Sec. 12. Limited transfer of unused balance in flexible spending arrangement
378 words·~2 min read·
/bill/114/hr/4067/ih/section-12A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 125 of the Internal Revenue Code of 1986 is amended by redesignating subsections
(k)and
(l)as subsections
(l)and (m), respectively, and by inserting after subsection
(h)the following new subsection: For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or flexible spending arrangement merely because such arrangement provides for qualified retirement distributions. For purposes of this section, the term qualified retirement distribution means any distribution to an individual of all or a portion of the employee’s account under such arrangement, but only to the extent— the amount does not exceed the lesser of— $250, or the unused benefits with respect to the arrangement, and the amount received is paid in the form of a direct trustee-to-trustee transfer to a qualified retirement plan (as defined in section 4974(c)), or an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A), maintained by the same employer as the employer maintaining the cafeteria plan or flexible spending arrangement of the individual. For purposes of this paragraph, the term unused benefits means, with respect to an employee, the excess of— the maximum amount of reimbursement allowable to the employee during a plan year under a flexible spending arrangement, over the actual amount of reimbursement during such year under such arrangement. For purposes of this title, qualified retirement distributions— shall be treated as elective deferrals (as defined in section 402(g)(3)) under an annuity contract described in section 403(b), shall be treated as elective deferrals (as so defined) in the case of contributions to a qualified cash or deferred arrangement (as defined in section 401(k)) under a plan which is described in section 401(a) which includes a trust which is exempt from tax under section 501(a), shall be treated as deferred compensation in the case of contributions to an eligible deferred compensation plan (as defined in section 457(b)) maintained by an employer described in section 457(e)(1)(A), and shall be treated in the manner designated for purposes of section 408 or 408A in the case of contributions to an individual retirement plan. . The amendments made by this section shall apply to plan years ending after the date of the enactment of this Act.