I 
116TH CONGRESS 
1ST SESSION H. R. 4117 
To reduce the disadvantages of individual retirement plans with respect to 
employer-sponsored retirement plans by helping taxpayers comply with 
laws affecting individual retirement plans, by providing for reduced pen-
alties under the Internal Revenue Code of 1986 for certain self-correc-
tions with respect to such laws, and by expanding the Employee Plans 
Compliance Resolution System to cover certain errors under individual 
retirement plans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 30, 2019 
Mr. KIND (for himself and Mr. KELLY of Pennsylvania) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To reduce the disadvantages of individual retirement plans 
with respect to employer-sponsored retirement plans by 
helping taxpayers comply with laws affecting individual 
retirement plans, by providing for reduced penalties 
under the Internal Revenue Code of 1986 for certain 
self-corrections with respect to such laws, and by expand-
ing the Employee Plans Compliance Resolution System 
to cover certain errors under individual retirement plans, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘IRA Preservation Act 
of 2019’’. 
SEC. 2. EDUCATION WITH RESPECT TO IRAS. 
The Secretary of the Treasury shall make available 
to the public the following information: 
(1) An overview of the laws and regulations re-
lated to individual retirement plans (as defined in 
section 7701(a)(37) of the Internal Revenue Code of 
1986), including— 
(A) limits on contributions; 
(B) limits on deductions for contributions; 
(C) rollovers; 
(D) minimum required distributions; 
(E) nonexempt prohibited transactions; 
and 
(F) tax consequences for early distribu-
tions. 
(2) Examples of common errors by taxpayers 
with respect to the laws and regulations described in 
paragraph (1) and instructions on how to avoid such 
errors. 
SEC. 3. REDUCTION OF EXCISE TAXES FOR VOLUNTARY 
CORRECTION OF COMMON IRA ERRORS. 
(a) REDUCTION IN EXCISE TAX ON EXCESS CON-
TRIBUTIONS.—Section 4973 of the Internal Revenue Code 
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of 1986 is amended by adding at the end the following 
new subsection: 
‘‘(i) REDUCTION OF TAX IN CERTAIN CASES.— 
‘‘(1) REDUCTION.—In the case of a taxpayer 
who— 
‘‘(A) corrects, during the correction win-
dow, an excess contribution which was made to 
an individual retirement plan and which re-
sulted in imposition of a tax under paragraph 
(1) or (3) of subsection (a), and 
‘‘(B) submits a return, during the correc-
tion window, reflecting such tax (as modified by 
this subsection), 
the first and second sentences of subsection (a) shall 
be applied by substituting ‘3 percent’ for ‘6 percent’ 
each place it appears. 
‘‘(2) CORRECTION WINDOW.—For purposes of 
this subsection, the term ‘correction window’ means 
the period beginning on the date on which the tax 
under subsection (a) is imposed with respect to an 
excess contribution, and ending on the earlier of— 
‘‘(A) the date on which the Secretary initi-
ates an audit, or otherwise demands payment, 
with respect to the excess contribution, or 
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‘‘(B) the last day of the second taxable 
year that begins after the end of the taxable 
year in which the tax under subsection (a) is 
imposed.’’. 
(b) REDUCTION IN EXCISE TAX ON FAILURES TO 
TAKE REQUIRED MINIMUM DISTRIBUTIONS.— 
(1) IN GENERAL.—Section 4974 of the Internal 
Revenue Code of 1986 is amended by adding at the 
end the following new subsection: 
‘‘(e) REDUCTION OF TAX IN CERTAIN CASES.— 
‘‘(1) REDUCTION.—In the case of a taxpayer 
who— 
‘‘(A) corrects, during the correction win-
dow, a shortfall of distributions from an indi-
vidual retirement plan which resulted in imposi-
tion of a tax under subsection (a), and 
‘‘(B) submits a return, during the correc-
tion window, reflecting such tax (modified by 
this subsection), 
the first sentence of subsection (a) shall be applied 
by substituting ‘10 percent’ for ‘50 percent’. 
‘‘(2) CORRECTION WINDOW.—For purposes of 
this subsection, the term ‘correction window’ means 
the period of time beginning on the data on which 
the tax under subsection (a) is imposed with respect 
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(b) REPEAL OF TAX DISQUALIFICATION PENALTY.— 
(1) IN
GENERAL.—Paragraph (2) of section 
408(e) of the Internal Revenue Code of 1986 is re-
pealed. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 408(e)(1) of the Internal Rev-
enue Code of 1986 is amended by striking ‘‘(2) 
or’’. 
(B) Sections 220(e)(2), 223(e)(2), and 
530(e) of the Internal Revenue Code of 1986 
are each amended by striking ‘‘paragraphs (2) 
and (4) of section 408(e)’’ and inserting ‘‘sec-
tion 408(e)(4)’’. 
(C) Section 4975(c)(3) of the Internal 
Revenue Code of 1986 is amended by striking 
‘‘the account ceases to be an individual retire-
ment account by reason of the application of 
section 408(e)(2)(A) or if’’. 
(c) STATUTE OF LIMITATIONS.—Section 6501(l) of 
the Internal Revenue Code of 1986 is amended— 
(1) in paragraph (1), by inserting ‘‘(other than 
with respect to an individual retirement plan)’’ after 
‘‘section 4975’’; and 
(2) by adding at the end the following new 
paragraph: 
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ment plans (as defined in section 7701(a)(37) of the Inter-
nal Revenue Code of 1986) to address inadvertent failures 
for which the owner of an individual retirement plan was 
not at fault, including (but not limited to)— 
(1) waivers of the excise tax which would other-
wise apply under section 4974 of the Internal Rev-
enue Code of 1986; 
(2) under the self-correction component of the 
Employee Plans Compliance Resolution System, 
waivers of the 60-day deadline for a rollover where 
the deadline is missed for reasons beyond the rea-
sonable control of the account owner; and 
(3) rules permitting a nonspouse beneficiary to 
return distributions to an inherited individual retire-
ment plan described in section 408(d)(3)(C) of the 
Internal Revenue Code of 1986 in a case where, due 
to an inadvertent error by a service provider, the 
beneficiary had reason to believe that the distribu-
tion could be rolled over without inclusion in income 
of any part of the distributed amount. 
(b) REQUIRED MINIMUM DISTRIBUTION CORREC-
TIONS.—The Secretary shall expand the Employee Plans 
Compliance Resolution System to allow plans to which 
such system applies and trustees, custodians, issuers, and 
owners of individual retirement plans to self-correct, with-
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out an excise tax, any inadvertent failures pursuant to 
which a distribution is made no more than 180 days after 
it was required to be made. 
(c) INADVERTENT FAILURE.—For purposes of this 
section— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the term ‘‘inadvertent failure’’ means a 
failure that occurs despite the existence of practices 
and procedures which— 
(A) satisfy the standards set forth in sec-
tion 4.04 of Revenue Procedure 2018–52 (or 
any successor provision); or 
(B) satisfy similar standards in the case of 
an individual retirement plan. 
(2) CORRECTION
BY
OWNER
OF
INDIVIDUAL 
RETIREMENT PLAN.—In the case of a correction by 
an owner of an individual retirement plan under 
subsection (b), the term ‘‘inadvertent failure’’ means 
a failure due to reasonable cause. 
SEC. 6. EFFECTIVE DATE. 
(a) IN GENERAL.—Subject to subsections (b) and (c), 
this Act and the amendments made by this Act shall take 
effect on the date of the enactment of this Act. 
(b) TRANSITION PROVISIONS.— 
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(1) IN GENERAL.—The amendments made by 
this Act shall apply to any determination of or af-
fecting liability for taxes, interest, or penalties which 
is made on or after the date of the enactment of this 
Act, without regard to whether the conduct upon 
which the determination is based occurred before 
such date of enactment. Notwithstanding the pre-
ceding sentence, nothing in the amendments made 
by section 4(a) shall be construed to create an infer-
ence with respect to the law in effect prior to the ef-
fective date of such amendments. 
(2) CALCULATION OF CORRECTION WINDOW IN 
CERTAIN CASES.—In the case of an error that would 
have been eligible for correction under section 
4973(i) or 4974(e) (as added by this section) of the 
Internal Revenue Code of 1986 if tax had not been 
imposed under 4973(a) or 4974(a), as the case may 
be, of such Code before the date of the enactment 
of this Act, the correction window referred to in sec-
tions 4973(i) and 4974(e) of such Code shall be the 
period beginning on the date on which such tax was 
imposed and ending on the earlier of— 
(A) the date on which the Secretary of the 
Treasury initiates an audit or otherwise de-
mands payment with respect to the conduct de-
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scribed in section 4973(a) or 4974(a), as the 
case may be, of such Code; or 
(B) the last day of the second taxable year 
that begins after the taxable year in which the 
date of the enactment of this Act occurs. 
(c) IMPLEMENTATION.—Section 2 shall be imple-
mented as soon as reasonably practicable after the enact-
ment of this Act but in no case later than the date that 
is 1 year after the date of the enactment of this Act. 
Æ 
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