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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1590 Introduced in House (IH)]

107th CONGRESS
  1st Session
                                H. R. 1590

   To amend the Internal Revenue Code of 1986 to allow up to $500 of 
  health benefits and dependent care assistance in flexible spending 
    accounts and similar arrangements to be carried forward to the 
    succeeding taxable year or to be included in gross income upon 
             termination of such accounts and arrangements.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 25, 2001

 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 allow up to $500 of 
  health benefits and dependent care assistance in flexible spending 
    accounts and similar arrangements to be carried forward to the 
    succeeding taxable year or to be included in gross income upon 
             termination of such accounts and arrangements.

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

SECTION 1. $500 OF HEALTH BENEFITS AND DEPENDENT CARE ASSISTANCE IN 
              FLEXIBLE SPENDING ACCOUNTS CARRIED FORWARD TO SUCCEEDING 
              TAXABLE YEAR AND INCLUDED IN GROSS INCOME UPON 
              TERMINATION OF ACCOUNTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j) and by inserting after 
subsection (g) the following:
    ``(h) Carryforwards of Certain Unused Health Benefits and Dependent 
Care Assistance to Succeeding Taxable Year; Income Inclusion Upon 
Termination.--
            ``(1) In general.--For purposes of this title--
                    ``(A) a plan or other arrangement shall not fail to 
                be treated as a cafeteria plan or flexible spending or 
                similar arrangement, and
                    ``(B) no amount shall be required to be included in 
                gross income by reason of this section or any other 
                provision of this chapter,
        solely because under such plan or other arrangement an employee 
        may make the election described in paragraph (3).
            ``(2) Limitation.--Paragraph (1) shall not apply to more 
        than $500 of benefits which are unused as of the close of the 
        taxable year or as of the date of termination of the plan or 
        arrangement.
            ``(3) Election.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the election described in this paragraph is an 
                election--
                            ``(i)(I) to carry forward to the succeeding 
                        taxable year health benefits and dependent care 
                        assistance (as defined in section 129(e)(1)) 
                        which are unused as of the close of a taxable 
                        year, or
                            ``(II) to include the amount of such unused 
                        benefits in gross income for the taxable year,
                            ``(ii) upon the termination of the plan or 
                        arrangement, to include the amount of such 
                        unused benefits in gross income for the taxable 
                        year ending within or with the end of the year 
                        in which such termination occurs, and
                            ``(iii) upon failure to re-enroll in such 
                        plan or arrangement, to include the amount of 
                        such unused benefits in gross income for the 
                        last taxable year of enrollment in such plan or 
                        arrangement.
                    ``(B) When made.--The election described in 
                subparagraph (A) shall be made before the close of the 
                fiscal year of the plan or arrangement.''.
    (b) Carryforward Subject to Exclusion Limitation.--Subparagraph (A) 
of section 129(a)(2) of such Code (relating to general limitation of 
exclusion under dependent care assistance programs) is amended by 
inserting before the period at the end the following: ``, reduced by 
the amount carried forward to such taxable year under section 125(h)''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>
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