H.R. 6757 — what changed

“(H) Exception from required minimum distributions during life of employee where assets do not exceed $50,000

“(i) In general—If on the last day of any calendar year the aggregate value of an employee’s entire interest under all applicable eligible retirement plans does not exceed $50,000, then the requirements of subparagraph (A) with respect to any distribution relating to such year shall not apply with respect to such employee.

“(ii) Applicable eligible retirement plan—For purposes of this subparagraph, the term “applicable eligible retirement plan” means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan.

“(iii) Limit on required minimum distribution—The required minimum distribution determined under subparagraph (A) for an employee under all applicable eligible retirement plans shall not exceed an amount equal to the excess of—

“(I) the aggregate value of an employee’s entire interest under such plans on the last day of the calendar year to which such distribution relates, over

“(II) the dollar amount in effect under clause (i) for such calendar year.

“(iv) Inflation adjustment—In the case of any calendar year beginning after 2019, the $50,000 amount in clause (i) shall be increased by an amount equal to—

“(I) such dollar amount, multiplied by

“(II) the cost of living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting “calendar year 2018” for “calendar year 2016” in subparagraph (A)(ii) thereof.

“(v) Plan administrator reliance on employee certification—An applicable eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) shall not be treated as failing to meet the requirements of this paragraph in the case of any failure to make a required minimum distribution for a calendar year if—

changed “(I) the aggregate value of an employee’s entire interest under all applicable eligible retirement plans of the employer on the last day of the preceding calendar year to which such distribution relates does not exceed the dollar amount in effect for such year under clause (i), and

changed “(II) the employee certifies that the aggregate value of the employee’s entire interest under all applicable eligible retirement plans on the last day of the preceding calendar year to which such distribution relates did not exceed the dollar amount in effect for such year under clause (i).

“(vi) Aggregation rule—All employers treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer for purposes of clause (v).”

changed “(g) “(h) Account balance for participants who have attained age 69

“(1) In general—Not later than January 31 of each year, the plan administrator (as defined in section 414(g)) of each applicable eligible retirement plan (as defined in section 401(a)(9)(H)) shall make a return to the Secretary with respect to each participant of such plan who has attained age 69 as of the end of the preceding calendar year which states—

“(A) the name and plan number of the plan,

“(B) the name and address of the plan administrator,

“(C) the name, address, and taxpayer identification number of the participant, and

“(D) the account balance of such participant as of the end of the preceding calendar year.

“(2) Statement furnished to participant—Every person required to make a return under paragraph (1) with respect to a participant shall furnish a copy of such return to such participant.

“(3) Application to individual retirement plans and annuities—In the case of an applicable eligible retirement plan described in clause (i) or (ii) of section 402(c)(8)(B)—

“(A) any reference in this subsection to the plan administrator shall be treated as a reference to the trustee or issuer, as the case may be, and

“(B) any reference in this subsection to the participant shall be treated as a reference to the individual for whom such account or annuity is maintained.”

changed “(o) Special rules for applying nondiscrimination rules To to protect older, longer service and grandfathered participants

“(1) Testing of defined benefit plans with closed classes of participants

“(A) Benefits, rights, or features provided to closed classes—A defined benefit plan which provides benefits, rights, or features to a closed class of participants shall not fail to satisfy the requirements of subsection (a)(4) by reason of the composition of such closed class or the benefits, rights, or features provided to such closed class, if—

“(i) for the plan year as of which the class closes and the 2 succeeding plan years, such benefits, rights, and features satisfy the requirements of subsection (a)(4) (without regard to this subparagraph but taking into account the rules of subparagraph (I)),

“(ii) after the date as of which the class was closed, any plan amendment which modifies the closed class or the benefits, rights, and features provided to such closed class does not discriminate significantly in favor of highly compensated employees, and

“(iii) the class was closed before April 5, 2017, or the plan is described in subparagraph (C).

“(B) Aggregate testing with defined contribution plans permitted on a benefits basis

“(i) In general—For purposes of determining compliance with subsection (a)(4) and section 410(b), a defined benefit plan described in clause (iii) may be aggregated and tested on a benefits basis with 1 or more defined contribution plans, including with the portion of 1 or more defined contribution plans which—

“(I) provides matching contributions (as defined in subsection (m)(4)(A)),

“(II) provides annuity contracts described in section 403(b) which are purchased with matching contributions or nonelective contributions, or

“(III) consists of an employee stock ownership plan (within the meaning of section 4975(e)(7)) or a tax credit employee stock ownership plan (within the meaning of section 409(a)).

“(ii) Special rules for matching contributions—For purposes of clause (i), if a defined benefit plan is aggregated with a portion of a defined contribution plan providing matching contributions—

“(I) such defined benefit plan must also be aggregated with any portion of such defined contribution plan which provides elective deferrals described in subparagraph (A) or (C) of section 402(g)(3), and

“(II) such matching contributions shall be treated in the same manner as nonelective contributions, including for purposes of applying the rules of subsection (l).

“(iii) Plans described—A defined benefit plan is described in this clause if—

“(I) the plan provides benefits to a closed class of participants,

“(II) for the plan year as of which the class closes and the 2 succeeding plan years, the plan satisfies the requirements of section 410(b) and subsection (a)(4) (without regard to this subparagraph but taking into account the rules of subparagraph (I)),

“(III) after the date as of which the class was closed, any plan amendment which modifies the closed class or the benefits provided to such closed class does not discriminate significantly in favor of highly compensated employees, and

“(IV) the class was closed before April 5, 2017, or the plan is described in subparagraph (C).

“(C) Plans described—A plan is described in this subparagraph if, taking into account any predecessor plan—

“(i) such plan has been in effect for at least 5 years as of the date the class is closed, and

“(ii) during the 5-year period preceding the date the class is closed, there has not been a substantial increase in the coverage or value of the benefits, rights, or features described in subparagraph (A) or in the coverage or benefits under the plan described in subparagraph (B)(iii) (whichever is applicable).

“(D) Determination of substantial increase for benefits, rights, and features—In applying subparagraph (C)(ii) for purposes of subparagraph (A)(iii), a plan shall be treated as having had a substantial increase in coverage or value of the benefits, rights, or features described in subparagraph (A) during the applicable 5-year period only if, during such period—

“(i) the number of participants covered by such benefits, rights, or features on the date such period ends is more than 50 percent greater than the number of such participants on the first day of the plan year in which such period began, or

“(ii) such benefits, rights, and features have been modified by 1 or more plan amendments in such a way that, as of the date the class is closed, the value of such benefits, rights, and features to the closed class as a whole is substantially greater than the value as of the first day of such 5-year period, solely as a result of such amendments.

“(E) Determination of substantial increase for aggregate testing on benefits basis—In applying subparagraph (C)(ii) for purposes of subparagraph (B)(iii)(IV), a plan shall be treated as having had a substantial increase in coverage or benefits during the applicable 5-year period only if, during such period—

“(i) the number of participants benefitting under the plan on the date such period ends is more than 50 percent greater than the number of such participants on the first day of the plan year in which such period began, or

“(ii) the average benefit provided to such participants on the date such period ends is more than 50 percent greater than the average benefit provided on the first day of the plan year in which such period began.

“(F) Certain employees disregarded—For purposes of subparagraphs (D) and (E), any increase in coverage or value or in coverage or benefits, whichever is applicable, which is attributable to such coverage and value or coverage and benefits provided to employees—

“(i) who became participants as a result of a merger, acquisition, or similar event which occurred during the 7-year period preceding the date the class is closed, or

“(ii) who became participants by reason of a merger of the plan with another plan which had been in effect for at least 5 years as of the date of the merger,

“(G) Rules relating to average benefit—For purposes of subparagraph (E)—

“(i) the average benefit provided to participants under the plan will be treated as having remained the same between the 2 dates described in subparagraph (E)(ii) if the benefit formula applicable to such participants has not changed between such dates, and

“(ii) if the benefit formula applicable to 1 or more participants under the plan has changed between such 2 dates, then the average benefit under the plan shall be considered to have increased by more than 50 percent only if—

“(I) the total amount determined under section 430(b)(1)(A)(i) for all participants benefitting under the plan for the plan year in which the 5-year period described in subparagraph (E) ends, exceeds

“(II) the total amount determined under section 430(b)(1)(A)(i) for all such participants for such plan year, by using the benefit formula in effect for each such participant for the first plan year in such 5-year period, by more than 50 percent.

“(H) Treatment as single plan—For purposes of subparagraphs (E) and (G), a plan described in section 413(c) shall be treated as a single plan rather than as separate plans maintained by each employer in the plan.

“(I) Special rules—For purposes of subparagraphs (A)(i) and (B)(iii)(II), the following rules shall apply:

“(i) In applying section 410(b)(6)(C), the closing of the class of participants shall not be treated as a significant change in coverage under section 410(b)(6)(C)(i)(II).

“(ii) 2 or more plans shall not fail to be eligible to be aggregated and treated as a single plan solely by reason of having different plan years.

“(iii) Changes in the employee population shall be disregarded to the extent attributable to individuals who become employees or cease to be employees, after the date the class is closed, by reason of a merger, acquisition, divestiture, or similar event.

“(iv) Aggregation and all other testing methodologies otherwise applicable under subsection (a)(4) and section 410(b) may be taken into account.

“(J) Spun-off plans—For purposes of this paragraph, if a portion of a defined benefit plan described in subparagraph (A) or (B)(iii) is spun off to another employer and the spun-off plan continues to satisfy the requirements of—

“(i) subparagraph (A)(i) or (B)(iii)(II), whichever is applicable, if the original plan was still within the 3-year period described in such subparagraph at the time of the spin off, and

“(ii) subparagraph (A)(ii) or (B)(iii)(III), whichever is applicable,

“(2) Testing of defined contribution plans

“(A) Testing on a benefits basis—A defined contribution plan shall be permitted to be tested on a benefits basis if—

“(i) such defined contribution plan provides make-whole contributions to a closed class of participants whose accruals under a defined benefit plan have been reduced or eliminated,

“(ii) for the plan year of the defined contribution plan as of which the class eligible to receive such make-whole contributions closes and the 2 succeeding plan years, such closed class of participants satisfies the requirements of section 410(b)(2)(A)(i) (determined by applying the rules of paragraph (1)(I)),

“(iii) after the date as of which the class was closed, any plan amendment to the defined contribution plan which modifies the closed class or the allocations, benefits, rights, and features provided to such closed class does not discriminate significantly in favor of highly compensated employees, and

“(iv) the class was closed before April 5, 2017, or the defined benefit plan under clause (i) is described in paragraph (1)(C) (as applied for purposes of paragraph (1)(B)(iii)(IV)).

“(B) Aggregation with plans including matching contributions

“(i) In general—With respect to 1 or more defined contribution plans described in subparagraph (A), for purposes of determining compliance with subsection (a)(4) and section 410(b), the portion of such plans which provides make-whole contributions or other nonelective contributions may be aggregated and tested on a benefits basis with the portion of 1 or more other defined contribution plans which—

“(I) provides matching contributions (as defined in subsection (m)(4)(A)),

“(II) provides annuity contracts described in section 403(b) which are purchased with matching contributions or nonelective contributions, or

“(III) consists of an employee stock ownership plan (within the meaning of section 4975(e)(7)) or a tax credit employee stock ownership plan (within the meaning of section 409(a)).

“(ii) Special rules for matching contributions—Rules similar to the rules of paragraph (1)(B)(ii) shall apply for purposes of clause (i).

“(C) Special rules for testing defined contribution plan features providing matching contributions to certain older, longer service participants—In the case of a defined contribution plan which provides benefits, rights, or features to a closed class of participants whose accruals under a defined benefit plan have been reduced or eliminated, the plan shall not fail to satisfy the requirements of subsection (a)(4) solely by reason of the composition of the closed class or the benefits, rights, or features provided to such closed class if the defined contribution plan and defined benefit plan otherwise meet the requirements of subparagraph (A) but for the fact that the make-whole contributions under the defined contribution plan are made in whole or in part through matching contributions.

“(D) Spun-off plans—For purposes of this paragraph, if a portion of a defined contribution plan described in subparagraph (A) or (C) is spun off to another employer, the treatment under subparagraph (A) or (C) of the spun-off plan shall continue with respect to the other employer if such plan continues to comply with the requirements of clauses (ii) (if the original plan was still within the 3-year period described in such clause at the time of the spin off) and (iii) of subparagraph (A), as determined for purposes of subparagraph (A) or (C), whichever is applicable.

“(3) Definitions—For purposes of this subsection—

“(A) Make-whole contributions—Except as otherwise provided in paragraph (2)(C), the term “make-whole contributions” means nonelective allocations for each employee in the class which are reasonably calculated, in a consistent manner, to replace some or all of the retirement benefits which the employee would have received under the defined benefit plan and any other plan or qualified cash or deferred arrangement under subsection (k)(2) if no change had been made to such defined benefit plan and such other plan or arrangement. For purposes of the preceding sentence, consistency shall not be required with respect to employees who were subject to different benefit formulas under the defined benefit plan.

“(B) References to closed class of participants—References to a closed class of participants and similar references to a closed class shall include arrangements under which 1 or more classes of participants are closed, except that 1 or more classes of participants closed on different dates shall not be aggregated for purposes of determining the date any such class was closed.

“(C) Highly compensated employee—The term “highly compensated employee” has the meaning given such term in section 414(q).”

“(I) Protected participants

“(i) In general—A plan shall be deemed to satisfy the requirements of subparagraph (A) if—

“(I) the plan is amended—

“(aa) to cease all benefit accruals, or

“(bb) to provide future benefit accruals only to a closed class of participants,

“(II) the plan satisfies subparagraph (A) (without regard to this subparagraph) as of the effective date of the amendment, and

“(III) the amendment was adopted before April 5, 2017, or the plan is described in clause (ii).

“(ii) Plans described—A plan is described in this clause if the plan would be described in subsection (o)(1)(C), as applied for purposes of subsection (o)(1)(B)(iii)(IV) and by treating the effective date of the amendment as the date the class was closed for purposes of subsection (o)(1)(C).

“(iii) Special rules—For purposes of clause (i)(II), in applying section 410(b)(6)(C), the amendments described in clause (i) shall not be treated as a significant change in coverage under section 410(b)(6)(C)(i)(II).

“(iv) Spun-off plans—For purposes of this subparagraph, if a portion of a plan described in clause (i) is spun off to another employer, the treatment under clause (i) of the spun-off plan shall continue with respect to the other employer.”

“IX Universal Savings Accounts

“530U. Universal Savings Accounts

“(a) General rule—A Universal Savings Account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, such account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).

“(b) Universal savings account—For purposes of this section, the term Universal Savings Account means a trust created or organized in the United States by an individual for the exclusive benefit of such individual and which is designated (in such manner as the Secretary may prescribe) at the time of the establishment of the trust as a Universal Savings Account, but only if the written governing instrument creating the trust meets the following requirements:

“(1) Except in the case of a qualified rollover contribution described in subsection (d)—

“(A) no contribution will be accepted unless it is in cash, and

“(B) contributions will not be accepted for the taxable year in excess of the contribution limit specified in subsection (c)(2).

“(2) No distribution will be made unless it is—

“(A) cash, or

“(B) property that—

“(i) has a readily ascertainable fair market value, and

“(ii) is identified by the Secretary in regulations or other guidance as property to which this subparagraph applies.

“(3) The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section.

“(4) No part of the trust assets will be invested in life insurance contracts or collectibles (as defined in section 408(m)).

“(5) The interest of an individual in the balance of his account is nonforfeitable.

“(6) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.

“(c) Treatment of distributions and contributions

“(1) Distributions

“(A) In general—Except as provided in subparagraph (B), any distribution from a Universal Savings Account shall not be includible in gross income.

“(B) Net income attributable to excess contributions—Any distribution of net income described in section 4973(i)(2) shall be includible in the gross income of the account holder in the taxable year in which the contribution to which such net income relates was made.

“(2) Contribution limit

“(A) In general—The aggregate amount of contributions (other than qualified rollover contributions described in subsection (d)) for any taxable year to all Universal Savings Accounts maintained for the benefit of an individual shall not exceed the lesser of—

“(i) $2,500, or

“(ii) an amount equal to the compensation (within the meaning of section 219) includible in such individual’s gross income for such taxable year.

“(B) No contributions for dependents—In the case of an individual who is a dependent of another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, the dollar amount under subparagraph (A) for such individual’s taxable year shall be zero.

“(C) Special rule in case of joint return

“(i) In general—In the case of an individual to whom this clause applies, the amount determined under subparagraph (A)(ii) with respect to such individual for the taxable year shall not be less than an amount equal to the sum of—

“(I) the compensation of such individual includible in gross income for the taxable year, plus

“(II) the compensation of such individual’s spouse includible in gross income for the taxable year reduced (but not below zero) by the amount contributed for the taxable year to all Universal Savings Accounts maintained for the benefit of such spouse.

“(ii) Individual to whom clause (i) applies—Clause (i) shall apply to any individual—

“(I) who files a joint return for the taxable year, and

“(II) whose compensation includible in gross income for the taxable year is less than the compensation of such individual’s spouse includible in gross income for the taxable year.

“(D) Cost-of-living adjustment—In the case of any taxable year beginning in a calendar year after 2019, the $2,500 amount under subparagraph (A)(i) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting “calendar year 2018” for “calendar year 2016” in subparagraph (A)(ii) thereof.

“(d) Qualified rollover contribution—For purposes of this section, the term qualified rollover contribution means a contribution to a Universal Savings Account from another such account of the same individual, but only if such amount is contributed not later than the 60th day after the distribution from such other account.

“(e) Treatment of account upon death—Upon death of any account holder of a Universal Savings Account—

“(1) Spouse—In the case of the account holder’s surviving spouse acquiring such account holder’s interest in such account by reason of the death of the account holder, such account shall be treated as if the spouse were the account holder.

“(2) Other cases—In any other case—

“(A) all amounts in such account shall be treated as distributed on the date of such individual’s death, and

“(B) such account shall cease to be treated as a Universal Savings Account.

“(f) Other special rules

“(1) Community property laws—This section shall be applied without regard to any community property laws.

“(2) Loss of taxation exemption of account where individual engages in prohibited transaction; effect of pledging account as security—Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to any Universal Savings Account.

“(g) Reports—The trustee of a Universal Savings Account shall make such reports regarding such account to the Secretary and to the account holder with respect to contributions, distributions, and such other matters as the Secretary may require. Such reports shall be—

“(1) filed at such time and in such manner as the Secretary provides, and

“(2) furnished to account holders—

“(A) not later than January 31 of the calendar year following the calendar year to which such reports relate, and

“(B) in such manner as the Secretary provides.”

“(7) a Universal Savings Account (as defined in section 530U),”

“(i) Excess contributions to universal savings accounts—For purposes of this section—

“(1) In general—In the case of Universal Savings Accounts (within the meaning of section 530U), the term excess contributions means the sum of—

“(A) the amount (if any) by which the amount contributed for the taxable year to such accounts (other than qualified rollover contributions (as defined in section 530U(d))) exceeds the contribution limit under section 530U(c)(2) for such taxable year, and

“(B) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—

“(i) the distributions out of the account for the taxable year, and

“(ii) the amount (if any) by which the maximum amount allowable as a contribution under section 530U(c)(2) for the taxable year exceeds the amount contributed to the accounts for the taxable year.

“(2) Special rule—A contribution shall not be taken into account under paragraph (1) if such contribution (together with the amount of net income attributable to such contribution) is distributed to the account holder on or before the due date of the account holder’s return of tax for such taxable year.”

“(H) a Universal Savings Account (as defined in section 530U).”

“(G) section 530U(g) (relating to Universal Savings Accounts).”

“(H) Distributions from retirement plans in case of birth of child or adoption

“(i) In general—Any qualified birth or adoption distribution.

“(ii) Limitation—The aggregate amount which may be treated as qualified birth or adoption distributions by any individual with respect to any birth or adoption shall not exceed $7,500.

“(iii) Qualified birth or adoption distribution—For purposes of this subparagraph—

“(I) In general—The term “qualified birth or adoption distribution” means any distribution from an applicable eligible retirement plan to an individual if made during the 1-year period beginning on the date on which a child of the individual is born or on which the legal adoption by the individual of an eligible child is finalized.

“(II) Eligible child—The term “eligible child” means any individual (other than a child of the taxpayer’s spouse) who has not attained age 18 or is physically or mentally incapable of self-support.

“(iv) Treatment of plan distributions

“(I) In general—If a distribution to an individual would (without regard to clause (ii)) be a qualified birth or adoption distribution, a plan shall not be treated as failing to meet any requirement of this title merely because the plan treats the distribution as a qualified birth or adoption distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $7,500.

“(II) Controlled group—For purposes of subclause (I), the term “controlled group” means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.

“(v) Amount distributed may be repaid

“(I) In general—Any individual who receives a qualified birth or adoption distribution may make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an applicable eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be.

“(II) Limitation on contributions to applicable eligible retirement plans other than IRAs—The aggregate amount of contributions made by an individual under subclause (I) to any applicable eligible retirement plan which is not an individual retirement plan shall not exceed the aggregate amount of qualified birth or adoption distributions which are made from such plan to such individual. Subclause (I) shall not apply to contributions to any applicable eligible retirement plan which is not an individual retirement plan unless the individual is eligible to make contributions (other than those described in subclause (I)) to such applicable eligible retirement plan.

“(III) Treatment of repayments of distributions from applicable eligible retirement plans other than IRAs—If a contribution is made under subclause (I) with respect to a qualified birth or adoption distribution from an applicable eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received such distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the applicable eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

“(IV) Treatment of repayments for distributions from IRAs—If a contribution is made under subclause (I) with respect to a qualified birth or adoption distribution from an individual retirement plan, then, to the extent of the amount of the contribution, such distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the applicable eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

“(vi) Definition and special rules—For purposes of this subparagraph—

“(I) Applicable eligible retirement plan—The term “applicable eligible retirement plan” means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan.

“(II) Exemption of distributions from trustee to trustee transfer and withholding rules—For purposes of sections 401(a)(31), 402(f), and 3405, a qualified birth or adoption distribution shall not be treated as an eligible rollover distribution.

“(III) Taxpayer must include TIN—A distribution shall not be treated as a qualified birth or adoption distribution with respect to any child or eligible child unless the taxpayer includes the name, age, and TIN of such child or eligible child on the taxpayer’s return of tax for the taxable year.

“(IV) Distributions treated as meeting plan distribution requirements—Any qualified birth or adoption distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A).”