To amend the Internal Revenue Code of 1986 to permit deferred compensation plans of State and local governments and tax-exempt organizations to make certain distributions, and for other purposes.

Amends the Internal Revenue Code to permit deferred compensation plans of State and local governments and tax-exempt organizations to make distributions to a participant if: (1) the total does not exceed $3,500; and (2) such amount may be distributed only if no amount has been deferred during the two-year period ending on the date of distribution and there has been no prior distribution. Allows the plan to distribute such amount without the participant's consent under such circumstances.

Allows participants to make one change in their deferred distribution date.

Provides for a cost-of-living adjustment to the maximum deferral amount per year.

 
HR 2906 IH
102d CONGRESS
1st Session
 H. R. 2906
To amend the Internal Revenue Code of 1986 to permit deferred compensation
plans of State and local governments and tax-exempt organizations to make
certain distributions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
July 16, 1991
Mr. MOODY 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 deferred compensation
plans of State and local governments and tax-exempt organizations to make
certain distributions, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. TREATMENT OF DEFERRED COMPENSATION PLANS OF STATE AND LOCAL
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.
  (a) SPECIAL RULES FOR PLAN DISTRIBUTIONS- Paragraph (9) of section 457(e)
  of the Internal Revenue Code of 1986 (relating to other definitions and
  special rules) is amended to read as follows:
  `(9) BENEFITS NOT TREATED AS MADE AVAILABLE BY REASON OF CERTAIN ELECTIONS,
  ETC-
  `(A) TOTAL AMOUNT PAYABLE IS $3,500 OR LESS- The total amount payable to
  a participant under the plan shall not be treated as made available merely
  because the participant may elect to receive such amount (or the plan may
  distribute such amount without the participant's consent) if--
  `(i) such amount does not exceed $3,500, and
  `(ii) such amount may be distributed only if--
  `(I) no amount has been deferred under the plan with respect to such
  participant during the 2-year period ending on the date of the distribution,
  and
  `(II) there has been no prior distribution under the plan to such participant
  to which this subparagraph applied.
A plan shall not be treated as failing to meet the distribution requirements of
subsection (d) by reason of a distribution to which this subparagraph applies.
  `(B) ELECTION TO DEFER COMMENCEMENT OF DISTRIBUTIONS- The total amount
  payable to a participant under the plan shall not be treated as made
  available merely because the participant may elect to defer commencement
  of distributions under the plan if--
  `(i) such election is made after amounts may be available under the plan
  in accordance with subsection (d)(1)(A) and before commencement of such
  distributions, and
  `(ii) the participant may make only 1 such election.'
  (b) COST-OF-LIVING ADJUSTMENT OF MAXIMUM DEFERRAL AMOUNT-
  (1) IN GENERAL- Subparagraph (A) of section 457(b)(2) of such Code (defining
  eligible deferred compensation plan) is amended to read as follows:
  `(A) the dollar amount applicable under section 402(g)(1) for the taxable
  year (determined without regard to paragraphs (4) and (8) of section
  402(g)), or'.
  (2) CONFORMING AMENDMENT- Paragraph (1) of section 457(c) of such Code is
  amended by striking `$7,500' and inserting `the dollar amount applicable
  under subsection (b)(2)(A) for the taxable year'.
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after the date of the enactment of this Act.