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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5204 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 5204
To amend the Internal Revenue Code of 1986 to exempt individual account
plans from certain prohibited transaction rules.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 30, 2026
Mr. Barrasso (for himself and Mrs. Blackburn) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exempt individual account
plans from certain prohibited transaction rules.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Simplifying Modern Access to
Retirement Tools for Savings Act of 2026'' or the ``SMART Savings Act
of 2026''.
SEC. 2. EXEMPTION FROM PROHIBITED TRANSACTION RULES.
(a) In General.--Paragraph (1) of section 4975(e) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(1) Plan.--For purposes of this section, the term `plan'
means a trust described in section 401(a) which forms a part of
a plan, or a plan described in section 403(a), which trust or
plan is exempt from tax under section 501(a).''.
(b) Conforming Amendments.--
(1) Section 4975(c) of the Internal Revenue Code of 1986 is
amended--
(A) by striking paragraphs (3), (4), (5), and (6),
and
(B) by redesignating paragraph (7) as paragraph
(3).
(2) Section 4975(f)(8)(E) of such Code is amended by
striking clause (ii) and by redesignating clause (iii) as
clause (ii).
(c) Preservation of Self-Dealing Prohibitions.--Section
408(e)(2)(A) of the Internal Revenue Code of 1986 is amended to read as
follows:
``(A) In general.--
``(i) Self-dealing.--If, during any taxable
year of the individual for whose benefit any
individual retirement account is established,
that individual or the individual's beneficiary
deals with the income or assets of a plan in
the individual's own interest or for the
individual's own account or receives
consideration for the individual's own personal
account from any party dealing with the plan in
connection with a transaction involving the
income or assets of the plan, other than the
receipt of any relationship benefits, such
account ceases to be an individual retirement
account as of the first day of such taxable
year. For purposes of this paragraph--
``(I) the individual for whose
benefit any account was established is
treated as the creator of such account,
``(II) the separate account for any
individual within an individual
retirement account maintained by an
employer or association of employees is
treated as a separate individual
retirement account, and
``(III) each individual retirement
plan of the individual shall be treated
as a separate contract.
``(ii) Relationship benefits.--For purposes
of clause (i), the term `relationship benefits'
means reduced cost or no-cost products or
services or enhanced or improved products or
services or other benefits received by a person
pursuant to an arrangement in which the account
value of, or the fees incurred for services
provided to, an individual retirement account
are taken into account for purposes of
determining eligibility to receive such
benefit.''.
(d) Effective Date.--The amendments made by this section shall
apply to transactions occurring after the date of the enactment of this
Act.
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