,i #aafth ,,congress #ast ,session ,h4 ,r4 #ahei ,,in ,,the ,,house ,,of ,,representatives ,march #be1 #bjai ,mr4 ,katko 7for himself and ,mr4 ,brindisi7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide for parent savings accounts1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,working ,parents ,flexibility ,act of #bjai4 #b4 ,parental leave savings accounts 7a7 ,in ,general ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by redesignating section #bbd as section #bbe and by inserting after section #bbc the following new section3 #bbd4 ,parental leave savings accounts 7a7 ,allowance of deduction 7#a7 ,in general ,in the case of an individual who is an eligible individual for any month during the taxable year1 there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by such individual to a parental leave savings account of such individual4 7b7 ,limitations 7#a7 ,annual limitation for any year ,the amount allowable as a deduction under subsection 7a7 to an eligible individual for the taxable year shall not exceed #f1gej4 7#b7 ,overall limitation ,the aggregate amounts contributed to a parental leave savings account for all taxable years shall not exceed #bd1jjj4 7#c7 ,adjusted gross income limitation ,in the case of a taxpayer whose adjusted gross income exceeds #bej1jjj for the taxable year1 the dollar limitation under paragraph 7#a7 for such taxable year shall be zero4 7#d7 ,denial of deduction to dependents ,no deduction shall be allowed under this section to any individual with respect to whom a deduction under section #aea is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins4 7#e7 ,coordination with employer contributions ,the limitation which would 7but for this paragraph7 apply under this subsection to an individual for any taxable year shall be reduced 7but not below zero7 by the aggregate amount contributed to a parental leave savings account of such individual which is excludable from the taxpayer's adjusted gross income for such taxable year under section #aci;,g 7and such amount shall not be allowed as a deduction under subsection 7a774 7c7 ,eligible individual ,for purposes of this section1 the term eligible individual means1 with respect to any month1 any individual who has earned income from employment during the #ab months preceding the month in which the parental leave savings account is established4 7d7 ,parental leave savings account ,for purposes of this section3 7#a7 ,in general ,the term parental leave savings account means a trust created or organized in the ,united ,states exclusively for the purpose of making distributions for the care of a child of the account owner1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,except in the case of a rollover contribution described in subsection 7e77#c71 no contribution will be accepted-- 7i7 unless it is in cash1 or 7ii7 to the extent such contribution-- 7,i7 when added to previous contributions to the trust for the calendar year1 exceeds the dollar amount in effect under subsection 7b77#a71 or 7,,ii7 when added to all previous contributions to the trust1 exceeds the limit under subsection 7b77#b74 7,b7 ,the trustee is a bank 7as defined in section #djh7n771 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the interest of an individual in the balance in his account is nonforfeitable4 7#b7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,except as provided in section #ajf7;d71 section #bai7;f77#e7 7relating to employer payments74 7,d7 ,section #djh7;g7 7relating to community property laws74 7e7 ,tax treatment of distributions 7#a7 ,in general ,except as provided in paragraph 7#b71 any distribution from a parental leave savings account shall be included in the gross income of the account owner4 7#b7 ,early parenthood payments or immediate return of contributions 7,a7 ,in general ,any amount paid or distributed out of a parental leave savings account which-- 7i7 is made pursuant to a request by the account owner and not later than #a year after the birth or adoption of a child of the account owner1 or 7ii7 is not more than the amount of contributions made to the account during the #cj-;day period ending on the date of such distribution1 shall not be included in gross income4 ,clause 7ii7 shall not apply if a deduction is allowed with respect to such contribution4 7,b7 ,return of contribution not taken into account in determining deduction ,the amount allowed as a deduction under subsection 7a7 for the taxable year 7determined without regard to this subparagraph7 shall be reduced by the amount of distributions made during the taxable year under subparagraph 7,a77ii74 7,c7 ,coordination with dependent care tax credit ,the employment-related expenses 7as defined in section #ba7;b77#b77 taken into account with respect to any child of the taxpayer in determining the credit under section #ba for the taxable year 7determined without regard to this subparagraph7 shall be reduced by any amounts excluded from gross income for the taxable year under subparagraph 7,a77i7 with respect to such child4 7#c7 ,rollover contributions ,an amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs 7,a7 and 7,b74 7,a7 ,in general ,paragraph 7#a7 shall not apply to any amount paid or distributed from a parental leave savings account to the account owner if-- 7i7 the entire amount received is paid into an individual retirement account or individual retirement annuity 7other than an endowment contract7 for the benefit of such individual not later than the #fjth day after the day on which he receives the payment or distribution1 or 7ii7 the entire amount received is paid into an eligible retirement plan for the benefit of such individual not later than the #fjth day after the date on which the payment or distribution is received1 except the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross income 7determined without regard to this paragraph74 ,for purposes of clause 7ii71 the term eligible retirement plan means an eligible retirement plan described in clause 7iii71 7iv71 7v71 or 7vi7 of section #djb7;c77#h77;,b74 7,b7 ,limitation ,this paragraph does not apply to any amount described in subparagraph 7,a77i7 received by an individual from a parental leave savings account if at any time during the #a-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from a parental leave savings account which was not includible in his gross income because of the application of this paragraph4 7,c7 ,special rule for #ebi and #ebi;,a funding distributions 7i7 ,in general ,a plan shall not fail to be treated as a parental leave savings account under this section solely because the account provides for distributions from a parental leave savings account to a qualified tuition program 7as defined in section #ebi7;b77 or a qualified ,,able program 7as defined in section #ebi;,a7b77 of the taxpayer or a child of the taxpayer 7as defined in section #ebi7;e774 7ii7 ,tax treatment ,paragraph 7#a7 shall not apply to so much of any such distribution as is allocable to earnings on the amounts contributed by the taxpayer to the parental leave savings account4 7#d7 ,additional tax for distributions not used for early parenthood payments ,the tax imposed by this chapter on the account owner for any taxable year in which there is a payment or distribution from a parental leave savings account of such account owner which is includible in gross income under subparagraph 7#a7 shall be increased by #bj percent of the amount which is so includible4 ,the preceding sentence shall not apply to the portion of a distribution described in subparagraph 7,c77i7 that is so includible4 7#e7 ,excess ,contributions ,returned ,before ,due ,date of ,return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to any parental leave savings account of an individual1 paragraph 7#a7 shall not apply to distributions from the parental leave savings account of such individual 7to the extent such distributions do not exceed the aggregate excess contributions to the account of such individual for such year7 if-- 7i7 such distribution is received by the individual on or before the last day prescribed by law 7including extensions of time7 for filing such individual's return for such taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in the gross income of the individual for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution 7other than a rollover contribution described in paragraph 7#c77 which is neither excludable from gross income under section #aci;,g nor deductible under this section4 7#f7 ,transfer of account incident to divorce ,the transfer of an individual's interest in a parental leave savings account to an individual's spouse or former spouse under a divorce or separation instrument described in subparagraph 7,a7 of section #ga7;b77#b7 shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle1 and such interest shall1 after such transfer1 be treated as a parental leave savings account with respect to which such spouse is the account owner4 7#g7 ,treatment after death of account owner 7,a7 ,treatment if designated beneficiary is spouse 7i7 ,in general ,if a qualified individual acquires such owner's interest in a parental leave savings account by reason of being the designated beneficiary of such account at the death of the account owner1 such parental leave savings account shall be treated as if the qualified individual were the account owner4 7ii7 ,qualified individual ,for purposes of clause 7i71 the term qualified individual means1 with respect to any account owner-- 7,i7 the account owner's surviving spouse1 or 7,,ii7 any other person with custody of any child of the deceased account owner1 but only if such death occurred not later than #a year after the birth or adoption of such child by the deceased account owner4 7,b7 ,other cases 7i7 ,in general ,if1 by reason of the death of the account owner1 any person acquires the account owner's interest in a parental leave savings account in a case to which subparagraph 7,a7 does not apply-- 7,i7 such account shall cease to be a parental leave savings account as of the date of death1 and 7,,ii7 an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such owner1 in such person's gross income for the taxable year which includes such date1 or if such person is the estate of such owner1 in such owner's gross income for the last taxable year of such owner4 7ii7 ,special rules ,an appropriate deduction shall be allowed under section #fia7;c7 to any person 7other than the decedent or the decedent's spouse7 with respect to amounts included in gross income under clause 7i7 by such person4 7f7 ,tax treatment of account 7#a7 ,in general ,a parental leave savings account shall be exempt from taxation under this subtitle4 ,notwithstanding the preceding sentence1 the parental leave savings account shall be subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to any parental leave savings account4 7g7 ,one account per individual ,an individual may not own more than one parental leave savings account4 ,the ,secretary shall prescribe such rules as are necessary to provide for liquidating an individual's parental leave savings account for transfer to a new parental leave savings account of the individual and for treating such amounts as a rollover distribution described in subsection 7e77#c74 7h7 ,reports ,the owner of a parental leave savings account shall make such reports regarding such account to the ,secretary with respect to contributions1 distributions1 the return of excess contributions1 and such other matters as the ,secretary may require4 ,the reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the ,secretary4 7i7 ,cost-of-,living adjustment 7#a7 ,in general ,in the case of taxable years beginning in a calendar year after #bjbj1 each dollar amount in subsections 7b77#a7 and 7b77#b7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins determined by substituting calendar year #bjai for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7#b7 ,rounding ,if any increase under paragraph 7#a7 is not a multiple of #ej1 such increase shall be rounded to the nearest multiple of #ej4 4 7b7 ,deduction allowed whether or not individual itemizes other deductions ,section #fb7;a7 of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,parental leave savings accounts ,the deduction allowed under section #bbd4 4 7c7 ,exclusion for employer contributions to parental leave savings accounts 7#a7 ,in general ,part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after section #aci;,f the following new section3 #aci;,g4 ,contributions by employer to parental leave savings accounts 7a7 ,in general ,gross income of an employee does not include contributions by the employer to the parental leave savings account of the employee to the extent such amounts do not exceed the limitation under section #bbd7;b77#a7 7determined without regard to this section7 which is applicable to such employee for such taxable year4 7b7 ,parental leave savings account ,for purposes of this section1 the term parental leave savings account shall have the meaning given to such term by section #bbd4 7c7 ,exclusion not ,to exceed compensation 7#a7 ,employees ,the amount excluded from gross income by subsection 7a7 with respect to an employee shall not exceed such employee's wages1 salaries1 tips1 and other employee compensation which are attributable to such employee's employment by the employer referred to in such subsection4 7#b7 ,self-employed individuals ,the amount excluded from gross income by subsection 7a7 for contributions with respect to an individual who is self-employed shall not exceed such individual's earned income 7as defined in section #dja7;c77#b77 derived by the taxpayer from the trade or business with respect to which the individual is self-employed4 7#c7 ,community property laws not to apply ,the limitations under this subsection shall be determined without regard to community property laws4 4 7#b7 ,conforming amendments 7,a7 ,section #caba7;a7 of such ,code is amended by striking or at the end of paragraph 7#bb71 by striking the period at the end of paragraph 7#bc7 and inserting 2 or1 and by inserting after paragraph 7#bc7 the following new paragraph3 7#bd7 any payment made to a parental leave savings account 7as defined in section #bbd7 or an employee4 4 7,b7 ,section #cbca7;e7 of such ,code is amended by adding at the end the following new paragraph3 7#ac7 ,parental leave savings account contributions ,the term compensation shall not include any payment made to a parental leave savings account 7as defined in section #bbd7 of an employee4 4 7,c7 ,section #ccjf7;b7 of such ,code is amended by striking or at the end of paragraph 7#ai71 by striking the period at the end of paragraph 7#bj7 and inserting 2 or1 and by inserting after paragraph 7#bj7 the following new paragraph3 7#ba7 any payment made to a parental leave savings account 7as defined in section #bbd7 of an employee4 4 7,d7 ,section #cdja7;a7 of such ,code is amended by striking or at the end of paragraph 7#ba71 by striking the period at the end of paragraph 7#bb7 and inserting 2 or1 and by inserting after paragraph 7#bb7 the following new paragraph3 7#bc7 any payment made to a parental leave savings account 7as defined in section #bbd7 of an employee4 4 7,e7 ,section #fjea7;a7 of such ,code is amended by striking and at the end of paragraph 7#ac71 by striking the period at the end of paragraph 7#ad7 and inserting 1 and1 and by inserting after paragraph 7#ad7 the following new paragraph3 7#ae7 the amount contributed to any parental leave savings account 7as defined in section #bbd7 of such employee4 4 7d7 ,prohibited transactions 7#a7 ,exception for taxable distributions from parental leave savings accounts ,subsection 7c7 of section #dige of such ,code 7defining prohibited transaction7 is amended by adding at the end the following new paragraph3 7#g7 ,special rule for parental leave savings accounts ,an individual for whose benefit a parental leave savings account 7with the meaning of section #bbd7 is established and any contributor to such account shall be exempt from the tax imposed by this section with respect to any transaction concerning such account 7which would otherwise be taxable under this section7 if1 with respect to such transaction1 the account ceases to be a parental leave savings account by reason of the application of section #bbd7;f77#b7 to such account4 4 7#b7 ,plan defined ,section #dige7;e77#a7 of such ,code is amended by striking or at the end of subparagraph 7,f71 by redesignating subparagraph 7,g7 as subparagraph 7,h71 and by inserting after subparagraph 7,f7 the following new subparagraph3 7,g7 a parental leave savings account described in section #bbd1 or 4 7e7 ,penalty on failure ,to report ,section #ffic7;a77#b7 of such ,code is amended by striking and at the end of subparagraph 7,d71 by striking the period at the end of subparagraph 7,e7 and inserting 1 and1 and by inserting after subparagraph 7,e7 the following new subparagraph3 7,f7 section #bbd7;g7 7relating to parental leave savings accounts74 4 7f7 ,conforming amendment ,section #bf7;b77#b7 of such ,code is amended by striking and at the end of subparagraph 7,x71 by striking the period at the end of subparagraph 7,y7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,z7 section #bbd7;e77#d7 7relating to additional tax with respect to distributions not used for early parenthood payment purposes74 4 7g7 ,clerical amendments 7#a7 ,the table of sections for part ,,vii of subchapter ,b of chapter #a of such ,code is amended by redesignating the item relating to section #bbd as an item relating to section #bbe and by inserting after the item relating to section #bbc the following new item3 ,sec4 #bbd4 ,parental leave savings accounts4 4 7#b7 ,the table of sections for part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #aci;,f the following new item3 ,sec4 #aci;,g4 ,contributions by employer to parental leave savings accounts4 4 7h7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjai4