Qualifying longevity annuity contracts

(a) In general Not later than the date which is 1 year after the date of the enactment of this Act, the Secretary of the Treasury or the Secretary’s delegate (hereafter in this section referred to as the Secretary) shall amend the regulation issued by the Department of the Treasury relating to Longevity Annuity Contracts (79 Fed. Reg. 37633 (July 2, 2014)), as follows: (1) Repeal 25-percent premium limit The Secretary shall amend Q&A–17(b)(3) of Treasury Regulation section 1.401(a)(9)–6 and Q&A–12(b)(3) of Treasury Regulation section 1.408–8 to eliminate the requirement that premiums for qualifying longevity annuity contracts be limited to a percentage of an individual’s account balance, and to make such corresponding changes to the regulations and related forms as are necessary to reflect the elimination of this requirement. (2) Facilitate joint and survivor benefits The Secretary shall amend Q&A–17(c) of Treasury Regulation section 1.401(a)(9)–6, and make such corresponding changes to the regulations and related forms as are necessary, to provide that, in the case of a qualifying longevity annuity contract which was purchased with joint and survivor annuity benefits for the individual and the individual’s spouse which were permissible under the regulations at the time the contract was originally purchased, a divorce occurring after the original purchase and before the annuity payments commence under the contract will not affect the permissibility of the joint and survivor annuity benefits or other benefits under the contract, or require any adjustment to the amount or duration of benefits payable under the contract, provided that any qualified domestic relations order (within the meaning of section 414(p) of the Internal Revenue Code of 1986) or, in the case of an arrangement not subject to section 414(p) of such Code or section 206(d) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1056(d)), any divorce or separation instrument (as defined in subsection (b))— (A) provides that the former spouse is entitled to the survivor benefits under the contract; (B) does not modify the treatment of the former spouse as the beneficiary under the contract who is entitled to the survivor benefits; or (C) does not modify the treatment of the former spouse as the measuring life for the survivor benefits under the contract. (3) Permit short free look period The Secretary shall amend Q&A–17(a)(4) of Treasury Regulation section 1.401(a)(9)–6 to ensure that such Q&A does not preclude a contract from including a provision under which an employee may rescind the purchase of the contract within a period not exceeding 90 days from the date of purchase. (b) Divorce or separation instrument For purposes of subsection (a)(2), the term divorce or separation instrument means— (1) a decree of divorce or separate maintenance or a written instrument incident to such a decree, (2) a written separation agreement, or (3) a decree (not described in paragraph (1)) requiring a spouse to make payments for the support or maintenance of the other spouse. (c) Effective dates, enforcement, and interpretations (1) Effective dates (A) Paragraph (1) of subsection (a) shall be effective with respect to contracts purchased or received in an exchange on or after the date of the enactment of this Act. (B) Paragraphs (2) and (3) of subsection (a) shall be effective with respect to contracts purchased or received in an exchange on or after July 2, 2016. (2) Enforcement and interpretations Prior to the date on which the Secretary issues final regulations pursuant to subsection (a)— (A) the Secretary (or delegate) shall administer and enforce the law in accordance with subsection (a) and the effective dates in paragraph (1) of this subsection; and (B) taxpayers may rely upon their reasonable good faith interpretations of subsection (a). (d) Regulatory successor provision Any reference to a regulation under this section shall be treated as including a reference to any successor regulation thereto.