Sec. 334. Long-term care contracts purchased with retirement plan distributions
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Section 401(a) is amended by inserting after paragraph
(38)the following new paragraph: A trust forming part of a defined contribution plan shall not be treated as failing to constitute a qualified trust under this section solely by reason of allowing qualified long-term care distributions. For purposes of this paragraph— The term qualified long-term care distribution means so much of the distributions made during the taxable year as does not exceed, in the aggregate, the least of the following: The amount paid by or assessed to the employee during the taxable year for or with respect to certified long-term care insurance for the employee or the employee’s spouse (or other family member of the employee as provided by the Secretary by regulation). An amount equal to 10 percent of the present value of the nonforfeitable accrued benefit of the employee under the plan. $2,500. In the case of taxable years beginning after December 31, 2024, the $2,500 amount in clause (i)(II) shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2023 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase under the preceding sentence is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100. The term certified long-term care insurance means— a qualified long-term care insurance contract (as defined in section 7702B(b)) covering qualified long-term care services (as defined in section 7702B(c)), coverage of the risk that an insured individual would become a chronically ill individual (within the meaning of section 101(g)(4)(B)) under a rider or other provision of a life insurance contract which satisfies the requirements of section 101(g)(3) (determined without regard to subparagraph
(D)thereof), or coverage of qualified long-term care services (as so defined) under a rider or other provision of an insurance or annuity contract which is treated as a separate contract under section 7702B(e) and satisfies the requirements of section 7702B(g), if such coverage provides meaningful financial assistance in the event the insured needs home-based or nursing home care. For purposes of the preceding sentence, coverage shall not be deemed to provide meaningful financial assistance unless benefits are adjusted for inflation and consumer protections are provided, including protection in the event the coverage is terminated. Rules similar to the rules of section 402(l)(3) shall apply for purposes of this paragraph. No distribution shall be treated as a qualified long-term care distribution unless a long-term care premium statement with respect to the employee has been filed with the plan. For purposes of this paragraph, a long-term care premium statement is a statement provided by the issuer of long-term care coverage, upon request by the owner of such coverage, which includes— the name and taxpayer identification number of such issuer, a statement that the coverage is certified long-term care insurance, identification of the employee as the owner of such coverage, identification of the individual covered and such individual’s relationship to the employee, the premiums owed for the coverage for the calendar year, and such other information as the Secretary may require. A long-term care premium statement will be accepted only if the issuer has completed a disclosure to the Secretary for the specific coverage product to which the statement relates. Such disclosure shall identify the issuer, type of coverage, and such other information as the Secretary may require which is included in the filing of the product with the applicable State authority. . Section 401(k)(2)(B)(i) is amended by striking or at the end of subclause (V), by adding or at the end of subclause (VI), and by adding at the end the following new subclause: as provided in section 401(a)(39), . Section 403(a) is amended by adding at the end the following new paragraph: An annuity contract shall not fail to be subject to this subsection solely by reason of allowing distributions to which section 401(a)(39) applies. . Section 403(b)(7)(A)(i) is amended by striking or at the end of subclause (V), by striking and at the end of subclause
(VI)and inserting or and by adding at the end the following new subclause: as provided for distributions to which section 401(a)(39) applies, and . Section 403(b)(11) is amended by striking or at the end of subparagraph (C), by striking the period at the end of subparagraph
(D)and inserting , or , and by inserting after subparagraph
(D)the following new subparagraph: for distributions to which section 401(a)(39) applies. . Section 457(d)(1)(A) is amended by striking or at the end of clause (iii), by striking the comma at the end of clause
(iv)and inserting , or , and by adding at the end the following new clause: as provided in section 401(a)(39), . Section 72(t)(2), as amended by this Act, is further amended by adding at the end the following new subparagraph: Any qualified long-term care distribution to which section 401(a)(39) applies. If, with respect to the plan, the individual covered by the long-term care coverage to which such distribution relates is the spouse of the employee, clause
(i)shall apply only if the employee and the employee’s spouse file a joint return. For purposes of sections 401(a)(31), 402(f), and 3405, any qualified long-term care distribution described in clause
(i)shall not be treated as an eligible rollover distribution. . Subpart B of part III of subchapter A of chapter 61 is amended by adding at the end the following new section: Any issuer of certified long-term care insurance (as defined in section 401(a)(39)(C)) who provides a long-term care premium statement with respect to any purchaser pursuant to section 401(a)(39)(E) for a calendar year, shall make a return not later than February 1 of the succeeding calendar year, according to forms or regulations prescribed by the Secretary, setting forth with respect to each such purchaser— the name and taxpayer identification number of such issuer, a statement that the coverage is certified long-term care insurance as defined in section 401(a)(39)(C), the name of the owner of such coverage, identification of the individual covered and such individual's relationship to the owner, the premiums paid for the coverage for the calendar year, and such other information as the Secretary may require. Every person required to make a return under subsection
(a)shall furnish to each individual whose name is required to be set forth in such return a written statement showing— the name, address, and phone number of the information contact of the issuer of the contract or coverage, and the aggregate amount of premiums and charges paid under the contract or coverage covering the insured individual during the calendar year. The written statement required under the preceding sentence shall be furnished to the individual or individuals on or before January 31 of the year following the calendar year for which the return required under subsection
(a)was required to be made. In the case of contracts or coverage covering more than one insured, the return and statement required by subsections
(a)and
(b)shall identify only the portion of the premium that is properly allocable to the insured in respect of whom the return or statement is made. If any individual to whom a return is required to be furnished under subsection
(b)requests that such a return be furnished at any time before the close of the calendar year, the person required to make the return under subsection
(b)shall comply with such request and shall furnish to the Secretary at such time a copy of the return so provided. . Section 6724(d) is amended— in paragraph (1)(B), by adding or at the end of clause (xxvii) and by inserting after such clause the following new clause: section 6050Z (relating to reports relating to long-term care premium statements), and , and in paragraph (2)— by redesignating subparagraph (JJ), relating to section 6050Y, as subparagraph
(KK)and moving such subparagraph to the position immediately after subparagraph (JJ), relating to section 6226(a)(2), by striking or at the end of subparagraph (II), by striking the period at the end of subparagraph (JJ), relating to section 6226(a)(2), and inserting a comma, by striking the period at the end of subparagraph (KK), as so redesignated, and inserting , or , and by inserting after subparagraph (KK), as so redesignated, the following new subparagraph: section 6050Z (relating to reports relating to long-term care premium statements). . The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding after the item relating to section 6050Y the following new item: Sec. 6050Z. Reports relating to long-term care premium statements. . The amendments made by this section shall apply to distributions made after the date which is 3 years after the date of the enactment of this Act. The Secretary of the Treasury (or the Secretary's delegate) shall issue such forms and guidance as are necessary to collect the filing required by section 401(a)(39)(E)(iii) of the Internal Revenue Code of 1986, as added by this section.