Sec. 7. Tax treatment of portable retirement and investment accounts
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Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection
(p)as subsection
(q)and by inserting after subsection
(o)the following new subsection: For purposes of this title— any portable retirement and investment account shall be treated as an individual retirement plan, and except to the extent provided in section 223A or the Portable Retirement and Investment Account Act of 2021 , any contribution to, or distribution from, a portable retirement and investment account shall be treated in the same manner as contributions to, or distributions from, such a plan. For purposes of this subsection, the term portable retirement and investment account has the meaning given such term by the Portable Retirement and Investment Account Act of 2021 and shall include PRIA Choice Accounts (as defined in section 223A). . Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 223 the following new section: There shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year to a PRIA Choice Account by the account beneficiary. Rules similar to section 219(d)(2) (relating to no deduction for rollovers) shall apply for purposes of this section. The amount allowable as a deduction under subsection
(a)to any individual for any taxable year shall not exceed the lesser of— the deductible amount in effect for the taxable year under section 219(b), or an amount equal to the compensation includible in the individual’s gross income for such taxable year. In the case of an individual who has attained the age of 50 before the close of the taxable year, the amounts described in paragraph (1)(A) and subsection (c)(4) for such taxable year shall be increased by $1,000. For purposes of this title, the term PRIA Choice Account means a trust created or organized in the United States for the exclusive benefit of an individual, but only if the written governing instrument creating the trust meets the following requirements: The trustee is a bank (as defined in section 408(n) of the Internal Revenue Code of 1986) or such other person who demonstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section. The amounts in the trust may consist only of— deposits under section 4(b) of the Portable Retirement and Investment Account Act of 2021 , amounts described in subsection (a)(1), amounts deposited by an employer of the account beneficiary, interest on amounts in such trust, and proceeds from investment of amounts in such trust. Except in the case of a rollover contribution described in subsection (d)(4), no contribution will be accepted unless it is in cash. No contributions in excess of the amount that is twice the dollar amount in effect under subsection (b)(1)(A) will be accepted during a calendar year. Amounts in the trust will be invested in not more than 15 total funds, and will be invested in at least 5 total broad market, low-fee funds, bonds, or lifecycle funds. The remaining funds may include not more than 5 niche funds and not more than 5 annuity funds, but all investments must be made in diversified funds which represent a prudent investment. No distribution that would bring the account balance below the amount deposited in such trust under section 4(b)(1) of the Portable Retirement and Investment Account Act of 2021 is allowed to an account beneficiary who has not attained the age 59 ½ . Rules similar to the rules of section 408(b) shall apply with respect to PRIA Choice Accounts in the case of a taxpayer purchasing an annuity contract or an endowment contract from a life insurance company. A PRIA Choice Account is exempt from taxation under this subtitle unless such account has ceased to be a PRIA Choice Account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc., organizations). Rules similar to the rules of paragraphs
(2)and
(4)of section 408(e) shall apply to PRIA Choice Accounts, and subsection (e)(2) shall not apply to any amount treated as distributed under such rules. For rules relating to distributions, see sections 7701(p) and 408(d) (and section 408A(d) in the case of a PRIA Choice Account to which qualified Roth contributions have been made under section 4 of the Portable Retirement and Investment Account Act of 2021 ). For purposes of this section— If during any taxable year a participant or beneficiary receives (directly or indirectly) any amount as a loan from a PRIA Choice Account, such amount shall be treated as having been received by such individual as a distribution from such account. Paragraph
(1)shall not apply to any loan to the extent that such loan (when added to the outstanding balance of all other loans from such account), does not exceed the lesser of— $50,000, reduced by the excess (if any) of— the highest outstanding balance of loans from the account during the 1-year period ending on the day before the date on which such loan was made, over the outstanding balance of loans from the plan on the date on which such loan was made, or the greater of— one-half of the amount in the account, or $10,000. Subparagraph
(A)shall not apply to any loan unless such loan, by its terms, is required to be repaid within 5 years. Clause
(i)shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant. Except as provided in regulations, this paragraph shall not apply to any loan unless substantially level amortization of such loan (with payments not less frequently than quarterly) is required over the term of the loan. For deductions related to employer contributions, see section 162. Under regulations prescribed by the Secretary, notwithstanding section 162, no deduction shall be allowed for employer contributions to a PRIA Choice Account on behalf of an employee who is a highly compensated employee (as defined in section 414(q)) if the employer contributions made on behalf of all employees discriminate in favor of such employees who are highly compensated employees. All employees who are treated as employed by a single employer under subsections (b), (c), and
(m)of section 414 shall be treated as employed by a single employer for purposes of this subsection. In the case of any taxable year beginning in a calendar year after 2021, the dollar amounts under subsection
(b)and subsection (c)(4) 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 2020 for calendar year 2016 in subparagraph (A)(ii) thereof. If any amount after adjustment under paragraph
(1)is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500. The Portable Retirement and Investment Board established under section 2 of the Portable Retirement and Investment Account Act of 2021 shall deposit any contribution to the PRIA Basic Account of an individual who has made the election under section 4(f)(1) of such Act into the PRIA Choice Account of the individual. Such contribution shall be treated as if made directly to such PRIA Choice Account. . The table of sections for chapter 1 is amended by inserting after the item related to section 223 the following new item: Sec. 223A. PRIA Choice Accounts. .