than a rollover contribution described in para-
graph (3)) which is neither excludable from 
gross income under section 139G nor deductible 
under this section. 
‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a parental leave savings account to an individual’s 
spouse or former spouse under a divorce or separa-
tion instrument described in subparagraph (A) of 
section 71(b)(2) shall not be considered a taxable 
transfer made by such individual notwithstanding 
any other provision of this subtitle, and such interest 
shall, after such transfer, be treated as a parental 
leave savings account with respect to which such 
spouse is the account owner. 
‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 
OWNER.— 
‘‘(A) TREATMENT IF DESIGNATED BENE-
FICIARY IS SPOUSE.— 
‘‘(i) IN GENERAL.—If a qualified indi-
vidual acquires such owner’s interest in a 
parental leave savings account by reason of 
being the designated beneficiary of such 
account at the death of the account owner, 
such parental leave savings account shall 
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be treated as if the qualified individual 
were the account owner. 
‘‘(ii) QUALIFIED
INDIVIDUAL.—For 
purposes of clause (i), the term ‘qualified 
individual’ means, with respect to any ac-
count owner— 
‘‘(I) the account owner’s sur-
viving spouse, or 
‘‘(II) any other person with cus-
tody of any child of the deceased ac-
count owner, but only if such death 
occurred not later than 1 year after 
the birth or adoption of such child by 
the deceased account owner. 
‘‘(B) OTHER CASES.— 
‘‘(i) IN GENERAL.—If, by reason of 
the death of the account owner, any person 
acquires the account owner’s interest in a 
parental leave savings account in a case to 
which subparagraph (A) does not apply— 
‘‘(I) such account shall cease to 
be a parental leave savings account as 
of the date of death, and 
‘‘(II) an amount equal to the fair 
market value of the assets in such ac-
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count on such date shall be includible 
if such person is not the estate of 
such owner, in such person’s gross in-
come for the taxable year which in-
cludes such date, or if such person is 
the estate of such owner, in such own-
er’s gross income for the last taxable 
year of such owner. 
‘‘(ii) SPECIAL
RULES.—An appro-
priate deduction shall be allowed under 
section 691(c) to any person (other than 
the decedent or the decedent’s spouse) with 
respect to amounts included in gross in-
come under clause (i) by such person. 
‘‘(f) TAX TREATMENT OF ACCOUNT.— 
‘‘(1) IN GENERAL.—A parental leave savings 
account shall be exempt from taxation under this 
subtitle. Notwithstanding the preceding sentence, 
the parental leave savings account shall be subject to 
the taxes imposed by section 511 (relating to imposi-
tion of tax on unrelated business income of chari-
table, etc. organizations). 
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 
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408(e) shall apply to any parental leave savings ac-
count. 
‘‘(g) ONE ACCOUNT PER INDIVIDUAL.—An indi-
vidual may not own more than one parental leave savings 
account. The Secretary shall prescribe such rules as are 
necessary to provide for liquidating an individual’s paren-
tal leave savings account for transfer to a new parental 
leave savings account of the individual and for treating 
such amounts as a rollover distribution described in sub-
section (e)(3). 
‘‘(h) REPORTS.—The owner of a parental leave sav-
ings account shall make such reports regarding such ac-
count to the Secretary with respect to contributions, dis-
tributions, the return of excess contributions, and such 
other matters as the Secretary may require. The reports 
required by this subsection shall be filed at such time and 
in such manner and furnished to such individuals at such 
time and in such manner as may be required by the Sec-
retary. 
‘‘(i) COST-OF-LIVING ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of taxable years 
beginning in a calendar year after 2017, each dollar 
amount in subsection (b)(1) and (b)(2) shall be in-
creased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(B) the cost of living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins deter-
mined by substituting ‘calendar year 2016’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $50, such increase 
shall be rounded to the nearest multiple of $50.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Section 62(a) 
of such Code is amended by inserting after paragraph (21) 
the following new paragraph: 
‘‘(22) PARENTAL LEAVE SAVINGS ACCOUNTS.— 
The deduction allowed under section 224.’’. 
(c) EXCLUSION FOR EMPLOYER CONTRIBUTIONS TO 
PARENTAL LEAVE SAVINGS ACCOUNTS.— 
(1) IN GENERAL.—Part III of subchapter B of 
chapter 1 of such Code is amended by inserting 
after section 139F the following new section: 
‘‘SEC. 139G. CONTRIBUTIONS BY EMPLOYER TO PARENTAL 
LEAVE SAVINGS ACCOUNTS. 
‘‘(a) IN GENERAL.—Gross income of an employee 
does not include contributions by the employer to the pa-
rental leave savings account of the employee to the extent 
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such amounts do not exceed the limitation under section 
224(b)(1) (determined without regard to this section) 
which is applicable to such employee for such taxable year. 
‘‘(b) PARENTAL LEAVE SAVINGS ACCOUNT.—For 
purposes of this section, the term ‘parental leave savings 
account’ shall have the meaning given to such term by 
section 224. 
‘‘(c) EXCLUSION
NOT
TO
EXCEED
COMPENSA-
TION.— 
‘‘(1) EMPLOYEES.—The amount excluded from 
gross income by subsection (a) with respect to an 
employee shall not exceed such employee’s wages, 
salaries, tips, and other employee compensation 
which are attributable to such employee’s employ-
ment by the employer referred to in such subsection. 
‘‘(2) 
SELF-EMPLOYED
INDIVIDUALS.—The 
amount excluded from gross income by subsection 
(a) for contributions with respect to an individual 
who is self employed shall not exceed such individ-
ual’s earned income (as defined in section 401(c)(2)) 
derived by the taxpayer from the trade or business 
with respect to which the individual is self-employed. 
‘‘(3) COMMUNITY
PROPERTY
LAWS
NOT
TO 
APPLY.—The limitations under this subsection shall 
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serting after paragraph (20) the following new 
paragraph: 
‘‘(21) any payment made to a parental leave 
savings account (as defined in section 224) of an 
employee.’’. 
(D) Section 3401(a) of such Code is 
amended by striking ‘‘or’’ at the end of para-
graph (21), by striking the period at the end of 
paragraph (22) and inserting ‘‘; or’’, and by in-
serting after paragraph (22) the following new 
paragraph: 
‘‘(23) any payment made to a parental leave 
savings account (as defined in section 224) of an 
employee.’’. 
(E) Section 6051(a) of such Code is 
amended by striking ‘‘and’’ at the end of para-
graph (13), by striking the period at the end of 
paragraph (14) and inserting ‘‘, and’’, and by 
inserting after paragraph (14) the following 
new paragraph: 
‘‘(15) the amount contributed to any parental 
leave savings account (as defined in section 224) of 
such employee.’’. 
(d) PROHIBITED TRANSACTIONS.— 
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(1) EXCEPTION FOR TAXABLE DISTRIBUTIONS 
FROM PARENTAL LEAVE SAVINGS ACCOUNTS.—Sub-
section (c) of section 4975 of such Code (defining to 
prohibited transaction) is amended by adding at the 
end the following new paragraph: 
‘‘(7) SPECIAL RULE FOR PARENTAL LEAVE SAV-
INGS ACCOUNTS.—An individual for whose benefit a 
parental leave savings account (with the meaning of 
section 224) is established and any contributor to 
such account shall be exempt from the tax imposed 
by this section with respect to any transaction con-
cerning such account (which would otherwise be tax-
able under this section) if, with respect to such 
transaction, the account ceases to be a parental 
leave savings account by reason of the application of 
section 224(f)(2) to such account.’’. 
(2) PLAN
DEFINED.—Section 4975(e)(1) of 
such Code is amended by striking ‘‘or’’ at the end 
of subparagraph (F), by redesignating subparagraph 
(G) as subparagraph (H), and by inserting after 
subparagraph (F) the following new subparagraph: 
‘‘(G) a parental leave savings account de-
scribed in section 224, or’’. 
(e) PENALTY
ON FAILURE TO REPORT.—Section 
6693(a)(2) of such Code is amended by striking ‘‘and’’ 
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at the end of subparagraph (D), by striking the period 
at the end of subparagraph (E) and inserting ‘‘, and’’, 
and by inserting after subparagraph (E) the following new 
subparagraph: 
‘‘(F) section 224(g) (relating to parental 
leave savings accounts).’’. 
(f) CONFORMING AMENDMENT.—Section 26(b)(2) of 
such Code is amended by striking ‘‘and’’ at the end of 
subparagraph (X), by striking the period at the end of 
subparagraph (Y) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
‘‘(Z) section 224(e)(4) (relating to addi-
tional tax with respect to distributions not used 
for early parenthood payment purposes).’’. 
(g) CLERICAL AMENDMENTS.— 
(1) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
redesignating the item relating to section 224 as an 
item relating to section 225 and by inserting after 
the item relating to section 223 the following new 
item: 
‘‘Sec. 224. Parental leave savings accounts.’’. 
(2) The table of sections for part III of sub-
chapter B of chapter 1 of such Code is amended by 
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inserting after the item relating to section 139F the 
following new item: 
‘‘Sec. 139G. Contributions by employer to parental leave savings accounts.’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
Æ 
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