SEAL Act

Bill: 115-s-940
Sponsor: full_name: Sen. Enzi, Michael B. [R-WY]
Introduced: 2017-04-25
Policy area: Taxation
Subjects: Administrative law and regulatory procedures

Consumer credit

Department of the Treasury

Employee benefits and pensions

Income tax exclusion
Latest action: action_date: 2017-04-25
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2017-04-25
action_desc: Introduced in Senate
text: <p><b>Shrinking Emergency Account Losses Act of 2017 or the SEAL Act</b></p> <p>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. </p> <p>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.</p>

tv_txt: II 115th CONGRESS 1st Session S. 940 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.

1. Short title This Act may be cited as the Shrinking Emergency Account Losses Act of 2017 or the SEAL Act . 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. 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. 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.