I 

116TH CONGRESS 

1ST SESSION H. R. 4117 

To reduce the disadvantages of individual retirement plans with respect to 

employer-sponsored retirement plans by helping taxpayers comply with 

laws affecting individual retirement plans, by providing for reduced penalties under the Internal Revenue Code of 1986 for certain self-corrections with respect to such laws, and by expanding the Employee Plans 

Compliance Resolution System to cover certain errors under individual 

retirement plans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2019 

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 reduce the disadvantages of individual retirement plans 

with respect to employer-sponsored retirement plans by 

helping taxpayers comply with laws affecting individual 

retirement plans, by providing for reduced penalties 

under the Internal Revenue Code of 1986 for certain 

self-corrections with respect to such laws, and by expanding the Employee Plans Compliance Resolution System 

to cover certain errors under individual retirement plans, 

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, 


kjohnson on DSK79L0C42 with BILLS
2 

•HR 4117 IH

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘IRA Preservation Act 

3 of 2019’’. 

4 SEC. 2. EDUCATION WITH RESPECT TO IRAS. 

5 The Secretary of the Treasury shall make available 

6 to the public the following information: 

7 (1) An overview of the laws and regulations re8 lated to individual retirement plans (as defined in 

9 section 7701(a)(37) of the Internal Revenue Code of 

10 1986), including— 

11 (A) limits on contributions; 

12 (B) limits on deductions for contributions; 

13 (C) rollovers; 

14 (D) minimum required distributions; 

15 (E) nonexempt prohibited transactions; 

16 and 

17 (F) tax consequences for early distribu18 tions. 

19 (2) Examples of common errors by taxpayers 

20 with respect to the laws and regulations described in 

21 paragraph (1) and instructions on how to avoid such 

22 errors. 

23 SEC. 3. REDUCTION OF EXCISE TAXES FOR VOLUNTARY 

24 CORRECTION OF COMMON IRA ERRORS. 

25 (a) REDUCTION IN EXCISE TAX ON EXCESS CON26 TRIBUTIONS.—Section 4973 of the Internal Revenue Code 


kjohnson on DSK79L0C42 with BILLS
3 

•HR 4117 IH

1 of 1986 is amended by adding at the end the following 

2 new subsection: 

3 ‘‘(i) REDUCTION OF TAX IN CERTAIN CASES.— 

4 ‘‘(1) REDUCTION.—In the case of a taxpayer 

5 who— 

6 ‘‘(A) corrects, during the correction win7 dow, an excess contribution which was made to 

8 an individual retirement plan and which re9 sulted in imposition of a tax under paragraph 

10 (1) or (3) of subsection (a), and 

11 ‘‘(B) submits a return, during the correc12 tion window, reflecting such tax (as modified by 

13 this subsection), 

14 the first and second sentences of subsection (a) shall 

15 be applied by substituting ‘3 percent’ for ‘6 percent’ 

16 each place it appears. 

17 ‘‘(2) CORRECTION WINDOW.—For purposes of 

18 this subsection, the term ‘correction window’ means 

19 the period beginning on the date on which the tax 

20 under subsection (a) is imposed with respect to an 

21 excess contribution, and ending on the earlier of— 

22 ‘‘(A) the date on which the Secretary initi23 ates an audit, or otherwise demands payment, 

24 with respect to the excess contribution, or 


kjohnson on DSK79L0C42 with BILLS
4 

•HR 4117 IH

1 ‘‘(B) the last day of the second taxable 

2 year that begins after the end of the taxable 

3 year in which the tax under subsection (a) is 

4 imposed.’’. 

5 (b) REDUCTION IN EXCISE TAX ON FAILURES TO

6 TAKE REQUIRED MINIMUM DISTRIBUTIONS.— 

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

8 Revenue Code of 1986 is amended by adding at the 

9 end the following new subsection: 

10 ‘‘(e) REDUCTION OF TAX IN CERTAIN CASES.— 

11 ‘‘(1) REDUCTION.—In the case of a taxpayer 

12 who— 

13 ‘‘(A) corrects, during the correction win14 dow, a shortfall of distributions from an indi15 vidual retirement plan which resulted in imposi16 tion of a tax under subsection (a), and 

17 ‘‘(B) submits a return, during the correc18 tion window, reflecting such tax (modified by 

19 this subsection), 

20 the first sentence of subsection (a) shall be applied 

21 by substituting ‘10 percent’ for ‘50 percent’. 

22 ‘‘(2) CORRECTION WINDOW.—For purposes of 

23 this subsection, the term ‘correction window’ means 

24 the period of time beginning on the data on which 

25 the tax under subsection (a) is imposed with respect 


kjohnson on DSK79L0C42 with BILLS
5 

•HR 4117 IH

1 to a shortfall of distributions from an individual re2 tirement plan, and ending on the earlier of— 

3 ‘‘(A) the date on which the Secretary initi4 ates an audit, or otherwise demands payment, 

5 with respect to the shortfall of distributions, or 

6 ‘‘(B) the last day of the second taxable 

7 year that begins after the end of the taxable 

8 year in which the tax under subsection (a) is 

9 imposed.’’. 

10 SEC. 4. HARMONIZATION OF TREATMENT OF IRAS WITH 

11 EMPLOYER PLANS. 

12 (a) ELIMINATION OF ADDITIONAL TAX ON CERTAIN

13 DISTRIBUTIONS.—Section 72(t)(2)(A) of the Internal 

14 Revenue Code of 1986 is amended— 

15 (1) by striking ‘‘or’’ at the end of clause (vii); 

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

17 (viii) and inserting ‘‘, or’’; and 

18 (3) by inserting after clause (viii) the following 

19 new clause: 

20 ‘‘(ix) attributable to withdrawal of in21 terest or other income earned on excess 

22 contributions (as defined in section 

23 4973(b) (without regard to the second to 

24 last sentence thereof)) to an individual re25 tirement plan.’’. 


kjohnson on DSK79L0C42 with BILLS
6 

•HR 4117 IH

1 (b) REPEAL OF TAX DISQUALIFICATION PENALTY.— 

2 (1) IN GENERAL.—Paragraph (2) of section 

3 408(e) of the Internal Revenue Code of 1986 is re4 pealed. 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Section 408(e)(1) of the Internal Rev7 enue Code of 1986 is amended by striking ‘‘(2) 

8 or’’. 

9 (B) Sections 220(e)(2), 223(e)(2), and 

10 530(e) of the Internal Revenue Code of 1986 

11 are each amended by striking ‘‘paragraphs (2) 

12 and (4) of section 408(e)’’ and inserting ‘‘sec13 tion 408(e)(4)’’. 

14 (C) Section 4975(c)(3) of the Internal 

15 Revenue Code of 1986 is amended by striking 

16 ‘‘the account ceases to be an individual retire17 ment account by reason of the application of 

18 section 408(e)(2)(A) or if’’. 

19 (c) STATUTE OF LIMITATIONS.—Section 6501(l) of 

20 the Internal Revenue Code of 1986 is amended— 

21 (1) in paragraph (1), by inserting ‘‘(other than 

22 with respect to an individual retirement plan)’’ after 

23 ‘‘section 4975’’; and 

24 (2) by adding at the end the following new 

25 paragraph: 


kjohnson on DSK79L0C42 with BILLS
7 

•HR 4117 IH

1 ‘‘(4) INDIVIDUAL RETIREMENT PLANS.—For 

2 purposes of any tax imposed by section 4973, 4974, 

3 or 4975 in connection with an individual retirement 

4 plan, the return referred to in this section shall be 

5 the income tax return filed by the person on whom 

6 the tax under such section is imposed for the year 

7 in which the act (or failure to act) giving rise to the 

8 liability for such tax occurred. In the case of a per9 son who is not required to file an income tax return 

10 for such year— 

11 ‘‘(A) the return referred to in this section 

12 shall be the income tax return that such person 

13 would have been required to file but for the fact 

14 that such person was not required to file such 

15 return, and 

16 ‘‘(B) the 3-year period referred to in sub17 section (a) with respect to the return shall be 

18 deemed to begin on the date by which the re19 turn would have been required to be filed (ex20 cluding any extension thereof).’’. 

21 SEC. 5. EXPANSION OF EMPLOYEE PLANS COMPLIANCE 

22 RESOLUTION SYSTEM. 

23 (a) EPCRS FOR IRAS.—The Secretary shall expand 

24 the Employee Plans Compliance Resolution System to 

25 allow trustees, custodians, and issuers of individual retireVerDate Sep 11 2014 03:37 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4117.IH H4117

kjohnson on DSK79L0C42 with BILLS
8 

•HR 4117 IH

1 ment plans (as defined in section 7701(a)(37) of the Inter2 nal Revenue Code of 1986) to address inadvertent failures 

3 for which the owner of an individual retirement plan was 

4 not at fault, including (but not limited to)— 

5 (1) waivers of the excise tax which would other6 wise apply under section 4974 of the Internal Rev7 enue Code of 1986; 

8 (2) under the self-correction component of the 

9 Employee Plans Compliance Resolution System, 

10 waivers of the 60-day deadline for a rollover where 

11 the deadline is missed for reasons beyond the rea12 sonable control of the account owner; and 

13 (3) rules permitting a nonspouse beneficiary to 

14 return distributions to an inherited individual retire15 ment plan described in section 408(d)(3)(C) of the 

16 Internal Revenue Code of 1986 in a case where, due 

17 to an inadvertent error by a service provider, the 

18 beneficiary had reason to believe that the distribu19 tion could be rolled over without inclusion in income 

20 of any part of the distributed amount. 

21 (b) REQUIRED MINIMUM DISTRIBUTION CORREC22 TIONS.—The Secretary shall expand the Employee Plans 

23 Compliance Resolution System to allow plans to which 

24 such system applies and trustees, custodians, issuers, and 

25 owners of individual retirement plans to self-correct, withVerDate Sep 11 2014 03:37 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4117.IH H4117

kjohnson on DSK79L0C42 with BILLS
9 

•HR 4117 IH

1 out an excise tax, any inadvertent failures pursuant to 

2 which a distribution is made no more than 180 days after 

3 it was required to be made. 

4 (c) INADVERTENT FAILURE.—For purposes of this 

5 section— 

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the term ‘‘inadvertent failure’’ means a 

8 failure that occurs despite the existence of practices 

9 and procedures which— 

10 (A) satisfy the standards set forth in sec11 tion 4.04 of Revenue Procedure 2018–52 (or 

12 any successor provision); or 

13 (B) satisfy similar standards in the case of 

14 an individual retirement plan. 

15 (2) CORRECTION BY OWNER OF INDIVIDUAL

16 RETIREMENT PLAN.—In the case of a correction by 

17 an owner of an individual retirement plan under 

18 subsection (b), the term ‘‘inadvertent failure’’ means 

19 a failure due to reasonable cause. 

20 SEC. 6. EFFECTIVE DATE. 

21 (a) IN GENERAL.—Subject to subsections (b) and (c), 

22 this Act and the amendments made by this Act shall take 

23 effect on the date of the enactment of this Act. 

24 (b) TRANSITION PROVISIONS.— 


kjohnson on DSK79L0C42 with BILLS
10 

•HR 4117 IH

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

2 this Act shall apply to any determination of or af3 fecting liability for taxes, interest, or penalties which 

4 is made on or after the date of the enactment of this 

5 Act, without regard to whether the conduct upon 

6 which the determination is based occurred before 

7 such date of enactment. Notwithstanding the pre8 ceding sentence, nothing in the amendments made 

9 by section 4(a) shall be construed to create an infer10 ence with respect to the law in effect prior to the ef11 fective date of such amendments. 

12 (2) CALCULATION OF CORRECTION WINDOW IN

13 CERTAIN CASES.—In the case of an error that would 

14 have been eligible for correction under section 

15 4973(i) or 4974(e) (as added by this section) of the 

16 Internal Revenue Code of 1986 if tax had not been 

17 imposed under 4973(a) or 4974(a), as the case may 

18 be, of such Code before the date of the enactment 

19 of this Act, the correction window referred to in sec20 tions 4973(i) and 4974(e) of such Code shall be the 

21 period beginning on the date on which such tax was 

22 imposed and ending on the earlier of— 

23 (A) the date on which the Secretary of the 

24 Treasury initiates an audit or otherwise de25 mands payment with respect to the conduct deVerDate Sep 11 2014 03:37 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4117.IH H4117

kjohnson on DSK79L0C42 with BILLS
11 

•HR 4117 IH

1 scribed in section 4973(a) or 4974(a), as the 

2 case may be, of such Code; or 

3 (B) the last day of the second taxable year 

4 that begins after the taxable year in which the 

5 date of the enactment of this Act occurs. 

6 (c) IMPLEMENTATION.—Section 2 shall be imple7 mented as soon as reasonably practicable after the enact8 ment of this Act but in no case later than the date that 

9 is 1 year after the date of the enactment of this Act. 

Æ 


kjohnson on DSK79L0C42 with BILLS