I 
116TH CONGRESS 
1ST SESSION H. R. 1859 
To amend the Internal Revenue Code of 1986 to provide for parent savings 
accounts, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 25, 2019 
Mr. KATKO (for himself and Mr. BRINDISI) 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 provide 
for parent savings accounts, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Working Parents 
Flexibility Act of 2019’’. 
SEC. 2. PARENTAL LEAVE SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
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‘‘SEC. 224. PARENTAL LEAVE SAVINGS ACCOUNTS. 
‘‘(a) ALLOWANCE OF DEDUCTION.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who is an eligible individual for any month during 
the taxable year, there shall be allowed as a deduc-
tion for the taxable year an amount equal to the ag-
gregate amount paid in cash during such taxable 
year by such individual to a parental leave savings 
account of such individual. 
‘‘(b) LIMITATIONS.— 
‘‘(1) ANNUAL
LIMITATION
FOR
ANY
YEAR.— 
The amount allowable as a deduction under sub-
section (a) to an eligible individual for the taxable 
year shall not exceed $6,750. 
‘‘(2) OVERALL
LIMITATION.—The aggregate 
amounts contributed to a parental leave savings ac-
count for all taxable years shall not exceed $24,000. 
‘‘(3) ADJUSTED GROSS INCOME LIMITATION.— 
In the case of a taxpayer whose adjusted gross in-
come exceeds $250,000 for the taxable year, the dol-
lar limitation under paragraph (1) for such taxable 
year shall be zero. 
‘‘(4) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
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taxpayer for a taxable year beginning in the cal-
endar year in which such individual’s taxable year 
begins. 
‘‘(5) COORDINATION
WITH
EMPLOYER
CON-
TRIBUTIONS.—The limitation which would (but for 
this paragraph) apply under this subsection to an in-
dividual for any taxable year shall be reduced (but 
not below zero) by the aggregate amount contributed 
to a parental leave savings account of such indi-
vidual which is excludable from the taxpayer’s ad-
justed gross income for such taxable year under sec-
tion 139G (and such amount shall not be allowed as 
a deduction under subsection (a)). 
‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 
section, the term ‘eligible individual’ means, with respect 
to any month, any individual who has earned income from 
employment during the 12 months preceding the month 
in which the parental leave savings account is established. 
‘‘(d) PARENTAL LEAVE SAVINGS ACCOUNT.—For 
purposes of this section: 
‘‘(1) IN GENERAL.—The term ‘parental leave 
savings account’ means a trust created or organized 
in the United States exclusively for the purpose of 
making distributions for the care of a child of the 
account owner, but only if the written governing in-
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strument creating the trust meets the following re-
quirements: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (e)(3), no con-
tribution will be accepted— 
‘‘(i) unless it is in cash, or 
‘‘(ii) to the extent such contribution— 
‘‘(I) when added to previous con-
tributions to the trust for the calendar 
year, exceeds the dollar amount in ef-
fect under subsection (b)(1), or 
‘‘(II) when added to all previous 
contributions to the trust, exceeds the 
limit under subsection (b)(2). 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which such person will ad-
minister the trust will be consistent with the re-
quirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust will not be 
commingled with other property except in a 
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common trust fund or common investment 
fund. 
‘‘(E) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers). 
‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Except as provided in section 106(d), 
section 219(f)(5) (relating to employer pay-
ments). 
‘‘(D) Section 408(g) (relating to commu-
nity property laws). 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any distribution from a parental leave 
savings account shall be included in the gross in-
come of the account owner. 
‘‘(2) EARLY PARENTHOOD PAYMENTS OR IMME-
DIATE RETURN OF CONTRIBUTIONS.— 
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‘‘(A) IN GENERAL.—Any amount paid or 
distributed out of a parental leave savings ac-
count which— 
‘‘(i) is made pursuant to a request by 
the account owner and not later than 1 
year after the birth or adoption of a child 
of the account owner, or 
‘‘(ii) is not more than the amount of 
contributions made to the account during 
the 30-day period ending on the date of 
such distribution, 
shall not be included in gross income. Clause 
(ii) shall not apply if a deduction is allowed 
with respect to such contribution. 
‘‘(B) RETURN
OF
CONTRIBUTION
NOT 
TAKEN
INTO
ACCOUNT
IN
DETERMINING
DE-
DUCTION.—The amount allowed as a deduction 
under subsection (a) for the taxable year (deter-
mined without regard to this subparagraph) 
shall be reduced by the amount of distributions 
made during the taxable year under subpara-
graph (A)(ii). 
‘‘(C) COORDINATION
WITH
DEPENDENT 
CARE
TAX
CREDIT.—The employment-related 
expenses (as defined in section 21(b)(2)) taken 
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than the 60th day after the date on which 
the payment or distribution is received, ex-
cept the maximum amount which may be 
paid into such plan may not exceed the 
portion of the amount received which is in-
cludible in gross income (determined with-
out regard to this paragraph). 
For purposes of clause (ii), the term ‘eligible re-
tirement plan’ means an eligible retirement plan 
described in clause (iii), (iv), (v), or (vi) of sec-
tion 402(c)(8)(B). 
‘‘(B) LIMITATION.—This paragraph does 
not apply to any amount described in subpara-
graph (A)(i) received by an individual from a 
parental leave savings account if at any time 
during the 1-year period ending on the day of 
such receipt such individual received any other 
amount described in that subparagraph from a 
parental leave savings account which was not 
includible in his gross income because of the ap-
plication of this paragraph. 
‘‘(C) SPECIAL
RULE
FOR
529
AND
529A 
FUNDING DISTRIBUTIONS.— 
‘‘(i) IN GENERAL.—A plan shall not 
fail to be treated as a parental leave sav-
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ings account under this section solely be-
cause the account provides for distribu-
tions from a parental leave savings account 
to a qualified tuition program (as defined 
in section 529(b)) or a qualified ABLE 
program (as defined in section 529A(b)) of 
the taxpayer or a child of the taxpayer (as 
defined in section 529(e)). 
‘‘(ii) TAX
TREATMENT.—Paragraph 
(1) shall not apply to so much of any such 
distribution as is allocable to earnings on 
the amounts contributed by the taxpayer to 
the parental leave savings account. 
‘‘(4) ADDITIONAL TAX FOR DISTRIBUTIONS NOT 
USED
FOR
EARLY
PARENTHOOD
PAYMENTS.—The 
tax imposed by this chapter on the account owner 
for any taxable year in which there is a payment or 
distribution from a parental leave savings account of 
such account owner which is includible in gross in-
come under subparagraph (1) shall be increased by 
20 percent of the amount which is so includible. The 
preceding sentence shall not apply to the portion of 
a distribution described in subparagraph (C)(i) that 
is so includible. 
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‘‘(5) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any parental leave savings account of an indi-
vidual, paragraph (1) shall not apply to dis-
tributions from the parental leave savings ac-
count of such individual (to the extent such dis-
tributions do not exceed the aggregate excess 
contributions to the account of such individual 
for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
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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 2020, each dollar 
amount in subsections (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 2019’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
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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be determined without regard to community prop-
erty laws.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 3121(a) of such Code is 
amended by striking ‘‘or’’ at the end of para-
graph (22), by striking the period at the end of 
paragraph (23) and inserting ‘‘; or’’, and by in-
serting after paragraph (23) the following new 
paragraph: 
‘‘(24) any payment made to a parental leave 
savings account (as defined in section 224) or an 
employee.’’. 
(B) Section 3231(e) of such Code is 
amended by adding at the end the following 
new paragraph: 
‘‘(13) PARENTAL
LEAVE
SAVINGS
ACCOUNT 
CONTRIBUTIONS.—The term ‘compensation’ shall 
not include any payment made to a parental leave 
savings account (as defined in section 224) of an 
employee.’’. 
(C) Section 3306(b) of such Code is 
amended by striking ‘‘or’’ at the end of para-
graph (19), by striking the period at the end of 
paragraph (20) and inserting ‘‘; or’’, and by in-
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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 
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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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, 2019. 
Æ 
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