179 
cies, including the authority to waive income, excise, or 
other taxes to ensure that any tax, penalty, or sanction 
is not excessive and bears a reasonable relationship to the 
nature, extent, and severity of the failure. 
SEC. 703. EXTENSION OF MORATORIUM ON APPLICATION 
OF CERTAIN NONDISCRIMINATION RULES TO 
ALL GOVERNMENTAL PLANS. 
(a) IN GENERAL.— 
(1) Subparagraph (G) of section 401(a)(5) and 
subparagraph (H) of section 401(a)(26) of the In-
ternal Revenue Code of 1986 are each amended by 
striking ‘‘section 414(d))’’ and all that follows and 
inserting ‘‘section 414(d)).’’. 
(2) Subparagraph (G) of section 401(k)(3) and 
paragraph (2) of section 1505(d) of the Taxpayer 
Relief Act of 1997 (26 U.S.C. 401 note) are each 
amended by striking ‘‘maintained by a State or local 
government or political subdivision thereof (or agen-
cy or instrumentality thereof)’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for subparagraph (G) of sec-
tion 401(a)(5) of such Code is amended to read as 
follows: ‘‘GOVERNMENTAL PLANS.—’’. 
(2) The heading for subparagraph (H) of sec-
tion 401(a)(26) of such Code is amended to read as
180 
follows: ‘‘EXCEPTION FOR GOVERNMENTAL PLANS.— 
’’. 
(3) Subparagraph (G) of section 401(k)(3) of 
such Code is amended by inserting ‘‘GOVERN-
MENTAL PLANS.—’’ after ‘‘(G)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2005. 
SEC. 704. NOTICE AND CONSENT PERIOD REGARDING DIS-
TRIBUTIONS. 
(a) EXPANSION OF PERIOD.— 
(1) AMENDMENT
OF
INTERNAL
REVENUE 
CODE.— 
(A) IN
GENERAL.—Subparagraph (A) of 
section 417(a)(6) of the Internal Revenue Code 
of 1986 is amended by striking ‘‘90-day’’ and 
inserting ‘‘180-day’’. 
(B) MODIFICATION
OF
REGULATIONS.— 
The Secretary of the Treasury shall modify the 
regulations under sections 402(f), 411(a)(11), 
and 417 of the Internal Revenue Code of 1986 
to substitute ‘‘180 days’’ for ‘‘90 days’’ each 
place it appears in Treasury Regulations sec-
tions 1.402(f)–1, 1.411(a)–11(c), and 1.417(e)– 
1(b).
181 
(2) AMENDMENT OF ERISA.— 
(A) IN GENERAL.—Section 205(c)(7)(A) of 
the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1055(c)(7)(A)) is amended 
by striking ‘‘90-day’’ and inserting ‘‘180-day’’. 
(B) MODIFICATION
OF
REGULATIONS.— 
The Secretary of the Treasury shall modify the 
regulations under part 2 of subtitle B of title 
I of the Employee Retirement Income Security 
Act of 1974 to the extent that they relate to 
sections 203(e) and 205 of such Act to sub-
stitute ‘‘180 days’’ for ‘‘90 days’’ each place it 
appears. 
(3) EFFECTIVE DATE.—The amendments made 
by paragraphs (1)(A) and (2)(A) and the modifica-
tions required by paragraphs (1)(B) and (2)(B) 
shall apply to years beginning after December 31, 
2005. 
(b) CONSENT REGULATION INAPPLICABLE TO CER-
TAIN DISTRIBUTIONS.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall modify the regulations under section 
411(a)(11) of the Internal Revenue Code of 1986 
and under section 205 of the Employee Retirement 
Income Security Act of 1974 to provide that the de-
182 
scription of a participant’s right, if any, to defer re-
ceipt of a distribution shall also describe the con-
sequences of failing to defer such receipt. 
(2) EFFECTIVE DATE.— 
(A) IN GENERAL.—The modifications re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2005. 
(B) REASONABLE NOTICE.—In the case of 
any description of such consequences made be-
fore the date that is 90 days after the date on 
which the Secretary of the Treasury issues a 
safe harbor description under paragraph (1), a 
plan shall not be treated as failing to satisfy the 
requirements of section 411(a)(11) of such 
Code or section 205 of such Act by reason of 
the failure to provide the information required 
by the modifications made under paragraph (1) 
if the Administrator of such plan makes a rea-
sonable attempt to comply with such require-
ments. 
SEC. 705. QUALIFIED GROUP LEGAL SERVICES PLANS. 
(a) IN GENERAL.—Subsection (e) of section 120 of 
the Internal Revenue Code of 1986 is amended to read 
as follows:
183 
‘‘(e) APPLICATION OF SECTION.—This section and 
section 501(c)(20) shall apply to taxable years begin-
ning— 
‘‘(1) after December 31, 1976, and before July 
1, 1992, and 
‘‘(2) after December 31, 2005, and before Jan-
uary 1, 2009.’’. 
(b) INCREASE IN MAXIMUM EXCLUSION.—The last 
sentence of section 120(a) is amended by striking ‘‘$70’’ 
and inserting ‘‘$150’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 706. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT PLANS FOR CHARITABLE PUR-
POSES. 
(a) IN GENERAL.—Subsection (d) of section 408 of 
the Internal Revenue Code of 1986 (relating to individual 
retirement accounts) is amended by adding at the end the 
following new paragraph: 
‘‘(8) DISTRIBUTIONS
FOR
CHARITABLE
PUR-
POSES.— 
‘‘(A) IN GENERAL.—No amount shall be 
includible in gross income by reason of a quali-
fied charitable distribution.
184 
‘‘(B) QUALIFIED
CHARITABLE
DISTRIBU-
TION.—For purposes of this paragraph, the 
term ‘qualified charitable distribution’ means 
any distribution from an individual retirement 
plan other than a plan described in subsection 
(k) or (p) of section 408— 
‘‘(i) which is made on or after the 
date that the individual for whose benefit 
the plan is maintained has attained age 
701⁄2, and 
‘‘(ii) which is made directly by the 
trustee— 
‘‘(I) to an organization described 
in section 170(c), or 
‘‘(II) to a split-interest entity. 
A distribution shall be treated as a qualified 
charitable distribution only to the extent that 
the distribution would be includible in gross in-
come without regard to subparagraph (A) and, 
in the case of a distribution to a split-interest 
entity, only if no person holds an income inter-
est in the amounts in the split-interest entity 
attributable to such distribution other than one 
or more of the following: the individual for 
whose benefit such plan is maintained, the
185 
spouse of such individual, or any organization 
described in section 170(c). 
‘‘(C) CONTRIBUTIONS
MUST
BE
OTHER-
WISE DEDUCTIBLE.—For purposes of this para-
graph— 
‘‘(i) DIRECT CONTRIBUTIONS.—A dis-
tribution to an organization described in 
section 170(c) shall be treated as a quali-
fied charitable distribution only if a deduc-
tion for the entire distribution would be al-
lowable under section 170 (determined 
without regard to subsection (b) thereof 
and this paragraph). 
‘‘(ii) SPLIT-INTEREST GIFTS.—A dis-
tribution to a split-interest entity shall be 
treated as a qualified charitable distribu-
tion only if a deduction for the entire value 
of the interest in the distribution for the 
use of an organization described in section 
170(c) would be allowable under section 
170 (determined without regard to sub-
section (b) thereof and this paragraph). 
‘‘(D) APPLICATION OF SECTION 72.—Not-
withstanding section 72, in determining the ex-
tent to which a distribution is a qualified chari-
186 
table distribution, the entire amount of the dis-
tribution shall be treated as includible in gross 
income without regard to subparagraph (A) to 
the extent that such amount does not exceed 
the aggregate amount which would have been so 
includible if all amounts distributed from all in-
dividual retirement plans were treated as 1 con-
tract under paragraph (2)(A) for purposes of 
determining the inclusion of such distribution 
under section 72. Proper adjustments shall be 
made in applying section 72 to other distribu-
tions in such taxable year and subsequent tax-
able years. 
‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST 
ENTITIES.— 
‘‘(i) 
CHARITABLE
REMAINDER 
TRUSTS.—Notwithstanding section 664(b), 
distributions made from a trust described 
in subparagraph (G)(i) shall be treated as 
ordinary income in the hands of the bene-
ficiary to whom is paid the annuity de-
scribed in section 664(d)(1)(A) or the pay-
ment described in section 664(d)(2)(A). 
‘‘(ii) POOLED
INCOME
FUNDS.—No 
amount shall be includible in the gross in-
187 
come of a pooled income fund (as defined 
in subparagraph (G)(ii)) by reason of a 
qualified charitable distribution to such 
fund, and all distributions from the fund 
which are attributable to qualified chari-
table distributions shall be treated as ordi-
nary income to the beneficiary. 
‘‘(iii) 
CHARITABLE
GIFT
ANNU-
ITIES.—Qualified charitable distributions 
made for a charitable gift annuity shall not 
be treated as an investment in the con-
tract. 
‘‘(F) DENIAL
OF
DEDUCTION.—Qualified 
charitable distributions shall not be taken into 
account in determining the deduction under sec-
tion 170. 
‘‘(G) SPLIT-INTEREST ENTITY DEFINED.— 
For purposes of this paragraph, the term ‘split- 
interest entity’ means— 
‘‘(i) a charitable remainder annuity 
trust or a charitable remainder unitrust 
(as such terms are defined in section 
664(d)) which must be funded exclusively 
by qualified charitable distributions,
188 
‘‘(ii) a pooled income fund (as defined 
in section 642(c)(5)), but only if the fund 
accounts separately for amounts attrib-
utable to qualified charitable distributions, 
and 
‘‘(iii) a charitable gift annuity (as de-
fined in section 501(m)(5)).’’. 
(b) MODIFICATIONS RELATING TO INFORMATION RE-
TURNS BY CERTAIN TRUSTS.— 
(1) RETURNS.—Section 6034 of such Code (re-
lating to returns by trusts described in section 
4947(a)(2) or claiming charitable deductions under 
section 642(c)) is amended to read as follows: 
‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 
4947(a)(2) OR CLAIMING CHARITABLE DEDUC-
TIONS UNDER SECTION 642(c). 
‘‘(a) TRUSTS DESCRIBED IN SECTION 4947(a)(2).— 
Every trust described in section 4947(a)(2) shall furnish 
such information with respect to the taxable year as the 
Secretary may by forms or regulations require. 
‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION 
UNDER SECTION 642(c).— 
‘‘(1) IN GENERAL.—Every trust not required to 
file a return under subsection (a) but claiming a de-
duction under section 642(c) for the taxable year
189 
shall furnish such information with respect to such 
taxable year as the Secretary may by forms or regu-
lations prescribe, including— 
‘‘(A) the amount of the deduction taken 
under section 642(c) within such year, 
‘‘(B) the amount paid out within such year 
which represents amounts for which deductions 
under section 642(c) have been taken in prior 
years, 
‘‘(C) the amount for which such deductions 
have been taken in prior years but which has 
not been paid out at the beginning of such year, 
‘‘(D) the amount paid out of principal in 
the current and prior years for the purposes de-
scribed in section 642(c), 
‘‘(E) the total income of the trust within 
such year and the expenses attributable thereto, 
and 
‘‘(F) a balance sheet showing the assets, li-
abilities, and net worth of the trust as of the 
beginning of such year. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to a trust for any taxable year if— 
‘‘(A) all the net income for such year, de-
termined under the applicable principles of the
190 
law of trusts, is required to be distributed cur-
rently to the beneficiaries, or 
‘‘(B) the trust is described in section 
4947(a)(1).’’. 
(2) INCREASE IN PENALTY RELATING TO FIL-
ING OF INFORMATION RETURN BY SPLIT-INTEREST 
TRUSTS.—Paragraph (2) of section 6652(c) of such 
Code (relating to returns by exempt organizations 
and by certain trusts) is amended by adding at the 
end the following new subparagraph: 
‘‘(C) SPLIT-INTEREST
TRUSTS.—In the 
case of a trust which is required to file a return 
under section 6034(a), subparagraphs (A) and 
(B) of this paragraph shall not apply and para-
graph (1) shall apply in the same manner as if 
such return were required under section 6033, 
except that— 
‘‘(i) the 5 percent limitation in the 
second sentence of paragraph (1)(A) shall 
not apply, 
‘‘(ii) in the case of any trust with 
gross income in excess of $250,000, the 
first sentence of paragraph (1)(A) shall be 
applied by substituting ‘$100’ for ‘$20’, 
and the second sentence thereof shall be
191 
applied by substituting ‘$50,000’ for 
‘$10,000’, and 
‘‘(iii) the third sentence of paragraph 
(1)(A) shall be disregarded. 
In addition to any penalty imposed on the trust 
pursuant to this subparagraph, if the person re-
quired to file such return knowingly fails to file 
the return, such penalty shall also be imposed 
on such person who shall be personally liable 
for such penalty.’’. 
(3) CONFIDENTIALITY
OF
NONCHARITABLE 
BENEFICIARIES.—Subsection (b) of section 6104 of 
such Code (relating to inspection of annual informa-
tion returns) is amended by adding at the end the 
following new sentence: ‘‘In the case of a trust which 
is required to file a return under section 6034(a), 
this subsection shall not apply to information re-
garding beneficiaries which are not organizations de-
scribed in section 170(c).’’. 
(c) EFFECTIVE DATES.— 
(1) SUBSECTION (a).—The amendment made by 
subsection (a) shall apply to distributions made after 
December 31, 2005.
192 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply to returns for taxable 
years beginning after December 31, 2005. 
TITLE VIII—MISCELLANEOUS 
PROVISIONS 
SEC. 801. PROVISIONS RELATING TO PLAN AMENDMENTS. 
(a) IN GENERAL.—If this section applies to any plan 
or contract amendment— 
(1) such plan or contract shall be treated as 
being operated in accordance with the terms of the 
plan during the period described in subsection 
(b)(2)(A), and 
(2) except as provided by the Secretary of the 
Treasury, such plan shall not fail to meet the re-
quirements of section 411(d)(6) of the Internal Rev-
enue Code of 1986 and section 204(g) of the Em-
ployee Retirement Income Security Act of 1974 by 
reason of such amendment. 
(b) AMENDMENTS TO WHICH SECTION APPLIES.— 
(1) IN GENERAL.—This section shall apply to 
any amendment to any plan or annuity contract 
which is made— 
(A) pursuant to any amendment made by 
this Act or title VI of the Economic Growth and 
Tax Relief Reconciliation Act of 2001, or pur-
193 
suant to any regulation issued by the Secretary 
of the Treasury or the Secretary of Labor 
under this Act or such title VI, and 
(B) on or before the last day of the first 
plan year beginning on or after January 1, 
2008. 
In the case of a governmental plan (as defined in 
section 414(d) of the Internal Revenue Code of 
1986), this paragraph shall be applied by sub-
stituting ‘‘2010’’ for ‘‘2008’’. 
(2) CONDITIONS.—This section shall not apply 
to any amendment unless— 
(A) during the period— 
(i) beginning on the date the legisla-
tive or regulatory amendment described in 
paragraph (1)(A) takes effect (or in the 
case of a plan or contract amendment not 
required by such legislative or regulatory 
amendment, the effective date specified by 
the plan), and 
(ii) ending on the date described in 
paragraph (1)(B) (or, if earlier, the date 
the plan or contract amendment is adopt-
ed),
194 
the plan or contract is operated as if such plan 
or contract amendment were in effect; and 
(B) such plan or contract amendment ap-
plies retroactively for such period. 
Æ