,i  #aaf? ,,congress  #b;d ,session  ,h4
 ,r4 #gadi  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,june #aa1 #bjbj,mr4  
,palm] 7= himself1 ,mr4 ,cook1 ,mr4     
,hag$orn1 ,mrs4 ,wagn]1 ,mr4 ,ad]holt1  
,mr4 ,/iv]s1 ,mr4 ,bald]son1 ,mr4 ,p]ry1
 ,mr4 ,gibbs1 & ,mr4 ,/ew>t7 introduc$ !
 foll[+ bill2 :i* 0 ref]r$ to !         
,committee on ,ways & ,means  ,a ,,bill 
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to provide special disposition    
rules = unus$ b5efits 9 flexible sp5d+  
arrangem5ts ( individuals = cal5d> ye>  
#bjbj4  #a4 ,special disposition rules =
 unus$ b5efits 9 flexible sp5d+         
arrangem5ts ( individuals 9 plan ye>    
#bjbj  7a7 ,f,s,as mu/ all[ di/ribution 
or rollov] 9 #bjbj ,= purposes (        
sections #ajf1 #abe1 & #abi ( ! ,int]nal
 ,rev5ue ,code ( #aihf1 a flexible sp5d+
 arrangem5t mu/ all[ a qualifi$ #bjbj   
di/ribution or rollov]4  7b7 ,taxes     
appli$ to c]ta9 di/ributions ,= purposes
 ( sections #abe7;a7 & #abi7;a7 ( su*   
,code1 su* sections %all n apply to any 

b5efit di/ribut$ f a flexible sp5d+     
arrangem5t = a use o!r ?an ! qualify+   
b5efit = :i* su* arrangem5t 0 e/abli%$4 
7c7 ,special rule = disposition ( unus$ 
b5efits ,= purposes ( su* ,code1 a plan 
%all n fail to be treat$ z a cafet]ia   
plan1 heal? flexible sp5d+ arrangem5t1  
or dep5d5t c>e flexible sp5d+ arrangem5t
 m]ely because su* arrangem5t provides =
 a qualifi$ #bjbj di/ribution or        
rollov]4  7d7 ,qualifi$ #bjbj           
di/ribution or rollov] ,= purposes ( ?is
 section1 ! t]m qualifi$ #bjbj          
di/ribution or rollov] means1 = plan ye>
 #bjbj1 any di/ribution at any "t to an 
individual ( all or a portion ( !       
balance 9 ! employee's acc\nt "u su*    
arrangem5t1 or ! rollov] ( ! balance 9 !
 employee's acc\nt to plan ye> #bjba4   
7e7 ,application ,?is section %all only 
apply to di/ributions or rollov]s 9 plan
 ye> #bjbj4  #b4 ,*ange 9 election am\nt
  7a7 ,9 g5]al ,a plan or o!r arrangem5t
 t o!rwise satisfies all applicable     
requirem5ts ( sections #ajf & #abe ( !  

,int]nal ,rev5ue ,code ( #aihf 7includ+ 
any rules or regulations !reund]7 %all n
 fail to be treat$ z a cafet]ia plan or 
heal? flexible sp5d+ arrangem5t m]ely   
because su* plan or arrangem5t all[s an 
employee to make1 ) respect to ! rema9+ 
portion ( a p]iod ( cov]age )9 !        
applicable p]iod-- 7#a7 an election     
modify+ ! am\nt ( su* employee's        
contributions to su* a heal? flexible   
sp5d+ arrangem5t 7)\t reg>d to any *ange
 9 /atus71 or  7#b7 an election modify+ 
! am\nt ( su* employee's elective paid  
"t (f4 ,any election z modifi$ "u       
p>agraph 7#a7 %all n exce$ ! limitation 
applicable "u section #abe7;i7 = !      
taxable ye>4  7b7 ,"o-,"t application   
,p>agraphs 7#a7 & 7#b7 ( subsection 7a7 
%all ea* apply to only #a election *ange
 describ$ 9 su* p>agraph ) respect to an
 employee 79 addition to any o!r        
election *anges dur+ a p]iod ( cov]age  
p]mitt$ "u ! plan or arrangem5t )\t     
reg>d to ?is section74  7c7 ,applicable 
p]iod ,= purposes ( ?is section1 ! t]m  

applicable p]iod means ! p]iod beg9n+ on
 ! date ( ! enactm5t ( ?is ,act & end+  
on ,decemb] #ca1 #bjbj4  #c4 ,ext5sion (
 grace p]iods1 etc  7a7 ,9 g5]al ,a plan
 or o!r arrangem5t t o!rwise satisfies  
all applicable requirem5ts ( sections   
#ajf1 #abe1 or #abi ( ! ,int]nal ,rev5ue
 ,code 7includ+ any rules or regulations
 !reund]7 %all n fail to be treat$ z a  
cafet]ia plan1 heal? flexible sp5d+     
arrangem5t1 or dep5d5t c>e flexible     
sp5d+ arrangem5t 7:i*ev] is applicable7 
m]ely because su* plan or arrangem5t    
ext5ds ! grace p]iod = ! plan ye> end+ 9
 #bjbj to #ab mon?s aft] ! end ( su*    
plan ye>1 ) respect to unus$ b5efits or 
contributions rema9+ 9 a heal? flexible 
sp5d+ arrangem5t or a dep5d5t c>e       
flexible sp5d+ arrangem5t4  7b7         
,po/-,t]m9ation reimbursem5ts f heal?   
,f,s,as ,a plan or o!r arrangem5t t     
o!rwise satisfies all applicable        
requirem5ts ( sections #ajf & #abe ( !  
,int]nal ,rev5ue ,code ( #aihf 7includ+ 
any rules or regulations !reund]7 %all n

 fail to be treat$ z a cafet]ia plan or 
heal? flexible sp5d+ arrangem5t m]ely   
because su* plan or arrangem5t all[s 7"u
 rules simil> to ! rules applicable to  
dep5d5t c>e flexible sp5d+ arrangem5ts7 
an employee :o ceases p>ticipation 9 !  
plan dur+ cal5d> ye> #bjbj to cont9ue to
 receive reimbursem5ts f unus$ b5efits  
or contributions ?r\gh ! end ( ! plan   
ye> 7includ+ any grace p]iod1 tak+ into 
acc\nt any modification ( a grace p]iod 
p]mitt$ "u subsection 7a774  7c7        
,def9itions ,any t]m us$ 9 ?is section  
:i* is also us$ 9 section #ajf1 #abe1 or
 #abi ( ! ,int]nal ,rev5ue ,code ( #aihf
 or ! rules or regulations !reund] %all 
h ! same mean+ z :5 us$ 9 su* section or
 rules or regulations4