Title: To amend the Internal Revenue Code of 1986 to treat as compensation for purposes of retirement contribution limitations any difficulty of care payments excluded from gross income.
Policy area: Taxation

Summary:
This bill requires difficulty of care payments that are excluded from gross income to be treated as compensation for the purpose of determining limitations on contributions to tax-exempt retirement accounts.
Difficulty of care payments are received by foster care providers as compensation for providing additional care for a foster individual. The care must be (1) required by reason of a physical, mental, or emotional handicap of the individual; and (2) provided in the home of the foster care provider.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1932 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 1932

To amend the Internal Revenue Code of 1986 to treat as compensation for 
purposes of retirement contribution limitations any difficulty of care 
                  payments excluded from gross income.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 27, 2019

  Ms. Schrier (for herself, Ms. DelBene, Mr. Panetta, Mr. Thompson of 
  California, Ms. Sanchez, Ms. Judy Chu of California, and Mr. Gomez) 
 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 treat as compensation for 
purposes of retirement contribution limitations any difficulty of care 
                  payments excluded from gross income.

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

SECTION 1. TREATING EXCLUDED DIFFICULTY OF CARE PAYMENTS AS 
              COMPENSATION FOR DETERMINING RETIREMENT CONTRIBUTION 
              LIMITATIONS.

    (a) Individual Retirement Accounts.--
            (1) In general.--Section 408(o) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(5) Special rule for difficulty of care payments excluded 
        from gross income.--In the case of an individual who for a 
        taxable year excludes from gross income under section 131 a 
        qualified foster care payment which is a difficulty of care 
        payment, if--
                    ``(A) the deductible amount in effect for the 
                taxable year under subsection (b), exceeds
                    ``(B) the amount of compensation includible in the 
                individual's gross income for the taxable year,
        the individual may elect to increase the nondeductible limit 
        under paragraph (2) for the taxable year by an amount equal to 
        the lesser of such excess or the amount so excluded.''.
            (2) Effective date.--The amendments made by this section 
        shall apply to contributions after the date of the enactment of 
        this Act.
    (b) Defined Contribution Plans.--Section 415(c) of such Code is 
amended by adding at the end the following new paragraph:
            ``(8) Special rule for difficulty of care payments excluded 
        from gross income.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(B), in the case of an individual who for a taxable 
                year excludes from gross income under section 131 a 
                qualified foster care payment which is a difficulty of 
                care payment, the participant's compensation, or earned 
                income, as the case may be, shall be increased by the 
                amount so excluded.
                    ``(B) Contributions allocable to difficulty of care 
                payments treated as after-tax.--Any contribution by the 
                participant which is allocable to an amount so 
                excluded--
                            ``(i) shall be treated for purposes of this 
                        title as investment in the contract, and
                            ``(ii) shall not cause a plan (and any 
                        arrangement which is part of such plan) to be 
                        treated as failing to meet any requirements of 
                        this chapter solely by reason of allowing any 
                        such contributions.''.
    (c) Effective Date.--The amendment made by this subsection shall 
apply to plan years beginning after December 31, 2015.
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