Details of Public Law 117-328, section 334 , Consolidated Appropriations Act, 2023, Long-Term Care Contracts Purchased with Retirement Plan Distributions

Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to Part I of Subchapter D of Chapter 1 of Subtitle A of the Internal Revenue Code, which includes IRC sections 401 and 403. Additionally, under RTC section 17551(c)(1), California automatically conforms to the federal changes made to IRC section 457. Therefore, the federal changes made by this provision automatically applies under California law.

California conforms to IRC section 72(t), additional tax on early distributions from qualified plans as applicable for federal purposes for the same taxable year using a rate of 2 ½ percent in lieu of the federal tax rate. (RTC section 17085(c)(1).) The qualified long-term care distributions would not be subject to a California early withdrawal tax if they are not subject to the federal additional tax on early distributions.

RTC section 18631(b) provides that a copy of certain federal information returns can be required to be filed with FTB at the time and in the manner as required by forms and instructions. The new federal information return requirement set forth in Section 334 (creating IRC section 6050Z) automatically applies under California law. (RTC section 18631(c)(25))

California generally conforms to IRC sections 6724 for reasonable cause waiver, definition, and special rules, as of 1/1/2015 with modifications, but does not conform to the modifications made under this section.