,i #aaith ,,congress #b;d ,session ,h4 ,r4 #ihac ,,in ,,the ,,house ,,of ,,representatives ,july #ba1 #bjbf,mr4 ,neal 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 impose limitations on high-income taxpayers with large retirement account balances4 #a4 ,contribution limit for individual retirement plans of high-income taxpayers with large account balances 7a7 ,contribution limit 7#a7 ,in general ,subpart ,a of part ,i of subchapter ,d of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following3 #dji;,b4 ,contribution limit on individual retirement plans of high-income taxpayers with large account balances 7a7 ,general rule ,notwithstanding any other provision of this title1 in the case of an individual who is an applicable taxpayer for any taxable year1 no applicable annual contributions for such taxable year shall be made by1 or on behalf of1 such individual to any individual retirement plan to the extent such applicable annual contributions exceed the excess 7if any7 of-- 7#a7 the applicable dollar amount for such taxable year1 over 7#b7 the aggregate vested balances to the credit of the individual 7whether as a participant1 owner1 or beneficiary7 in all applicable retirement plans 7determined as of the close of the calendar year preceding the calendar year in which such taxable year begins74 7b7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,applicable annual contribution 7,a7 ,in general ,except as provided in this paragraph1 the term applicable annual contribution means any contribution to an individual retirement plan4 7,b7 ,contributions to ,,sep and ,simple plans ,in the case of any employer or employee contributions by1 or on behalf of1 an individual to a simplified employee pension under section #djh7k7 or a simple retirement account under section #djh7p7-- 7i7 such contributions shall not be treated as applicable annual contributions for purposes of applying the limitation under subsection 7a71 but 7ii7 the excess described in subsection 7a7 shall be reduced by the amount of such contributions in applying such limitation to other applicable annual contributions with respect to such individual4 7,c7 ,rollover contributions disregarded ,a rollover contribution under section #djb7;c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 #deg7;e77#af71 or #ebi7;c77#c77;,e7 shall not be treated as an applicable annual contribution4 7,d7 ,accounts acquired by death or divorce or separation ,the acquisition of an individual retirement plan 7or the transfer to or contribution of amounts to an individual retirement plan7 by reason of-- 7i7 the death of another individual1 or 7ii7 divorce or separation 7pursuant to section #djh7;d77#f771 shall not be treated as an applicable annual contribution4 7#b7 ,applicable dollar amount ,the term applicable dollar amount means #aj1jjj1jjj4 7#c7 ,applicable retirement plan ,the term applicable retirement plan means-- 7,a7 a defined contribution plan to which section #dja7;a7 or #djc7;a7 applies1 7,b7 an annuity contract under section #djc7;b71 7,c7 an eligible deferred compensation plan described in section #deg7;b7 which is maintained by an eligible employer described in section #deg7;e77#a77;,a71 or 7,d7 an individual retirement plan4 7#d7 ,applicable taxpayer 7,a7 ,in general ,the term applicable taxpayer means1 with respect to any taxable year1 a taxpayer whose modified adjusted gross income for the preceding taxable year exceeds the amount determined under subparagraph 7,b74 7,b7 ,dollar limit ,the amount determined under this subparagraph for any taxable year is-- 7i7 #bbe1jjj for a married individual not filing a joint return1 7ii7 #dbe1jjj in the case of an individual who is a head of household 7as defined in section #b7;b771 7iii7 #dej1jjj in the case of an individual who is a married individual filing a joint return or a surviving spouse 7as defined in section #b7;a771 and 7iv7 #djj1jjj in any other case4 7,c7 ,modified adjusted gross income ,for purposes of this paragraph1 the term modified adjusted gross income means adjusted gross income determined without regard to sections #iaa1 #ica1 and #icc1 without regard to any deduction for applicable annual contributions to individual retirement plans to which subsection 7a7 applies1 and without regard to any increase in minimum required distributions by reason of section #digd7;f74 7#e7 ,adjustments for inflation 7,a7 ,in general ,in the case of any taxable year beginning after #bjbg1 each of the dollar amounts in paragraphs 7#b7 and 7#d77;,b7 shall be increased by an amount equal to the product of-- 7i7 such dollar amount1 and 7ii7 the cost-of-living adjustment under section #a7;f77#c7 for the calendar year in which such taxable year begins1 determined by substituting calendar year #bjbf for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7,b7 ,rounding ,if any amount as adjusted under subparagraph 7,a7 is not-- 7i7 in the case of the dollar amount under paragraph 7#b71 a multiple of #bej1jjj1 such amount shall be rounded to the next lowest multiple of #bej1jjj1 and 7ii7 in the case of a dollar amount under paragraph 7#d77;,b71 a multiple of #a1jjj1 such amount shall be rounded to the next lowest multiple of #a1jjj4 7c7 ,regulations ,the ,secretary shall prescribe such regulations and guidance as are necessary or appropriate to carry out the purposes of this section1 including regulations or guidance that provide for the application of this section and section #digd7;f7 in the case of plans with a valuation date other than the last day of a calendar year4 4 7#b7 ,conforming amendments 7,a7 ,the table of contents for subpart ,a of part ,i of subchapter ,d of chapter #a of such ,code is amended by adding after the item relating to section #dji;,a the following new item3 ,sec4 #dji;,b4 ,contribution limit on individual retirement plans of high-income taxpayers with large account balances4 4 7,b7 ,section #djh7r7 of such ,code is amended by adding at the end the following new paragraph3 7#c7 ,for additional limitations on contributions to individual retirement plans with large account balances1 see section #dji;,b4 4 7b7 ,excise tax on excess applicable annual contributions 7#a7 ,in general ,section #digc of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7i7 ,special rule for individual retirement plans with excess applicable annual contributions ,for purposes of this section1 in the case of individual retirement plans1 the excess contributions otherwise determined under this section with respect to any taxable year shall be increased by the sum of-- 7#a7 the excess of the applicable annual contributions 7within the meaning of section #dji;,b7b77#a77 to such plans over the limitation under section #dji;,b7a7 for such taxable year1 reduced by the amount of any excess contributions determined under subsections 7b7 and 7f71 and 7#b7 the lesser of-- 7,a7 the amount determined under this subsection for the preceding taxable year with respect to such plans1 reduced by the aggregate distributions from such plans for the taxable year 7including distributions required under section #digd7;f77 to the extent not contributed in a rollover contribution to another eligible retirement plan in accordance with section #djb7;c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 and #deg7;e77#af71 or 7,b7 the amount 7if any7 by which the amount determined under section #dji;,b7a77#b7 for the taxable year exceeds the applicable dollar amount under section #dji;,b7b77#b7 for the taxable year4 4 7#b7 ,conforming amendments ,subsections 7b7 and 7f7 of section #digc of such ,code are each amended by inserting 1 except as further provided in subsection 7i7 after ,for purposes of this section4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbf4 #b4 ,increase in minimum required distributions for high-income taxpayers with large retirement account balances 7a7 ,in general ,section #digd of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,increase in minimum required distributions for high-income taxpayers with large aggregate account balances 7#a7 ,in general ,if this subsection applies to a payee who is an applicable taxpayer 7as defined in section #dji;,b7b77#d77 for a taxable year-- 7,a7 all applicable retirement plans 7other than individual retirement accounts7 of the payee taken into account in computing the excess described in paragraph 7#c77;,a7 shall be treated as #a plan solely for purposes of applying this section to the increase in minimum required distributions for such taxable year determined under subparagraph 7,b71 and 7,b7 the minimum required distributions under this section for all plans treated as #a plan under subparagraph 7,a7 with respect to such payee for such taxable year shall be increased by the excess 7if any7 of-- 7i7 the sum of-- 7,i7 if paragraph 7#b7 applies to such taxable year1 the applicable ,roth excess amount1 plus 7,,ii7 #ej percent of the excess determined under paragraph 7#c77;,a71 reduced by the applicable ,roth excess amount1 over 7ii7 the sum of the minimum required distributions 7determined without regard to this subsection7 for all such plans4 7#b7 ,applicable ,roth excess amount 7,a7 ,application ,for purposes of paragraph 7#a77;,b77i71 this paragraph applies to a taxable year of a payee if the aggregate vested balances to the credit of the payee 7whether as a participant1 owner1 or beneficiary7 in all applicable retirement plans 7determined as of the close of the calendar year preceding the calendar year in which the taxable year begins7 exceed #bjj percent of the applicable dollar amount for the calendar year in which the taxable year begins4 7,b7 ,applicable ,roth excess amount ,the applicable ,roth excess amount for any taxable year to which this paragraph applies is an amount equal to the lesser of-- 7i7 the excess determined under subparagraph 7,a71 or 7ii7 the aggregate balances to the credit of the payee 7whether as a participant1 owner1 or beneficiary7 in all ,roth ,i,r,as and designated ,roth accounts 7within the meaning of section #djb;,a7 as of the close of the calendar year preceding the calendar year in which the taxable year begins4 7#c7 ,application ,this subsection shall apply to a payee for a taxable year-- 7,a7 if the aggregate vested balances to the credit of the payee 7whether as a participant1 owner1 or beneficiary7 in all applicable retirement plans 7determined as of the close of the calendar year preceding the calendar year in which the taxable year begins7 exceed the applicable dollar amount for the calendar year in which the taxable year begins1 and 7,b7 without regard to whether amounts with respect to the payee are otherwise required to be distributed under section #dja7;a77#i71 #djc7;b77#aj71 #djh7;a77#f71 #djh7;b77#c71 or #deg7;d77#b74 7#d7 ,coordination and allocation 7,a7 ,minimum distribution requirements ,if this subsection applies to a payee for any taxable year-- 7i7 this section shall apply first to minimum required distributions determined without regard to this subsection and then to any increase in minimum required distributions by reason of this subsection1 and 7ii7 nothing in this subsection shall be construed to affect the amount of any minimum required distribution determined without regard to this subsection or the plan or plans from which it is required to be distributed4 7,b7 ,allocation of increase in minimum required distributions 7i7 ,in general ,except as provided in clauses 7ii7 and 7iii71 the taxpayer may1 in such form and manner as the ,secretary may prescribe1 allocate any increase in minimum required distributions by reason of this subsection to applicable retirement plans treated as #a plan under subparagraph 7,a7 in such manner as the taxpayer chooses4 7ii7 ,allocation to ,roth ,i,r,as and accounts ,in the case of a taxable year to which paragraph 7#b7 applies1 the portion of any increase in minimum required distributions by reason of this subsection equal to the applicable ,roth excess amount shall be allocated first to ,roth ,i,r,as and then to designated ,roth accounts 7within the meaning of section #djb;,a7 of the payee4 7iii7 ,special rules for employee stock ownership plans 7,i7 ,in general ,in the case of a payee to which this subsection applies for any taxable year who has account balances in #a or more employee stock ownership plans 7as defined in section #dige7;e77#g77 any portion of which is invested in employer securities which are not readily tradable on an established securities market1 the increase in minimum required distributions by reason of this subsection shall not be allocated to any such portion4 7,,ii7 ,exception for amounts attributable to rollover ,subclause 7,i7 shall not apply to so much of any account balance as is attributable to a rollover contribution after the date of the enactment of this subsection to the account in accordance with section #djb7;c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 or #deg7;e77#af74 7#e7 ,distributions not eligible for rollovers ,for purposes of determining whether a distribution is an eligible rollover distribution1 any distribution from an applicable retirement plan which is attributable to any increase in minimum required distributions by reason of this subsection shall be treated as a distribution required under section #dja7;a77#i71 #djc7;b77#aj71 #djh7;a77#f71 #djh7;b77#c71 or #deg7;d77#b71 whichever is applicable4 7#f7 ,roth distributions treated as qualified distributions ,in the case of any distribution from a ,roth ,,ira1 or designated ,roth account 7within the meaning of section #djb;,a71 of the payee by reason of the allocation of an increase in minimum required distributions under this subsection1 such distribution shall be treated as a qualified distribution under section #djh;,a7d77#b7 or #djb;,a7d77#b71 as the case may be4 7#g7 ,definitions ,for purposes of this subsection1 any term used in this subsection which is also used in section #dji;,b shall have the same meaning as when such term is used in such section4 4 7b7 ,special rules 7#a7 ,distribution rights 7,a7 ,qualified trusts 7i7 ,in general ,section #dja7;a7 of the ,internal ,revenue ,code of #aihf is amended by inserting after paragraph 7#ci7 the following new paragraph3 7#dj7 ,immediate distribution right ,a trust forming part of a defined contribution plan shall not constitute a qualified trust under this section unless an employee who certifies to the plan that the employee is a taxpayer who is subject to the distribution requirements of section #digd7;f7 may elect to receive a distribution from the employee's account balance under the plan in such amount as the employee may elect1 including any amounts attributable to a qualified cash or deferred arrangement 7as defined in subsection 7k77#b774 ,the preceding sentence shall not apply in the case of any portion of an account balance to which section #digd7;f77#d77;,b77iii77,i7 applies4 4 7ii7 ,application to employee's annuities ,section #djd7;a77#b7 of such ,code is amended by striking and 7#cg7 and inserting 7#cg71 and 7#dj74 7,b7 ,annuity contracts 7i7 ,custodial accounts ,section #djc7;b77#g77;,a7 of such ,code is amended by adding at the end the following new flush sentence3 ,notwithstanding clause 7i71 the custodial account shall permit an employee who certifies that the employee is a taxpayer who is subject to the distribution requirements of section #digd7;f7 to elect to receive a distribution from the employee's custodial account in such amount as the employee may elect4 4 7ii7 ,annuity contracts ,section #djc7;b77#aa7 of such ,code is amended by adding at the end the following new sentence3 ,notwithstanding subparagraphs 7,a71 7,b71 7,c71 and 7,d71 the annuity contract shall permit an employee who certifies that the employee is a taxpayer who is subject to the distribution requirements of section #digd7;f7 to elect to receive a distribution of contributions made pursuant to a salary reduction agreement 7within the meaning of section #djb7;g77#c77 from the employee's annuity contract in such amount as the employee may elect44 7,c7 ,governmental plans ,section #deg7;d77#a7 of such ,code is amended by adding at the end the following new flush sentence3 ,notwithstanding subparagraph 7,a71 an eligible deferred compensation plan of an employer described in subsection 7e77#a77;,a7 shall permit a participant or beneficiary who certifies that the participant or beneficiary is a taxpayer who is subject to the distribution requirements of section #digd7;f7 to elect to receive a distribution from the plan in such amount as the participant or beneficiary may elect4 4 7#b7 ,exception from #aj percent additional tax on early distributions ,section #gb7t77#b7 of such ,code is amended by adding at the end the following new subparagraph3 7,o7 ,distributions of excess balances ,distributions from an applicable retirement plan 7within the meaning of section #dji;,b77 to the extent such distributions for the taxable year do not exceed the amount required to be distributed from such plan under section #digd7;f74 4 7#c7 ,withholding ,section #cdje7;b7 of such ,code is amended by adding at the end the following new paragraph3 7#c7 ,additional withholding for required distributions from high balance retirement accounts 7,a7 ,in general ,for purposes of this section1 a distribution pursuant to section #dja7;a77#dj71 the last sentence of section #djc7;b77#g77;,a71 the last sentence of section #djc7;b77#aa71 or the last sentence of section #deg7;d77#a7 shall be treated as a nonperiodic distribution1 except that in applying this subsection to such distribution-- 7i7 paragraph 7#a7 shall be applied by substituting #cg percent for #aj percent1 and 7ii7 no election may be made under paragraph 7#b7 with respect to such distribution4 7,b7 ,exception ,subparagraph 7,a7 shall not apply to any qualified distribution from a designated ,roth account 7within the meaning of section #djb;,a74 4 7c7 ,conforming amendment ,section #digd7;b7 of the ,internal ,revenue ,code of #aihf is amended by striking section #dja7;a77#i7 and inserting subsection 7f7 or section #dja7;a77#i74 7d7 ,effective dates 7#a7 ,in general ,the amendments made by subsection 7a7 shall apply to taxable years beginning after ,december #ca1 #bjcc4 7#b7 ,plan requirements ,the amendments made by subsection 7b7 shall apply to plan years beginning after ,december #ca1 #bjcc4