Modification of saver’s credit

(a)

50 percent credit for all taxpayers: expansion of phaseout ranges

Subsection (b) of section 25B of the Internal Revenue Code of 1986 is amended to read as follows:

(b)

Applicable percentage

For purposes of this section— (1)

In general

Except as provided in paragraph (2), the applicable percentage is 50 percent. (2)

Phaseout

The percentage under paragraph (1) shall be reduced (but not below zero) by the number of percentage points which bears the same ratio to 50 percentage points as— (A)the excess of— (i)the taxpayer’s adjusted gross income for such taxable year, over (ii)the applicable dollar amount, bears to (B)the phaseout range.

If any reduction determined under this paragraph is not a whole percentage point, such reduction shall be rounded to the nearest whole percentage point.

(3)

Applicable dollar amount; phaseout range

(A)

Joint returns

Except as provided in subparagraph (B)— (i)the applicable dollar amount is $65,000, and (ii)the phaseout range is $20,000. (B)

Other returns

In the case of— (i)a head of a household (as defined in section 2(b)), the applicable dollar amount and the phaseout range shall be 3/4 of the amounts applicable under subparagraph (A) (as adjusted under paragraph (4)), and (ii)any taxpayer who is not filing a joint return and who is not a head of a household (as so defined), the applicable dollar amount and the phaseout range shall be ½ of the amounts applicable under subparagraph (A) (as so adjusted). (4)

Inflation adjustment of applicable dollar amount

In the case of any taxable year beginning in a calendar year after 2014, the dollar amount in paragraph (3)(A)(i) shall be increased by an amount equal to— (A)such dollar amount, multiplied by (B)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2013 for calendar year 1992 in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $500.

(b)

Credit made refundable; matching contributions

(1)

Credit made refundable

The Internal Revenue Code of 1986 is amended by moving section 25B to subpart C of part IV of subchapter A of chapter 1 of such Code (relating to refundable credits), by inserting section 25B after section 36B, and by redesignating section 25B as section 36C. (2)

Matching contributions

Section 36C of such Code, as redesignated by paragraph (1), is amended by adding at the end the following:

(g)

Matching contributions

(1)

In general

The credit allowed to an eligible individual under this section for any taxable year shall be twice the credit which would (but for this subsection) be allowed if— (A)the individual consents to the application of paragraph (2), and (B)a designation by such individual is in effect for such year under paragraph (3). (2)

Credit paid into designated retirement account

Any credit under this section for any taxable year shall be paid by the Secretary into the designated retirement account of the individual for such year. The amount payable under the preceding sentence shall be subject to the reductions under section 6402 in the same manner as if such amount were an overpayment. The amount so paid shall be treated as refunded to such individual. (3)

Designated retirement account

For purposes of this subsection, the term designated retirement account means any account or plan— (A)of a type to which qualified retirement savings contributions may be made, (B)which is for such individual’s benefit, and (C)which is designated by such individual (in such form and manner as the Secretary may provide) on the return of tax for the taxable year. (4)

Treatment of matching contributions

In the case of an amount paid under paragraph (2) into a designated retirement account— (A)any dollar limitation otherwise applicable to the amount of contributions or deferrals to such account shall be increased by the amount so paid, (B)the individual’s basis in such account shall not be increased by reason of the amount so paid, and (C)such amount shall be treated as an employer contribution for the plan year in which such amount is paid for purposes of— (i)section 401(k)(3), and (ii)section 408(k)(6)(A)(iii). (5)

Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary to address situations under which the Secretary is not able to make a payment to a designated retirement account of an individual, including a plan of an employer for which the individual no longer works and to an account that does not exist.

(3)

Conforming amendments

(A)Section 6211(b)(4)(A) of such Code is amended by inserting 36C, after 36B,. (B)The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 25B. (C)The table of sections for subpart C of such part is amended by adding at the end the following new item:

Sec. 36C. Elective deferrals and IRA contributions by certain individuals.

(D)Section 1324(b)(2) of title 31, United States Code, is amended by inserting 36C, after 36B,. (c)

Maximum contributions

Subsection (a) of section 36C of such Code, as redesignated by subsection (b), is amended to read as follows:

(a)

Allowance of credit

(1)

In general

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the applicable percentage of so much of the qualified retirement savings contributions of the eligible individual for the taxable year as do not exceed the contribution limit. (2)

Contribution limit

For purposes of paragraph (1)— (A)

In general

Except as otherwise provided in this paragraph, the contribution limit is $500 ($1,500 for taxable years beginning after 2023). (B)

Annual increases to reach $1,500

In the case of taxable years beginning in a calendar year after 2013 and before 2024, the contribution limit shall be the sum of— (i)the contribution limit for taxable years beginning in the preceding calendar year (as increased under this subparagraph), and (ii)$100. (C)

Inflation adjustment

In the case of any taxable year beginning in a calendar year after 2023, the $1,500 amount in subparagraph (A) shall be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2022 for calendar year 1992 in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2013.