,i  #aafth ,,congress  #ast ,session    
,h4 ,r4 #daag  ,,in ,,the ,,house ,,of  
,,representatives  ,july #cj1 #bjai,mr4 
,kind 7for himself and ,mr4 ,kelly of   
,pennsylvania7 introduced the following 
bill2 which was referred to the         
,committee on ,ways and ,means  ,a      
,,bill  ,to reduce the disadvantages of 
individual retirement plans with respect
 to employer-sponsored retirement plans 
by helping taxpayers comply with laws   
affecting individual retirement plans1  
by providing for reduced penalties under
 the ,internal ,revenue ,code of #aihf  
for certain self-corrections with       
respect to such laws1 and by expanding  
the ,employee ,plans ,compliance        
,resolution ,system to cover certain    
errors under individual retirement      
plans1 and for other purposes4  #a4     
,short title ,this ,act may be cited as 
the ,,ira ,preservation ,act of #bjai4  
#b4 ,education with respect to ,i,r,as  
,the ,secretary of the ,treasury shall  
make available to the public the        

following information3  7#a7 ,an        
overview of the laws and regulations    
related to individual retirement plans  
7as defined in section #ggja7;a77#cg7 of
 the ,internal ,revenue ,code of #aihf71
 including--  7,a7 limits on            
contributions2  7,b7 limits on          
deductions for contributions2  7,c7     
rollovers2  7,d7 minimum required       
distributions2  7,e7 nonexempt          
prohibited transactions2 and  7,f7 tax  
consequences for early distributions4   
7#b7 ,examples of common errors by      
taxpayers with respect to the laws and  
regulations described in paragraph 7#a7 
and instructions on how to avoid such   
errors4  #c4 ,reduction of excise taxes 
for voluntary correction of common ,,ira
 errors  7a7 ,reduction in excise tax on
 excess contributions ,section #digc of 
the ,internal ,revenue ,code of #aihf is
 amended by adding at the end the       
following new subsection3  7i7          
,reduction of tax in certain cases  7#a7
 ,reduction ,in the case of a taxpayer  

who-- 7,a7 corrects1 during the         
correction window1 an excess            
contribution which was made to an       
individual retirement plan and which    
resulted in imposition of a tax under   
paragraph 7#a7 or 7#c7 of subsection    
7a71 and  7,b7 submits a return1 during 
the correction window1 reflecting such  
tax 7as modified by this subsection71   
the first and second sentences of       
subsection 7a7 shall be applied by      
substituting #c percent for #f percent  
each place it appears4  7#b7 ,correction
 window ,for purposes of this           
subsection1 the term correction window  
means the period beginning on the date  
on which the tax under subsection 7a7 is
 imposed with respect to an excess      
contribution1 and ending on the earlier 
of--  7,a7 the date on which the        
,secretary initiates an audit1 or       
otherwise demands payment1 with respect 
to the excess contribution1 or  7,b7 the
 last day of the second taxable year    
that begins after the end of the taxable

 year in which the tax under subsection 
7a7 is imposed4  4  7b7 ,reduction in   
excise tax on failures ,to take required
 minimum distributions  7#a7 ,in general
 ,section #digd of the ,internal        
,revenue ,code of #aihf is amended by   
adding at the end the following new     
subsection3  7e7 ,reduction of tax in   
certain cases  7#a7 ,reduction ,in the  
case of a taxpayer who-- 7,a7 corrects1 
during the correction window1 a         
shortfall of distributions from an      
individual retirement plan which        
resulted in imposition of a tax under   
subsection 7a71 and  7,b7 submits a     
return1 during the correction window1   
reflecting such tax 7modified by this   
subsection71  the first sentence of     
subsection 7a7 shall be applied by      
substituting #aj percent for #ej        
percent4  7#b7 ,correction window ,for  
purposes of this subsection1 the term   
correction window means the period of   
time beginning on the data on which the 
tax under subsection 7a7 is imposed with

 respect to a shortfall of distributions
 from an individual retirement plan1 and
 ending on the earlier of--  7,a7 the   
date on which the ,secretary initiates  
an audit1 or otherwise demands payment1 
with respect to the shortfall of        
distributions1 or  7,b7 the last day of 
the second taxable year that begins     
after the end of the taxable year in    
which the tax under subsection 7a7 is   
imposed4  4  #d4 ,harmonization of      
treatment of ,i,r,as with employer plans
  7a7 ,elimination of additional tax on 
certain distributions ,section          
#gb7t77#b77;,a7 of the ,internal        
,revenue ,code of #aihf is amended--    
7#a7 by striking or at the end of clause
 7vii72  7#b7 by striking the period at 
the end of clause 7viii7 and inserting 1
 or2 and  7#c7 by inserting after clause
 7viii7 the following new clause3  7ix7 
attributable to withdrawal of interest  
or other income earned on excess        
contributions 7as defined in section    
#digc7;b7 7without regard to the second 

to last sentence thereof77 to an        
individual retirement plan4  4  7b7     
,repeal of tax disqualification penalty 
7#a7 ,in general ,paragraph 7#b7 of     
section #djh7;e7 of the ,internal       
,revenue ,code of #aihf is repealed4    
7#b7 ,conforming amendments  7,a7       
,section #djh7;e77#a7 of the ,internal  
,revenue ,code of #aihf is amended by   
striking 7#b7 or4  7,b7 ,sections       
#bbj7;e77#b71 #bbc7;e77#b71 and #ecj7;e7
 of the ,internal ,revenue ,code of     
#aihf are each amended by striking      
paragraphs 7#b7 and 7#d7 of section     
#djh7;e7 and inserting section          
#djh7;e77#d74  7,c7 ,section            
#dige7;c77#c7 of the ,internal ,revenue 
,code of #aihf is amended by striking   
the account ceases to be an individual  
retirement account by reason of the     
application of section #djh7;e77#b77;,a7
 or if4  7c7 ,statute of limitations    
,section #feja7l7 of the ,internal      
,revenue ,code of #aihf is amended--    
7#a7 in paragraph 7#a71 by inserting    

7other than with respect to an          
individual retirement plan7 after       
section #dige2 and  7#b7 by adding at   
the end the following new paragraph3    
7#d7 ,individual retirement plans ,for  
purposes of any tax imposed by section  
#digc1 #digd1 or #dige in connection    
with an individual retirement plan1 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 7or failure to act7 giving rise
 to the liability for such tax occurred4
 ,in the case of a person who is not    
required to file an income tax return   
for such year--  7,a7 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 return1 and  7,b7 
the #c-year period referred to in       
subsection 7a7 with respect to the      
return shall be deemed to begin on the  

date by which the return would have been
 required to be filed 7excluding any    
extension thereof74  4  #e4 ,expansion  
of employee plans compliance resolution 
system  7a7 ,,epcrs for ,i,r,as ,the    
,secretary shall expand the ,employee   
,plans ,compliance ,resolution ,system  
to allow trustees1 custodians1 and      
issuers of individual retirement plans  
7as defined in section #ggja7;a77#cg7 of
 the ,internal ,revenue ,code of #aihf7 
to address inadvertent failures for     
which the owner of an individual        
retirement plan was not at fault1       
including 7but not limited to7--  7#a7  
waivers of the excise tax which would   
otherwise apply under section #digd of  
the ,internal ,revenue ,code of #aihf2  
7#b7 under the self-correction component
 of the ,employee ,plans ,compliance    
,resolution ,system1 waivers of the     
#fj-;day deadline for a rollover where  
the deadline is missed for reasons      
beyond the reasonable control of the    
account owner2 and  7#c7 rules          

permitting a nonspouse beneficiary to   
return distributions to an inherited    
individual retirement plan described in 
section #djh7;d77#c77;,c7 of the        
,internal ,revenue ,code of #aihf in a  
case where1 due to an inadvertent error 
by a service provider1 the beneficiary  
had reason to believe that the          
distribution could be rolled over       
without inclusion in income of any part 
of the distributed amount4  7b7         
,required minimum distribution          
corrections ,the ,secretary shall expand
 the ,employee ,plans ,compliance       
,resolution ,system to allow plans to   
which such system applies and trustees1 
custodians1 issuers1 and owners of      
individual retirement plans to          
self-correct1 without an excise tax1 any
 inadvertent failures pursuant to which 
a distribution is made no more than #ahj
 days after it was required to be made4 
7c7 ,inadvertent failure ,for purposes  
of this section-- 7#a7 ,in general      
,except as provided in paragraph 7#b71  

the term inadvertent failure means a    
failure that occurs despite the         
existence of practices and procedures   
which--  7,a7 satisfy the standards set 
forth in section #d4jd of ,revenue      
,procedure #bjah-eb 7or any successor   
provision72 or  7,b7 satisfy similar    
standards in the case of an individual  
retirement plan4  7#b7 ,correction by   
owner of individual retirement plan ,in 
the case of a correction by an owner of 
an individual retirement plan under     
subsection 7b71 the term inadvertent    
failure means a failure due to          
reasonable cause4  #f4 ,effective date  
7a7 ,in general ,subject to subsections 
7b7 and 7c71 this ,act and the          
amendments made by this ,act shall take 
effect on the date of the enactment of  
this ,act4  7b7 ,transition provisions  
7#a7 ,in general ,the amendments made by
 this ,act shall apply to any           
determination of or affecting liability 
for taxes1 interest1 or penalties which 
is made on or after the date of the     

enactment of this ,act1 without regard  
to whether the conduct upon which the   
determination is based occurred before  
such date of enactment4 ,notwithstanding
 the preceding sentence1 nothing in the 
amendments made by section #d7;a7 shall 
be construed to create an inference with
 respect to the law in effect prior to  
the effective date of such amendments4  
7#b7 ,calculation of correction window  
in certain cases ,in the case of an     
error that would have been eligible for 
correction under section #digc7;i7 or   
#digd7;e7 7as added by this section7 of 
the ,internal ,revenue ,code of #aihf if
 tax had not been imposed under         
#digc7;a7 or #digd7;a71 as the case may 
be1 of such ,code before the date of the
 enactment of this ,act1 the correction 
window referred to in sections #digc7;i7
 and #digd7;e7 of such ,code shall be   
the period beginning on the date on     
which such tax was imposed and ending on
 the earlier of--  7,a7 the date on     
which the ,secretary of the ,treasury   

initiates an audit or otherwise demands 
payment with respect to the conduct     
described in section #digc7;a7 or       
#digd7;a71 as the case may be1 of such  
,code2 or  7,b7 the last day of the     
second taxable year that begins after   
the taxable year in which the date of   
the enactment of this ,act occurs4  7c7 
,implementation ,section #b shall be    
implemented as soon as reasonably       
practicable after the enactment of this 
,act but in no case later than the date 
that is #a year after the date of the   
enactment of this ,act4