SMART Savings Act of 2026

This bill amends the Internal Revenue Code of 1986 to exempt individual account plans from certain prohibited transaction rules. It changes the definition of a plan for purposes of prohibited transaction rules, removes certain paragraphs from the code, and preserves self-dealing prohibitions for individual retirement accounts. The changes apply to transactions occurring after the bill is enacted.

Sec. 2, Exemption from prohibited transaction rules: This section amends the definition of a plan in section 4975(e)(1) of the Internal Revenue Code to include only trusts described in section 401(a) that are part of a plan, or plans described in section 403(a), that are exempt from tax under section 501(a). It also makes conforming amendments by striking paragraphs (3), (4), (5), and (6) from section 4975(c) and redesignating paragraph (7) as paragraph (3), and by striking clause (ii) from section 4975(f)(8)(E) and redesignating clause (iii) as clause (ii). Additionally, it preserves self-dealing prohibitions by amending section 408(e)(2)(A) to specify that if an individual or beneficiary deals with plan income or assets for their own interest or account, or receives consideration from a party dealing with the plan, the account ceases to be an individual retirement account, except for relationship benefits, which are defined as reduced cost or no-cost products or services, enhanced or improved products or services, or other benefits received based on account value or fees. The effective date applies to transactions occurring after the date of enactment.