Sec. 501. Modifications of required distribution rules for pension plans
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Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: In the case of distributions from a defined contribution plan, a trust forming part of such plan shall not constitute a qualified trust under this section unless the plan provides that, if— an employee dies before the distribution of the employee's interest (whether or not such distribution has begun in accordance with subparagraph (A)), and the aggregate account balances to the credit of the employee under all defined contribution plans, determined as of the date of the employee's death, exceeds $450,000, so much of the entire interest of the employee as exceeds the dollar amount in subclause
(II)will be distributed within 5 years after the death of such employee. If an employee has an account under more than 1 defined contribution plan, the $450,000 amount under clause (i)(II) shall be allocated among all such plans, as provided in regulations prescribed by the Secretary, for purposes of applying clause (i). The portion of the employee's interest distributed under clause
(i)shall not be taken into account for purposes of determining the rapidity or the method of distribution of any portion of the interest of the employee to which clause
(i)does not apply. In the case of an employee who has more than 1 beneficiary, the amount of the portion required to be distributed under clause
(i)which shall be treated as payable to (or for the benefit of) such beneficiary is the amount which bears the same ratio to the total amount of such portion as— the portion of the employee's entire interest (determined as of the date of the employee's death) which is payable to (or for the benefit of) such beneficiary, bears to the amount of the employee's entire interest (so determined). If— any portion of the employee's interest is payable to (or for the benefit of) an eligible designated beneficiary, such portion will be distributed (in accordance with regulations) over the life of such eligible designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), and such distributions begin not later than 1 year after the date of the employee's death or such later date as the Secretary may by regulations prescribe, for purposes of clause (i), the portion referred to in subclause
(I)shall be treated as distributed on the date on which such distributions begin. If the eligible designated beneficiary is the surviving spouse of the employee— the date on which the distributions are required to begin under clause (v)(III) shall not be earlier than the date on which the employee would have attained age 70 1/2 , and if the surviving spouse dies before the distributions to such spouse begin, this subparagraph shall be applied as if the surviving spouse were the employee. If an eligible designated beneficiary dies before the portion of the employee's interest to which clause
(i)applies which is payable to (or for the benefit of) such eligible designated beneficiary is entirely distributed, the exception under clause
(v)shall not apply to any beneficiary of such eligible designated beneficiary and the remainder of such portion shall be distributed within 5 years after the death of such beneficiary. For purposes of applying the provisions of this subparagraph and subsections (a)(6) and (b)(3) of section 408, individual retirement plans shall be treated as defined contribution plans in determining the aggregate account balances to the credit of the employee under all defined contribution plans and the amount required to be distributed to each beneficiary under such provisions. . Section 401(a)(9)(E) of such Code is amended to read as follows: For purposes of this paragraph— The term designated beneficiary means any individual designated as a beneficiary by the employee. The term eligible designated beneficiary means, with respect to any employee, any designated beneficiary who is— the surviving spouse of the employee, subject to clause (iii), a child of the employee who has not reached majority (within the meaning of subparagraph (F)), disabled (within the meaning of section 72(m)(7)), a chronically ill individual (within the meaning of section 7702B(c)(2), except that the requirements of subparagraph (A)(i) thereof shall only be treated as met if there is a certification that, as of such date, the period of inability described in such subparagraph with respect to the individual is an indefinite one which is reasonably expected to be lengthy in nature), or an individual not described in any of the preceding subclauses who is not more than 10 years younger than the employee. Subject to subparagraph (F), an individual described in clause (ii)(II) shall cease to be an eligible designated beneficiary as of the date the individual reaches majority and any remainder of the portion of the interest described in subparagraph (H)(v) shall be distributed within 5 years after such date. The determination of whether a designated beneficiary is an eligible designated beneficiary shall be made as of the date of death of the employee. . Clause
(ii)of section 401(a)(9)(B) of the Internal Revenue Code of 1986 is amended by striking A trust and inserting Except as provided in subparagraph (H), a trust . Section 402(c)(11)(A)(iii) of such Code is amended by striking section 401(a)(9)(B) (other than clause
(iv)thereof) and inserting subparagraphs
(B)(other than clause
(iv)thereof) and
(H)(other than clause
(vi)thereof) of section 401(a)(9) . Except as provided in this paragraph and paragraphs
(5)and (6), the amendments made by this subsection shall apply to distributions with respect to employees who die after December 31, 2018. In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of enactment of this Act, the amendments made by this subsection shall apply to distributions with respect to employees who die in calendar years beginning after the earlier of— the later of— the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof agreed to on or after the date of the enactment of this Act); or December 31, 2018; or December 31, 2020. For purposes of clause (i)(I), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subparagraph
(A)shall be applied by substituting December 31, 2020 for December 31, 2018 . The amendments made by this subsection shall not apply to a qualified annuity which is a binding annuity contract in effect on the date of enactment of this Act and at all times thereafter. For purposes of this paragraph, the term qualified annuity means, with respect to an employee, an annuity— which is a commercial annuity (as defined in section 3405(e)(6) of the Internal Revenue Code of 1986); under which the annuity payments are made over the life of the employee or over the joint lives of such employee and a designated beneficiary (or over a period not extending beyond the life expectancy of such employee or the joint life expectancy of such employee and a designated beneficiary) in accordance with the regulations described in section 401(a)(9)(A)(ii) of such Code (as in effect before such amendments) and which meets the other requirements of section 401(a)(9) of such Code (as so in effect) with respect to such payments; and with respect to which— annuity payments to the employee have begun before the date of enactment of this Act, and the employee has made an irrevocable election before such date as to the method and amount of the annuity payments to the employee or any designated beneficiaries; or if subclause
(I)does not apply, the employee has made an irrevocable election before the date of enactment of this Act as to the method and amount of the annuity payments to the employee or any designated beneficiaries. If an employee dies before the effective date, then, in applying the amendments made by this subsection to such employee's designated beneficiary who dies after such date— such amendments shall apply to any beneficiary of such designated beneficiary; and the designated beneficiary shall be treated as an eligible designated beneficiary for purposes of applying section 401(a)(9)(H)(iv) of the Internal Revenue Code of 1986 (as in effect after such amendments). For purposes of this paragraph, the term effective date means the first day of the first calendar year to which the amendments made by this subsection apply to a plan with respect to employees dying on or after such date. If this subsection applies to any plan amendment— such plan shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i); and except as provided by the Secretary of the Treasury, such plan shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 by reason of such amendment. This subsection shall apply to any amendment to any plan or which is made— pursuant to any amendment made by this section or pursuant to any regulation issued by the Secretary of the Treasury under this section or such amendments; and on or before the last day of the first plan year beginning after December 31, 2020, or such later date as the Secretary of the Treasury may prescribe. In the case of a governmental or collectively bargained plan to which subparagraph
(B)or
(C)of subsection (a)(4) applies, clause
(ii)shall be applied by substituting the date which is 2 years after the date otherwise applied under such clause. This subsection shall not apply to any amendment unless— during the period— beginning on the date the legislative or regulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan amendment not required by such legislative or regulatory amendment, the effective date specified by the plan); and ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan amendment is adopted), the plan is operated as if such plan amendment were in effect; and such plan amendment applies retroactively for such period.