Required Minimum Distribution Modernization Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8567 To amend the Internal Revenue Code of 1986 to increase to 75 the required beginning date age for mandatory retirement distributions and to exempt from such distribution rules individuals with lower account balances. IN THE HOUSE OF REPRESENTATIVES OCTOBER 9, 2020 Mrs. MURPHY of Florida (for herself and Mr. ESTES) 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 increase to 75 the required beginning date age for mandatory retirement distributions and to exempt from such dis- tribution rules individuals with lower account balances. 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 ‘‘Required Minimum 4 Distribution Modernization Act of 2020’’. 5 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 8567 IH SEC. 2. INCREASE IN AGE FOR REQUIRED BEGINNING DATE 1 FOR MANDATORY DISTRIBUTIONS. 2 (a) IN GENERAL.—Section 401(a)(9)(C)(i)(I) of the 3 Internal Revenue Code of 1986 is amended by striking 4 ‘‘age 72’’ and inserting ‘‘age 75’’. 5 (b) SPOUSE BENEFICIARIES; SPECIAL RULE FOR 6 OWNERS.—Subparagraphs (B)(iv)(I) and (C)(ii)(I) of sec- 7 tion 401(a)(9) of such Code are each amended by striking 8 ‘‘age 72’’ and inserting ‘‘age 75’’. 9 (c) CONFORMING AMENDMENTS.—The last sentence 10 of section 408(b) of such Code is amended by striking 11 ‘‘age 72’’ and inserting ‘‘age 75’’. 12 (d) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to distributions required to be 14 made after December 31, 2020, with respect to individuals 15 who attain age 72 after such date. 16 SEC. 3. EXEMPTION FROM REQUIRED MINIMUM DISTRIBU- 17 TION RULES FOR INDIVIDUALS WITH CER- 18 TAIN ACCOUNT BALANCES. 19 (a) IN GENERAL.—Section 401(a)(9) of the Internal 20 Revenue Code of 1986 is amended by adding at the end 21 the following new subparagraph: 22 ‘‘(J) EXCEPTION FROM REQUIRED MIN- 23 IMUM DISTRIBUTIONS DURING LIFE OF EM- 24 PLOYEE WHERE ASSETS DO NOT EXCEED 25 $100,000.— 26 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 8567 IH ‘‘(i) IN GENERAL.—If, as of a meas- 1 urement date, the aggregate value of an 2 employee’s entire interest under all defined 3 contribution plans does not exceed 4 $100,000, then, during any succeeding cal- 5 endar year beginning before the next meas- 6 urement date, the requirements of sub- 7 paragraph (A) shall not apply with respect 8 to such employee. 9 ‘‘(ii) DEFINED CONTRIBUTION 10 PLAN.—For purposes of this subpara- 11 graph, the term ‘defined contribution plan’ 12 has the same meaning as when used in 13 subparagraph (H). 14 ‘‘(iii) LIMIT ON REQUIRED MINIMUM 15 DISTRIBUTION.—The required minimum 16 distribution determined under subpara- 17 graph (A) for an employee under all de- 18 fined contribution plans shall not exceed 19 an amount equal to the excess of— 20 ‘‘(I) the aggregate value of an 21 employee’s entire interest under such 22 plans on the last day of the calendar 23 year to which such distribution re- 24 lates, over 25 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 8567 IH ‘‘(II) the dollar amount in effect 1 under clause (i) for such calendar 2 year. 3 The Secretary in regulations or other guid- 4 ance may provide how such amount shall 5 be distributed in the case of an individual 6 with more than one defined contribution 7 plan. 8 ‘‘(iv) MEASUREMENT DATE.—For 9 purposes of this subparagraph, the term 10 ‘measurement date’ means, with respect to 11 any employee— 12 ‘‘(I) the last day of the calendar 13 year preceding the calendar year in 14 which the employee attains age 75, 15 and 16 ‘‘(II) in the case of any employee 17 who (after a measurement date deter- 18 mined under subclause (I) with re- 19 spect to such employee) receives con- 20 tributions, rollovers, or transfers of 21 amounts that were not previously 22 taken into account in applying this 23 subparagraph, the last day of the cal- 24 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 8567 IH endar year in which such contribution, 1 rollover, or transfer was so received. 2 ‘‘(v) INFLATION ADJUSTMENT.—In 3 the case of any calendar year beginning 4 after 2020, the $100,000 amount in clause 5 (i) shall be increased by an amount equal 6 to— 7 ‘‘(I) such dollar amount, multi- 8 plied by 9 ‘‘(II) the cost of living adjust- 10 ment determined under section 1(f)(3) 11 for the calendar year, determined by 12 substituting ‘calendar year 2019’ for 13 ‘calendar year 2016’ in subparagraph 14 (A)(ii) thereof. 15 Any increase determined under this clause 16 shall be rounded to the next lowest mul- 17 tiple of $5,000. 18 ‘‘(vi) PLAN ADMINISTRATOR RELI- 19 ANCE ON EMPLOYEE CERTIFICATION.—A 20 defined contribution plan described in 21 clause (iii), (iv), (v), or (vi) of section 22 402(c)(8)(B) shall not be treated as failing 23 to meet the requirements of this paragraph 24 in the case of any failure to make a re- 25 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 8567 IH quired minimum distribution for a cal- 1 endar year if— 2 ‘‘(I) the aggregate value of an 3 employee’s entire interest under all 4 defined contribution plans of the em- 5 ployer on the last day of the calendar 6 year to which such distribution relates 7 does not exceed the dollar amount in 8 effect for such year under clause (i), 9 and 10 ‘‘(II) the employee certifies that 11 the aggregate value of the employee’s 12 entire interest under all defined con- 13 tribution plans on the most recent 14 measurement date with respect to the 15 employee (as determined by the em- 16 ployee based on guidance provided by 17 the Secretary) did not exceed the dol- 18 lar amount in effect for such year 19 under clause (i). 20 ‘‘(vii) AGGREGATION RULE.—All em- 21 ployers treated as a single employer under 22 subsection (b), (c), (m), or (o) of section 23 414 shall be treated as a single employer 24 for purposes of clause (v).’’. 25 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 8567 IH (b) PLAN ADMINISTRATOR REPORTING.—Section 1 6047 of such Code is amended by redesignating subsection 2 (h) as subsection (i) and by inserting after subsection (g) 3 the following new subsection: 4 ‘‘(h) ACCOUNT BALANCE FOR PARTICIPANTS WHO 5 HAVE ATTAINED AGE 74.— 6 ‘‘(1) IN GENERAL.—Not later than January 31 7 of each year, the plan administrator (as defined in 8 section 414(g)) of each defined contribution plan (as 9 defined in section 401(a)(9)(J)) shall make a return 10 to the Secretary with respect to each participant of 11 such plan who has attained age 74 as of the end of 12 the preceding calendar year which states— 13 ‘‘(A) the name and plan number of the 14 plan, 15 ‘‘(B) the name and address of the plan ad- 16 ministrator, 17 ‘‘(C) the name, address, and taxpayer 18 identification number of the participant, and 19 ‘‘(D) the account balance of such partici- 20 pant as of the end of the preceding calendar 21 year. 22 ‘‘(2) STATEMENT FURNISHED TO PARTICI- 23 PANT.—Every person required to make a return 24 under paragraph (1) with respect to a participant 25 VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8567.IH H8567 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 8567 IH shall furnish a copy of such return to such partici- 1 pant. 2 ‘‘(3) APPLICATION TO INDIVIDUAL RETIREMENT 3 PLANS AND ANNUITIES.—In the case of an defined 4 contribution plan described in clause (i) or (ii) of 5 section 402(c)(8)(B)— 6 ‘‘(A) any reference in this subsection to 7 the plan administrator shall be treated as a ref- 8 erence to the trustee or issuer, as the case may 9 be, and 10 ‘‘(B) any reference in this subsection to 11 the participant shall be treated as a reference 12 to the individual for whom such account or an- 13 nuity is maintained.’’. 14 (c) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to distributions required to be 16 made in calendar years beginning more than 120 days 17 after the date of the enactment of this Act. 18 Æ VerDate Sep 11 2014 23:04 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H8567.IH H8567 pbinns on 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