[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1538 Introduced in Senate (IS)]

  2d Session
                                S. 1538

To amend the Internal Revenue Code of 1986 to provide for the treatment 
  of excess benefit arrangements of certain tax-exempt group medical 
                   practices, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 26, 1996

 Mr. Glenn (for himself and Mr. Gorton) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the treatment 
  of excess benefit arrangements of certain tax-exempt group medical 
                   practices, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TREATMENT OF EXCESS BENEFIT ARRANGEMENTS OF CERTAIN TAX-
              EXEMPT GROUP MEDICAL PRACTICES.

    Subsection (e) of section 457 of the Internal Revenue Code of 1986 
(relating to deferred compensation plans of State and local governments 
and tax-exempt organizations) is amended by adding at the end the 
following new paragraph:
            ``(14) Excess benefit arrangements of certain group medical 
        practices.--
                    ``(A) In general.--Subsections (b)(2) and (c)(1) 
                shall not apply to any qualified excess benefit 
                arrangement, and benefits provided under such an 
                arrangement shall not be taken into account in 
                determining whether any other plan is an eligible 
                deferred compensation plan and the amount which may be 
                deferred under subsection (a) under such other plan.
                    ``(B) Limitation.--The maximum amount of 
                compensation of any one participant which may be 
                deferred under subsection (a) during any taxable year 
                under a qualified excess benefit arrangement shall not 
                exceed the lesser of--
                            ``(i) $25,000, or
                            ``(ii) 33\1/3\ percent of the participant's 
                        includible compensation.
                    ``(C) Qualified excess benefit arrangement.--For 
                purposes of this paragraph, the term `qualified excess 
                benefit arrangement' means a portion of a plan if--
                            ``(i) the plan is maintained by a qualified 
                        medical entity which is described in section 
                        501(c)(3) and exempt from tax under section 
                        501(a), and
                            ``(ii) such portion is so maintained solely 
                        for the purpose of providing to participants in 
                        the plan that part of the participant's annual 
                        benefit otherwise payable under the terms of 
                        the plan that exceeds the limitations on 
                        benefits imposed by section 415.
                    ``(D) Qualified medical entity.--For purposes of 
                subparagraph (C), the term `qualified medical entity' 
                means--
                            ``(i) any group medical practice, and
                            ``(ii) any integrated health care delivery 
                        system which employs groups of physicians to 
                        provide clinical services.''

SEC. 2. PLANS OF QUALIFIED MEDICAL ENTITIES EXEMPT FROM REDUCTION OF 
              LIMIT UNDER SECTION 457 FOR OTHER ELECTIVE DEFERRALS.

    The last sentence of paragraph (2) of section 457(c) of the 
Internal Revenue Code of 1986 is amended by inserting before the period 
``or in a plan maintained by a qualified medical entity (as defined in 
subsection (e)(14)) which is described in section 501(c)(3) and exempt 
from tax under section 501(a)''.

SEC. 3. COST-OF-LIVING ADJUSTMENTS OF DEFERRAL LIMITS UNDER SECTION 
              457.

    Subsection (e) of section 457 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(15) Cost-of-living adjustment of maximum deferral 
        amount.--The Secretary shall adjust the dollar amounts 
        specified in subsections (b)(2) and (c)(1), and in paragraph 
        (14) of this subsection, at the same time and in the same 
        manner as under section 415(d), except that the base period in 
        applying such section for purposes of this paragraph shall be 
        the calendar quarter beginning October 1, 1994.''

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall apply to taxable years 
beginning after December 31, 1994.
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