Title: To amend the Internal Revenue Code of 1986 to make lifetime income and managed account options of defined contribution retirement savings plans portable.
Policy area: Taxation

Summary:
This bill amends the Internal Revenue Code to allow distributions from certain tax-favored employer-sponsored retirement plans if a lifetime income investment or managed account investment is no longer authorized to be held as an investment option under the plan.
If a lifetime income or managed account investment is no longer authorized to be held as an investment option under the plan, the bill allows: (1) qualified distributions of a lifetime income investment or a managed account investment, or (2) distributions of a lifetime income investment in the form of a qualified plan distribution annuity contract.
A "qualified distribution" is a direct trustee-to-trustee transfer to an eligible retirement plan. A "qualified plan distribution annuity contract" is an annuity contract purchased for a participant and distributed to the participant by an employer-sponsored retirement plan.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3910 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 3910

To amend the Internal Revenue Code of 1986 to make lifetime income and 
  managed account options of defined contribution retirement savings 
                            plans portable.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 2, 2017

   Mr. Neal (for himself and Mr. Bishop of Michigan) 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 make lifetime income and 
  managed account options of defined contribution retirement savings 
                            plans portable.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PORTABILITY OF LIFETIME INCOME AND MANAGED ACCOUNT OPTIONS.

    (a) In General.--Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 is amended by inserting after paragraph (37) the 
following new paragraph:
            ``(38) Portability of lifetime income and managed account 
        options.--
                    ``(A) In general.--A trust forming part of a 
                defined contribution plan shall not be treated as 
                failing to constitute a qualified trust under this 
                section solely by reason of allowing--
                            ``(i) qualified distributions of a lifetime 
                        income investment or a managed account 
                        investment, or
                            ``(ii) distributions of a lifetime income 
                        investment in the form of a qualified plan 
                        distribution annuity contract,
                on or after the date that is 90 days prior to the date 
                on which such lifetime income investment or such 
                managed account investment is no longer authorized to 
                be held as an investment option under the plan except 
                as may otherwise be provided by regulations.
                    ``(B) Definitions.--For purposes of this 
                subsection--
                            ``(i) the term `qualified distribution' 
                        means a direct trustee-to-trustee transfer to 
                        an eligible retirement plan (as defined in 
                        section 402(c)(8)(B)), as described in section 
                        401(a)(31)(A), and in the case of a managed 
                        account investment, the eligible retirement 
                        plan must be maintained by the account manager 
                        of such managed account investment,
                            ``(ii) the term `lifetime income 
                        investment' means an investment option that is 
                        designed to provide an employee with election 
                        rights--
                                    ``(I) that are not uniformly 
                                available with respect to other 
                                investment options under the plan, and
                                    ``(II) that are to a lifetime 
                                income feature available through a 
                                contract or other arrangement offered 
                                under the plan or under another 
                                eligible retirement plan (as defined in 
                                section 402(c)(8)(B)) through a direct 
                                trustee-to-trustee transfer to such 
                                other eligible retirement plan under 
                                section 401(a)(31)(A),
                            ``(iii) the term `lifetime income feature' 
                        means--
                                    ``(I) a feature that guarantees a 
                                minimum level of income annually (or 
                                more frequently) for at least the 
                                remainder of the life of the employee 
                                or the joint lives of the employee and 
                                the employee's designated beneficiary, 
                                or
                                    ``(II) an annuity payable on behalf 
                                of the employee under which payments 
                                are made in substantially equal 
                                periodic payments (not less frequently 
                                than annually) over the life of the 
                                employee or the joint lives of the 
                                employee and the employee's designated 
                                beneficiary,
                            ``(iv) the term `qualified plan 
                        distribution annuity contract' means an annuity 
                        contract purchased for a participant and 
                        distributed to the participant by a plan 
                        described in subparagraph (B) of section 
                        402(c)(8) (without regard to clauses (i) and 
                        (ii) thereof),
                            ``(v) the term `managed account investment' 
                        means an investment option under which the 
                        assets of the employee's individual account are 
                        managed by an account manager, applying 
                        generally accepted investment theories, to 
                        achieve varying degrees of long-term 
                        appreciation and capital preservation based on 
                        the employee's age, target retirement date or 
                        life expectancy,
                            ``(vi) the term `account manager' means an 
                        investment manager (within the meaning of 
                        section 3(38) of the Employee Retirement Income 
                        Security Act), and
                            ``(vii) a lifetime income investment or 
                        managed account investment is treated as no 
                        longer authorized to be held as an investment 
                        under the plan if such treatment applies to all 
                        plan participants or to a class of such 
                        participants, as determined in any reasonable 
                        manner.''.
    (b) Cash or Deferred Arrangement.--Clause (i) of section 
401(k)(2)(B) of such Code is amended by striking ``or'' at the end of 
subclause (IV), by striking ``and'' at the end of subclause (V) and 
inserting ``or'', and by adding at the end of clause (i) the following:
                                    ``(VI) with respect to amounts 
                                invested in a lifetime income 
                                investment (as defined in section 
                                401(a)(38)(B)(ii)) or a managed account 
                                investment (as defined in section 
                                401(a)(38)(B)(v)), the date that is 90 
                                days prior to the date that such 
                                lifetime income investment or such 
                                managed account investment may no 
                                longer be held as an investment option 
                                under the plan (within the meaning of 
                                section 401(a)(38)(B)(vii)), provided 
                                that any distribution under this 
                                subclause must be in the form of a 
                                qualified distribution (as defined in 
                                section 401(a)(38)(B)(i)) or, in the 
                                case of a lifetime income investment, a 
                                qualified plan distribution annuity 
                                contract (as defined in section 
                                401(a)(38)(B)(iv)), and''.
    (c) Section 403(b) Plans.--
            (1) Annuity contracts.--Paragraph (11) of section 403(b) of 
        such Code is amended by striking ``or'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C), and by inserting ``, or'', and by adding at 
        the end the following:
                    ``(D) with respect to amounts invested in a 
                lifetime income investment (as defined in section 
                401(a)(38)(B)(ii)) or a managed account investment (as 
                defined in section 401(a)(38)(B)(v)), the date that is 
                90 days prior to the date that such lifetime income 
                investment or such managed account investment may no 
                longer be held as an investment option under the plan 
                (within the meaning of section 401(a)(38)(B)(vii)), 
                provided that any distribution under this subparagraph 
                must be in the form of a qualified distribution (as 
                defined in section 401(a)(38)(B)(i)) or, in the case of 
                a lifetime income investment, a qualified plan 
                distribution annuity contract (as defined in section 
                401(a)(38)(B)(iv)).''.
            (2) Custodial accounts.--Clause (ii) of section 
        403(b)(7)(A) of such Code is amended to read as follows:
                            ``(ii) under the custodial account, no such 
                        amounts may be paid or made available to any 
                        distributee (unless such amount is a 
                        distribution to which section 72(t)(2)(G) 
                        applies) before--
                                    ``(I) the employee dies,
                                    ``(II) the employee attains age 
                                59\1/2\,
                                    ``(III) the employee has a 
                                severance from employment,
                                    ``(IV) the employee becomes 
                                disabled (within the meaning of section 
                                72(m)(7)),
                                    ``(V) in the case of contributions 
                                made pursuant to a salary reduction 
                                agreement (within the meaning of 
                                section 3121(a)(5)(D)), the employee 
                                encounters financial hardship, or
                                    ``(VI) with respect to amounts 
                                invested in a lifetime income 
                                investment (as defined in section 
                                401(a)(38)(B)(ii)) or a managed account 
                                investment (as defined in section 
                                401(a)(38)(B)(v)), the date that is 90 
                                days prior to the date that such 
                                lifetime income investment or such 
                                managed account investment may no 
                                longer be held as an investment option 
                                under the plan (within the meaning of 
                                section 401(a)(38)(B)(vii)), provided 
                                that any distribution under this 
                                subparagraph must be in the form of a 
                                qualified distribution (as defined in 
                                section 401(a)(38)(B)(i)) or, in the 
                                case of a lifetime income investment, a 
                                qualified plan distribution annuity 
                                contract (as defined in section 
                                401(a)(38)(B)(iv)).''.
    (d) Eligible Deferred Compensation Plans.--Subparagraph (A) of 
section 457(d)(1) of such Code is amended by striking ``or'' at the end 
of clause (ii), by inserting ``or'' at the end of clause (iii), and by 
adding after clause (iii) the following:
                            ``(iv) with respect to amounts invested in 
                        a lifetime income investment (as defined in 
                        section 401(a)(38)(B)(ii)) or a managed account 
                        investment (as defined in section 
                        401(a)(38)(B)(v)), the date that is 90 days 
                        prior to the date that such lifetime income 
                        investment or such managed account investment 
                        may no longer be held as an investment option 
                        under the plan (within the meaning of section 
                        401(a)(38)(B)(vii)), provided that any 
                        distribution under this subparagraph must be in 
                        the form of a qualified distribution (as 
                        defined in section 401(a)(38)(B)(i)) or, in the 
                        case of a lifetime income investment, a 
                        qualified plan distribution annuity contract 
                        (as defined in section 401(a)(38)(B)(iv)),''.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2017.
                                 <all>