II 111th CONGRESS 2d Session S. 3453 IN THE SENATE OF THE UNITED STATES May 28 (legislative day, May 26), 2010 Mr. Nelson of Florida (for himself, Mr. Carper, and Mr. Chambliss) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To provide an exception from the payout requirements established for certain section 501(c)(3) type III supporting organizations under section 1241(d) of the Pension Protection Act of 2006.

1.

Exception from payout requirements for type III supporting organizations

(a)

In general

Section 1241(d) of the Pension Protection Act of 2006 (26 U.S.C. 509 note) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: (2)

Exception for certain existing organizations

(A)

In general

The regulations under paragraph (1) shall not apply to any type III supporting organization described in subparagraph (B). (B)

Application

A type III supporting organization is described in this subparagraph if— (i)the organization was classified as an organization described in section 509(a)(3) of the Internal Revenue Code of 1986 before August 17, 2006, (ii)no substantial contributor (within the meaning of section 4958(c)(3)(C) of such Code) to the organization was alive on August 17, 2006, (iii)no family member (within the meaning of section 4958(f)(4) of such Code) of any substantial contributor is an organization manager (as defined in section 4958(f)(2) of such Code) with respect to the organization or is a borrower or lessee of property from the organization, and (iv)either— (I)the organization has not accepted any contribution from a substantial contributor after December 31, 1970, other than by operation of the creator’s will or other gift instrument that was executed before December 31, 1970, or (II)the organization normally distributes each year for its exempt purposes an amount not less than 85 percent of the organization's adjusted net income (as defined in section 4942(f) of such Code) for the immediately preceding year and holds 30 percent or more of the reasonably estimated value of its total assets, other than assets used or held for use directly in carrying out one or more purposes described in section 170(c)(2)(B), in the form of assets for which market quotations are not readily available but which normally produce gross investment income (as defined in section 4940(c)(2) of such Code). . (b)

Conforming amendment

Section 1241(d)(3) of such Act, as redesignated by subsection (a), is amended by striking paragraph (1) and inserting this subsection. (c)

Effective date

The amendments made by this section shall take effect as if included in the provisions of the Pension Protection Act of 2006 to which such amendments relate.