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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3278 Introduced in Senate (IS)]

110th CONGRESS
  2d Session
                                S. 3278

To amend the Internal Revenue Code of 1986 to provide that no loan may 
  be made from a qualified employer plan using a credit card or other 
 intermediary and to limit the number of loans that may be made from a 
        qualified employer plan to a participant or beneficiary.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 17, 2008

   Mr. Schumer (for himself, Mr. Kohl, and Mr. Smith) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to provide that no loan may 
  be made from a qualified employer plan using a credit card or other 
 intermediary and to limit the number of loans that may be made from a 
        qualified employer plan to a participant or beneficiary.

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

SECTION 1. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING LOANS 
              THROUGH CREDIT CARDS AND OTHER INTERMEDIARIES.

    (a) In General.--Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 is amended by inserting after paragraph (36) the 
following new paragraph:
            ``(37) Prohibition of loans through credit cards and other 
        intermediaries.--A trust shall not constitute a qualified trust 
        under this section if the plan makes any loan to any 
        beneficiary under the plan through the use of any credit card 
        or any other intermediary.''
    (b) Application to Employee Annuities.--
            (1) In general.--Section 404(a)(2) of the Internal Revenue 
        Code of 1986 (relating to employees' annuities) is amended by 
        striking ``and (31)'' and inserting ``(31), and (37)''.
            (2) Section 403(b) annuity contracts.--Section 403(b)(1) of 
        such Code is amended by striking ``and'' at the end of 
        subparagraph (D), by inserting ``and'' at the end of 
        subparagraph (E), and by inserting after subparagraph (E) the 
        following new subparagraph:
                    ``(F) the requirements of section 401(a)(37) are 
                met with respect to the contract and any plan under 
                which the contract is purchased,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after the date of the enactment of this 
Act.

SEC. 2. LIMITATION ON NUMBER OF LOANS FROM QUALIFIED EMPLOYER PLANS 
              WHICH MAY BE OUTSTANDING WITH RESPECT TO ANY PARTICIPANT 
              OR BENEFICIARY.

    (a) In General.--Paragraph (2) of section 72(p) of the Internal 
Revenue Code of 1986 (relating to loans treated as distributions) is 
amended by redesignating subparagraph (D) as subparagraph (E) and by 
inserting after subparagraph (C) the following new subparagraph:
                    ``(D) Exception only to apply to 3 loans.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to any loan made after the date of 
                        the enactment of this subparagraph if, 
                        immediately after such loan is made, the number 
                        of outstanding loans from the plan to the 
                        participant or beneficiary exceeds 3.
                            ``(ii) Refinancings.--If any loan made 
                        after the date of the enactment of this 
                        subparagraph refinances 1 or more outstanding 
                        loans from the plan to the participant or 
                        beneficiary, the number of loans taken into 
                        account under subparagraph (A) with respect to 
                        such loan shall be equal to 1 plus the number 
                        of loans refinanced by such loan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to loans made after the date of the enactment of this Act.
                                 <all>
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