SEAL Act

To amend the Internal Revenue Code of 1986 to modify the rules relating to loans made from a qualified employer plan, and for other purposes. 1. Short title This Act may be cited as the Shrinking Emergency Account Losses Act of 2017 SEAL Act 2. Extended rollover period for the rollover of plan loan offset amounts in certain cases (a) In general Paragraph (3) of section 402(c) (C) Rollover of certain plan loan offset amounts (i) In general In the case of a qualified plan loan offset amount, paragraph (1) shall not apply to any transfer of such amount made after the due date (including extensions) for filing the return of tax for the taxable year in which such amount is treated as distributed from a qualified employer plan. (ii) Qualified plan loan offset amount For purposes of this subparagraph, the term qualified plan loan offset amount (I) the termination of the qualified employer plan, or (II) the failure to meet the repayment terms of the loan from such plan because of the severance from employment of the participant. (iii) Plan loan offset amount For purposes of clause (ii), the term plan loan offset amount (iv) Limitation This subparagraph shall not apply to any plan loan offset amount unless such plan loan offset amount relates to a loan to which section 72(p)(1) does not apply by reason of section 72(p)(2). (v) Qualified employer plan For purposes of this subsection, the term qualified employer plan . (b) Conforming amendment Subparagraph (A) of section 402(c)(3) subparagraph (B) subparagraphs (B) and (C) (c) Effective date The amendments made by this section shall apply to transfers made after the date of the enactment of this Act. 3. Modification of rules governing hardship distributions Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall modify Treasury Regulation section 1.401(k)–1(d)(3)(iv)(E) to— (1) delete the prohibition imposed by paragraph (2) thereof, and (2) to make any other modifications necessary to carry out the purposes of section 401(k)(2)(B)(i)(IV) 4. Qualified employer plans prohibited from making loans through credit cards and other similar arrangements (a) In general Paragraph (2) of section 72(p) (D) Prohibition of loans through credit cards and other similar arrangements Subparagraph (A) shall not apply to any loan which is made through the use of any credit card or any other similar arrangement. . (b) Effective date The amendments made by this section shall apply to plan years beginning after the date which is 60 days after the date of the enactment of this Act.

Summary: Shrinking Emergency Account Losses Act of 2017 or the SEAL Act This bill amends the Internal Revenue Code, with respect to loans made from a qualified employer plan, to: (1) extend the period for repayment of loans if a plan terminates or a plan participant becomes unemployed, and (2) prohibit qualified employer plans from making loans using credit cards or any other similar arrangement. The bill also requires the Department of the Treasury to modify regulations governing hardship distributions from qualified employer plans to allow participants to make additional contributions to a plan during the six-month period following a hardship distribution.