[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3873 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3873

  To amend the Internal Revenue Code of 1986 to permit rollovers from 
              retirement plans to health savings accounts.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 22, 2005

 Mr. Fortenberry 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 permit rollovers from 
              retirement plans to health savings accounts.

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

SECTION 1. ROLLOVERS FROM RETIREMENT PLANS TO HEALTH SAVINGS ACCOUNTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139A the following new section:

``SEC. 139B. HSA FUNDING DISTRIBUTIONS.

    ``(a) In General.--In the case of an eligible individual, gross 
income does not include a qualified HSA funding distribution.
    ``(b) Qualified HSA Funding Distribution.--For purposes of this 
section, the term `qualified HSA funding distribution' means any 
distribution from an eligible retirement plan of an eligible individual 
to the extent that such distribution is contributed to a health savings 
account of such individual (or of the surviving spouse, a dependent of 
the surviving spouse, or alternate payee (as defined in section 
414(p)(8)) of such individual) not later than the 60th day after the 
day on which such individual (or such surviving spouse, dependent, or 
alternate payee) receives such distribution or in a direct trustee-to-
trustee transfer.
    ``(c) Distribution Treated as Rollover to HSA.--For purposes of 
sections 223 and 4973(g), a qualified HSA funding distribution shall be 
treated as a rollover contribution described in section 223(f)(5).
    ``(d) Definitions.--For purposes of this section--
            ``(1) Eligible retirement plan.--The term `eligible 
        retirement plan' has the meaning given such term by section 
        402(c)(8)(B), except that such term shall also include an 
        eligible deferred compensation plan maintained by an eligible 
        employer described in section 457(e)(1)(B).
            ``(2) Eligible individual.--The term `eligible individual' 
        has the meaning given such term by section 223(c)(1).''.
    (b) 10-Percent Penalty on Early Distributions not to Apply.--
Section 72(t)(2)(A) of such Code (relating to subsection not to apply 
to certain distributions) is amended by striking ``or'' at the end of 
clause (vi), by striking the period at the end of clause (vii) and 
inserting ``, or'', and by inserting after clause (vii) the following 
new clause:
                            ``(viii) a qualified HSA funding 
                        distribution (as defined by section 
                        139B(b)).''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code (relating to cash 
        or deferred arrangements) is amended by striking ``or'' at the 
        end of subclause (III), by striking ``and'' at the end of 
        subclause (IV) and inserting ``or'', and by inserting after 
        subclause (IV) the following new subclause:
                                    ``(V) the funding of a health 
                                savings account under section 139B, 
                                and''.
            (2) Section 402(c)(4) of such Code (relating to rules 
        applicable to rollovers from exempt trusts) is amended by 
        striking ``and'' at the end of subparagraph (B), by striking 
        the period at the end of subparagraph (C) and inserting ``, 
        and'', and by inserting after subparagraph (C) the following 
        new subparagraph:
                    ``(D) any qualified HSA funding distribution (as 
                defined by section 139B(b)).''.
            (3) Section 403(a) of such Code (relating to taxability of 
        beneficiary under a qualified annuity plan) is amended by 
        inserting after paragraph (1) the following new paragraph:
            ``(2) Special rule for qualified hsa funding 
        distribution.--To the extent provided in section 139B, 
        paragraph (1) shall not apply to the amount distributed under 
        the contract which is otherwise includible in gross income 
        under this subsection.''.
            (4) Section 403(b) of such Code (relating to taxability of 
        beneficiary under annuity purchased by section 501(c)(3) 
        organization or public school) is amended by inserting after 
        paragraph (1) the following new paragraph:
            ``(2) Special rule for qualified hsa funding 
        distribution.--To the extent provided in section 139B, 
        paragraph (1) shall not apply to the amount distributed under 
        the contract which is otherwise includible in gross income 
        under this subsection.''.
            (5) Section 457(a) of such Code (relating to year of 
        inclusion in gross income) is amended by adding at the end the 
        following new paragraph:
            ``(3) Special rule for qualified hsa funding 
        distribution.--To the extent provided in section 139B, 
        paragraph (1) shall not apply to amounts otherwise includible 
        in gross income under this subsection.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions in taxable years beginning after December 31, 
2004.
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