I
117th CONGRESS
2d Session
H. R. 9286
IN THE HOUSE OF REPRESENTATIVES
November 10, 2022
Mr. Kind (for himself and Mr. Kelly of Pennsylvania) 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 treat certain price protection payments as eligible rollover distributions, and for other purposes.
Price protection payments treated as eligible rollover distributions
In general
Section 402(c)(4) of the Internal Revenue Code of 1986 is amended—
by striking For purposes of
and inserting—
In general
For purposes of
,
by striking If all or any portion
and all that follows through the period and inserting—
Special rule for 2020
If all or any portion
, and
by adding at the end the following new subparagraphs:
Certain price protection payments treated as eligible rollover distributions
Distributions prior to 2023
In the case of a price protection payment made after December 12, 2019, with respect to a plan year ending before January 1, 2023, such payment will be treated as an eligible rollover distribution if such payment is made pursuant to a price protection agreement which provides a payment to a participant (or beneficiary of such participant) who separates from service with an employer due to retirement, death or disability.
Distributions after 2022
In the case of a price protection payment made with respect to a plan year ending after December 31, 2022, such payment will be treated as an eligible rollover distribution if such payment is made pursuant to a price protection agreement which—
is offered as part of an employee stock ownership plan,
covers any separation of service of a plan participant regardless of the reason for such separation, and
pays price protection payments upon commencement of plan distributions under section 409(o)(1)(A)(i).
Definitions
For purposes of this paragraph—
Price protection agreement
The term price protection agreement
means an agreement between an employer maintaining an employee stock ownership plan and the trustee of such plan, pursuant to which a participant or beneficiary receives a price protection payment for stock distributions from such plan following an exempt loan taken on by the employer.
Price protection payment
The term price protection payment
means an amount paid to a plan participant or beneficiary pursuant to a price protection agreement if such agreement provides that price protection payments will be made—
within a specified period of time, not to exceed the shorter of 5 years or the life of an exempt loan, following the purchase of employer securities with such loan, and
in an amount equal to the excess, if any, of—
the fair market value of the shares of employer securities at the time of the distribution determined without regard to such exempt loan, over
the fair market value of the employer securities at the time of distribution.
Employee stock ownership plan
The term employee stock ownership plan
has the meaning given such term in section 4975(e)(7).
Exempt loan
The term exempt loan
means a loan described in section 4975(d)(3).
.
Price protection agreements not considered discriminatory
Section 401(a)(5) of such Code is amended by adding at the end the following new subparagraph:
Price protection agreements
A plan shall not be considered discriminatory within the meaning of paragraph (4) merely because the plan is subject to a price protection agreement (as defined in section 402(c)(4)(D)(ii)) which favors highly compensated employees.
.
Price protection payments not taken into account for purposes of deduction limits
Section 404 of such Code is amended by adding at the end the following new subsection:
Price protection payments not taken into account for purposes of deduction limits
Price protection payments (as defined in section 402(c)(4)(D)(i)) shall not be subject to any limitation contained in subsection (a)(3).
.
Effective dates
The amendments made by subsection (a) shall apply to amounts paid after December 12, 2019.
The amendments made by subsections (b) and (c) shall apply to amounts paid in plan years ending after December 31, 2022.