26 U.S.C. § 6433 — Saver’s Match

Page 3685 TITLE 26—INTERNAL REVENUE CODE § 6433 § 1010(a)–(d), Dec. 19, 2009, 123 Stat. 3472, 3473; Pub. L. 111–144, § 3(a), (b)(1)–(4), Mar. 2, 2010, 124 Stat. 43, 44; Pub. L. 111–157, § 3(a), (b), Apr. 15, 2010, 124 Stat. 1117; Pub. L. 113–295, div. A, title II, § 209(j)(3), Dec. 19, 2014, 128 Stat. 4031, related to premium assistance for COBRA continuation coverage. § 6433. Saver’s Match (a) In general (1) Allowance of match Any eligible individual who makes qualified retirement savings contributions for the tax- able year shall be allowed a matching con- tribution for such taxable year in an amount equal to the applicable percentage of so much of the qualified retirement savings contribu- tions made by such eligible individual for the taxable year as does not exceed $2,000. (2) Payment of match (A) In general Except as provided in subparagraph (B), the matching contribution under this sec- tion shall be allowed as a credit which shall be payable by the Secretary as a contribu- tion (as soon as practicable after the eligible individual has filed a tax return making a claim for such matching contribution for the taxable year) to the applicable retirement savings vehicle of the eligible individual. (B) Exception In the case of an eligible individual who elects the application of this subparagraph and with respect to whom the matching con- tribution determined under paragraph (1) is greater than zero but less than $100 for the taxable year, subparagraph (A) shall not apply and such matching contribution shall be treated as a credit allowed by subpart C of part IV of subchapter A of chapter 1. (b) Applicable percentage For purposes of this section— (1) In general Except as provided in paragraph (2), the ap- plicable percentage is 50 percent. (2) Phaseout The percentage under paragraph (1) shall be reduced (but not below zero) by the number of percentage points which bears the same ratio to 50 percentage points as— (A) the excess of— (i) the taxpayer’s modified adjusted gross income for such taxable year, over (ii) the applicable dollar amount, bears to (B) the phaseout range. If any reduction determined under this para- graph is not a whole percentage point, such re- duction shall be rounded to the next lowest whole percentage point. (3) Applicable dollar amount; phaseout range (A) Joint returns and surviving spouses Except as provided in subparagraph (B)— (i) the applicable dollar amount is $41,000, and (ii) the phaseout range is $30,000. (B) Other returns In the case of— (i) a head of a household (as defined in section 2(b)), the applicable dollar amount and the phaseout range shall be 3⁄4 of the amounts applicable under subparagraph (A) (as adjusted under subsection (h)), and (ii) any taxpayer who is not filing a joint return, who is not a head of a household (as so defined), and who is not a surviving spouse (as defined in section 2(a)), the ap- plicable dollar amount and the phaseout range shall be 1⁄2 of the amounts applicable under subparagraph (A) (as so adjusted). (c) Eligible individual For purposes of this section— (1) In general The term ‘‘eligible individual’’ means any individual if such individual has attained the age of 18 as of the close of the taxable year. (2) Dependents and full-time students not eligi- ble The term ‘‘eligible individual’’ shall not in- clude— (A) any individual with respect to whom a deduction under section 151 is allowed to an- other taxpayer for a taxable year beginning in the calendar year in which such individ- ual’s taxable year begins, and (B) any individual who is a student (as de- fined in section 152(f)(2)). (3) Nonresident aliens not eligible The term ‘‘eligible individual’’ shall not in- clude any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of chapter 1 by reason of an elec- tion under subsection (g) or (h) of section 6013. (d) Qualified retirement savings contributions For purposes of this section— (1) In general The term ‘‘qualified retirement savings con- tributions’’ means, with respect to any taxable year, the sum of— (A) the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual, (B) the amount of— (i) any elective deferrals (as defined in section 402(g)(3)) of such individual, and (ii) any elective deferral of compensation by such individual under an eligible de- ferred compensation plan (as defined in section 457(b)) of an eligible employer de- scribed in section 457(e)(1)(A), and (C) the amount of voluntary employee con- tributions by such individual to any quali- fied retirement plan (as defined in section 4974(c)). Such term shall not include any amount attrib- utable to a payment under subsection (a)(2). (2) Reduction for certain distributions (A) In general The qualified retirement savings contribu- tions determined under paragraph (1) for a Page 3686 TITLE 26—INTERNAL REVENUE CODE § 6433 taxable year shall be reduced (but not below zero) by the aggregate distributions received by the individual during the testing period from any entity of a type to which contribu- tions under paragraph (1) may be made. (B) Testing period For purposes of subparagraph (A), the test- ing period, with respect to a taxable year, is the period which includes— (i) such taxable year, (ii) the 2 preceding taxable years, and (iii) the period after such taxable year and before the due date (including exten- sions) for filing the return of tax for such taxable year. (C) Excepted distributions There shall not be taken into account under subparagraph (A)— (i) any distribution referred to in section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), (ii) any distribution to which section 408(d)(3) or 408A(d)(3) applies, and (iii) any portion of a distribution if such portion is transferred or paid in a rollover contribution (as defined in section 402(c), 403(a)(4), 403(b)(8), 408A(e), or 457(e)(16)) to an account or plan to which qualified re- tirement savings contributions can be made. (D) Treatment of distributions received by spouse of individual For purposes of determining distributions received by an individual under subpara- graph (A) for any taxable year, any distribu- tion received by the spouse of such indi- vidual shall be treated as received by such individual if such individual and spouse file a joint return for such taxable year and for the taxable year during which the spouse re- ceives the distribution. (e) Applicable retirement savings vehicle (1) In general The term ‘‘applicable retirement savings ve- hicle’’ means an account or plan elected by the eligible individual under paragraph (2). (2) Election Any such election to have contributed the amount determined under subsection (a) shall be to an account or plan which— (A) is— (i) the portion of a plan which— (I) is described in clause (v) of section 402(c)(8)(B), is a qualified cash or de- ferred arrangement (within the meaning of section 401(k)), or is an annuity con- tract described in section 403(b) which is purchased under a salary reduction agreement, and (II) does not consist of a qualified Roth contribution program (as defined in sec- tion 402A(b)), or (ii) an individual retirement plan which is not a Roth IRA, (B) is for the benefit of the eligible indi- vidual, (C) accepts contributions made under this section, and (D) is designated by such individual (in such form and manner as the Secretary may provide). (f) Other definitions and special rules (1) Modified adjusted gross income For purposes of this section, the term ‘‘modified adjusted gross income’’ means ad- justed gross income— (A) determined without regard to sections 911, 931, and 933, and (B) determined without regard to any ex- clusion or deduction allowed for any quali- fied retirement savings contribution made during the taxable year. (2) Treatment of contributions In the case of any contribution under sub- section (a)(2)— (A) except as otherwise provided in this section or by the Secretary under regula- tions, such contribution shall be treated as— (i) an elective deferral made by the indi- vidual, if contributed to an applicable re- tirement savings vehicle described in sub- section (e)(2)(A)(i), or (ii) as an individual retirement plan con- tribution made by such individual, if con- tributed to such a plan, (B) such contribution shall not be taken into account with respect to any applicable limitation under sections 402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 408A(c)(2), 414(v)(2), 415(c), or 457(b)(2), and shall be disregarded for purposes of sections 401(a)(4), 401(k)(3), 401(k)(11)(B)(i)(III), and 416, and (C) such contribution shall not be treated as an amount that may be paid, made avail- able, or distributable to the participant under section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(i)(V), or 457(d)(1)(A)(iii). (3) Treatment of qualified plans, etc. A plan or arrangement to which a contribu- tion is made under this section shall not be treated as violating any requirement under section 401, 403, 408, or 457 solely by reason of accepting such contribution. (4) Erroneous matching contributions (A) In general If any contribution is erroneously paid under subsection (a)(2), including a payment that is not made to an applicable retirement savings vehicle, the amount of such erro- neous payment shall be treated as an under- payment of tax (other than for purposes of part II of subchapter A of chapter 68) for the taxable year in which the Secretary deter- mines the payment is erroneous. (B) Distribution of erroneous matching con- tributions In the case of a contribution to which sub- paragraph (A) applies— (i) section 402(a), 403(a)(1), 403(b)(1), 408(d)(1), or 457(a)(1), whichever is applica- ble, shall not apply to any distribution of such contribution, and section 72(t) shall not apply to the distribution of such con- Page 3687 TITLE 26—INTERNAL REVENUE CODE § 6433 tribution or any income attributable thereto, if such distribution is received not later than the day prescribed by law (in- cluding extensions of time) for filing the individual’s return for such taxable year, and (ii) any plan or arrangement from which such a distribution is made under this sub- paragraph shall not be treated as violating any requirement under section 401, 403, or 457 solely by reason of making such dis- tribution. (5) Exception from reduction or offset Any payment made to any individual under this section shall not be— (A) subject to reduction or offset pursuant to subsection (c), (d), (e), or (f) of section 6402 or any similar authority permitting off- set, or (B) reduced or offset by other assessed Federal taxes that would otherwise be sub- ject to levy or collection. (6) Saver’s match recovery payments (A) In general In the case of an applicable retirement savings vehicle to which contributions have been made under subsection (a)(2), and from which a specified early distribution has been made during the taxable year, if the aggre- gate amount of such contributions exceeds the account balance of such savings vehicle at the end of the such taxable year, the tax imposed by chapter 1 shall be increased by an amount equal to such excess (reduced by the amount by which the tax under such chapter was increased under section 72(t)(1) with respect to such distribution). (B) Specified early distribution For purposes of this paragraph, the term ‘‘specified early distribution’’ means any portion of a distribution— (i) which is from such applicable retire- ment savings vehicle to which a contribu- tion has been made under subsection (a)(2), (ii) which is includible in gross income, and (iii) to which 72(t)(1) applies. (C) Excess may be repaid (i) In general The increase in tax for any taxable year under subparagraph (A) shall be reduced (but not below zero) by so much of such specified early distribution as the indi- vidual elects to contribute to an applicable retirement savings vehicle not later than the day prescribed by law (including exten- sions of time) for filing such individual’s return for such taxable year. (ii) Contribution of excess Any individual who elects to contribute an amount under clause (i) may make one or more contributions in an aggregate amount not to exceed the amount of the specified early distribution to which the election relates to an applicable retire- ment savings vehicle and to which a roll- over contribution of such distribution could be made under section 402(c), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be. (iii) Limitation on contributions to applica- ble retirement savings vehicle other than IRAs The aggregate amount of contributions made by an individual under clause (ii) to any applicable savings retirement vehicle which is not an individual retirement plan shall not exceed the aggregate amount of specified early retirement distributions which are made from such savings retire- ment vehicle to such individual. Clause (ii) shall not apply to contributions to any ap- plicable retirement savings vehicle which is not an individual retirement plan unless the individual is eligible to make contribu- tions (other than those described in clause (ii)) to such retirement savings vehicle. (iv) Treatment of repayments of distribu- tions from applicable eligible retire- ment plans other than IRAs If a contribution is made under clause (ii) with respect to a specified early dis- tribution from an applicable savings re- tirement vehicle other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the con- tribution, be treated as having received such distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the savings retirement vehicle in a direct trustee to trustee transfer within 60 days of the distribution. (v) Treatment of repayments for distribu- tions from IRAs If a contribution is made under clause (ii) with respect to a specified early dis- tribution from an individual retirement plan, then, to the extent of the amount of the contribution, such distribution shall be treated as a distribution described in section 408(d)(3) and as having been trans- ferred to the applicable retirement savings vehicle in a direct trustee to trustee trans- fer within 60 days of the distribution. (D) Rules to account for investment loss The Secretary shall prescribe such rules as may be appropriate to reduce any increase in tax otherwise made under subparagraph (A) to properly account for the extent to which any portion of the excess described in such subparagraph is allocable to invest- ment loss in the retirement savings vehicle. (g) Provision by Secretary of information relat- ing to contributions In the case of an amount elected by an eligible individual to be contributed to an account or plan under subsection (e)(2), the Secretary shall provide general guidance applicable to the cus- todian of the account or the plan sponsor, as the case may be, detailing the treatment of such contribution under subsection (f)(2) and the re- porting requirements with respect to such con- tribution under section 6058, particularly as Page 3688 TITLE 26—INTERNAL REVENUE CODE § 6501 1 See References in Text note below. 1 Section numbers editorially supplied. such requirements are modified pursuant to sec- tion 102(c)(2) 1 of the SECURE 2.0 Act of 2022. (h) Inflation adjustments (1) In general In the case of any taxable year beginning in a calendar year after 2027, the $41,000 amount in subsection (b)(3)(A)(i) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment deter- mined under section 1(f)(3) for the calendar year in which the taxable year begins, deter- mined by substituting ‘‘calendar year 2026’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) thereof. (2) Rounding Any increase determined under paragraph (1) shall be rounded to the nearest multiple of $1,000. (Added Pub. L. 117–328, div. T, title I, § 103(a), Dec. 29, 2022, 136 Stat. 5279.) Editorial Notes REFERENCES IN TEXT Section 102(c)(2) of the SECURE 2.0 Act of 2022, re- ferred to in subsec. (g), probably means section 103(c)(2) of div. T of Pub. L. 117–328, known as the SECURE 2.0 Act of 2022, which is set out as a note under section 6058 of this title and which directs the Secretary of the Treasury to amend the forms relating to reports re- quired under section 6058. There is no section 102(c)(2) of the Act. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 117–328, div. T, title I, § 103(f), Dec. 29, 2022, 136 Stat. 5286, provided that: ‘‘The amendments made by this section [enacting this section and amending sec- tions 25B and 6211 of this title and section 1324 of Title 31, Money and Finance] shall apply to taxable years be- ginning after December 31, 2026.’’ TREATMENT OF CERTAIN POSSESSIONS Pub. L. 117–328, div. T, title I, § 103(b), Dec. 29, 2022, 136 Stat. 5284, provided that: ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS.—The Secretary of the Treasury shall pay to each possession of the United States which has a mir- ror code tax system amounts equal to the loss (if any) to that possession by reason of the amendments made by this section [enacting this section and amending sections 25B and 6211 of this title and section 1324 of Title 31, Money and Finance]. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respec- tive possession. ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits (if any) that would have been provided to eligible resi- dents of such possession by reason of the amendments made by this section if a mirror code tax system had been in effect in such possession. The preceding sen- tence shall not apply unless the respective possession has a process, which has been approved by the Sec- retary of the Treasury, under which such possession promptly transfers the payments directly on behalf of eligible residents to a retirement savings vehicle estab- lished under the laws of such possession or the United States that is substantially similar to a plan, or is a plan, described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue Code of 1986 or an individual retirement plan, and the restrictions on dis- tributions from such retirement savings vehicle are substantially similar to the provisions of section 6433(d)(2) of such Code (as added by this section). ‘‘(3) COORDINATION WITH UNITED STATES SAVER’S MATCH.—No matching contribution shall be allowed under section 6433 of the Internal Revenue Code of 1986 (as added by this section) to any person— ‘‘(A) to whom a matching contribution is paid by the possession by reason of the amendments made by this section, or ‘‘(B) who is eligible for a payment under a plan de- scribed in paragraph (2). ‘‘(4) MIRROR CODE TAX SYSTEM.—For purposes of this subsection, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. ‘‘(5) TREATMENT OF PAYMENTS.—For purposes of sec- tion 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same man- ner as a refund due from a credit provision referred to in subsection (b)(2) of such section.’’ PROMOTION OF SAVER’S MATCH Pub. L. 117–328, div. T, title I, § 104(a), Dec. 29, 2022, 136 Stat. 5286, provided that: ‘‘The Secretary of the Treas- ury shall take such steps as the Secretary determines are necessary and appropriate to increase public aware- ness of the matching contribution provided under sec- tion 6433 of the Internal Revenue Code of 1986.’’ CHAPTER 66—LIMITATIONS Subchapter Sec.1 A. Limitations on assessment and collec- tion .................................................... 6501 B. Limitations on credit or refund ............ 6511 C. Mitigation of effect of period of limita- tions ................................................... 6521 D. Periods of limitation in judicial pro- ceedings .............................................. 6531 Subchapter A—Limitations on Assessment and Collection Sec. 6501. Limitations on assessment and collection. 6502. Collection after assessment. 6503. Suspension of running of period of limitation. 6504. Cross references. § 6501. Limitations on assessment and collection (a) General rule Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax be- came due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assess- ment for the collection of such tax shall be begun after the expiration of such period. For purposes of this chapter, the term ‘‘return’’ means the return required to be filed by the tax-