Title: Family Attribution Modernization Act
Policy area: Taxation

Summary:
Family Attribution Modernization Act
This bill modifies family attribution rules for purposes of tax-exempt pension and profit sharing plans (e.g., 401k retirement plans) to provide that (1) community property laws shall be disregarded for purposes of determining ownership under attribution rules, and (2) attribution is eliminated for spouses and minor children under certain circumstances. The family attribution rule treats an individual taxpayer as owning property interests (e.g., stock) that are owned, directly or indirectly, by the individual's spouse, children, grandchildren, and parents.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 5125 Introduced in Senate (IS)]

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117th CONGRESS
  2d Session
                                S. 5125

To amend the Internal Revenue Code of 1986 to reform the application of 
       family attribution rules for purposes of retirement plans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 17, 2022

Mr. Kelly (for himself and Mr. Cassidy) 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 reform the application of 
       family attribution rules for purposes of retirement plans.

    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 ``Family Attribution Modernization 
Act''.

SEC. 2. REFORM OF FAMILY ATTRIBUTION RULE.

    (a) In General.--Section 414 of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (b)--
                    (A) by striking ``For purposes of'' and inserting 
                the following:
            ``(1) In general.--For purposes of'', and
                    (B) by adding at the end the following new 
                paragraphs:
            ``(2) Special rules for applying family attribution.--For 
        purposes of applying the attribution rules under section 1563 
        with respect to paragraph (1), the following rules apply:
                    ``(A) Community property laws shall be disregarded 
                for purposes of determining ownership.
                    ``(B) Except as provided by the Secretary, stock of 
                an individual not attributed under section 1563(e)(5) 
                to such individual's spouse shall not be attributed to 
                such spouse by reason of 1563(e)(6)(A).
                    ``(C) Except as provided by the Secretary, in the 
                case of stock in different corporations that is 
                attributed to a child under section 1563(e)(6)(A) from 
                each parent, and is not attributed to such parents as 
                spouses under section 1563(e)(5), such attribution to 
                the child shall not by itself result in such 
                corporations being members of the same controlled 
                group.
            ``(3) Plan shall not fail to be treated as satisfying this 
        section.--If application of paragraph (2) causes two or more 
        entities to be a controlled group, or an affiliated service 
        group, or to no longer be in a controlled group or an 
        affiliated service group, such change shall be treated as a 
        transaction to which section 410(b)(6)(C) applies.'', and
            (2) in subsection (m)(6)(B), by striking ``apply'' and 
        inserting ``apply, except that community property laws shall be 
        disregarded for purposes of determining ownership''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the date of the enactment of 
this section.
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