H.R. 7997

116TH CONGRESS
2D SESSION

H.R. 7997

To allow individuals to mitigate the financial impact
of COVID-19 by taking a one-time distribution of flexible
spending arrangement funds in certain plan years,
and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

AUGUST 11, 2020

Mrs. AXNE introduced the following bill; which
was referred to the Committee on _____

A BILL

To allow individuals to mitigate the financial impact of COVID-19 by taking a one-time distribution of flexible spending arrangement funds in certain plan years, and for other purposes.

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 DURING CERTAIN PLAN YEARS.

(a) FSAS MAY ALLOW QUALIFIED DISTRIBUTION. — For purposes of sections 106, 125, and 129 of the Internal Revenue Code of 1986, a flexible spending arrangement may allow a qualified distribution.

(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 under subsection (a) 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 distribution.

(d) QUALIFIED DISTRIBUTION. — For purposes of this section, the term "qualified distribution" means a one-time distribution in a qualifying plan year to an individual of all or a portion of the balance in the employee's account under a cafeteria plan, health flexible spending arrangement, or dependent care flexible spending arrangement.

(e) QUALIFYING PLAN YEAR. — The term "qualifying plan year" means plan year 2020, plan year 2021, and any plan year that falls during a calendar year in which a national emergency is declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the Coronavirus Disease 2019 (COVID-19).

(f) GUIDANCE. — The Secretary of the Treasury (or the Secretary's delegate) shall issue guidance with respect to the interaction between a qualified distribution under subsection (a) and the nondiscrimination testing provisions of section 125 of such Code.