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Bill
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Title V — Revenue provisions

H.R. 1007 · 116th Congress · Feb 6, 2019 · Lineage

V Revenue provisions

Sec. 501 Modifications of required distribution rules for pension plans

(a)
Modification of rules where employee dies before entire distribution—
(1)
In general— Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(H) Special rules for certain defined contribution plans

“(i) In general—In the case of distributions from a defined contribution plan, a trust forming part of such plan shall not constitute a qualified trust under this section unless the plan provides that, if—

“(I) an employee dies before the distribution of the employee's interest (whether or not such distribution has begun in accordance with subparagraph (A)), and

“(II) the aggregate account balances to the credit of the employee under all defined contribution plans, determined as of the date of the employee's death, exceeds $450,000,

“(ii) Allocation of limitation—If an employee has an account under more than 1 defined contribution plan, the $450,000 amount under clause (i)(II) shall be allocated among all such plans, as provided in regulations prescribed by the Secretary, for purposes of applying clause (i).

“(iii) Treatment of remaining amount—The portion of the employee's interest distributed under clause (i) shall not be taken into account for purposes of determining the rapidity or the method of distribution of any portion of the interest of the employee to which clause (i) does not apply.

“(iv) Multiple beneficiaries—In the case of an employee who has more than 1 beneficiary, the amount of the portion required to be distributed under clause (i) which shall be treated as payable to (or for the benefit of) such beneficiary is the amount which bears the same ratio to the total amount of such portion as—

“(I) the portion of the employee's entire interest (determined as of the date of the employee's death) which is payable to (or for the benefit of) such beneficiary, bears to

“(II) the amount of the employee's entire interest (so determined).

“(v) Exception for eligible designated beneficiaries—If—

“(I) any portion of the employee's interest is payable to (or for the benefit of) an eligible designated beneficiary,

“(II) such portion will be distributed (in accordance with regulations) over the life of such eligible designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), and

“(III) such distributions begin not later than 1 year after the date of the employee's death or such later date as the Secretary may by regulations prescribe,

“(vi) Special rule for surviving spouse of employee—If the eligible designated beneficiary is the surviving spouse of the employee—

“(I) the date on which the distributions are required to begin under clause (v)(III) shall not be earlier than the date on which the employee would have attained age 701/2, and

“(II) if the surviving spouse dies before the distributions to such spouse begin, this subparagraph shall be applied as if the surviving spouse were the employee.

“(vii) Rules upon death of eligible designated beneficiary—If an eligible designated beneficiary dies before the portion of the employee's interest to which clause (i) applies which is payable to (or for the benefit of) such eligible designated beneficiary is entirely distributed, the exception under clause (v) shall not apply to any beneficiary of such eligible designated beneficiary and the remainder of such portion shall be distributed within 5 years after the death of such beneficiary.

“(viii) Coordination with individual retirement plans—For purposes of applying the provisions of this subparagraph and subsections (a)(6) and (b)(3) of section 408, individual retirement plans shall be treated as defined contribution plans in determining the aggregate account balances to the credit of the employee under all defined contribution plans and the amount required to be distributed to each beneficiary under such provisions.”

(2)
Definition of eligible designated beneficiary— Section 401(a)(9)(E) of such Code is amended to read as follows:

“(E) Definitions and rules relating to designated beneficiary—For purposes of this paragraph—

“(i) Designated beneficiary—The term designated beneficiary means any individual designated as a beneficiary by the employee.

“(ii) Eligible designated beneficiary—The term eligible designated beneficiary means, with respect to any employee, any designated beneficiary who is—

“(I) the surviving spouse of the employee,

“(II) subject to clause (iii), a child of the employee who has not reached majority (within the meaning of subparagraph (F)),

“(III) disabled (within the meaning of section 72(m)(7)),

“(IV) a chronically ill individual (within the meaning of section 7702B(c)(2), except that the requirements of subparagraph (A)(i) thereof shall only be treated as met if there is a certification that, as of such date, the period of inability described in such subparagraph with respect to the individual is an indefinite one which is reasonably expected to be lengthy in nature), or

“(V) an individual not described in any of the preceding subclauses who is not more than 10 years younger than the employee.

“(iii) Special rule for children—Subject to subparagraph (F), an individual described in clause (ii)(II) shall cease to be an eligible designated beneficiary as of the date the individual reaches majority and any remainder of the portion of the interest described in subparagraph (H)(v) shall be distributed within 5 years after such date.

“(iv) Time for determination of eligible designated beneficiary—The determination of whether a designated beneficiary is an eligible designated beneficiary shall be made as of the date of death of the employee.”

(3)
Conforming amendments—
(A)
Clause (ii) of section 401(a)(9)(B) of the Internal Revenue Code of 1986 is amended by striking “A trust” and inserting “Except as provided in subparagraph (H), a trust”.
(B)
Section 402(c)(11)(A)(iii) of such Code is amended by striking “section 401(a)(9)(B) (other than clause (iv) thereof)” and inserting “subparagraphs (B) (other than clause (iv) thereof) and (H) (other than clause (vi) thereof) of section 401(a)(9)”.
(4)
Effective dates—
(A)
In general— Except as provided in this paragraph and paragraphs (5) and (6), the amendments made by this subsection shall apply to distributions with respect to employees who die after December 31, 2018.
(B)
Collective bargaining exception— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of enactment of this Act, the amendments made by this subsection shall apply to distributions with respect to employees who die in calendar years beginning after the earlier of—
(i)
the later of—
(I)
the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof agreed to on or after the date of the enactment of this Act); or
(II)
December 31, 2018; or
(ii)
December 31, 2020.
(C)
Governmental plans— In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subparagraph (A) shall be applied by substituting “December 31, 2020” for “December 31, 2018”.
(5)
Exception for certain existing annuity contracts—
(A)
In general— The amendments made by this subsection shall not apply to a qualified annuity which is a binding annuity contract in effect on the date of enactment of this Act and at all times thereafter.
(B)
Qualified annuity— For purposes of this paragraph, the term qualified annuity means, with respect to an employee, an annuity—
(i)
which is a commercial annuity (as defined in section 3405(e)(6) of the Internal Revenue Code of 1986);
(ii)
under which the annuity payments are made over the life of the employee or over the joint lives of such employee and a designated beneficiary (or over a period not extending beyond the life expectancy of such employee or the joint life expectancy of such employee and a designated beneficiary) in accordance with the regulations described in section 401(a)(9)(A)(ii) of such Code (as in effect before such amendments) and which meets the other requirements of section 401(a)(9) of such Code (as so in effect) with respect to such payments; and
(iii)
with respect to which—
(I)
annuity payments to the employee have begun before the date of enactment of this Act, and the employee has made an irrevocable election before such date as to the method and amount of the annuity payments to the employee or any designated beneficiaries; or
(II)
if subclause (I) does not apply, the employee has made an irrevocable election before the date of enactment of this Act as to the method and amount of the annuity payments to the employee or any designated beneficiaries.
(6)
Exception for certain beneficiaries—
(A)
In general— If an employee dies before the effective date, then, in applying the amendments made by this subsection to such employee's designated beneficiary who dies after such date—
(i)
such amendments shall apply to any beneficiary of such designated beneficiary; and
(ii)
the designated beneficiary shall be treated as an eligible designated beneficiary for purposes of applying section 401(a)(9)(H)(iv) of the Internal Revenue Code of 1986 (as in effect after such amendments).
(B)
Effective date— For purposes of this paragraph, the term effective date means the first day of the first calendar year to which the amendments made by this subsection apply to a plan with respect to employees dying on or after such date.
(b)
Provisions relating to plan amendments—
(1)
In general— If this subsection applies to any plan amendment—
(A)
such plan shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i); and
(B)
except as provided by the Secretary of the Treasury, such plan shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 by reason of such amendment.
(2)
Amendments to which subsection applies—
(A)
In general— This subsection shall apply to any amendment to any plan or which is made—
(i)
pursuant to any amendment made by this section or pursuant to any regulation issued by the Secretary of the Treasury under this section or such amendments; and
(ii)
on or before the last day of the first plan year beginning after December 31, 2020, or such later date as the Secretary of the Treasury may prescribe.
(B)
Conditions— This subsection shall not apply to any amendment unless—
(i)
during the period—
(I)
beginning on the date the legislative or regulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan amendment not required by such legislative or regulatory amendment, the effective date specified by the plan); and
(II)
ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan amendment is adopted),
(ii)
such plan amendment applies retroactively for such period.

Sec. 502 Increase in penalty for failure to file

(a)
In general— The second sentence of subsection (a) of section 6651 of the Internal Revenue Code of 1986 is amended by striking “$205” and inserting “$400”.
(b)
Effective date— The amendment made by this section shall apply to returns the due date for which (including extensions) is after December 31, 2018.

Sec. 503 Increased penalties for failure to file retirement plan returns

(a)
In general— Subsection (e) of section 6652 of the Internal Revenue Code of 1986 is amended—
(1)
by striking “$25” and inserting “$100”; and
(2)
by striking “$15,000” and inserting “$50,000”.
(b)
Annual registration statement and notification of changes— Subsection (d) of section 6652 of the Internal Revenue Code of 1986 is amended—
(1)
by striking “$1” both places it appears in paragraphs (1) and (2) and inserting “$2”;
(2)
by striking “$5,000” in paragraph (1) and inserting “$10,000”; and
(3)
by striking “$1,000” in paragraph (2) and inserting “$5,000”.
(c)
Failure To provide notice— Subsection (h) of section 6652 of the Internal Revenue Code of 1986 is amended—
(1)
by striking “$10” and inserting “$100”; and
(2)
by striking “$5,000” and inserting “$50,000”.
(d)
Effective date— The amendments made by this section shall apply to returns, statements, and notifications required to be filed, and notices required to be provided, after December 31, 2018.

Sec. 504 Increase information sharing to administer excise taxes

(a)
In general— Section 6103(o) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

“(3) Taxes imposed by section 4481—Returns and return information with respect to taxes imposed by section 4481 shall be open to inspection by or disclosure to officers and employees of United States Customs and Border Protection of the Department of Homeland Security whose official duties require such inspection or disclosure for purposes of administering such section.”

(b)
Conforming amendments— Paragraph (4) of section 6103(p) of the Internal Revenue Code of 1986 is amended by striking “or (o)(1)(A)” each place it appears and inserting “, (o)(1)(A), or (o)(3)”.

Sec. 505 Pension variable rate premium payment acceleration

Notwithstanding section 4007(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1307(a)) and section 4007.11 of title 29, Code of Federal Regulations, any additional premium determined under subparagraph (E) of section 4006(a)(3) of such Act (29 U.S.C. 1306(a)(3)) the due date for which is (but for this section) after September 30, 2027, and before June 1, 2028, shall be due not later than September 30, 2027.