115th CONGRESS 2d Session |
To amend the Internal Revenue Code to increase the exclusion for employer-provided dependent care assistance and to allow limited annual carryforward of unused dependent care flexible spending arrangement account balances.
October 9, 2018
Mrs. Wagner (for herself and Mr. Sessions) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code to increase the exclusion for employer-provided dependent care assistance and to allow limited annual carryforward of unused dependent care flexible spending arrangement account balances.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “Child and Dependent Care Modernization Act of 2018”.
SEC. 2. Increase in exclusion for employer-provided dependent care assistance.
(a) In general.—Section 129(a)(2) of the Internal Revenue Code of 1986 is amended—
(1) by striking “shall not exceed” in subparagraph (A) and all that follows and inserting the following: “shall not exceed—
“(i) $8,000 (half such dollar amount in the case of a separate return by a married individual) if there is 1 qualifying individual with respect to the taxpayer during such taxable year, or
“(ii) $16,000 (half such dollar amount in the case of such a separate return) if there are 2 or more qualifying individuals with respect to the taxpayer during such taxable year.”; and
(2) by adding at the end the following new subparagraph:
“(D) QUALIFYING INDIVIDUAL.—For purposes of this paragraph, the term ‘qualifying individual’ has the meaning given to such term under section 21(b)(1).”.
(b) Inflation adjustment.—Section 129(a)(2) of such Code is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:
“(C) INFLATION ADJUSTMENT.—In the case of any taxable year beginning in a calendar year after 2019, the dollar amounts in clauses (i) and (ii) of subparagraph (A) shall be increased by an amount equal to—
“(i) such dollar amount, multiplied by
“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2018’ for ‘calendar year 1992’ in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $100.”.
(c) Conforming amendment.—Section 129(a)(2).
(d) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2018.
SEC. 3. Carryforward and limitation for dependent care flexible spending arrangement account balance.
(a) In general.—Section 125 of the Internal Revenue Code of 1986 is amended by redesignating subsections (k) and (l) as subsections (l) and (m), respectively and by inserting after subsection (j) the following new subsection:
“(k) Rules for dependent care flexible spending arrangements.—
“(1) CARRYFORWARD OF UNUSED DEPENDENT CARE BENEFITS.—For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement merely because such arrangement provides that an amount not exceeding the lesser of—
“(A) such arrangement’s account balance determined as of the end of any plan year, or
“(B) the limitation described in paragraph (2) for the succeeding plan year,
may be carried forward to the succeeding plan year of such flexible spending arrangement.
“(2) CUMULATIVE LIMITATION.—For purposes of this section, if a benefit is provided under a cafeteria plan through a dependent care flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless it provides that the account balance of the employee shall not exceed the dollar limitation in effect with respect to the employee under section 129(a)(2)(A) for such plan year.”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2018.