II 

115TH CONGRESS 

1ST SESSION S. 1076 

To amend the Employee Retirement Income Security Act of 1974 and the 

Internal Revenue Code of 1986 to modify certain provisions relating 

to multiemployer pensions, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 9, 2017 

Mr. SANDERS (for himself, Ms. BALDWIN, Mr. BROWN, Mr. FRANKEN, Ms. 

KLOBUCHAR, Mrs. MCCASKILL, Mr. PETERS, Mr. REED, Ms. STABENOW, 

and Mr. WHITEHOUSE) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

modify certain provisions relating to multiemployer pensions, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Keep Our Pension 

5 Promises Act’’. 


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1 SEC. 2. RESTORING ANTI-CUTBACK PROVISIONS. 

2 Section 201 of the Multiemployer Pension Reform 

3 Act of 2014 (division O of Public Law 113–235) and the 

4 amendments made by such section are repealed, and the 

5 Employee Retirement Income Security Act of 1974 and 

6 the Internal Revenue Code of 1986 shall be applied as if 

7 such section and amendments had never been enacted. 

8 SEC. 3. PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS. 

9 (a) IN GENERAL.—Section 4233 of the Employee Re10 tirement Income Security Act of 1974 (29 U.S.C. 1413), 

11 as amended by section 122 of the Multiemployer Pension 

12 Reform Act of 2014 (division O of Public Law 113–235), 

13 is amended to read as follows: 

14 ‘‘SEC. 4233. PARTITIONS OF ELIGIBLE MULTIEMPLOYER 

15 PLANS. 

16 ‘‘(a)(1) Upon the application by the plan sponsor of 

17 an eligible multiemployer plan for a partition of the plan, 

18 the corporation may order a partition of the plan in ac19 cordance with this section. The corporation shall make a 

20 determination regarding the application, in accordance 

21 with regulations promulgated by the corporation, not later 

22 than 270 days after— 

23 ‘‘(A) the date such application was filed; or 

24 ‘‘(B) if later, the date such application was 

25 completed. 


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1 ‘‘(2) At least 14 days before submitting an applica2 tion for partition of a plan under paragraph (1), the plan 

3 sponsor of the plan shall notify all participants and bene4 ficiaries of such application, in the form and manner pre5 scribed by regulations issued by the corporation. 

6 ‘‘(b) For purposes of this section, a multiemployer 

7 plan is an eligible multiemployer plan if— 

8 ‘‘(1) the plan is in critical status and is pro9 jected to become insolvent within the meaning of 

10 section 4245— 

11 ‘‘(A) during the current plan year or any 

12 of the 14 succeeding plan years; or 

13 ‘‘(B) during the current plan year or any 

14 of the 19 succeeding plan years, if the plan has 

15 a ratio of inactive participants to active partici16 pants that exceeds 2 to 1 and the funded per17 centage of the plan is less than 80 percent; 

18 ‘‘(2) the corporation determines, after consulta19 tion with the Participant and Plan Sponsor Advo20 cate selected under section 4004, that the plan spon21 sor has taken (or is taking concurrently with an ap22 plication for partition) all reasonable measures de23 scribed in section 432(e)(3)(A) of the Internal Rev24 enue Code of 1986, and has made (or is making) 


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1 benefit adjustments under section 432(e)(8) of such 

2 Code to reduce the risk of insolvency; 

3 ‘‘(3) 20 percent or more of the amount by 

4 which the liabilities of the plan exceed the value of 

5 plan assets is attributable to the service of partici6 pants whose employers— 

7 ‘‘(A) withdrew from the plan prior to the 

8 date of enactment of the Keep Our Pension 

9 Promises Act; and 

10 ‘‘(B) failed to pay (or are delinquent with 

11 respect to paying) the full amount of the em12 ployer’s withdrawal liability under section 

13 4201(b)(1) or as otherwise determined under 

14 an agreement with the plan; 

15 ‘‘(4) the corporation reasonably expects that— 

16 ‘‘(A) a partition of the plan will reduce the 

17 corporation’s expected long-term loss with re18 spect to the plan; and 

19 ‘‘(B) a partition of the plan is necessary 

20 for the plan to remain or become solvent; and 

21 ‘‘(5) the corporation certifies to Congress that 

22 after partition the corporation will continue to have 

23 the ability to meet existing financial assistance obli24 gations to other plans (including any liabilities asso25 ciated with multiemployer plans that are insolvent or 


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1 that are projected to become insolvent within 10 

2 years). 

3 ‘‘(c)(1) A partition under this section shall consist of 

4 a transfer to the plan created by the partition order of 

5 benefits to which eligible participants and beneficiaries 

6 were entitled under the plan that was partitioned, in an 

7 amount not to exceed the amount that would be guaran8 teed under section 4022A if the plan were insolvent as 

9 of the date of the partition order. 

10 ‘‘(2) The corporation’s partition order shall provide 

11 for an annual transfer by the corporation to the plan cre12 ated by the partition order of an amount equal to the year13 ly benefits that would be guaranteed under section 4022A 

14 to the eligible participants and beneficiaries if the plan 

15 were insolvent as of the date of the partition order. 

16 ‘‘(3)(A) Where practicable, the initial transfer in ac17 cordance with paragraph (2) shall be completed at least 

18 60 days prior to the plan year that immediately follows 

19 the partition start date. The partition order shall require 

20 that the initial transfer be sufficient to satisfy the guaran21 teed benefits in the first plan year of the partitioned plan. 

22 ‘‘(B) Subsequent transfers in accordance with para23 graph (2) shall be completed at least 60 days prior to the 

24 first day of each succeeding plan year. 


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1 ‘‘(d)(1)(A) The plan created by the partition order 

2 is a successor plan to which section 4022A applies. 

3 ‘‘(B) At the discretion of the plan sponsor, the plan 

4 created by the partition order may remain a part of the 

5 plan that was partitioned or be maintained as a separate 

6 plan. 

7 ‘‘(2)(A) The plan sponsor and the administrator of 

8 an eligible multiemployer plan prior to the partition shall 

9 be the plan sponsor and the administrator, respectively, 

10 of the plan created by the partition order, and shall adopt 

11 reasonable procedures to reduce administrative expenses 

12 and to coordinate benefit payments and communications 

13 with the participants and beneficiaries in the plan created 

14 by the partition order. 

15 ‘‘(B) Benefit payments equal to the amount of an eli16 gible participant or beneficiary’s guaranteed benefits shall 

17 be paid to such participant or beneficiary and may be— 

18 ‘‘(i) paid separately by the plan created by the 

19 partition order; or 

20 ‘‘(ii) paid in a single, monthly payment by the 

21 plan that was partitioned. 

22 ‘‘(3) In the event an employer withdraws from the 

23 plan that was partitioned, withdrawal liability shall be 

24 computed under section 4201 with respect to both the plan 


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1 that was partitioned and the plan created by the partition 

2 order. 

3 ‘‘(e) In addition to the payment of guaranteed bene4 fits under subsection (d)(2)(B), each eligible participant 

5 or beneficiary of the plan created by the partition order 

6 shall receive a monthly benefit for each month the benefit 

7 is in pay status in an amount that— 

8 ‘‘(1) the corporation, in consultation with the 

9 Participant and Plan Sponsor Advocate, determines 

10 to be fair to the plan, the participant or beneficiary, 

11 the employers, and the corporation; and 

12 ‘‘(2) when aggregated with the payment under 

13 subsection (d)(2)(B), results in a monthly benefit 

14 that is at least equal to the lesser of— 

15 ‘‘(A) the monthly nonforfeitable benefit for 

16 such participant or beneficiary payable under 

17 the plan that was partitioned; or 

18 ‘‘(B) 80 percent of the maximum benefit 

19 commencing at age 65 guaranteed under sec20 tion 4022(a) for participants and beneficiaries 

21 in terminated single employer plans, unreduced 

22 for early retirement. 

23 Such monthly benefit may be combined with the monthly 

24 payment under subsection (d)(2)(B)(ii). 


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1 ‘‘(f)(1) The corporation shall establish a legacy fund 

2 for the purposes of funding the administrative and benefit 

3 costs to the corporation arising from partitions under this 

4 section, as described in paragraph (2). 

5 ‘‘(2) Any administrative and benefit costs to the cor6 poration arising from a partition ordered under this sec7 tion in excess of amounts available in such legacy fund 

8 shall be paid from the fund for basic benefits guaranteed 

9 for multiemployer plans. 

10 ‘‘(g) Only one partition order shall be issued with re11 spect to each eligible multiemployer plan. 

12 ‘‘(h) For purposes of this subsection, the term ‘eligi13 ble participant or beneficiary’ means a participant or ben14 eficiary of an eligible multiemployer plan that is parti15 tioned in accordance with a petition order under this sec16 tion, and who is an employee or beneficiary of an employee 

17 of an employer that is described in subsection (b)(3). 

18 ‘‘(i) Not later than 14 days after the issuance of a 

19 partition order under this section, the corporation shall 

20 provide notice of such order to the Committee on Finance 

21 of the Senate, the Committee on Health, Education, 

22 Labor, and Pensions of the Senate, the Committee on 

23 Education and the Workforce of the House of Representa24 tives, the Committee on Ways and Means of the House 

25 of Representatives, and to all eligible participants or beneVerDate Sep 11 2014 00:05 May 13, 2017 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1076.IS S1076

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1 ficiaries whose guaranteed benefits will be paid directly or 

2 indirectly by the plan created by the partition order.’’. 

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

4 subsection (a) shall apply with respect to plan years begin5 ning after the date of enactment of this Act. 

6 (c) TRANSFERS TO LEGACY FUND.—The Secretary 

7 of the Treasury shall from time to time transfer from the 

8 general fund of the Treasury to the legacy fund estab9 lished under section 4233(f)(1) of the Employee Retire10 ment Income Security Act of 1974 (29 U.S.C. 1413(f)(1)) 

11 (as amended by subsection (a)) amounts equal to the in12 crease in revenues to the Treasury by reason of the 

13 amendments made by sections 6 and 7 of this Act. 

14 (d) TRANSFERS BETWEEN FUNDS OF THE PBGC.— 

15 Section 4005 of the Employee Retirement Income Security 

16 Act of 1974 (29 U.S.C. 1305) is amended by adding at 

17 the end the following: 

18 ‘‘(i)(1) An eighth fund is established under section 

19 4233(f) and credited with the amounts described in sec20 tion 3(c) of the Keep Our Pension Promises Act. 

21 ‘‘(2) Notwithstanding subsection (g), the corporation 

22 may transfer amounts into the legacy fund established 

23 under section 4233(f)(1) from other funds established 

24 under this section, as the corporation determines appro25 priate.’’. 


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1 SEC. 4. EMPLOYER WITHDRAWALS RELATING TO MULTIEM2 PLOYER PLANS. 

3 The matter preceding paragraph (1) of section 

4 4225(b) of the Employee Retirement Income Security Act 

5 of 1974 (29 U.S.C. 1405(b)) is amended by inserting ‘‘, 

6 including an employer undergoing liquidation under chap7 ter 7 of title 11, United States Code, or similar provisions 

8 of State law,’’ after ‘‘dissolution,’’. 

9 SEC. 5. PRIORITIES OF CLAIMS IN BANKRUPTCY. 

10 (a) IN GENERAL.—Section 507(a) of title 11, United 

11 States Code, is amended— 

12 (1) by redesignating paragraphs (1) through 10 

13 as paragraphs (2) through (11), respectively; 

14 (2) by inserting before paragraph (2) (as redes15 ignated) the following: 

16 ‘‘(1) First, withdrawal liability determined 

17 under part 1 of subtitle E of title IV of the Em18 ployee Retirement Income Security Act of 1974 (29 

19 U.S.C. 1381 et seq.).’’; 

20 (3) in the matter preceding subparagraph (A) 

21 of paragraph (2) (as redesignated), by striking 

22 ‘‘First:’’ and inserting ‘‘Second:’’; 

23 (4) in paragraph (3) (as redesignated), by strik24 ing ‘‘Second,’’ and inserting ‘‘Third,’’; 

25 (5) in paragraph (4) (as redesignated), by strik26 ing ‘‘Third,’’ and inserting ‘‘Fourth,’’; 


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1 (6) in the matter preceding subparagraph (A) 

2 of paragraph (5) (as redesignated), by striking 

3 ‘‘Fourth,’’ and inserting ‘‘Fifth,’’; 

4 (7) in the matter preceding subparagraph (A) 

5 of paragraph (6) (as redesignated), by striking 

6 ‘‘Fifth,’’ and inserting ‘‘Sixth,’’; 

7 (8) in the matter preceding subparagraph (A) 

8 of paragraph (7) (as redesignated), by striking 

9 ‘‘Sixth,’’ and inserting ‘‘Seventh,’’; 

10 (9) in paragraph (8) (as redesignated), by strik11 ing ‘‘Seventh,’’ and inserting ‘‘Eighth,’’; 

12 (10) in the matter preceding subparagraph (A) 

13 of paragraph (9) (as redesignated), by striking 

14 ‘‘Eighth,’’ and inserting ‘‘Ninth,’’; 

15 (11) in paragraph (10) (as redesignated), by 

16 striking ‘‘Ninth,’’ and inserting ‘‘Tenth,’’; and 

17 (12) in paragraph (11) (as redesignated), by 

18 striking ‘‘Tenth,’’ and inserting ‘‘Eleventh,’’. 

19 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

20 (1) Section 502(i) of title 11, United States 

21 Code, is amended by striking ‘‘section 507(a)(8)’’ 

22 and inserting ‘‘section 507(a)(9)’’. 

23 (2) Section 503(b)(1)(B)(i) of title 11, United 

24 States Code, is amended by striking ‘‘section 

25 507(a)(8)’’ and inserting ‘‘section 507(a)(9)’’. 


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1 (3) Section 507(d) of title 11, United States 

2 Code, is amended by striking ‘‘(a)(1), (a)(4), (a)(5), 

3 (a)(6), (a)(7), (a)(8), or (a)(9)’’ and inserting 

4 ‘‘(a)(2), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9), or 

5 (a)(10)’’. 

6 (4) Section 523(A) of title 11, United States 

7 Code, is amended by striking ‘‘section 507(a)(3) or 

8 507(a)(8)’’ and inserting ‘‘section 507(a)(4) or 

9 507(a)(9)’’. 

10 (5) Section 724 of title 11, United States Code, 

11 is amended— 

12 (A) in subsection (b)(2), by striking ‘‘sec13 tion 507(a)(1)(C) or 507(a)(2)’’ and inserting 

14 ‘‘section 507(a)(2)(C) or 507(a)(3)’’; and 

15 (B) in subsection (f)— 

16 (i) in paragraph (1), by striking ‘‘sec17 tion 507(a)(4)’’ and inserting ‘‘section 

18 507(a)(5)’’; and 

19 (ii) in paragraph (2), by striking ‘‘sec20 tion 507(a)(5)’’ and inserting ‘‘section 

21 507(a)(6)’’. 

22 (6) Section 726(b) of title 11, United States 

23 Code, is amended by striking ‘‘paragraph (1), (2), 

24 (3), (4), (5), (6), (7), (8), (9), or (10) of section 


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1 507(a)’’ and inserting ‘‘paragraphs (2) through (11) 

2 of section 507(a)’’. 

3 (7) Section 752(a) of title 11, United States 

4 Code, is amended by striking ‘‘section 507(a)(2)’’ 

5 and inserting ‘‘section 507(a)(3)’’. 

6 (8) Section 766 of title 11, United States Code, 

7 is amended— 

8 (A) in subsection (h), by striking ‘‘section 

9 507(a)(2)’’ and inserting ‘‘section 507(a)(3)’’; 

10 and 

11 (B) in subsection (i)— 

12 (i) in paragraph (1), by striking ‘‘sec13 tion 507(a)(2)’’ and inserting ‘‘section 

14 507(a)(3)’’; and 

15 (ii) in paragraph (2), by striking ‘‘sec16 tion 507(a)(2)’’ and inserting ‘‘section 

17 507(a)(3)’’. 

18 (9) Section 901 of title 11, United States Code, 

19 is amended by striking ‘‘507(a)(2)’’ and inserting 

20 ‘‘507(a)(3)’’. 

21 (10) Section 943(b)(5) of title 11, United 

22 States Code, is amended by striking ‘‘section 

23 507(a)(2)’’ and inserting ‘‘section 507(a)(3)’’. 

24 (11) Section 1123(a)(1) of title 11, United 

25 States Code, is amended by striking ‘‘section 


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1 507(a)(2), 507(a)(3), or 507(a)(8)’’ and inserting 

2 ‘‘section 507(a)(3), 507(a)(4), or 507(a)(9)’’. 

3 (12) Section 1129(a)(9) of title 11, United 

4 States Code, is amended— 

5 (A) in subparagraph (A), by striking ‘‘sec6 tion 507(a)(3) or 507(a)(4)’’ and inserting 

7 ‘‘section 507(a)(4) or 507(a)(5)’’; 

8 (B) in the matter preceding clause (i) of 

9 subparagraph (B), by striking ‘‘section 

10 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or 

11 507(a)(7)’’ and inserting ‘‘section 507(a)(2), 

12 507(a)(5), 507(a)(6), 507(a)(7), or 507(a)(8)’’; 

13 (C) in the matter preceding clause (i) of 

14 subparagraph (C), by striking ‘‘section 

15 507(a)(8)’’ and inserting ‘‘section 507(a)(9)’’; 

16 and 

17 (D) in subparagraph (D), by striking ‘‘sec18 tion 507(a)(8)’’ and inserting ‘‘section 

19 507(a)(9)’’. 

20 (13) Section 1222(a)(4) of title 11, United 

21 States Code, is amended by striking ‘‘section 

22 507(a)(1)(B)’’ and inserting ‘‘507(a)(2)(B)’’. 

23 (14) Section 1226(b)(1) of title 11, United 

24 States Code, is amended by striking ‘‘section 

25 507(a)(2)’’ and inserting ‘‘section 507(a)(3)’’. 


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1 (15) Section 1322(a)(4) of title 11, United 

2 States Code, is amended by striking ‘‘section 

3 507(a)(1)(B)’’ and inserting ‘‘section 507(a)(2)(B)’’. 

4 (16) Section 1326(b)(1) of title 11, United 

5 States Code, is amended by striking ‘‘section 

6 507(a)(2)’’ and inserting ‘‘section 507(a)(3)’’. 

7 (17) Section 1328(a)(2) of title 11, United 

8 States Code, is amended by striking ‘‘section 

9 507(a)(8)(C)’’ and inserting ‘‘section 507(a)(9)(C)’’. 

10 SEC. 6. LIMITATION OF NONRECOGNITION OF LIKE-KIND 

11 EXCHANGES. 

12 (a) IN GENERAL.—Paragraph (2) of section 1031(a) 

13 of the Internal Revenue Code of 1986 is amended— 

14 (1) by redesignating subparagraphs (A), (B), 

15 (C), (D), (E), and (F) as clauses (i), (ii), (iii), (iv), 

16 (v), and (vi), and by moving such clauses 2 ems to 

17 the right, 

18 (2) by moving the flush language after the first 

19 sentence 2 ems to the right, 

20 (3) by striking ‘‘(2) EXCEPTION.—This sub21 section’’ and inserting ‘‘(2) EXCEPTIONS.— 

22 ‘‘(A) EXCLUDED PROPERTY.—This sub23 section’’, and 

24 (4) by adding at the end the following new sub25 paragraph: 


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1 ‘‘(B) DOLLAR LIMITATION FOR EX2 CHANGES OF REAL PROPERTY.— 

3 ‘‘(i) IN GENERAL.—Paragraph (1) 

4 shall not apply so much of the gain which, 

5 but for such paragraph, would be recog6 nized by the taxpayer with respect to real 

7 property exchanged during the taxable year 

8 as exceeds $1,000,000. 

9 ‘‘(ii) SPECIAL RULES FOR PARTNER10 SHIPS AND S-CORPORATIONS.—In the case 

11 of a pass-through entity, clause (i) shall be 

12 applied at both the entity and at the part13 ner or owner level. 

14 ‘‘(iii) AGGREGATION RULES.—For 

15 purposes of this subparagraph— 

16 ‘‘(I) FAMILY MEMBERS.—Individ17 uals who are spouses or who bear any 

18 of the relationships described in sec19 tion 152(d)(2) to each other shall be 

20 treated as 1 taxpayer (without regard 

21 to whether spouses file a joint return). 

22 ‘‘(II) CORPORATIONS AND OTHER

23 ENTITIES.—All persons treated as a 

24 single employer under subsection (a) 

25 or (b) of section 52 or subsection (m) 


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1 or (o) of section 414 shall be treated 

2 as 1 person. 

3 ‘‘(iv) ADJUSTMENT FOR INFLATION.— 

4 In the case of exchanges completed in a 

5 taxable year beginning after December 31, 

6 2017, the $1,000,000 amount in clause (i) 

7 shall be increased by an amount equal to— 

8 ‘‘(I) such dollar amount, multi9 plied by 

10 ‘‘(II) the cost-of-living adjust11 ment determined under section 1(f)(3) 

12 for the calendar year in which the tax13 able year begins, determined by sub14 stituting ‘calendar year 2016’ for ‘cal15 endar year 1992’ in subparagraph (B) 

16 thereof. 

17 If any amount as adjusted under the pre18 ceding sentence is not a multiple of 

19 $1,000, such amount shall be rounded to 

20 the nearest multiple of $1,000.’’. 

21 (b) EXCLUSION OF ART AND COLLECTIBLES.—Sub22 paragraph (A) of section 1031(a)(2) of the Internal Rev23 enue Code of 1986, as amended by subsection (a), is 

24 amended— 

25 (1) by striking ‘‘or’’ at the end of clause (v), 


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1 (2) by striking the period at the end of clause 

2 (vi) and inserting ‘‘, or’’, and 

3 (3) by inserting after clause (vi) the following 

4 new clause: 

5 ‘‘(vii) any collectible (within the mean6 ing of section 408(m), without regard to 

7 paragraph (3) thereof).’’. 

8 (c) REGULATORY AUTHORITY.—Subsection (f) of 

9 section 1031 of the Internal Revenue Code of 1986 is 

10 amended by adding at the end the following new para11 graph: 

12 ‘‘(5) RULES RELATING TO DOLLAR LIMITA13 TION.—The Secretary shall prescribe such guidance 

14 as is necessary for applying subsection (a)(2)(B)(i) 

15 in the case of the exchange of multiple pieces of real 

16 property by related persons.’’. 

17 (d) CONFORMING AMENDMENTS.— 

18 (1) Subsection (b) of section 1031 of the Inter19 nal Revenue Code of 1986 is amended— 

20 (A) by striking ‘‘IN KIND.—If an ex21 change’’ and inserting ‘‘IN KIND.— 

22 ‘‘(1) IN GENERAL.—If an exchange’’, and 

23 (B) by adding at the end the following new 

24 paragraph: 


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1 ‘‘(2) COORDINATION WITH SUBSECTION

2 (a)(2)(B).—In the case of an exchange to which 

3 paragraph (1) applies— 

4 ‘‘(A) paragraph (1) shall be applied before 

5 the application of subsection (a)(2)(B), and 

6 ‘‘(B) subsection (a)(2)(B) shall be ap7 plied— 

8 ‘‘(i) as if such exchange were within 

9 the provisions of subsection (a), and 

10 ‘‘(ii) by increasing the basis of the 

11 property disposed of by the taxpayer in 

12 such exchange by the amount of any gain 

13 determined under paragraph (1).’’. 

14 (2) Subsection (d) of section 1031 of such Code 

15 is amended by striking ‘‘in the amount of gain’’ and 

16 inserting ‘‘in the amount of gain (including any gain 

17 recognized by reason of subsection (a)(2)(B)(i))’’. 

18 (3) Subsection (i) of section 1031 of such Code 

19 is amended by striking ‘‘(a)(2)(B)’’ and inserting 

20 ‘‘(a)(2)(A)(ii)’’. 

21 (e) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to exchanges completed in taxable 

23 years beginning after December 31, 2016. 


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1 SEC. 7. CONTRIBUTION LIMIT AND INCREASED MINIMUM 

2 DISTRIBUTIONS FOR CERTAIN RETIREMENT 

3 PLANS WITH LARGE ACCOUNT BALANCES. 

4 (a) CONTRIBUTION LIMIT.— 

5 (1) IN GENERAL.—Subpart A of part I of sub6 chapter D of chapter 1 of the Internal Revenue Code 

7 of 1986 is amended by adding at the end the fol8 lowing: 

9 ‘‘SEC. 409B. CONTRIBUTION LIMIT ON CERTAIN RETIRE10 MENT PLANS WITH LARGE ACCOUNT BAL11 ANCES. 

12 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

13 provision of this title, no applicable annual additions shall 

14 be made by, or on behalf of, an individual for the taxable 

15 year to any applicable retirement plan to the extent such 

16 applicable annual additions exceed the excess (if any) of— 

17 ‘‘(1) the applicable dollar amount for the tax18 able year, over 

19 ‘‘(2) the aggregate balances to the credit of the 

20 individual (whether as a participant, owner, or bene21 ficiary) in all applicable retirement plans (deter22 mined as of the close of the calendar year preceding 

23 the calendar year in which the taxable year begins). 

24 ‘‘(b) RULES RELATING TO CONTRIBUTION LIMITA25 TIONS.— 

26 ‘‘(1) PLANS OTHER THAN CERTAIN IRAS.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 paragraph (2), applicable annual additions in 

3 excess of the limitation under subsection (a) 

4 shall be treated for purposes of this title in the 

5 same manner as excess deferrals are treated 

6 under section 402(g). 

7 ‘‘(B) SPECIAL RULE FOR AFTER TAX CON8 TRIBUTIONS.—If, without regard to this para9 graph, any portion of an applicable annual ad10 dition to which subparagraph (A) applies with 

11 respect to an individual is not excludable from 

12 gross income of the individual (or no deduction 

13 is allowable to the individual with respect to 

14 such portion), such portion shall not be— 

15 ‘‘(i) includible in gross income by rea16 son of the application of subparagraph (A), 

17 or 

18 ‘‘(ii) taken into account in computing 

19 the investment in the contract for purposes 

20 of section 72. 

21 ‘‘(2) SPECIAL RULE FOR IRAS.— 

22 ‘‘(A) IN GENERAL.—In the case of an ap23 plicable retirement plan which is an individual 

24 retirement plan (other than a simplified em25 ployee pension under section 408(k) or a simple 


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1 retirement account under section 408(p)), any 

2 applicable annual addition to such plan in ex3 cess of the limitation under subsection (a) shall 

4 be treated for purposes of sections 408 and 

5 408A as a contribution for the taxable year in 

6 excess of the maximum amount allowable as a 

7 deduction under section 219 for the taxable 

8 year. 

9 ‘‘(B) AFTER TAX CONTRIBUTIONS.—In the 

10 case of applicable annual additions in excess of 

11 the limitation under subsection (a)— 

12 ‘‘(i) which are treated as designated 

13 nondeductible contributions under section 

14 408(o), rules similar to the rules of para15 graph (1)(B) shall apply, and 

16 ‘‘(ii) to a Roth IRA, section 

17 408A(d)(2)(C) shall apply to such addi18 tions and to any net income allocable to 

19 such additions. 

20 For purposes of clause (ii), distributions from a 

21 Roth IRA shall be treated as first made from 

22 amounts described in clause (ii) and section 

23 408A(d)(2)(C) shall be applied in the same 

24 manner as if there were a distribution of a con25 tribution described in section 408(d)(4) (withVerDate Sep 11 2014 00:05 May 13, 2017 Jkt 069200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S1076.IS S1076

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1 out regard to whether such distribution is time2 ly made). 

3 ‘‘(3) ALLOCATION OF EXCESS APPLICABLE AN4 NUAL ADDITIONS.—If the applicable dollar amount 

5 for a taxable year exceeds the amount described in 

6 subsection (a)(2), the taxpayer may, in such form 

7 and manner as the Secretary may prescribe, allocate 

8 such excess to applicable annual additions to each 

9 applicable retirement plan in such manner as the 

10 taxpayer chooses. 

11 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur12 poses of this section— 

13 ‘‘(1) APPLICABLE ANNUAL ADDITION.— 

14 ‘‘(A) IN GENERAL.—The term ‘applicable 

15 annual addition’ means any of the following 

16 made to or on behalf of an individual: 

17 ‘‘(i) An annual addition (within the 

18 meaning of section 415(c)(2)). 

19 ‘‘(ii) Any contribution to an individual 

20 retirement plan, including any employer or 

21 employee contribution to a simplified em22 ployee pension under section 408(k) or a 

23 simple retirement account under section 

24 408(p). 


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1 ‘‘(iii) Any deferral under an eligible 

2 deferred compensation plan described in 

3 section 457(b) which is maintained by an 

4 eligible employer described in section 

5 457(e)(1)(A). 

6 ‘‘(B) ROLLOVER CONTRIBUTIONS DIS7 REGARDED.—A rollover contribution under sec8 tion 402(c), 403(b)(8), 408(d)(3)(A)(ii), or 

9 457(e)(16) shall not be treated as an annual 

10 addition. 

11 ‘‘(2) APPLICABLE DOLLAR AMOUNT.— 

12 ‘‘(A) IN GENERAL.—The term ‘applicable 

13 dollar amount’ means $5,000,000. 

14 ‘‘(B) ADJUSTMENT FOR INFLATION.—In 

15 the case of any taxable year beginning after 

16 2017, the $5,000,000 amount under subpara17 graph (A) shall be increased by an amount 

18 equal to the product of— 

19 ‘‘(i) such amount, and 

20 ‘‘(ii) the cost-of-living adjustment 

21 under section 1(f)(3) for the calendar year 

22 in which such taxable year begins, deter23 mined by substituting ‘calendar year 2016’ 

24 for ‘calendar year 1992’ in subparagraph 

25 (B) thereof. 


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1 ‘‘(C) ROUNDING.—If any amount as ad2 justed under subparagraph (B) is not a mul3 tiple of $1,000, such amount shall be rounded 

4 to the next lowest multiple of $1,000. 

5 ‘‘(3) APPLICABLE RETIREMENT PLAN.—The 

6 term ‘applicable retirement plan’ means— 

7 ‘‘(A) a defined contribution plan to which 

8 section 401(a) or 403(a) applies, 

9 ‘‘(B) an annuity contract under section 

10 403(b), 

11 ‘‘(C) an eligible deferred compensation 

12 plan described in section 457(b) which is main13 tained by an eligible employer described in sec14 tion 457(e)(1)(A), or 

15 ‘‘(D) an individual retirement plan. 

16 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

17 such regulations and guidance as are necessary or appro18 priate to carry out the purposes of this section, including 

19 regulations or guidance that provide for the application 

20 of this section and section 4974(e) in the case of plans 

21 with a valuation date other than the last day of a calendar 

22 year.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) The table of contents for subpart A of 

25 part I of subchapter D of chapter 1 of such 


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1 Code is amended by adding after the item relat2 ing to section 409A the following new item: 

‘‘Sec. 409B. Contribution limit on certain retirement plans with large account 

balances.’’. 

3 (B) Section 402(g) of such Code is amend4 ed by adding at the end the following new para5 graph: 

6 ‘‘(9) AGGREGATE LIMITATION.—For additional 

7 limitation on contributions to certain plans with 

8 large account balances, see section 409B.’’. 

9 (C) Section 403(b)(1) of such Code is 

10 amended by adding at the end the following 

11 new sentence: ‘‘For additional limitation on 

12 contributions to certain plans with large ac13 count balances, see section 409B.’’. 

14 (D) Section 408(r) of such Code is amend15 ed by adding at the end the following new para16 graph: 

17 ‘‘(3) For additional limitation on contributions 

18 to certain plans with large account balances, see sec19 tion 409B.’’. 

20 (E) Section 457(c) of such Code is amend21 ed by adding at the end the following new sen22 tence: ‘‘For additional limitation on contribu23 tions to certain plans with large account bal24 ances, see section 409B.’’. 


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1 (b) EXCISE TAX ON EXCESS ANNUAL ADDITIONS.— 

2 (1) IN GENERAL.—Subsection (a) of section 

3 4973 of the Internal Revenue Code of 1986 is 

4 amended— 

5 (A) by striking ‘‘or’’ at the end of para6 graph (5), 

7 (B) by inserting ‘‘or’’ after the comma at 

8 the end of paragraph (6), and 

9 (C) by inserting after paragraph (6) the 

10 following new paragraph: 

11 ‘‘(7) an applicable retirement plan (within the 

12 meaning of section 409B(c)(3)),’’. 

13 (2) EXCESS CONTRIBUTIONS TO APPLICABLE

14 RETIREMENT PLANS.—Section 4973 of such Code is 

15 amended by adding at the end the following new 

16 subsection: 

17 ‘‘(i) EXCESS CONTRIBUTIONS TO APPLICABLE RE18 TIREMENT PLANS.—For purposes of this section, in the 

19 case of applicable retirement plans (within the meaning 

20 of section 409B(c)(3)), the term ‘excess contributions’ 

21 with respect to any taxable year means the sum of— 

22 ‘‘(1) the excess of the applicable annual addi23 tions (within the meaning of section 409B(c)(1)) to 

24 such plans over the limitation under section 409B(a) 

25 for such taxable year, and 


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1 ‘‘(2) the lesser of— 

2 ‘‘(A) the amount determined under this 

3 subsection for the preceding taxable year, re4 duced by the aggregate distributions from such 

5 plans for the taxable year (including distribu6 tions required under section 4974(e)) to the ex7 tent not contributed in a rollover contribution 

8 to another eligible retirement plan in accord9 ance with section 402(c), 403(b)(8), 457(e)(16), 

10 408(d)(3), or 408A(d)(3), or 

11 ‘‘(B) the amount (if any) by which the 

12 amount determined under section 409B(a)(2) 

13 for the taxable year exceeds the applicable dol14 lar amount under section 409B(c)(2) for the 

15 taxable year.’’. 

16 (3) CONFORMING AMENDMENTS.—Subsection 

17 (a) of section 4973 of such Code is amended— 

18 (A) by striking ‘‘accounts or annuities’’ 

19 and inserting ‘‘accounts, annuities, or plans’’, 

20 and 

21 (B) by striking ‘‘account or annuity’’ and 

22 inserting ‘‘account, annuity, or plan’’. 

23 (c) INCREASE IN MINIMUM REQUIRED DISTRIBU24 TIONS.— 


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1 (1) IN GENERAL.—Section 4974 of the Internal 

2 Revenue Code of 1986 is amended by adding at the 

3 end the following: 

4 ‘‘(e) INCREASE IN MINIMUM REQUIRED DISTRIBU5 TIONS FOR PAYEES WITH LARGE AGGREGATE ACCOUNT

6 BALANCES.— 

7 ‘‘(1) IN GENERAL.—If this subsection applies to 

8 a payee for any taxable year— 

9 ‘‘(A) all qualified retirement plans and eli10 gible deferred compensation plans of the payee 

11 which are applicable retirement plans taken into 

12 account in computing the excess described in 

13 paragraph (2)(A) shall be treated as 1 plan 

14 solely for purposes of applying this section to 

15 the increase in minimum required distributions 

16 for the taxable year described in subparagraph 

17 (B), and 

18 ‘‘(B) the minimum required distributions 

19 under this section for all plans treated as 1 

20 plan under subparagraph (A) with respect to 

21 such payee for the taxable year shall be in22 creased by the excess (if any) of— 

23 ‘‘(i) the excess described in paragraph 

24 (2)(A), over 


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1 ‘‘(ii) the sum of the minimum re2 quired distributions (determined without 

3 regard to this subsection) for all such 

4 plans. 

5 ‘‘(2) APPLICATION.—This subsection shall 

6 apply to a payee for a taxable year— 

7 ‘‘(A) if the aggregate balances to the credit 

8 of the payee (whether as a participant, owner, 

9 or beneficiary) in all applicable retirement plans 

10 (determined as of the close of the calendar year 

11 preceding the calendar year in which the tax12 able year begins) exceed the applicable dollar 

13 amount for the calendar year in which the tax14 able year begins, and 

15 ‘‘(B) without regard to whether amounts 

16 with respect to the payee are otherwise required 

17 to be distributed under section 401(a)(9), 

18 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2). 

19 ‘‘(3) COORDINATION AND ALLOCATION.— 

20 ‘‘(A) MINIMUM DISTRIBUTION REQUIRE21 MENTS.—If this subsection applies to a payee 

22 for any taxable year— 

23 ‘‘(i) this section shall apply first to 

24 minimum required distributions deter25 mined without regard to this subsection 


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1 and then to any increase in minimum re2 quired distributions by reason of this sub3 section, and 

4 ‘‘(ii) nothing in this subsection shall 

5 be construed to affect the amount of any 

6 minimum required distribution determined 

7 without regard to this subsection or the 

8 plan or plans from which it is required to 

9 be distributed from. 

10 ‘‘(B) ALLOCATION OF INCREASE IN MIN11 IMUM REQUIRED DISTRIBUTIONS.—The tax12 payer may, in such form and manner as the 

13 Secretary may prescribe, allocate any increase 

14 in minimum required distributions by reason of 

15 this subsection to applicable retirement plans 

16 treated as 1 plan under subparagraph (A) in 

17 such manner as the taxpayer chooses. 

18 ‘‘(4) TREATMENT OF ROTH IRAS.— 

19 ‘‘(A) IN GENERAL.—Notwithstanding sec20 tion 408A(c)(5)— 

21 ‘‘(i) the aggregate balance to the cred22 it of a payee of any Roth IRA shall be 

23 taken into account for purposes of this 

24 subsection, and 


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1 ‘‘(ii) distributions from a Roth IRA 

2 may be taken into account in determining 

3 whether the required increase in minimum 

4 required distributions by reason of this 

5 subsection has been satisfied. 

6 ‘‘(B) INCLUSION IN INCOME OF DISTRIB7 UTED EARNINGS.—If any distribution from a 

8 Roth IRA is taken into account under subpara9 graph (A)(ii), then, notwithstanding section 

10 408A(d)(5), the portion of such distribution 

11 which is properly allocable to net income on 

12 contributions to the Roth IRA shall not be 

13 treated as a qualified distribution and shall be 

14 included in gross income of the payee. 

15 ‘‘(5) RATABLE INCLUSION FOR FIRST YEAR OF

16 INCREASE.—If the first taxable year of a taxpayer 

17 for which there is a required increase in minimum 

18 required distributions by reason of this subsection 

19 begins before January 1, 2019, any amount required 

20 to be included in gross income by reason of such in21 crease shall be included in income ratably over the 

22 6-taxable-year period (or such shorter period as the 

23 taxpayer may elect) beginning with such first taxable 

24 year. 


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1 ‘‘(6) DEFINITIONS.—For purposes of this sub2 section, any term used in this subsection which is 

3 also used in section 409B shall have the same mean4 ing as when such term is used in such section.’’. 

5 (2) EXCEPTION FROM 10 PERCENT ADDITIONAL

6 TAX ON EARLY DISTRIBUTIONS.—Section 72(t)(2) of 

7 such Code is amended by adding at the end the fol8 lowing new subparagraph: 

9 ‘‘(H) DISTRIBUTIONS OF EXCESS BAL10 ANCES.—Distributions from applicable retire11 ment plans (within the meaning of section 

12 409B) to the extent such distributions during 

13 the taxable year do not exceed the amount (if 

14 any) by which— 

15 ‘‘(i) the amount determined under 

16 section 409B(a)(2) for the taxable year, 

17 exceeds 

18 ‘‘(ii) the applicable dollar amount 

19 under section 409B(c)(2) for the preceding 

20 taxable year.’’. 

21 (d) REPORTING REQUIREMENTS.—Section 6047 of 

22 the Internal Revenue Code of 1986 is amended by redesig23 nating subsection (g) as subsection (h) and by inserting 

24 after subsection (f) the following: 


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1 ‘‘(g) REPORTING RELATING TO AGGREGATE CON2 TRIBUTION AND BALANCE LIMITS ON CERTAIN RETIRE3 MENT PLANS.—The Secretary shall require the plan ad4 ministrator or trustee of an applicable retirement plan (as 

5 defined in section 409B) to make such returns and reports 

6 to the Secretary and participants and beneficiaries as are 

7 necessary to apply the aggregate limits on contributions 

8 imposed by section 409B and the increases in minimum 

9 required distributions required by section 4974(e). If the 

10 account balance of a plan as of the close of a calendar 

11 year is not otherwise required under this title to be re12 ported to a participant, a beneficiary, or the Secretary, 

13 such requirements shall include a requirement that the 

14 plan administrator or trustee shall notify the participant, 

15 the beneficiary, or the Secretary of such account balance 

16 at such time and in such manner as the Secretary may 

17 prescribe.’’. 

18 (e) EFFECTIVE DATES.— 

19 (1) IN GENERAL.—The amendments made by 

20 this section shall apply to taxable years beginning 

21 after the date of the enactment of this Act. 

22 (2) PLAN REQUIREMENTS.—The amendments 

23 made by subsection (d) shall apply to years begin24 ning after the date of the enactment of this Act. 

Æ 


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