Senate Finance Committee Issues Report on Enhancing American Retirement Now Act – Title II – Retirees (Part 8 of 19)
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(Continued from Part 7 of 19)
10. One-time election for qualified charitable distribution to split-interest entity; increase in qualified charitable distribution limitation (sec. 210 of the bill and sec. 408(d)(8) of the Code)
PRESENT LAW
In general
If an amount withdrawn from a traditional individual retirement arrangement ("IRA") or a Roth IRA is donated to a charitable organization, the rules relating to the tax treatment of withdrawals from IRAs apply to the amount withdrawn and the charitable contribution is subject to the normally applicable limitations on deductibility of such contributions. An exception applies in the case of a qualified charitable distribution.
Charitable contributions
In computing taxable income, an individual taxpayer who itemizes deductions generally is allowed to deduct the amount of cash and up to the fair market value of property contributed to the following entities: (1) a charity described in section 170(c)(2); (2) certain veterans' organizations, fraternal societies, and cemetery companies;/417/ and (3) a Federal, State, or local governmental entity, but only if the contribution is made for exclusively public purposes./418/ The deduction also is allowed for purposes of calculating alternative minimum taxable income.
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/417/Secs. 170(c)(3)-(5).
/418/Sec. 170(c)(1).
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The amount of the deduction allowable for a taxable year with respect to a charitable contribution of property may be reduced depending on the type of property contributed, the type of charitable organization to which the property is contributed, and the income of the taxpayer./419/
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/419/Secs. 170(b) and (e).
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A taxpayer who takes the standard deduction (i.e., who does not itemize deductions) generally may not take a separate deduction for charitable contributions./420/
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/420/Sec. 170(a).
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A payment to a charity (regardless of whether it is termed a "contribution") in exchange for which the donor receives an economic benefit is not deductible, except to the extent that the donor can demonstrate, among other things, that the payment exceeds the fair market value of the benefit received from the charity. To facilitate distinguishing charitable contributions from purchases of goods or services from charities, present law provides that no charitable contribution deduction is allowed for a separate contribution of
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/421/Sec. 170(f)(8). For any contribution of a cash, check, or other monetary gift, no deduction is allowed unless the donor maintains as a record of such contribution a bank record or written communication from the donee charity showing the name of the donee organization, the date of the contribution, and the amount of the contribution. Sec. 170(f)(17).
/422/Sec. 6115.
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Under present law, total deductible contributions of an individual taxpayer to public charities, private operating foundations, and certain types of private nonoperating foundations generally may not exceed 50 percent of the taxpayer's contribution base, which is the taxpayer's adjusted gross income for a taxable year (disregarding any net operating loss carryback). To the extent a taxpayer has not exceeded the 50-percent limitation, (1) contributions of capital gain property to public charities generally may be deducted up to 30 percent of the taxpayer's contribution base, (2) contributions of cash to most private nonoperating foundations and certain other charitable organizations generally may be deducted up to 30 percent of the taxpayer's contribution base, and (3) contributions of capital gain property to private foundations and certain other charitable organizations generally may be deducted up to 20 percent of the taxpayer's contribution base. For taxable years beginning after
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/423/Sec. 170(b)(1)(G).
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Contributions by individuals in excess of the applicable limits generally may be carried over and deducted over the next five taxable years, subject to the relevant percentage limitations on the deduction in each of those years.
In general, a charitable deduction is not allowed for income, estate, or gift tax purposes if the donor transfers an interest in property to a charity (e.g., a remainder) while also either retaining an interest in that property (e.g., an income interest) or transferring an interest in that property to a noncharity for less than full and adequate consideration./424/ Exceptions to this general rule are provided for, among other interests, remainder interests in charitable remainder trusts (discussed below), pooled income funds, and present interests in the form of a guaranteed annuity or a fixed percentage of the annual value of the property./425/ For such interests, a charitable deduction is allowed to the extent of the present value of the interest designated for a charitable organization.
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/424/Secs. 170(f), 2055(e)(2), and 2522(c)(2).
/425/Sec. 170(f)(2).
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Charitable remainder trusts and charitable gift annuities
Both charitable remainder trusts and charitable gift annuities are arrangements under which a taxpayer contributes assets to charity (directly or through a trust) but retains an interest. As part of these arrangements, a stream of payments is guaranteed to one or more noncharitable beneficiaries (possibly including the taxpayer) over a period of time, with the remaining interest passing to charity. The taxpayer generally claims a charitable deduction for the portion of the transfer attributable to the charitable interest.
Charitable remainder trusts A charitable remainder annuity trust is a trust that is required to pay, at least annually, a fixed dollar amount of at least five percent of the initial value of the trust to a noncharity for the life of an individual or for a period of 20 years or less, with the remainder passing to charity. A charitable remainder unitrust is a trust that generally is required to pay, at least annually, a fixed percentage of at least five percent of the fair market value of the trust's assets determined at least annually to a noncharity for the life of an individual or for a period of 20 years or less, with the remainder passing to charity./426/
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/426/Sec. 664(d). Charitable remainder annuity trusts and charitable remainder unitrusts are exempt from Federal income tax for a tax year unless the trust has any unrelated business taxable income for the year (including certain debt financed income). A charitable remainder trust that loses its exemption from income tax for a taxable year is taxed as a complex trust. As such, the trust is allowed a deduction in computing taxable income for amounts required to be distributed in a taxable year, not to exceed the amount of the trust's distributable net income for the year. Taxes imposed on the trust are required to be allocated to corpus. Treas. Reg. sec. 1.664-1(d)(2).
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A trust does not qualify as a charitable remainder annuity trust if the annuity for a year is greater than 50 percent of the initial fair market value of the trust's assets. A trust does not qualify as a charitable remainder unitrust if the percentage of assets that are required to be distributed at least annually is less than five percent or greater than 50 percent. A trust does not qualify as a charitable remainder annuity trust or a charitable remainder unitrust unless the present value of the remainder interest in the trust (determined at the time of the transfer to the trust under section 7520) is at least 10 percent of the value of the assets contributed to the trust.
Distributions from a charitable remainder annuity trust or charitable remainder unitrust are treated in the following order as: (1) ordinary income to the extent of the trust's current and previously undistributed ordinary income for the trust's year in which the distribution occurred, (2) capital gains to the extent of the trust's current capital gain and previously undistributed capital gain for the trust's year in which the distribution occurred, (3) other income (e.g., tax-exempt income) to the extent of the trust's current and previously undistributed other income for the trust's year in which the distribution occurred, and (4) corpus./427/
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/427/Sec. 664(b).
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In general, distributions to the extent they are characterized as income are includible in the income of the beneficiary for the year that the annuity or unitrust amount is required to be distributed even though the annuity or unitrust amount is not distributed until after the close of the trust's taxable year./428/
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/428/Treas. Reg. sec. 1.664-1(d)(4).
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Charitable gift annuities
A charitable gift annuity is similar in concept to a charitable remainder annuity trust, except that, under a contract between the taxpayer and a charity, the assets are transferred to the charity (not to a separate trust) in exchange for the charity's promise to make fixed annuity payments for life to the donor or to the donor and one other person.
Charitable gift annuities are not treated as commercial-type insurance for purposes of section 501(m), under which an organization is not described in section 501(c)(3) if a substantial part of its activities consists of providing commercial-type insurance./429/
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/429/Sec. 501(m)(3)(E) and (5).
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IRA rules
Within limits, individuals may make deductible and nondeductible contributions to a traditional IRA. Amounts in a traditional IRA are includible in income when withdrawn (except to the extent the withdrawal represents a return of nondeductible contributions). Certain individuals also may make nondeductible contributions to a Roth IRA (deductible contributions cannot be made to a Roth IRA). Qualified withdrawals from a Roth IRA are excludable from gross income. Withdrawals from a Roth IRA that are not qualified withdrawals are includible in gross income to the extent attributable to earnings. Includible amounts withdrawn from a traditional IRA or a Roth IRA before attainment of age 59/1/2/ are subject to an additional 10-percent early withdrawal tax unless an exception applies. Under present law, minimum distributions are required to be made from tax-favored retirement arrangements, including IRAs. Minimum required distributions from a traditional IRA must generally begin by April1 of the calendar year following the year in which the IRA owner attains age 72./430/
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/430/Minimum distribution rules also apply in the case of distributions after the death of a traditional or Roth IRA owner.
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If an individual has made nondeductible contributions to a traditional IRA, a portion of each distribution from an IRA is nontaxable until the total amount of nondeductible contributions has been received. In general, the amount of a distribution that is nontaxable is determined by multiplying the amount of the distribution by the ratio of the remaining nondeductible contributions to the account balance. In making the calculation, all traditional IRAs of an individual are treated as a single IRA, all distributions during any taxable year are treated as a single distribution, and the value of the contract, income on the contract, and investment in the contract are computed as of the close of the calendar year.
In the case of a distribution from a Roth IRA that is not a qualified distribution, in determining the portion of the distribution attributable to earnings, contributions and distributions are deemed to be distributed in the following order: (1) regular Roth IRA contributions; (2) taxable conversion contributions;/431/ (3) nontaxable conversion contributions; and (4) earnings. In determining the amount of taxable distributions from a Roth IRA, all Roth IRA distributions in the same taxable year are treated as a single distribution, all regular Roth IRA contributions for a year are treated as a single contribution, and all conversion contributions during the year are treated as a single contribution.
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/431/Conversion contributions refer to conversions of amounts in a traditional IRA to a Roth IRA.
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Distributions from an IRA (other than a Roth IRA) are generally subject to withholding unless the individual elects not to have withholding apply./432/ Elections not to have withholding apply are to be made in the time and manner prescribed by the Secretary.
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/432/Sec. 3405.
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Qualified charitable distributions
Otherwise-taxable IRA distributions from a traditional or Roth IRA are excluded from gross income to the extent they are qualified charitable distributions./433/ The exclusion may not exceed
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/433/ Sec. 408(d)(8). The exclusion does not apply to distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pensions ("SEPs").
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An individual who receives a deduction for a contribution to a traditional IRA for years ending on or after age 70/1/2/ is not eligible to exclude such amount from income as a qualified charitable distribution. Thus, the amount of qualified charitable distributions otherwise excludable from an individual's gross income for a taxable year is reduced (but not below zero) by the excess of (i) the aggregate amount of deductions allowed to the taxpayer for contributions to a traditional IRA for taxable years ending on or after the individual attains age 70/1/2/, over (ii) the aggregate amount of reductions for all taxable years preceding the current year.
Special rules apply in determining the amount of an IRA distribution that is otherwise taxable. The otherwise applicable rules regarding taxation of IRA distributions and the deduction of charitable contributions continue to apply to distributions from an IRA that are not qualified charitable distributions. A qualified charitable distribution is taken into account for purposes of the minimum distribution rules applicable to traditional IRAs to the same extent the distribution would have been taken into account under such rules had the distribution not been directly distributed under the qualified charitable distribution provision. An IRA does not fail to qualify as an IRA as a result of qualified charitable distributions being made from the IRA.
A qualified charitable distribution is any distribution from an IRA directly by the IRA trustee to an organization described in section 170(b)(1)(A) (generally, public charities) other than a supporting organization (as described in section 509(a)(3)) or a donor advised fund (as defined in section 4966(d)(2)). Distributions are eligible for the exclusion only if made on or after the date the IRA owner attains age 70/1/2/ and only to the extent the distribution would be includible in gross income (without regard to this provision).
The exclusion applies only if a charitable contribution deduction for the entire distribution otherwise would be allowable (under present law), determined without regard to the generally applicable percentage limitations. Thus, for example, if the deductible amount is reduced because of a benefit received in exchange, or if a deduction is not allowable because the donor did not obtain sufficient substantiation, the exclusion is not available with respect to any part of the IRA distribution.
If the IRA owner has any IRA that includes nondeductible contributions, a special rule applies in determining the portion of a distribution that is includible in gross income (but for the qualified charitable distribution provision) and thus is eligible for qualified charitable distribution treatment. Under the special rule, the distribution is treated as consisting of income first, up to the aggregate amount that would be includible in gross income (but for the qualified charitable distribution provision) if the aggregate balance of all IRAs having the same owner were distributed during the same year. In determining the amount of subsequent IRA distributions includible in income, proper adjustments are to be made to reflect the amount treated as a qualified charitable distribution under the special rule.
Distributions that are excluded from gross income by reason of the qualified charitable distribution provision are not taken into account in determining the deduction for charitable contributions under section 170.
REASONS FOR CHANGE
The present-law qualified charitable distribution rules provide senior citizens with flexibility in making gifts to charity by treating certain charitable distributions from an IRA as required minimum distributions while excluding these distributions from gross income. The
EXPLANATION OF PROVISION
First, the provision indexes the annual
Second, the provision allows a taxpayer to elect for a taxable year to treat certain distributions from an IRA to a split-interest entity as if the contributions were made directly to a qualifying charity for purposes of the exclusion from gross income for qualified charitable distributions. Such an election may not have been in effect for a preceding taxable year; thus, the election may be made for only one taxable year during the taxpayer's lifetime. The aggregate amount of distributions of the taxpayer with respect to the election may not exceed
A split-interest entity means: (1) a charitable remainder annuity trust (as defined in section 664(d)(1)); (2) a charitable remainder unitrust (as defined in section 664(d)(2)); or (3) a charitable gift annuity (as defined in section 501(m)). In each case, the trust or arrangement must be funded exclusively by qualified charitable distributions. In the case of a charitable gift annuity, fixed payments of five percent or greater must commence not later than one year from the date of funding.
In the case of a distribution from an IRA to a charitable remainder annuity trust or charitable remainder unitrust, the distribution qualifies for the one-time election only if a charitable deduction for the entire value of the charitable remainder interest would be allowable under section 170 (determined without regard to this provision or the charitable deduction percentage limits under section 170(b)). In the case of a distribution to a charitable gift annuity, the distribution qualifies for the one-time election only if a charitable deduction in an amount equal to the amount of the distribution reduced by the value of the annuity/434/ would be allowable under section 170 (determined without regard to this provision or the charitable deduction percentage limits under section 170(b)).
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/434/The annuity must be described in section 501(m)(5)(B), which provides that the annuity is described in section 514(c)(5), determined as if the amount paid in cash for the issuance of the annuity were property. Section 514(c)(5), in turn, describes when an obligation to pay an annuity is not treated as "acquisition indebtedness" for purposes of the section 514 debt-financed income rules. Under that section, the obligation to pay the annuity: (1) generally must be the sole consideration issued in exchange for property if, at the time of the exchange, the value of the annuity is less than 90 percent of the value of the property received in exchange; (2) is payable over the life of one individual or the lives of two individuals in being at such time; and (3) does not guarantee a minimum amount of payments or specify a maximum amount of payments and does not provide for any adjustment of the amount of the annuity payments by reference to the income received from the transferred property or any other property. Sec. 514(c)(5).
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In addition, a distribution from an IRA to a split-interest entity qualifies for the one-time election only if: (1) no person holds an income interest in the split-interest entity other than the individual for whose benefit such account is maintained, the spouse of such individual, or both; and (2) the income interest in the split-interest entity is nonassignable.
In the case of a charitable remainder annuity trust or a charitable remainder unitrust that is funded by qualified charitable distributions, distributions are treated as ordinary income in the hands of a beneficiary to whom an annuity or unitrust payment is made. A qualified charitable distribution made to fund a charitable gift annuity is not treated as an investment in the contract for purposes of section 72(c).
EFFECTIVE DATE
The provision is effective for distributions made in taxable years beginning after the date of enactment.
11. Exception to penalty on early distributions from qualified plans for individuals with a terminal illness (sec. 211 of the bill and sec. 72(t) of the Code)
PRESENT LAW
Distributions from tax-favored retirement plans Background on distributions from tax-favored retirement plans may be found in Title I, section 5 of this document.
REASON FOR CHANGE
The Committee believes that terminally ill individuals should be able to access funds from retirement plans when needed, without being subject to the 10-percent early withdrawal tax that otherwise generally applies to early distributions from a retirement plan.
EXPLANATION OF PROVISION
Under the provision, an exception to the 10-percent early withdrawal tax applies in the case of a distribution made to an employee who is a terminally ill individual on or after the date on which such employee has been certified by a physician as having a terminal illness. For purposes of this provision, terminally ill individual means an individual who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 84 months or less after the date of the certification./435/ An employee will not be considered terminally ill unless sufficient evidence is provided in a form and manner to be determined by the Secretary.
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/435/This definition has the same meaning given such term under sec. 101(g)(4)(A) (pertaining to the treatment of certain accelerated death benefits) except that "84 months" is substituted for "24 months."
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EFFECTIVE DATE
The provision is effective for distributions made after the date of enactment.
12. Surviving spouse election to be treated as employee (sec. 212 of the bill and sec. 401(a)(9) of the Code)
PRESENT LAW
General background on the requirements related to required minimum distributions may be found in Title II, section 1 of this document.
REASONS FOR CHANGE
Under present law, a surviving spouse receives a more favorable distribution period of his or her spouse's interest in a retirement plan if the surviving spouse rolls the amount to an IRA. The Committee wishes to remove this unnecessary step and ease the burden on surviving spouses by providing a similar distribution period under a retirement plan to that provided under an IRA.
EXPLANATION OF PROVISION
In the case of an employee who dies before the distribution of required minimum distributions has begun under the plan, and who has designated a spouse as sole beneficiary, the provision permits the spouse to elect to be treated as the employee for purposes of determining the distribution period. The provision further directs the Secretary to amend the regulations to provide that the distribution period for the spouse in such case is determined using the Uniform Life Table./436/ Thus, the provision allows a designated beneficiary who is a spouse to receive a similar distribution period for lifetime distributions under an employer-sponsored retirement plan as is permitted under present law in an IRA.
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/436/Treas. Reg. sec. 1.401(a)(9)-5, Q&A 5(a), or any successor regulation.
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The provision also permits the spouse to elect whether to apply the present-law rule that treats the spouse as the employee for purposes of determining the distribution period in cases where the spouse dies before distributions have begun.
The provision provides for the elections to be made in such time and manner as prescribed by the Secretary. The election must include a timely notice to the plan administrator, and once made it may not be revoked except with the consent of the Secretary.
EFFECTIVE DATE
The provision is effective for calendar years beginning after
13. Long-term care contracts purchased with retirement plan distributions (sec. 213 of the bill and new secs. 72(t)(2)(L), 401(a)(39), 403(a)(6), and 6050Z, and sec. 6724(d) of the Code)
PRESENT LAW
Background on the distribution rules that apply to retirement plans, including the 10-percent early withdrawal tax, may be found in Title I, section 14 of this document.
Qualified long-term care insurance contracts
Tax-favored treatment applies to premiums and benefits under a qualified long-term care insurance contract./437/ The contract is treated as an accident and health insurance contract; thus, amounts received under the contract generally are excludable from income as amounts received for personal injuries or sickness./438/
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/437/Sec. 7702B(a).
/438/In the case of per diem contracts, the excludable amount is subject to a per-day dollar cap. If payments under such contracts exceed the dollar cap, then the excess is excludable only to the extent of actual costs in excess of the dollar cap that are incurred for long-term care services.
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An employer-sponsored health plan that provides employees with coverage under a qualified long-term care insurance contract generally is treated in the same manner as employer-provided health benefits. As a result, the employer's premium payments are generally excluded from income and wages,/439/ and benefits payable under the contract generally are excludable from the recipient's income. Long-term care insurance expenses of a self-employed individual are deductible under the self-employed health insurance deduction.
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/439/However, section 106(c) provides that gross income of an employee includes employer-provided coverage of qualified long-term care services to the extent such coverage is provided through a flexible spending or similar arrangement. Thus, the exclusion does not apply to qualified long-term care insurance provided under a cafeteria plan.
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In addition, premiums paid for a qualified long-term care insurance contract and unreimbursed expenses for qualified long-term care services are treated as medical expenses for purposes of the itemized deduction for medical care./440/
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/440/Under section213(d)(10), premiums paid for long-term care coverage are deductible only to the extent that the premiums do not exceed a dollar cap measured by the insured's age at the end of the taxable year.
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A qualified long-term care insurance contract is defined as any insurance contract that provides only coverage for qualified long-term care services and that meets additional requirements./441/ Per diem-type and reimbursement-type contracts are permitted. Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and that are provided pursuant to a plan of care prescribed by a licensed health care practitioner./442/
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/441/Sec. 7702B(b). For example, the contract is not permitted to provide for a cash surrender value or other money that can be paid, assigned or pledged as collateral for a loan, or borrowed (and any premium refunds must be applied as a reduction in future premiums or to increase future benefits).
/442/Sec. 7702B(c)(1). A chronically ill individual is generally one who has been certified within the previous 12 months by a licensed health care practitioner as being unable to perform (without substantial assistance) at least two activities of daily living (ADLs) for at least 90 days due to a loss of functional capacity (or meeting other definitional requirements). Sec. 7702B(c)(2).
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REASONS FOR CHANGE
The Committee is aware of a widespread lack of coverage of costly long-term care risks across a significant cohort of the domestic population. This provision seeks to address this coverage gap by providing an opportunity to purchase long-term care coverage with distributions (up to a dollar limitation) from a defined contribution plan. Plan participants may choose to use taxable distributions of such retirement savings, up to a dollar limitation, to pay for certified long-term care insurance. In addition, the otherwise applicable 10-percent early withdrawal tax does not apply to such distributions. Benefits provided by such insurance can offset the cost of care for an individual participant or spouse in need of long-term care services. A reporting requirement applies to ensure that the distributions from the defined contribution plan are applied for this intended purpose.
EXPLANATION OF PROVISION
Qualified long-term care distributions
The provision provides that a defined contribution plan may allow qualified long-term care distributions. Qualified long-term care distributions are those distributions made during a taxable year that do not exceed the lesser of
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/443/The
/444/See new section 401(a)(39)(D), referring to section 402(1)(3).
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This insurance coverage must be for the participant or the participant's spouse (or other family member of the participant as provided by the Secretary by regulation). This insurance coverage (referred to as certified long-term care insurance) is (1) a qualified long-term care insurance contract/445/ covering qualified long-term care services,/446/ (2) coverage of the risk that an insured individual would become a chronically ill individual,/447/ or (3) coverage of qualified long-term care services under a rider or other provision of a life insurance or annuity contract if the rider or provision is treated as a separate contract and meets specified consumer protection provisions./448/
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/445/Defined in section 7702B(b).
/446/Defined in section 7702B(c).
/447/This is a chronically ill individual within the meaning of section 101(g)(4)(B), under a rider or other provision of a life insurance contract which satisfies the requirements relating to chronically ill insureds in section 101(g)(3) (determined without regard to subparagraph (D) thereof, relating to periodic payments).
/448/Qualified long-term care services are defined in section 7702B(c). Whether a rider or other provision of a life insurance or annuity contract is treated as a separate contract is determined under section 7702B(e) and regulations thereunder. The consumer protection provisions are defined in section 7702B(g).
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It is intended that only high-quality coverage meeting applicable definitions is eligible for the favorable treatment provided. Therefore, the provision requires that, to meet the definition of certified long-term care insurance, coverage must provide meaningful financial assistance in the event the insured needs home-based or nursing home care. Providing meaningful financial assistance means that benefits must be adjusted for inflation and consumer protections must be provided, including protection in the event the coverage is terminated.
Qualified long-term care distributions are generally includible in income. However, the provision provides an exemption for such distributions from the 10-percent early withdrawal tax provided that applicable requirements are met./449/ If the individual covered by the long-term care coverage to which the distribution relates is the spouse of the participant in the plan, this exclusion from the early withdrawal tax applies only if the participant and the participant's spouse file a joint return. A qualified long-term care distribution is not subject to mandatory withholding./450/
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/449/New sec. 72(t)(2)(L).
/450/New sec. 72(t)(2)(L) and sec. 3405.
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Reporting requirements
Long-term care premium statement For a distribution to be a qualified long-term care distribution from a plan, a long-term care premium statement must be filed with the plan./451/ The statement is to be provided by the issuer of the coverage. This statement must provide the name and TIN of the issuer, provide a statement that the coverage is certified long-term care insurance, identify the participant as the owner of the coverage, identify the insured individual and their relationship to the participant, state the amount of premiums for the coverage for the calendar year, and provide such other information as is required by the Secretary. The long-term care premium statement can be accepted only if the issuer has completed a disclosure to the Secretary with respect to the product to which the long-term care premium statement relates. The disclosure must identify the issuer and type of coverage, and provide such other information required by the Secretary which is included in the filing with respect to the product with the applicable State insurance regulatory authority.
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/451/New sec. 401(a)(39)(E).
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Reporting rules
An issuer of certified long-term care insurance that provides a long-term care premium statement to any purchaser must make a return to the
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/452/New section 6050Z.
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In addition, the issuer must furnish a written statement to each individual whose name is required to be reported on the return. The written statement is to be furnished on or before
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/453/New section 6050Z(b). An individual to whom a written statement must be furnished may request the written statement at any time before the close of the calendar year, and the person required to furnish the return must comply with the request and also furnish a copy of the written statement to the Secretary.
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Applicable penalties
The filing of the return and the furnishing of the written statement are subject to penalties for failure to file correct information returns and to furnish correct payee statements./454/
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/454/The present-law penalties for failure to file correct information returns and to furnish correct payee statements apply with respect to new section 6050Z. See sections 6721 and 6722, as well as sections 6724(d)(1) and (2) as modified by the provision.
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Information for consumers
The provision also directs
EFFECTIVE DATE
The provision is effective for distributions made after the date that is three years after the date of enactment.
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Continues with Part 9 of 19
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