Temporary waiver of required minimum distribution rules for certain retirement plans and accounts

(a)

In general

Section 401(a)(9) of the Internal Revenue Code of 1986 (relating to required distributions) is amended by adding at the end the following new subparagraph:

(H)

Temporary waiver of minimum required distribution

(i)

In general

The requirements of this paragraph shall not apply in calendar year 2008, 2009, or 2010 to— (I)a defined contribution plan which is described in this subsection or in section 403(a) or 403(b), (II)a defined contribution plan which is an eligible deferred compensation plan described in section 457(b) but only if such plan is maintained by an employer described in section 457(e)(1)(A), or (III)an individual retirement plan. (ii)

Plans only to make elective distributions

A trust forming part of a plan shall not constitute a qualified trust under this subsection unless the plan provides that it will not make a payment or distribution during calendar year 2009 or 2010 which would otherwise be made to meet the requirements of this paragraph unless the employee or beneficiary elects to have such payment or distribution made. This clause shall not apply to an employee or beneficiary who is receiving, after the annuity starting date, distributions under the plan through an annuity contract issued by a company licensed to do business as an insurance company under the laws of any State. (iii)

Election

An election under clause (ii) shall be made at such time and in such manner as the Secretary may prescribe. The Secretary may permit an employer to offer only 1 election that applies to 2009 and 2010 or may require employers to offer separate elections for each calendar year. (iv)

Individual retirement plans exempt from elective distribution requirement

In the case of an individual retirement account or annuity described in section 408, this subparagraph shall be applied without regard to clauses (ii) and (iii). (v)

Special rules regarding waiver period

For purposes of this paragraph— (I)the required beginning date with respect to any individual shall be determined without regard to this subparagraph for purposes of applying this paragraph to calendar years after 2010, and (II)if clause (ii) of subparagraph (B) applies to such individual, the 5-year period described in such clause shall be determined without regard to calendar years 2008, 2009, or 2010.

(b)

Eligible rollover distributions

Section 402(c)(4) of the Internal Revenue Code of 1986 (defining eligible rollover distribution) is amended by adding at the end the following new flush sentence:

If all or any portion of a distribution during 2008, 2009, or 2010 is treated as an eligible rollover distribution but would not be so treated if the minimum distribution requirements under section 401(a)(9) had applied during such calendar year, such distribution shall not be treated as an eligible rollover distribution for purposes of section 401(a)(31) or 3405(c) or subsection (f) of this section

(c)

Effective dates

(1)

In general

The amendments made by this section shall apply to taxable years beginning after December 31, 2007. (2)

Recontributions of distributions in 2008 or early 2009

(A)

In general

If a person receives 1 or more eligible distributions, the person may, on or before July 1, 2009, make one or more contributions (in an aggregate amount not exceeding all eligible distributions) to an eligible retirement plan and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the Internal Revenue Code of 1986, as the case may be. For purposes of the preceding sentence, rules similar to the rules of clauses (ii) and (iii) of section 402(c)(11)(A) of such Code shall apply in the case of a beneficiary who is not the surviving spouse of the employee or of the owner of the individual retirement plan. (B)

Eligible distribution

For purposes of this paragraph— (i)

In general

Except as provided in clause (ii), the term eligible distribution means an applicable distribution to a person from an individual account or annuity— (I)under a plan which is described in clause (iv), and (II)from which a distribution would, but for the application of section 401(a)(9)(H) of such Code, have been required to have been made to the individual for 2008 or 2009, whichever is applicable, in order to satisfy the requirements of sections 401(a)(9), 404(a)(2), 403(b)(10), 408(a)(6), 408(b)(3), and 457(d)(2) of such Code. (ii)

Eligible distributions limited to required distributions

The aggregate amount of applicable distributions which may be treated as eligible distributions for purposes of this paragraph shall not exceed— (I)for purposes of applying subparagraph (A) to distributions made in 2008, the amount which would, but for the application of section 401(a)(9)(H) of such Code, have been required to have been made to the individual in order to satisfy the requirements of sections 401(a)(9), 404(a)(2), 403(b)(10), 408(a)(6), 408(b)(3), and 457(d)(2) of such Code for 2008, and (II)for purposes of applying subparagraph (A) to distributions made in 2009, the sum of the amount which would, but for the application of such section 401(a)(9)(H), have been required to have been made to the individual in order to satisfy such requirements for 2009, plus the excess (if any) of the amount described in subclause (I) which may be distributed in 2009 to meet such requirements for 2008 over the portion of such amount taken into account under subclause (I) for distributions made in 2008. (iii)

Applicable distribution

(I)

In general

The term applicable distribution means a payment or distribution which is made during the period beginning on January 1, 2008, and ending on June 30, 2009. (II)

Exception for minimum required distributions for other years

Such term shall not include a payment or distribution which is required to be made in order to satisfy the requirements of section 401(a)(9), 404(a)(2), 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2) of such Code for a calendar year other than 2008 or 2009. (III)

Exception for payments in a series

In the case of any plan described in clause (iv)(I), such term shall not include any payment or distribution made in 2009 which is a payment or distribution described in section 402(c)(4)(A). (iv)

Plans described

A plan is described in this clause if the plan is— (I)a defined contribution plan (within the meaning of section 414(i) of such Code) which is described in section 401, 403(a), or 403(b) of such Code or which is an eligible deferred compensation plan described in section 457(b) of such Code maintained by an eligible employer described in section 457(e)(1)(A) of such Code, or (II)an individual retirement plan (as defined in section 7701(a)(37) of such Code). (C)

Treatment of repayments of distributions from eligible retirement plans other than IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a payment or distribution from a plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the payment or distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the plan in a direct trustee to trustee transfer. (D)

Treatment of repayments for distributions from IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a payment or distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, such payments or distributions shall be treated as a distribution that satisfies subparagraphs (A) and (B) of section 408(d)(3) of such Code and as having been transferred to the individual retirement plan in a direct trustee to trustee transfer. (3)

Provisions relating to plan or contract amendments

(A)

In general

If this paragraph applies to any pension plan or contract amendment, such pension plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subparagraph (B)(ii)(I). (B)

Amendments to which paragraph applies

(i)

In general

This paragraph shall apply to any amendment to any pension plan or annuity contract which— (I)is made by pursuant to the amendments made by this section, and (II)is made on or before the last day of the first plan year beginning on or after January 1, 2011.

In the case of a governmental plan, subclause (II) shall be applied by substituting 2012 for 2011.

(ii)

Conditions

This paragraph shall not apply to any amendment unless— (I)during the period beginning on January 1, 2009, and ending on December 31, 2010 (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect; and (II)such plan or contract amendment applies retroactively for such period.