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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3209 Introduced in House (IH)]

  2d Session
                                H. R. 3209

  To amend the Internal Revenue Code of 1986 to increase the maximum 
     amount deferrable under a 457 plan for any year to the amount 
   deferrable for such year under a 401(k) plan, and to require that 
                 amounts in 457 plans be held in trust.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 1996

 Mr. Bereuter 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 increase the maximum 
     amount deferrable under a 457 plan for any year to the amount 
   deferrable for such year under a 401(k) plan, and to require that 
                 amounts in 457 plans be held in trust.

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

SECTION 1. INCREASE OF MAXIMUM AMOUNT DEFERRABLE UNDER 457 PLAN TO 
              AMOUNT DEFERRABLE UNDER 401(K) PLAN FOR SAME YEAR AND 
              REQUIREMENT THAT AMOUNTS IN 457 PLANS BE HELD IN TRUST.

    (a) Increase in Amount Deferrable Under 457 Plan.--
            (1) In general.--Subparagraph (A) of section 457(b)(2) of 
        the Internal Revenue Code of 1986 (relating to deferred 
        compensation plans of State and local governments and tax-
        exempt organizations) is amended to read as follows:
                    ``(A) the limitation in effect for such taxable 
                year under section 402(g)(1), or''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (b) Trust Requirement.--
            (1) In general.--Paragraph (6) of section 457(b) of such 
        Code (relating to eligible deferred compensation plan defined) 
        is amended by striking the text following subparagraph (C) and 
        inserting the following:
        ``shall be held in trust for the exclusive benefit of 
        participants and their beneficiaries until made available to 
        participants or their beneficiaries.''
            (2) Special rules for trusts.--Section 457 of such Code is 
        amended by adding at the end the following new subsection:
    ``(g) Trusts and Participants.--
            ``(1) Taxability of trusts and participants.--For purposes 
        of this title--
                    ``(A) a trust described in subsection (b)(6) shall 
                be treated as an organization exempt from taxation 
                under section 501(a), and
                    ``(B) notwithstanding any other provision of this 
                title, amounts in the trust shall be includible in the 
                gross income of participants and beneficiaries only to 
                the extent, and at the time, provided in this section.
            ``(2) Custodial accounts and contracts.--For purposes of 
        this subsection and subsection (b)(6), custodial accounts and 
        contracts described in section 401(f) shall be treated as 
        trusts under rules similar to the rules under section 401(f).''
            (3) Effective dates.--
                    (A) State and local governments.--In the case of an 
                eligible employer (within the meaning of section 
                457(e)(1) of such Code) which is a State, political 
                subdivision of a State, or any agency or 
                instrumentality of a State or political subdivision of 
                a State, the amendments made by this subsection shall 
                apply to assets and income described in section 
                457(b)(6) of such Code and held by a plan on and after 
                the earlier of--
                            (i) the date which is 90 days after the 
                        close of the 1st session of the legislature of 
                        such State which begins after the date of the 
                        enactment of this Act, or
                            (ii) January 1, 1998.
                    (B) Tax exempt organizations.--In the case of an 
                eligible employer (within the meaning of section 
                457(e)(1) of such Code) not described in subparagraph 
                (A), the amendments made by this subsection shall apply 
                to assets and income described in section 457(b)(6) of 
                such Code and held by a plan on and after January 1, 
                1998.
                                 <all>
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