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<PRE>[DOCID: f:h63ih.txt]






107th CONGRESS
  1st Session
                                 H. R. 63

  To amend the Internal Revenue Code of 1986 to allow unused benefits 
    under cafeteria plans and flexible spending arrangements to be 
                              distributed.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 3, 2001

 Mr. Dreier (for himself and Mr. Royce) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to allow unused benefits 
    under cafeteria plans and flexible spending arrangements to be 
                              distributed.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. DISTRIBUTION OF UNUSED BENEFITS FROM CAFETERIA PLANS AND 
              FLEXIBLE SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j), respectively, and by inserting 
after subsection (g) the following new subsection:
    ``(h) Allowance of Distributions of Unused Benefits.--For purposes 
of this title, a plan or other arrangement shall not fail to be treated 
as a cafeteria plan or flexible spending or similar arrangement solely 
because under such plan or other arrangement any nontaxable benefit 
which is unused as of the close of a taxable year may be distributed to 
the participant. Any amount which is so distributed shall be included 
in the gross income of the participant.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.
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