Text: H.R.7149 — 116th Congress (2019-2020)All Information (Except Text)

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Introduced in House (06/11/2020)


116th CONGRESS
2d Session
H. R. 7149


To amend the Internal Revenue Code of 1986 to provide special disposition rules for unused benefits in flexible spending arrangements of individuals for calendar year 2020.


IN THE HOUSE OF REPRESENTATIVES

June 11, 2020

Mr. Palmer (for himself, Mr. Cook, Mr. Hagedorn, Mrs. Wagner, Mr. Aderholt, Mr. Stivers, Mr. Balderson, Mr. Perry, Mr. Gibbs, and Mr. Stewart) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to provide special disposition rules for unused benefits in flexible spending arrangements of individuals for calendar year 2020.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Special disposition rules for unused benefits in flexible spending arrangements of individuals in plan year 2020.

(a) FSAs must allow distribution or rollover in 2020.—For purposes of sections 106, 125, and 129 of the Internal Revenue Code of 1986, a flexible spending arrangement must allow a qualified 2020 distribution or rollover.

(b) Taxes applied to certain distributions.—For purposes of sections 125(a) and 129(a) of such Code, such sections shall not apply to any benefit distributed from a flexible spending arrangement for a use other than the qualifying benefit for which such arrangement was established.

(c) Special rule for disposition of unused benefits.—For purposes of such Code, a plan shall not fail to be treated as a cafeteria plan, health flexible spending arrangement, or dependent care flexible spending arrangement merely because such arrangement provides for a qualified 2020 distribution or rollover.

(d) Qualified 2020 distribution or rollover.—For purposes of this section, the term “qualified 2020 distribution or rollover” means, for plan year 2020, any distribution at any time to an individual of all or a portion of the balance in the employee's account under such arrangement, or the rollover of the balance in the employee’s account to plan year 2021.

(e) Application.—This section shall only apply to distributions or rollovers in plan year 2020.

SEC. 2. Change in election amount.

(a) In general.—A plan or other arrangement that otherwise satisfies all applicable requirements of sections 106 and 125 of the Internal Revenue Code of 1986 (including any rules or regulations thereunder) shall not fail to be treated as a cafeteria plan or health flexible spending arrangement merely because such plan or arrangement allows an employee to make, with respect to the remaining portion of a period of coverage within the applicable period—

(1) an election modifying the amount of such employee’s contributions to such a health flexible spending arrangement (without regard to any change in status), or

(2) an election modifying the amount of such employee’s elective paid time off. Any election as modified under paragraph (1) shall not exceed the limitation applicable under section 125(i) for the taxable year.

(b) One-Time application.—Paragraphs (1) and (2) of subsection (a) shall each apply to only 1 election change described in such paragraph with respect to an employee (in addition to any other election changes during a period of coverage permitted under the plan or arrangement without regard to this section).

(c) Applicable period.—For purposes of this section, the term “applicable period” means the period beginning on the date of the enactment of this Act and ending on December 31, 2020.

SEC. 3. Extension of grace periods, etc.

(a) In general.—A plan or other arrangement that otherwise satisfies all applicable requirements of sections 106, 125, or 129 of the Internal Revenue Code (including any rules or regulations thereunder) shall not fail to be treated as a cafeteria plan, health flexible spending arrangement, or dependent care flexible spending arrangement (whichever is applicable) merely because such plan or arrangement extends the grace period for the plan year ending in 2020 to 12 months after the end of such plan year, with respect to unused benefits or contributions remaining in a health flexible spending arrangement or a dependent care flexible spending arrangement.

(b) Post-Termination reimbursements from health FSAs.—A plan or other arrangement that otherwise satisfies all applicable requirements of sections 106 and 125 of the Internal Revenue Code of 1986 (including any rules or regulations thereunder) shall not fail to be treated as a cafeteria plan or health flexible spending arrangement merely because such plan or arrangement allows (under rules similar to the rules applicable to dependent care flexible spending arrangements) an employee who ceases participation in the plan during calendar year 2020 to continue to receive reimbursements from unused benefits or contributions through the end of the plan year (including any grace period, taking into account any modification of a grace period permitted under subsection (a)).

(c) Definitions.—Any term used in this section which is also used in section 106, 125, or 129 of the Internal Revenue Code of 1986 or the rules or regulations thereunder shall have the same meaning as when used in such section or rules or regulations.


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