I

104TH CONGRESS

1ST SESSION H. R. 1119

To amend the Internal Revenue Code of 1986 to revise the treatment of

deferred compensation plans of State and local governments and taxexempt organizations.

IN THE HOUSE OF REPRESENTATIVES

MARCH 2, 1995

Mr. RAMSTAD 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 revise

the treatment of deferred compensation plans of State

and local governments and tax-exempt organizations.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. TREATMENT OF DEFERRED COMPENSATION

4 PLANS OF STATE AND LOCAL GOVERNMENTS

5 AND TAX-EXEMPT ORGANIZATIONS.

6 (a) SPECIAL RULES FOR PLAN DISTRIBUTIONS.—

7 Paragraph (9) of section 457(e) of the Internal Revenue

8 Code of 1986 (relating to other definitions and special

9 rules) is amended to read as follows:
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1 ‘‘(9) BENEFITS TREATED AS NOT MADE AVAIL2 ABLE BY REASON OF CERTAIN ELECTIONS, ETC.—

3 ‘‘(A) TOTAL AMOUNT PAYABLE IS $3,500

4 OR LESS.—The total amount payable to a par5 ticipant under the plan shall not be treated as

6 made available merely because the participant

7 may elect to receive such amount (or the plan

8 may distribute such amount without the partici9 pant’s consent) if—

10 ‘‘(i) such amount does not exceed

11 $3,500, and

12 ‘‘(ii) such amount may be distributed

13 only if—

14 ‘‘(I) no amount has been deferred

15 under the plan with respect to such

16 participant during the 2-year period

17 ending on the date of the distribution,

18 and

19 ‘‘(II) there has been no prior dis20 tribution under the plan to such par21 ticipant to which this subparagraph

22 applied.

23 A plan shall not be treated as failing to meet

24 the distribution requirements of subsection (d)
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1 by reason of a distribution to which this sub2 paragraph applies.

3 ‘‘(B) ELECTION TO DEFER COMMENCE4 MENT OF DISTRIBUTIONS.—The total amount

5 payable to a participant under the plan shall

6 not be treated as made available merely because

7 the participant may elect to defer commence8 ment of distributions under the plan if—

9 ‘‘(i) such election is made after

10 amounts may be made available under the

11 plan in accordance with subsection

12 (d)(1)(A) and before commencement of

13 such distributions, and

14 ‘‘(ii) the participant may make only 1

15 such election.’’

16 (b) COST-OF-LIVING ADJUSTMENT OF MAXIMUM DE17 FERRAL AMOUNT.—Subsection (e) of section 457 of such

18 Code is amended by adding at the end the following new

19 paragraph:

20 ‘‘(14) COST-OF-LIVING ADJUSTMENT OF MAXI21 MUM DEFERRAL AMOUNT.—The Secretary shall ad22 just the $7,500 amount specified in subsections

23 (b)(2) and (c)(1) at the same time and in the same

24 manner as under section 415(d), except that the

25 base period in applying such section for purposes of
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1 this paragraph shall be the calendar quarter begin2 ning October 1, 1994.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 the date of the enactment of this Act.

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