any tax
imposed by section 4973, 4974, or 4975 in connection with an
individual retirement plan, the return referred to in this
section shall be the income tax return filed by the person on
whom the tax under such section is imposed for the year in
which the act (or failure to act) giving rise to the liability
for such tax occurred. In the case of a person who is not
required to file an income tax return for such year--
``(A) the return referred to in this section shall
be the income tax return that such person would have
been required to file but for the fact that such person
was not required to file such return, and
``(B) the 3-year period referred to in subsection
(a) with respect to the return shall be deemed to begin
on the date by which the return would have been
required to be filed (excluding any extension
thereof).''.
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2020.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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