Reduction of age for making catch-up contributions for individuals out of workforce to provide dependent care services

(a)

Individual retirement plans

Section 219(b)(5) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(D)

Reduction of age for making catch-up contributions for individuals out of workforce to provide dependent care services

(i)

In general

In the case of an eligible individual, subparagraph (B)(i) shall be applied by substituting the applicable age with respect to such individual for the age of 50.(ii)

Applicable age

For purposes of this subparagraph, the term applicable age means, with respect to any eligible individual for any taxable year, 50 reduced by the number of years which is equal to the duration of the aggregate qualified unemployment periods with respect to such individual (determined as of the beginning of such taxable year). For purposes of the preceding sentence any duration of aggregate qualified unemployment periods which is not a multiple of a whole number of years shall be rounded to the next lowest whole number of years.(iii)

Eligible individual

For purposes of this subparagraph, the term eligible individual means, with respect to any taxable year, any individual who has one or more qualified unemployment periods determined as of the beginning of such taxable year.(iv)

Qualified unemployment period

For purposes of this subparagraph, the term qualified unemployment period means, with respect to any individual, any uninterrupted period—(I)which is not less than 1 year,(II)which begins after such individual attains age 18, and(III)during which such individual has no earned income (as defined in section 32(c)(2)) on account of such individual’s provision of care to one or more qualifying individuals (as defined in section 21(b)(1)).(v)

Declaration requirement

A qualified unemployment period shall not be taken into account under this subparagraph with respect to any individual unless such individual has submitted to the Secretary a written declaration made under the penalties of perjury that such period meets the requirements of clause (iv) with respect to such individual. The trustee may rely on such declaration unless the trustee knows, or has reason to know, that such declaration is false.

(b)

Elective deferrals

Section 414(v) of such Code is amended by adding at the end the following new paragraph:

(7)

Reduction of age for making catch-up contributions for individuals out of workforce to provide dependent care services

(A)

In general

In the case of an eligible participant, paragraph (5)(A) shall be applied by substituting the applicable age with respect to such participant for age 50.(B)

Application of definitions and rules

For purposes of this paragraph, clauses (ii), (iii), (iv), and (v) of section 219(b)(5)(D) shall apply—(i)by substituting participant for individual each place it appears in such clauses, and(ii)by substituting plan administrator for trustee in such clause (v).(C)

Error correction

The Secretary shall issue regulations or other guidance under which an applicable employer plan may correct for an impermissible catch-up contribution by providing for a distribution of such contribution together with any earnings properly attributable thereto.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.