IRA Preservation Act of 2017

IRA Preservation Act of 2017

This bill modifies the requirements for Individual Retirement Arrangements (IRAs) to: (1) require the Department of the Treasury to provide taxpayers with certain educational materials and notifications, and (2) modify various penalties.

Treasury must provide the public with: (1) an overview of the laws and regulations related to IRAs, and (2) examples of common errors with respect to the laws and regulations and instructions on how to avoid the errors.

Treasury must also provide individual taxpayers with specified notices that identify critical failure points, inconsistencies, or errors and include advice on avoiding failures or errors.

The bill amends the Internal Revenue Code to:

• reduce penalties for taxpayers who voluntarily correct certain IRA errors, including excess contributions and failures to take required minimum distributions;
• eliminate the 10% additional tax on early distributions that are attributable to withdrawal of interest or other income earned on excess contributions to an IRA;
• repeal the tax disqualification penalty (loss of tax-exempt status) for accounts where employees engage in certain prohibited transactions; and
• revise the statute of limitations for collecting certain taxes in connection with an IRA.