SMART Savings Act of 2026

Paragraph (1) of section 4975(e) of the Internal Revenue Code of 1986 is amended to read as follows:

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).

(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).

Section 408(e)(2)(A) of the Internal Revenue Code of 1986 is amended to read as follows:

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.

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.

The amendments made by this section shall apply to transactions occurring after the date of the enactment of this Act.