Title: SEAL Act
Policy area: Taxation

Summary:
Shrinking Emergency Account Losses Act of 2017 or the SEAL Act
This bill amends the Internal Revenue Code, with respect to loans made from a qualified employer plan, to: (1) extend the period for repayment of loans if a plan terminates or a plan participant becomes unemployed, and (2) prohibit qualified employer plans from making loans using credit cards or any other similar arrangement.
The bill also requires the Department of the Treasury to modify regulations governing hardship distributions from qualified employer plans to allow participants to make additional contributions to a plan during the six-month period following a hardship distribution.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 940 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                 S. 940

To amend the Internal Revenue Code of 1986 to modify the rules relating 
 to loans made from a qualified employer plan, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 25, 2017

 Mr. Enzi (for himself and Mr. Nelson) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to modify the rules relating 
 to loans made from a qualified employer plan, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Shrinking Emergency Account Losses 
Act of 2017'' or the ``SEAL Act''.

SEC. 2. EXTENDED ROLLOVER PERIOD FOR THE ROLLOVER OF PLAN LOAN OFFSET 
              AMOUNTS IN CERTAIN CASES.

    (a) In General.--Paragraph (3) of section 402(c) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Rollover of certain plan loan offset 
                amounts.--
                            ``(i) In general.--In the case of a 
                        qualified plan loan offset amount, paragraph 
                        (1) shall not apply to any transfer of such 
                        amount made after the due date (including 
                        extensions) for filing the return of tax for 
                        the taxable year in which such amount is 
                        treated as distributed from a qualified 
                        employer plan.
                            ``(ii) Qualified plan loan offset amount.--
                        For purposes of this subparagraph, the term 
                        `qualified plan loan offset amount' means a 
                        plan loan offset amount which is treated as 
                        distributed from a qualified employer plan to a 
                        participant or beneficiary solely by reason 
                        of--
                                    ``(I) the termination of the 
                                qualified employer plan, or
                                    ``(II) the failure to meet the 
                                repayment terms of the loan from such 
                                plan because of the severance from 
                                employment of the participant.
                            ``(iii) Plan loan offset amount.--For 
                        purposes of clause (ii), the term `plan loan 
                        offset amount' means the amount by which the 
                        participant's accrued benefit under the plan is 
                        reduced in order to repay a loan from the plan.
                            ``(iv) Limitation.--This subparagraph shall 
                        not apply to any plan loan offset amount unless 
                        such plan loan offset amount relates to a loan 
                        to which section 72(p)(1) does not apply by 
                        reason of section 72(p)(2).
                            ``(v) Qualified employer plan.--For 
                        purposes of this subsection, the term 
                        `qualified employer plan' has the meaning given 
                        such term by section 72(p)(4).''.
    (b) Conforming Amendment.--Subparagraph (A) of section 402(c)(3) of 
the Internal Revenue Code of 1986 is amended by striking ``subparagraph 
(B)'' and inserting ``subparagraphs (B) and (C)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transfers made after the date of the enactment of this Act.

SEC. 3. MODIFICATION OF RULES GOVERNING HARDSHIP DISTRIBUTIONS.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of the Treasury shall modify Treasury Regulation section 
1.401(k)-1(d)(3)(iv)(E) to--
            (1) delete the prohibition imposed by paragraph (2) 
        thereof, and
            (2) to make any other modifications necessary to carry out 
        the purposes of section 401(k)(2)(B)(i)(IV) of the Internal 
        Revenue Code of 1986.

SEC. 4. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING LOANS THROUGH 
              CREDIT CARDS AND OTHER SIMILAR ARRANGEMENTS.

    (a) In General.--Paragraph (2) of section 72(p) of the Internal 
Revenue Code of 1986 is amended by redesignating subparagraph (D) as 
subparagraph (E) and by inserting after subparagraph (C) the following 
new subparagraph:
                    ``(D) Prohibition of loans through credit cards and 
                other similar arrangements.--Subparagraph (A) shall not 
                apply to any loan which is made through the use of any 
                credit card or any other similar arrangement.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after the date which is 60 days after the 
date of the enactment of this Act.
                                 <all>