Sec. 320. IRA preservation

965 words·~4 min read·/bill/115/s/3781/is/section-320

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The Secretary of the Treasury shall make available to the public the following information: An overview of the laws and regulations related to individual retirement plans (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986), including— limits on contributions; limits on deductions for contributions; rollovers; minimum required distributions; non-exempt prohibited transactions; and tax consequences for early distributions. Examples of common errors by taxpayers with respect to the laws and regulations described in paragraph

(1)and instructions on how to avoid such errors. Section 4973 is amended by adding at the end the following new subsection: In the case of a taxpayer who— corrects, during the correction window, an excess contribution which was made to an individual retirement plan and which resulted in imposition of a tax under paragraph

(1)or

(3)of subsection (a), and submits a return, during the correction window, reflecting such tax (as modified by this subsection), the first and second sentences of subsection

(a)shall be applied by substituting 3 percent for 6 percent each place it appears. For purposes of this subsection, the term correction window means the period beginning on the date on which the tax under subsection

(a)is imposed with respect to an excess contribution, and ending on the earlier of— the date on which the Secretary initiates an audit, or otherwise demands payment, with respect to the excess contribution, or the last day of the second taxable year that begins after the end of the taxable year in which the tax under subsection

(a)is imposed. . Section 4974, as amended by this Act, is further amended by adding at the end the following new subsection: In the case of a taxpayer who— corrects, during the correction window, a shortfall of distributions from an individual retirement plan which resulted in imposition of a tax under subsection (a), and submits a return, during the correction window, reflecting such tax (as modified by this subsection), the first sentence of subsection

(a)shall be applied by substituting 10 percent for 25 percent . For purposes of this subsection, the term correction window means the period of time beginning on the date on which the tax under subsection

(a)is imposed with respect to a shortfall of distributions from an individual retirement plan, and ending on the earlier of— the date on which the Secretary initiates an audit, or otherwise demands payment, with respect to the shortfall of distributions, or the last day of the second taxable year that begins after the end of the taxable year in which the tax under subsection

(a)is imposed. . Paragraph

(2)of subsection

(e)of section 408 is repealed. Section 408(e)(1) is amended by striking

(2)or . Sections 220(e)(2), 223(e)(2), and 530(e) are each amended by striking paragraphs

(2)and

(4)of section 408(e) and inserting section 408(e)(4) . Section 4975(c)(3) is amended by striking the account ceases to be an individual retirement account by reason of the application of section 408(e)(2)(A) or if . Subsection

(l)of section 6501 of the Internal Revenue Code of 1986 is amended— in paragraph (1), by inserting (other than with respect to an individual retirement plan) after section 4975 ; and by adding at the end the following new paragraph: For purposes of any tax imposed by section 4973, 4974, or 4975 in connection with an individual retirement plan, the return referred to in this section shall be the income tax return filed by the person on whom the tax under such section is imposed for the year in which the act (or failure to act) giving rise to the liability for such tax occurred. In the case of a person who is not required to file an income tax return for such year— the return referred to in this section shall be the income tax return that such person would have been required to file but for the fact that such person was not required to file such return, and the 3-year period referred to in subsection

(a)with respect to the return shall be deemed to begin on the date by which the return would have been required to be filed (excluding any extension thereof). . Subject to paragraphs

(2)and (3), this section and the amendments made by this section shall take effect on the date of the enactment of this Act. The amendments made by this section shall apply to any determination of or affecting liability for taxes, interest, or penalties which is made on or after the date of the enactment of this Act, without regard to whether the conduct upon which the determination is based occurred before such date of enactment. In the case of an error that would have been eligible for correction under section 4973(i) or 4974(e) of the Internal Revenue Code of 1986 if tax had not been imposed under 4973(a) or 4974(a), as the case may be, of such Code before the date of the enactment of this Act, the correction window referred to in sections 4973(i) and 4974(e) of such Code (as added by this section) shall be the period beginning on the date on which such tax was imposed and ending on the earlier of— the date on which the Secretary of the Treasury initiates an audit or otherwise demands payment with respect to the conduct described in section 4973(a) or 4974(a), as the case may be, of such Code; or the last day of the second taxable year that begins after the taxable year in which the date of the enactment of this Act occurs. Subsection

(a)shall be implemented as soon as reasonably practicable after the enactment of this Act but in no case later than the date that is 1 year after such date of enactment.