Investing in Your Family's Future Act

I 116TH CONGRESS 2D SESSION H. R. 5837 To amend the Internal Revenue Code of 1986 to permit treatment of child care payments as elective deferrals for purposes of employer matching contributions, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 10, 2020 Mrs. WAGNER (for herself and Mr. JEFFRIES) 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 permit treatment of child care payments as elective deferrals for purposes of employer matching contributions, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Investing in Your 4 Family’s Future Act’’. 5 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 5837 IH SEC. 2. TREATMENT OF CHILD CARE PAYMENTS AS ELEC- 1 TIVE DEFERRALS FOR PURPOSES OF MATCH- 2 ING CONTRIBUTIONS. 3 (a) IN GENERAL.—Subparagraph (A) of section 4 401(m)(4) of the Internal Revenue Code of 1986 is 5 amended by striking ‘‘and’’ at the end of clause (i), by 6 striking the period at the end of clause (ii) and inserting 7 ‘‘, and’’, and by adding at the end the following new 8 clause: 9 ‘‘(iii) subject to the requirements of 10 paragraph (13), any employer contribution 11 made to a defined contribution plan on be- 12 half of an employee on account of a quali- 13 fied child care payment.’’. 14 (b) QUALIFIED CHILD CARE PAYMENT.—Paragraph 15 (4) of section 401(m) of the Internal Revenue Code of 16 1986 is amended by adding at the end the following new 17 subparagraph: 18 ‘‘(D) QUALIFIED CHILD CARE PAYMENT.— 19 The term ‘qualified child care payment’ means 20 any payment by an employee of employment-re- 21 lated expenses (within the meaning of section 22 21(b)(2)), but only to the extent such payments 23 in the aggregate for the year do not exceed an 24 amount equal to 25 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 5837 IH ‘‘(i) the limitation applicable under 1 section 402(g) for the year (or, if lesser, 2 the employee’s compensation (as defined in 3 section 415(c)(3)) for the year), reduced 4 by 5 ‘‘(ii) the elective deferrals made by the 6 employee for such year.’’. 7 (c) MATCHING CONTRIBUTIONS FOR QUALIFIED 8 CHILD CARE PAYMENTS.—Subsection (m) of section 401 9 of the Internal Revenue Code of 1986 is amended by re- 10 designating paragraph (13) as paragraph (14), and by in- 11 serting after paragraph (12) the following new paragraph: 12 ‘‘(13) MATCHING CONTRIBUTIONS FOR QUALI- 13 FIED CHILD CARE PAYMENTS.— 14 ‘‘(A) IN GENERAL.—For purposes of para- 15 graph (4)(A)(iii), an employer contribution 16 made to a defined contribution plan on account 17 of a qualified child care payment shall be treat- 18 ed as a matching contribution for purposes of 19 this title if— 20 ‘‘(i) the plan provides matching con- 21 tributions on account of elective deferrals 22 at the same rate as contributions on ac- 23 count of qualified child care payments, 24 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 5837 IH ‘‘(ii) the plan provides matching con- 1 tributions on account of qualified child 2 care payments only on behalf of employees 3 otherwise eligible to make elective defer- 4 rals, and 5 ‘‘(iii) under the plan, all employees el- 6 igible to receive matching contributions on 7 account of elective deferrals are eligible to 8 receive matching contributions on account 9 of qualified child care payments. 10 ‘‘(B) TREATMENT FOR PURPOSES OF NON- 11 DISCRIMINATION RULES, ETC.— 12 ‘‘(i) NONDISCRIMINATION RULES.— 13 For purposes of subparagraph (A)(iii), 14 subsection (a)(4), and section 410(b), 15 matching contributions described in para- 16 graph (4)(A)(iii) shall not fail to be treated 17 as available to an employee solely because 18 such employee does not have employment- 19 related expenses (within the meaning of 20 section 21(b)(2)). 21 ‘‘(ii) CHILD CARE PAYMENTS NOT 22 TREATED AS PLAN CONTRIBUTION.—Ex- 23 cept as provided in clause (iii), a qualified 24 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 5837 IH child care payment shall not be treated as 1 a contribution to a plan under this title. 2 ‘‘(iii) MATCHING CONTRIBUTION 3 RULES.—Solely for purposes of meeting 4 the requirements of paragraph (11)(B) or 5 (12) of this subsection, or paragraph 6 (11)(B)(i)(II), (12)(B), or (13)(D) of sub- 7 section (k), a plan may treat a qualified 8 child care payment as an elective deferral 9 or an elective contribution, whichever is 10 applicable.’’. 11 (d) SIMPLE RETIREMENT ACCOUNTS.—Paragraph 12 (2) of section 408(p) of the Internal Revenue Code of 13 1986 is amended by adding at the end the following new 14 subparagraph: 15 ‘‘(F) MATCHING CONTRIBUTIONS FOR 16 QUALIFIED CHILD CARE PAYMENTS.— 17 ‘‘(i) IN GENERAL.—Subject to the 18 rules of clause (iii), an arrangement shall 19 not fail to be treated as meeting the re- 20 quirements of subparagraph (A)(iii) solely 21 because under the arrangement, solely for 22 purposes of such subparagraph, qualified 23 child care payments are treated as 24 amounts elected by the employee under 25 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 5837 IH subparagraph (A)(i)(I) to the extent such 1 payments do not exceed— 2 ‘‘(I) the applicable dollar amount 3 under subparagraph (E) (after appli- 4 cation of section 414(v)) for the year 5 (or, if lesser, the employee’s com- 6 pensation (as defined in section 7 415(c)(3)) for the year), reduced by 8 ‘‘(II) any other amounts elected 9 by the employee under subparagraph 10 (A)(i)(I) for the year. 11 ‘‘(ii) QUALIFIED CHILD CARE PAY- 12 MENT.—For purposes of this subpara- 13 graph, the term ‘qualified child care pay- 14 ment’ means any payment by an employee 15 of employment-related expenses (within the 16 meaning of section 21(b)(2)). 17 ‘‘(iii) APPLICABLE RULES.—Clause (i) 18 shall apply to an arrangement only if, 19 under the arrangement— 20 ‘‘(I) matching contributions on 21 account of qualified child care pay- 22 ments are provided only on behalf of 23 employees otherwise eligible to elect 24 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 5837 IH contributions under subparagraph 1 (A)(i)(I), and 2 ‘‘(II) all employees otherwise eli- 3 gible to participate in the arrange- 4 ment are eligible to receive matching 5 contributions on account of qualified 6 child care payments.’’. 7 (e) 403(b) PLANS.—Subparagraph (A) of section 8 403(b)(12) of the Internal Revenue Code of 1986 is 9 amended by adding at the end the following: ‘‘The fact 10 that the employer offers matching contributions on ac- 11 count of qualified child care payments as described in sec- 12 tion 401(m)(13) shall not be taken into account in deter- 13 mining whether the arrangement satisfies the require- 14 ments of clause (ii) (and any regulation thereunder).’’. 15 (f) 457(b) PLANS.—Subsection (b) of section 457 of 16 the Internal Revenue Code of 1986 is amended by adding 17 at the end the following: ‘‘A plan which is established and 18 maintained by an employer which is described in sub- 19 section (e)(1)(A) shall not be treated as failing to meet 20 the requirements of this subsection solely because the 21 plan, or another plan maintained by the employer which 22 meets the requirements of section 401(a), provides for 23 matching contributions on account of qualified child care 24 payments as described in section 401(m)(13).’’. 25 VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 5837 IH (g) REGULATORY AUTHORITY.—The Secretary shall 1 prescribe regulations for purposes of implementing the 2 amendments made by this section, including regulations— 3 (1) permitting a plan to make matching con- 4 tributions for qualified child care payments, as de- 5 fined in sections 401(m)(4)(D) and 408(p)(2)(F) of 6 the Internal Revenue Code of 1986, as added by this 7 section, at a different frequency than matching con- 8 tributions are otherwise made under the plan, pro- 9 vided that the frequency is not less than annually; 10 (2) permitting employers to establish reasonable 11 procedures to claim matching contributions for such 12 qualified child care payments under the plan, includ- 13 ing an annual deadline (not earlier than 3 months 14 after the close of each plan year) by which a claim 15 must be made; and 16 (3) promulgating model amendments which 17 plans may adopt to implement matching contribu- 18 tions on such qualified child care payments for pur- 19 poses of sections 401(m), 408(p), 403(b), and 20 457(b) of the Internal Revenue Code of 1986. 21 (h) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to contributions made for years 23 beginning after December 31, 2020. 24 Æ VerDate Sep 11 2014 22:03 Feb 14, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H5837.IH H5837 kjohnson on DSK79L0C42PROD with BILLS