H.R. 3287 – SEAL 401(k) Savings Act

112th CONGRESS

1st Session

H. R. 3287

IN THE HOUSE OF REPRESENTATIVES

November 1, 2011

Mr. Sam Johnson of Texas (for himself and Mr. Neal) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to modify the rules relating to loans made from a qualified employer plan, and for other purposes.

Short title

This Act may be cited as the Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011 or the SEAL 401(k) Savings Act.

Extended rollover period for the rollover of plan loan offset amounts in certain cases

(a)

In general

Paragraph (3) of section 402(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(C)

Rollover of certain plan loan offset amounts

(i)

In general

In the case of a qualified plan loan offset amount, paragraph (1) shall not apply to any transfer of such amount made after the due date (including extensions) for filing the return of tax for the taxable year in which such amount is treated as distributed from a qualified employer plan.

(ii)

Qualified plan loan offset amount

For purposes of this subparagraph, the term qualified plan loan offset amount means a plan loan offset amount which is treated as distributed from a qualified employer plan to a participant or beneficiary solely by reason of—

(I)

the termination of the qualified employer plan, or

(II)

the failure to meet the repayment terms of the loan from such plan because of the separation from service of the participant (whether due to layoff, cessation of business, termination of employment, or otherwise).

(iii)

Plan loan offset amount

For purposes of clause (ii), the term plan loan offset amount means the amount by which the participant's accrued benefit under the plan is reduced in order to repay a loan from the plan.

(iv)

Limitation

This subparagraph shall not apply to any plan loan offset amount unless such plan loan offset amount relates to a loan to which section 72(p)(1) does not apply by reason of section 72(p)(2).

(v)

Qualified employer plan

For purposes of this subsection, the term qualified employer plan has the meaning given such term by section 72(p)(4).

(b)

Conforming amendment

Subparagraph (A) of section 402(c)(3) of the Internal Revenue Code of 1986 is amended by striking subparagraph (B) and inserting subparagraphs (B) and (C).

(c)

Effective date

The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.

Modification of rules governing hardship distributions

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall modify Treasury Regulation section 1.401(k)–1(d)(3)(iv)(E) to—

(1)

delete the prohibition imposed by paragraph (2) thereof, and

(2)

to make any other modifications necessary to carry out the purposes of section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986.

SEAL 401(k) Savings Act

Legislative Activity

Bill Text