[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3081 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 3081

To increase the Federal minimum wage and to amend the Internal Revenue 
  Code of 1986 to provide tax benefits for small businesses, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 14, 1999

   Mr. Lazio (for himself, Mr. Condit, Mr. Shimkus, Mr. Cramer, Mr. 
Sherwood, Mr. Bishop, Mr. Weller, Ms. Hooley of Oregon, Mr. Pickering, 
and Mr. Peterson of Minnesota) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
     Committee on Education and the Workforce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
To increase the Federal minimum wage and to amend the Internal Revenue 
  Code of 1986 to provide tax benefits for small businesses, 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. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Wage and 
Employment Growth Act of 1999''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; references; table of contents.
        TITLE I--AMENDMENTS TO FAIR LABOR STANDARDS ACT OF 1938

Sec. 101. Minimum wage.
Sec. 102. Exemption for computer professionals.
Sec. 103. Exemption for certain sales employees.
Sec. 104. Exemption for funeral directors.
                  TITLE II--SMALL BUSINESS PROVISIONS

Sec. 201. Deduction for 100 percent of health insurance costs of self-
                            employed individuals.
Sec. 202. Increase in expense treatment for small businesses.
Sec. 203. Small businesses allowed increased deduction for meal 
                            expenses.
Sec. 204. Increased deductibility of business meal expenses for 
                            individuals subject to Federal limitations 
                            on hours of service.
Sec. 205. Repeal of occupational taxes relating to distilled spirits, 
                            wine, and beer.
                     TITLE III--PENSION PROVISIONS

                     Subtitle A--Expanding Coverage

Sec. 301. Increase in benefit and contribution limits.
Sec. 302. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 303. Modification of top-heavy rules.
Sec. 304. Elective deferrals not taken into account for purposes of 
                            deduction limits.
Sec. 305. Repeal of coordination requirements for deferred compensation 
                            plans of State and local governments and 
                            tax-exempt organizations.
Sec. 306. Elimination of user fee for requests to IRS regarding pension 
                            plans.
Sec. 307. Deduction limits.
Sec. 308. Option to treat elective deferrals as after-tax 
                            contributions.
Sec. 309. Reduced PBGC premium for new plans of small employers.
Sec. 310. Reduction of additional PBGC premium for new and small plans.
                Subtitle B--Enhancing Fairness for Women

Sec. 321. Catchup contributions for individuals age 50 or over.
Sec. 322. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 323. Faster vesting of certain employer matching contributions.
Sec. 324. Simplify and update the minimum distribution rules.
Sec. 325. Clarification of tax treatment of division of section 457 
                            plan benefits upon divorce.
Sec. 326. Modification of safe harbor relief for hardship withdrawals 
                            from cash or deferred arrangements.
          Subtitle C--Increasing Portability for Participants

Sec. 331. Rollovers allowed among various types of plans.
Sec. 332. Rollovers of IRAs into workplace retirement plans.
Sec. 333. Rollovers of after-tax contributions.
Sec. 334. Hardship exception to 60-day rule.
Sec. 335. Treatment of forms of distribution.
Sec. 336. Rationalization of restrictions on distributions.
Sec. 337. Purchase of service credit in governmental defined benefit 
                            plans.
Sec. 338. Employers may disregard rollovers for purposes of cash-out 
                            amounts.
Sec. 339. Minimum distribution and inclusion requirements for section 
                            457 plans.
       Subtitle D--Strengthening Pension Security and Enforcement

Sec. 341. Repeal of 150 percent of current liability funding limit.
Sec. 342. Maximum contribution deduction rules modified and applied to 
                            all defined benefit plans.
Sec. 343. Missing participants.
Sec. 344. Periodic pension benefits statements.
Sec. 345. Civil penalties for breach of fiduciary responsibility.
Sec. 346. Excise tax relief for sound pension funding.
Sec. 347. Excise tax on failure to provide notice by defined benefit 
                            plans significantly reducing future benefit 
                            accruals.
Sec. 348. Protection of investment of employee contributions to 401(k) 
                            plans.
Sec. 349. Treatment of multiemployer plans under section 415.
Sec. 350. Technical corrections to Saver Act.
Sec. 351. Model spousal consent language and qualified domestic 
                            relations order.
Sec. 352. Elimination of ERISA double jeopardy.
                Subtitle E--Reducing Regulatory Burdens

Sec. 361. Modification of timing of plan valuations.
Sec. 362. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
Sec. 363. Repeal of transition rule relating to certain highly 
                            compensated employees.
Sec. 364. Employees of tax-exempt entities.
Sec. 365. Clarification of treatment of employer-provided retirement 
                            advice.
Sec. 366. Reporting simplification.
Sec. 367. Improvement of employee plans compliance resolution system.
Sec. 368. Substantial owner benefits in terminated plans.
Sec. 369. Modification of exclusion for employer provided transit 
                            passes.
Sec. 370. Repeal of the multiple use test.
Sec. 371. Flexibility in nondiscrimination, coverage, and line of 
                            business rules.
Sec. 372. Extension to international organizations of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 373. Notice and consent period regarding distributions.
Sec. 374. Annual report dissemination.
Sec. 375. Excess benefit plans.
Sec. 376. Benefit suspension notice.
Sec. 377. Clarification of church welfare plan status under State 
                            insurance law.
                      Subtitle F--Plan Amendments

Sec. 381. Provisions relating to plan amendments.
  TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK 
                                 CREDIT

Sec. 401. Work opportunity credit and welfare-to-work credit.
                       TITLE V--ESTATE TAX RELIEF

          Subtitle A--Reductions of Estate and Gift Tax Rates

Sec. 501. Reductions of estate and gift tax rates.
   Subtitle B--Unified Credit Replaced With Unified Exemption Amount

Sec. 511. Unified credit against estate and gift taxes replaced with 
                            unified exemption amount.
     Subtitle C--Modifications of Generation-skipping Transfer Tax

Sec. 521. Deemed allocation of GST exemption to lifetime transfers to 
                            trusts; retroactive allocations.
Sec. 522. Severing of trusts.
Sec. 523. Modification of certain valuation rules.
Sec. 524. Relief provisions.
                   Subtitle D--Conservation Easements

Sec. 531. Expansion of estate tax rule for conservation easements.
     TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND INDUSTRIES

           Subtitle A--American Community Renewal Act of 1999

Sec. 601. Short title.
Sec. 602. Designation of and tax incentives for renewal communities.
Sec. 603. Extension of expensing of environmental remediation costs to 
                            renewal communities.
Sec. 604. Extension of work opportunity tax credit for renewal 
                            communities.
Sec. 605. Conforming and clerical amendments.
                     Subtitle B--Timber Incentives

Sec. 611. Temporary suspension of maximum amount of amortizable 
                            reforestation expenditures.
                   TITLE VII--REAL ESTATE PROVISIONS

         Subtitle A--Improvements in Low-Income Housing Credit

Sec. 701. Modification of State ceiling on low-income housing credit.
Sec. 702. Modification of criteria for allocating housing credits among 
                            projects.
Sec. 703. Additional responsibilities of housing credit agencies.
Sec. 704. Modifications to rules relating to basis of building which is 
                            eligible for credit.
Sec. 705. Other modifications.
Sec. 706. Carryforward rules.
Sec. 707. Effective date.
    Subtitle B--Provisions Relating to Real Estate Investment Trusts

   Part I--Treatment of Income and Services Provided by Taxable REIT 
                              Subsidiaries

Sec. 711. Modifications to asset diversification test.
Sec. 712. Treatment of income and services provided by taxable REIT 
                            subsidiaries.
Sec. 713. Taxable REIT subsidiary.
Sec. 714. Limitation on earnings stripping.
Sec. 715. 100 percent tax on improperly allocated amounts.
Sec. 716. Effective date.
                       Part II--Health Care REITs

Sec. 721. Health care REITs.
      Part III--Conformity With Regulated Investment Company Rules

Sec. 731. Conformity with regulated investment company rules.
 Part IV--Clarification of Exception From Impermissible Tenant Service 
                                 Income

Sec. 741. Clarification of exception for independent operators.
           Part V--Modification of Earnings and Profits Rules

Sec. 751. Modification of earnings and profits rules.
              Subtitle C--Private Activity Bond Volume Cap

Sec. 761. Acceleration of phase-in of increase in volume cap on private 
                            activity bonds.
 Subtitle D--Exclusion From Gross Income for Certain Forgiven Mortgage 
                              Obligations.

Sec. 771. Exclusion from gross income for certain forgiven mortgage 
                            obligations.
                  TITLE VIII--MISCELLANEOUS PROVISIONS

Sec. 801. Credit for modifications to inter-city buses required under 
                            the Americans with Disabilities Act of 
                            1990.
Sec. 802. Certain educational benefits provided by an employer to 
                            children of employees excludable from gross 
                            income as a scholarship.
Sec. 803. Tax incentives for qualified United States independent film 
                            and television production.

        TITLE I--AMENDMENTS TO FAIR LABOR STANDARDS ACT OF 1938

SEC. 101. MINIMUM WAGE.

    (a) Increase.--Section 6(a)(1) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:
            ``(1) except as otherwise provided in this section, not 
        less than--
                    ``(A) $5.15 an hour beginning September 1, 1997,
                    ``(B) $5.48 an hour during the year beginning April 
                1, 2000,
                    ``(C) $5.81 an hour during the year beginning April 
                1, 2001, and
                    ``(D) $6.15 an hour during the year beginning April 
                1, 2002.''.
    (b) Overtime.--Section 7(e) of such Act (29 U.S.C. 207(e)) is 
amended by striking paragraph (1).

SEC. 102. EXEMPTION FOR COMPUTER PROFESSIONALS.

    Section 13(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
213(a)) is amended by amending paragraph (17) to read as follows:
            ``(17) any employee who is a computer systems, network, or 
        database analyst, designer, developer, programmer, software 
        engineer, or other similarly skilled worker--
                    ``(A) whose primary duty is--
                            ``(i) the application of systems or network 
                        or database analysis techniques and procedures, 
                        including consulting with users, to determine 
                        hardware, software, systems, network, or 
                        database specifications (including functional 
                        specifications);
                            ``(ii) the design, configuration, 
                        development, integration, documentation, 
                        analysis, creation, testing, securing, or 
                        modification of, or problem resolution for, 
                        computer systems, networks, databases, or 
                        programs, including prototypes, based on and 
                        related to user, system, network, or database 
                        specifications, including design specifications 
                        and machine operating systems;
                            ``(iii) the management or training of 
                        employees performing duties described in clause 
                        (i) or (ii); or
                            ``(iv) a combination of duties described in 
                        clauses (i), (ii), or (iii) the performance of 
                        which requires the same level of skills; and
                    ``(B) who, in the case of an employee who is 
                compensated on an hourly basis, is compensated at a 
                rate of not less than $27.63 an hour.
        For purposes of paragraph (17), the term `network' includes the 
        Internet and intranet networks and the world wide web. An 
        employee who meets the exemption provided by paragraph (17) 
        shall be considered an employee in a professional capacity 
        pursuant to paragraph (1).''.

SEC. 103. EXEMPTION FOR CERTAIN SALES EMPLOYEES.

    (a) Amendment.--Section 13(a) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 213(a)) is amended by striking the period at the end of 
paragraph (17) and inserting a semicolon and by adding at the end the 
following:
            ``(18) any employee employed in a sales position if--
                    ``(A) the employee has specialized or technical 
                knowledge related to products or services being sold;
                    ``(B) the employee's--
                            ``(i) sales are predominantly to persons or 
                        entities to whom the employee's position has 
                        made previous sales; or
                            ``(ii) position does not involve initiating 
                        sales contacts;
                    ``(C) the employee has a detailed understanding of 
                the needs of those to whom the employee is selling;
                    ``(D) the employee exercises discretion in offering 
                a variety of products and services;
                    ``(E) the employee receives--
                            ``(i) base compensation, determined without 
                        regard to the number of hours worked by the 
                        employee, of not less than an amount equal to 
                        one and one-half times the minimum wage in 
                        effect under section 6(a)(1) multiplied by 
                        2,080; and
                            ``(ii) in addition to the employee's base 
                        compensation, compensation based upon each sale 
                        attributable to the employee;
                    ``(F) the employee's aggregate compensation based 
                upon sales attributable to the employee is not less 
                than 40 percent of one and one-half times the minimum 
                wage multiplied by 2,080;
                    ``(G) the employee receives a rate of compensation 
                based upon each sale attributable to the employee which 
                is beyond sales required to reach the compensation 
                required by subparagraph (F) which rate is not less 
                than the rate on which the compensation required by 
                subparagraph (F) is determined; and
                    ``(H) the rate of annual compensation or base 
                compensation for any employee who did not work for an 
                employer for an entire calendar year is prorated to 
                reflect annual compensation which would have been 
                earned if the employee had been compensated at the same 
                rate for the entire calendar year.''.
    (b) Construction.--The amendment made by subsection (a) may not be 
construed to apply to individuals who are employed as route sales 
drivers.

SEC. 104. EXEMPTION FOR FUNERAL DIRECTORS.

    Section 13(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
213(a)) is amended by striking the period at the end of paragraph (18) 
and inserting ``; or'' and by adding after paragraph (18) the 
following:
            ``(19) any employee employed as a licensed funeral director 
        or a licensed embalmer.''.

                  TITLE II--SMALL BUSINESS PROVISIONS

SEC. 201. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) is amended to read 
as follows:
            ``(1) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section an 
        amount equal to 100 percent of the amount paid during the 
        taxable year for insurance which constitutes medical care for 
        the taxpayer and the taxpayer's spouse and dependents.''.
    (b) Clarification of Limitations on Other Coverage.--The first 
sentence of section 162(l)(2)(B) is amended to read as follows: 
``Paragraph (1) shall not apply to any taxpayer for any calendar month 
for which the taxpayer participates in any subsidized health plan 
maintained by any employer (other than an employer described in section 
401(c)(4)) of the taxpayer or the spouse of the taxpayer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

 SEC. 202. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) In General.--Paragraph (1) of section 179(b) (relating to 
dollar limitation) is amended to read as follows:
            ``(1) Dollar limitation.--The aggregate cost which may be 
        taken into account under subsection (a) for any taxable year 
        shall not exceed $30,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 203. SMALL BUSINESSES ALLOWED INCREASED DEDUCTION FOR MEAL 
              EXPENSES.

    (a) In General.--Subsection (n) of section 274 (relating to only 50 
percent of meal and entertainment expenses allowed as deduction) is 
amended by adding at the end the following new paragraph:
            ``(4) Special rule for small businesses.--
                    ``(A) In general.--In the case of any taxpayer 
                which is a small business, paragraph (1) shall be 
                applied by substituting for `50 percent' with respect 
to expenses for food or beverages--
                            ``(i) `55 percent' in the case of taxable 
                        years beginning in 2001, and
                            ``(ii) `60 percent' in the case of taxable 
                        years beginning after 2001.
                    ``(B) Small business.--For purposes of this 
                paragraph, the term `small business' means, with 
                respect to expenses paid or incurred during any taxable 
                year--
                            ``(i) any C corporation which meets the 
                        requirements of section 55(e)(1) for such year, 
                        and
                            ``(ii) any S corporation, partnership, or 
                        sole proprietorship which would meet such 
                        requirements if it were a C corporation.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 204. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR 
              INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF 
              SERVICE.

    (a) In General.--Paragraph (3) of section 274(n) (relating to only 
50 percent of meal and entertainment expenses allowed as deduction) is 
amended to read as follows:
            ``(3) Special rule for individuals subject to federal hours 
        of service.--In the case of any expenses for food or beverages 
        consumed while away from home (within the meaning of section 
        162(a)(2)) by an individual during, or incident to, the period 
        of duty subject to the hours of service limitations of the 
        Department of Transportation, paragraph (1) shall be applied by 
        substituting `80 percent' for `50 percent'.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 205. REPEAL OF OCCUPATIONAL TAXES RELATING TO DISTILLED SPIRITS, 
              WINE, AND BEER.

    (a) Repeal of Occupational Taxes.--
            (1) In general.--The following provisions of part II of 
        subchapter A of chapter 51 of the Internal Revenue Code of 1986 
        (relating to occupational taxes) are hereby repealed:
                    (A) Subpart A (relating to rectifier).
                    (B) Subpart B (relating to brewer).
                    (C) Subpart D (relating to wholesale dealers) 
                (other than sections 5114 and 5116).
                    (D) Subpart E (relating to retail dealers) (other 
                than section 5124).
                    (E) Subpart G (relating to general provisions) 
                (other than sections 5142, 5143, 5145, and 5146).
            (2) Nonbeverage domestic drawback.--Section 5131 is amended 
        by striking ``, on payment of a special tax per annum,''.
            (3) Industrial use of distilled spirits.--Section 5276 is 
        hereby repealed.
    (b) Conforming Amendments.--
            (1)(A) The heading for part II of subchapter A of chapter 
        51 and the table of subparts for such part are amended to read 
        as follows:

                  ``PART II--MISCELLANEOUS PROVISIONS

                              ``Subpart A. Manufacturers of stills.
                              ``Subpart B. Nonbeverage domestic 
                                        drawback claimants.
                              ``Subpart C. Recordkeeping by dealers.
                              ``Subpart D. Other provisions.''
            (B) The table of parts for such subchapter A is amended by 
        striking the item relating to part II and inserting the 
        following new item:

                              ``Part II. Miscellaneous provisions.''
            (2) Subpart C of part II of such subchapter (relating to 
        manufacturers of stills) is redesignated as subpart A.
            (3)(A) Subpart F of such part II (relating to nonbeverage 
        domestic drawback claimants) is redesignated as subpart B and 
        sections 5131 through 5134 are redesignated as sections 5111 
        through 5114, respectively.
            (B) The table of sections for such subpart B, as so 
        redesignated, is amended--
                    (i) by redesignating the items relating to sections 
                5131 through 5134 as relating to sections 5111 through 
                5114, respectively, and
                    (ii) by striking ``and rate of tax'' in the item 
                relating to section 5111, as so redesignated.
            (C) Section 5111, as redesignated by subparagraph (A), is 
        amended--
                    (i) by striking ``and rate of tax'' in the section 
                heading,
                    (ii) by striking the subsection heading for 
                subsection (a), and
                    (iii) by striking subsection (b).
            (4) Part II of subchapter A of chapter 51 is amended by 
        adding after subpart B, as redesignated by paragraph (3), the 
        following new subpart:

                 ``Subpart C. Recordkeeping by Dealers

                              ``Sec. 5121. Recordkeeping by wholesale 
                                        dealers.
                              ``Sec. 5122. Recordkeeping by retail 
                                        dealers.
                              ``Sec. 5123. Preservation and inspection 
                                        of records, and entry of 
                                        premises for inspection.''
            (5)(A) Section 5114 (relating to records) is moved to 
        subpart C of such part II and inserted after the table of 
        sections for such subpart.
            (B) Section 5114 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.'',

                and
                    (ii) by redesignating subsection (c) as subsection 
                (d) and by inserting after subsection (b) the following 
                new subsection:
    ``(c) Wholesale Dealers.--For purposes of this part--
            ``(1) Wholesale dealer in liquors.--The term `wholesale 
        dealer in liquors' means any dealer (other than a wholesale 
        dealer in beer) who sells, or offers for sale, distilled 
        spirits, wines, or beer, to another dealer.
            ``(2) Wholesale dealer in beer.--The term `wholesale dealer 
        in beer' means any dealer who sells, or offers for sale, beer, 
        but not distilled spirits or wines, to another dealer.
            ``(3) Dealer.--The term `dealer' means any person who 
        sells, or offers for sale, any distilled spirits, wines, or 
        beer.
            ``(4) Presumption in case of sale of 20 wine gallons or 
        more.--The sale, or offer for sale, of distilled spirits, 
        wines, or beer, in quantities of 20 wine gallons or more to the 
        same person at the same time, shall be presumptive evidence 
        that the person making such sale, or offer for sale, is engaged 
        in or carrying on the business of a wholesale dealer in liquors 
        or a wholesale dealer in beer, as the case may be. Such 
        presumption may be overcome by evidence satisfactorily showing 
        that such sale, or offer for sale, was made to a person other 
        than a dealer.''
            (C) Paragraph (3) of section 5121(d), as so redesignated, 
        is amended by striking ``section 5146'' and inserting ``section 
        5123''.
            (6)(A) Section 5124 (relating to records) is moved to 
        subpart C of part II of subchapter A of chapter 51 and inserted 
        after section 5121.
            (B) Section 5124 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',

                    (ii) by striking ``section 5146'' in subsection (c) 
                and inserting ``section 5123'', and
                    (iii) by redesignating subsection (c) as subsection 
                (d) and inserting after subsection (b) the following 
                new subsection:
    ``(c) Retail Dealers.--For purposes of this section--
            ``(1) Retail dealer in liquors.--The term `retail dealer in 
        liquors' means any dealer (other than a retail dealer in beer) 
        who sells, or offers for sale, distilled spirits, wines, or 
        beer, to any person other than a dealer.
            ``(2) Retail dealer in beer.--The term `retail dealer in 
        beer' means any dealer who sells, or offers for sale, beer, but 
        not distilled spirits or wines, to any person other than a 
        dealer.
            ``(3) Dealer.--The term `dealer' has the meaning given such 
        term by section 5121(c)(3).''
            (7) Section 5146 is moved to subpart C of part II of 
        subchapter A of chapter 51, inserted after section 5122, and 
        redesignated as section 5123.
            (8) Part II of subchapter A of chapter 51 is amended by 
        inserting after subpart C the following new subpart:

                     ``Subpart D. Other Provisions

                              ``Sec. 5131. Packaging distilled spirits 
                                        for industrial uses.
                              ``Sec. 5132. Prohibited purchases by 
                                        dealers.''
            (9) Section 5116 is moved to subpart D of part II of 
        subchapter A of chapter 51, inserted after the table of 
        sections, redesignated as section 5131, and amended by 
        inserting ``(as defined section 5121(c))'' after ``dealer'' in 
        subsection (a).
            (10) Subpart D of part II of subchapter A of chapter 51 is 
        amended by adding at the end thereof the following new section:

``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.

    ``(a) In General.--Except as provided in regulations prescribed by 
the Secretary, it shall be unlawful for a dealer to purchase distilled 
spirits from any person other than a wholesale dealer in liquors who is 
required to keep the records prescribed by section 5121.
    ``(b) Penalty and Forfeiture.--

                                ``For penalty and forfeiture provisions 
applicable to violations of subsection (a), see sections 5687 and 
7302.''

            (11) Subsection (b) of section 5002 is amended--
                    (A) by striking ``section 5112(a)'' and inserting 
                ``section 5121(c)(3)'',
                    (B) by striking ``section 5112'' and inserting 
                ``section 5121(c)'',
                    (C) by striking ``section 5122'' and inserting 
                ``section 5122(c)''.
            (12) Subparagraph (A) of section 5010(c)(2) is amended by 
        striking ``section 5134'' and inserting ``section 5114''.
            (13) Subsection (d) of section 5052 is amended to read as 
        follows:
    ``(d) Brewer.--For purposes of this chapter, the term `brewer' 
means any person who brews beer or produces beer for sale. Such term 
shall not include any person who produces only beer exempt from tax 
under section 5053(e).''
            (14) The text of section 5182 is amended to read as 
        follows:
            ``For provisions requiring recordkeeping by wholesale 
        liquor dealers, see section 5112, and by retail liquor dealers, 
        see section 5122.''
            (15) Subsection (b) of section 5402 is amended by striking 
        ``section 5092'' and inserting ``section 5052(d)''.
            (16) Section 5671 is amended by striking ``or 5091''.
            (17)(A) Part V of subchapter J of chapter 51 is hereby 
        repealed.
            (B) The table of parts for such subchapter J is amended by 
        striking the item relating to part V.
            (18)(A) Sections 5142, 5143, and 5145 are moved to 
        subchapter D of chapter 52, inserted after section 5731, 
        redesignated as sections 5732, 5733, and 5734, respectively, 
        and amended by striking ``this part'' each place it appears and 
        inserting ``this subchapter''.
            (B) Section 5732, as redesignated by subparagaph (A), is 
        amended by striking ``(except the tax imposed by section 
        5131)'' each place it appears.
            (C) Subsection (c) of section 5733, as redesignated by 
        subparagraph (A), is amended by striking paragraph (2) and by 
        redesignating paragraph (3) as paragraph (2).
            (D) The table of sections for subchapter D of chapter 52 is 
        amended by adding at the end thereof the following:

                              ``Sec. 5732. Payment of tax.
                              ``Sec. 5733. Provisions relating to 
                                        liability for occupational 
                                        taxes.
                              ``Sec. 5734. Application of State laws.''
            (E) Section 5731 is amended by striking subsection (c) and 
        by redesignating subsection (d) as subsection (c).
            (19) Subsection (c) of section 6071 is amended by striking 
        ``section 5142'' and inserting ``section 5732''.
            (20) Paragraph (1) of section 7652(g) is amended--
                    (A) by striking ``subpart F'' and inserting 
                ``subpart B'', and
                    (B) by striking ``section 5131(a)'' and inserting 
                ``section 5111(a)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act, but shall not apply to 
taxes imposed for periods before such date.

                     TITLE III--PENSION PROVISIONS

                     Subtitle A--Expanding Coverage

SEC. 301. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

    (a) Defined Benefit Plans.--
            (1) Dollar limit.--
                    (A) Subparagraph (A) of section 415(b)(1) (relating 
                to limitation for defined benefit plans) is amended by 
                striking ``$90,000'' and inserting ``$160,000''.
                    (B) Subparagraphs (C) and (D) of section 415(b)(2) 
                are each amended by striking ``$90,000'' each place it 
                appears in the headings and the text and inserting 
                ``$160,000''.
                    (C) Paragraph (7) of section 415(b) (relating to 
                benefits under certain collectively bargained plans) is 
                amended by striking ``the greater of $68,212 or one-
                half the amount otherwise applicable for such year 
                under paragraph (1)(A) for `$90,000''' and inserting 
                ``one-half the amount otherwise applicable for such 
                year under paragraph (1)(A) for `$160,000'''.
            (2) Limit reduced when benefit begins before age 62.--
        Subparagraph (C) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 62''.
            (3) Limit increased when benefit begins after age 65.--
        Subparagraph (D) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 65''.
            (4) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) by striking ``$90,000'' in paragraph (1)(A) and 
                inserting ``$160,000'', and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``$90,000'' in the heading 
                        and inserting ``$160,000'', and
                            (ii) by striking ``October 1, 1986'' and 
                        inserting ``July 1, 2000''.
            (5) Conforming amendment.--Section 415(b)(2) is amended by 
        striking subparagraph (F).
    (b) Defined Contribution Plans.--
            (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``$30,000'' and inserting ``$40,000''.
            (2) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) by striking ``$30,000'' in paragraph (1)(C) and 
                inserting ``$40,000'', and
                    (B) in paragraph (3)(D)--
                            (i) by striking ``$30,000'' in the heading 
                        and inserting ``$40,000'', and
                            (ii) by striking ``October 1, 1993'' and 
                        inserting ``July 1, 2000''.
    (c) Qualified Trusts.--
            (1) Compensation limit.--Sections 401(a)(17), 404(l), 
        408(k), and 505(b)(7) are each amended by striking ``$150,000'' 
        each place it appears and inserting ``$200,000''.
            (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--
                    (A) by striking ``October 1, 1993'' and inserting 
                ``July 1, 2000'', and
                    (B) by striking ``$10,000'' both places it appears 
                and inserting ``$5,000''.
    (d) Elective Deferrals.--
            (1) In general.--Paragraph (1) of section 402(g) (relating 
        to limitation on exclusion for elective deferrals) is amended 
        to read as follows:
            ``(1) In general.--
                    ``(A) Limitation.--Notwithstanding subsections 
                (e)(3) and (h)(1)(B), the elective deferrals of any 
                individual for any taxable year shall be included in 
                such individual's gross income to the extent the amount 
                of such deferrals for the taxable year exceeds the 
                applicable dollar amount.
                    ``(B) Applicable dollar amount.--For purposes of 
                subparagraph (A), the applicable dollar amount shall be 
                the amount determined in accordance with the following 
                table:

                ``For taxable years
                                                         The applicable
                    beginning in
                                                         dollar amount:
                    calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                    2005 or thereafter..................... $15,000.''.

            (2) Cost-of-living adjustment.--Paragraph (5) of section 
        402(g) is amended to read as follows:
            ``(5) Cost-of-living adjustment.--In the case of taxable 
        years beginning after December 31, 2005, the Secretary shall 
        adjust the $15,000 amount under paragraph (1)(B) at the same 
        time and in the same manner as under section 415(d), except 
        that the base period shall be the calendar quarter beginning 
        July 1, 2004, and any increase under this paragraph which is 
        not a multiple of $500 shall be rounded to the next lowest 
        multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Section 402(g) (relating to limitation on 
                exclusion for elective deferrals), as amended by 
                paragraphs (1) and (2), is further amended by striking 
                paragraph (4) and redesignating paragraphs (5), (6), 
                (7), (8), and (9) as paragraphs (4), (5), (6), (7), and 
                (8), respectively.
                    (B) Paragraph (2) of section 457(c) is amended by 
                striking ``402(g)(8)(A)(iii)'' and inserting 
                ``402(g)(7)(A)(iii)''.
                    (C) Clause (iii) of section 501(c)(18)(D) is 
                amended by striking ``(other than paragraph (4) 
                thereof)''.
    (e) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Section 457 (relating to deferred 
        compensation plans of State and local governments and tax-
        exempt organizations) is amended--
                    (A) in subsections (b)(2)(A) and (c)(1) by striking 
                ``$7,500'' each place it appears and inserting ``the 
                applicable dollar amount'', and
                    (B) in subsection (b)(3)(A) by striking ``$15,000'' 
                and inserting ``twice the dollar amount in effect under 
                subsection (b)(2)(A)''.
            (2) Applicable dollar amount; cost-of-living adjustment.--
        Paragraph (15) of section 457(e) is amended to read as follows:
            ``(15) Applicable dollar amount.--
                    ``(A) In general.--The applicable dollar amount 
                shall be the amount determined in accordance with the 
                following table:

                ``For taxable years
                                                         The applicable
                    beginning in
                                                         dollar amount:
                    calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                        2005 or thereafter.................    $15,000.

                    ``(B) Cost-of-living adjustments.--In the case of 
                taxable years beginning after December 31, 2005, the 
                Secretary shall adjust the $15,000 amount specified in 
                the table in subparagraph (A) at the same time and in 
                the same manner as under section 415(d), except that 
                the base period shall be the calendar quarter beginning 
                July 1, 2004, and any increase under this paragraph 
                which is not a multiple of $500 shall be rounded to the 
                next lowest multiple of $500.''.
    (f) Simple Retirement Accounts.--
            (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
        (relating to general rule for qualified salary reduction 
        arrangement) is amended by striking ``$6,000'' and inserting 
        ``the applicable dollar amount''.
            (2) Applicable dollar amount.--Subparagraph (E) of 
        408(p)(2) is amended to read as follows:
                    ``(E) Applicable dollar amount; cost-of-living 
                adjustment.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable dollar 
                        amount shall be the amount determined in 
                        accordance with the following table:

                ``For taxable years
                                                         The applicable
                    beginning in
                                                         dollar amount:
                    calendar year:
                              2001.........................     $7,000 
                              2002.........................     $8,000 
                              2003.........................     $9,000 
                              2004 or thereafter...........    $10,000.

                            ``(ii) Cost-of-living adjustment.--In the 
                        case of a year beginning after December 31, 
                        2004, the Secretary shall adjust the $10,000 
                        amount under clause (i) at the same time and in 
                        the same manner as under section 415(d), except 
                        that the base period taken into account shall 
                        be the calendar quarter beginning July 1, 2003, 
                        and any increase under this subparagraph which 
                        is not a multiple of $500 shall be rounded to 
                        the next lower multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Clause (I) of section 401(k)(11)(B)(i) is 
                amended by striking ``$6,000'' and inserting ``the 
                amount in effect under section 408(p)(2)(A)(ii)''.
                    (B) Section 401(k)(11) is amended by striking 
                subparagraph (E).
    (g) Rounding Rule Relating to Defined Benefit Plans and Defined 
Contribution Plans.--Paragraph (4) of section 415(d) is amended to read 
as follows:
            ``(4) Rounding.--
                    ``(A) $160,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.
                    ``(B) $40,000 amount.--Any increase under 
                subparagraph (C) of paragraph (1) which is not a 
                multiple of $1,000 shall be rounded to the next lowest 
                multiple of $1,000.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 302. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND SOLE 
              PROPRIETORS.

    (a) Amendment to 1986 Code.--Subparagraph (B) of section 4975(f)(6) 
(relating to exemptions not to apply to certain transactions) is 
amended by adding at the end the following new clause:
                            ``(iii) Loan exception.--For purposes of 
                        subparagraph (A)(i), the term `owner-employee' 
                        shall only include a person described in 
                        subclause (II) or (III) of clause (i).''.
    (b) Amendment to ERISA.--Section 408(d)(2) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is 
amended by adding at the end the following new subparagraph:
    ``(C) For purposes of paragraph (1)(A), the term `owner-employee' 
shall only include a person described in clause (ii) or (iii) of 
subparagraph (A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to loans made after December 31, 2000.

SEC. 303. MODIFICATION OF TOP-HEAVY RULES.

    (a) Simplification of Definition of Key Employee.--
            (1) In general.--Section 416(i)(1)(A) (defining key 
        employee) is amended--
                    (A) by striking ``or any of the 4 preceding plan 
                years'' in the matter preceding clause (i),
                    (B) by striking clause (i) and inserting the 
                following:
                            ``(i) an officer of the employer having an 
                        annual compensation greater than $150,000,'',
                    (C) by striking clause (ii) and redesignating 
                clauses (iii) and (iv) as clauses (ii) and (iii), 
                respectively, and
                    (D) by striking the second sentence in the matter 
                following clause (iii), as redesignated by subparagraph 
                (C).
            (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
        amended by striking ``and subparagraph (A)(ii)''.
    (b) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this subparagraph.''.
    (c) Distributions During Last Year Before Determination Date Taken 
Into Account.--
            (1) In general.--Paragraph (3) of section 416(g) is amended 
        to read as follows:
            ``(3) Distributions during last year before determination 
        date taken into account.--
                    ``(A) In general.--For purposes of determining--
                            ``(i) the present value of the cumulative 
                        accrued benefit for any employee, or
                            ``(ii) the amount of the account of any 
                        employee,
                such present value or amount shall be increased by the 
                aggregate distributions made with respect to such 
                employee under the plan during the 1-year period ending 
                on the determination date. The preceding sentence shall 
                also apply to distributions under a terminated plan 
                which if it had not been terminated would have been 
                required to be included in an aggregation group.
                    ``(B) 5-year period in case of in-service 
                distribution.--In the case of any distribution made for 
                a reason other than separation from service, death, or 
                disability, subparagraph (A) shall be applied by 
                substituting `5-year period' for `1-year period'.''.
            (2) Benefits not taken into account.--Subparagraph (E) of 
        section 416(g)(4) is amended--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date'', and
                    (B) by striking ``5-year period'' and inserting 
                ``1-year period''.
    (d) Definition of Top-Heavy Plans.--Paragraph (4) of section 416(g) 
(relating to other special rules for top-heavy plans) is amended by 
adding at the end the following new subparagraph:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a plan which consists solely of--
                            ``(i) a cash or deferred arrangement which 
                        meets the requirements of section 401(k)(12), 
                        and
                            ``(ii) matching contributions with respect 
                        to which the requirements of section 401(m)(11) 
                        are met.
                If, but for this subparagraph, a plan would be treated 
                as a top-heavy plan because it is a member of an 
                aggregation group which is a top-heavy group, 
                contributions under the plan may be taken into account 
                in determining whether any other plan in the group 
                meets the requirements of subsection (c)(2).''.
    (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit 
plans) is amended--
                    (A) by striking ``clause (ii)'' in clause (i) and 
                inserting ``clause (ii) or (iii)'', and
                    (B) by adding at the end the following:
                            ``(iii) Exception for frozen plan.--For 
                        purposes of determining an employee's years of 
                        service with the employer, any service with the 
                        employer shall be disregarded to the extent 
                        that such service occurs during a plan year 
                        when the plan benefits (within the meaning of 
                        section 410(b)) no employee or former 
                        employee.''.
    (f) Elimination of Family Attribution.--Section 416(i)(1)(B) 
(defining 5-percent owner) is amended by adding at the end the 
following new clause:
                            ``(iv) Family attribution disregarded.--
                        Solely for purposes of applying this paragraph 
(and not for purposes of any provision of this title which incorporates 
by reference the definition of a key employee or 5-percent owner under 
this paragraph), section 318 shall be applied without regard to 
subsection (a)(1) thereof in determining whether any person is a 5-
percent owner.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 304. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              DEDUCTION LIMITS.

    (a) In General.--Section 404 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended by adding at the 
end the following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Deduction Limits.--Elective deferrals (as defined in section 402(g)(3)) 
shall not be subject to any limitation contained in paragraph (3), (7), 
or (9) of subsection (a), and such elective deferrals shall not be 
taken into account in applying any such limitation to any other 
contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 305. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION 
              PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 211, is amended to read as 
follows:
    ``(c) Limitation.--The maximum amount of the compensation of any 
one individual which may be deferred under subsection (a) during any 
taxable year shall not exceed the amount in effect under subsection 
(b)(2)(A) (as modified by any adjustment provided under subsection 
(b)(3)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 2000.

SEC. 306. ELIMINATION OF USER FEE FOR REQUESTS TO IRS REGARDING PENSION 
              PLANS.

    (a) Elimination of Certain User Fees.--The Secretary of the 
Treasury or the Secretary's delegate shall not require payment of user 
fees under the program established under section 7527 of the Internal 
Revenue Code of 1986 for requests to the Internal Revenue Service for 
determination letters with respect to the qualified status of a pension 
benefit plan maintained solely by one or more eligible employers or any 
trust which is part of the plan. The preceding sentence shall not apply 
to any request--
            (1) made after the 5th plan year the pension benefit plan 
        is in existence, or
            (2) made by the sponsor of any prototype or similar plan 
        which the sponsor intends to market to participating employers.
    (b) Pension Benefit Plan.--For purposes of this section, the term 
``pension benefit plan'' means a pension, profit-sharing, stock bonus, 
annuity, or employee stock ownership plan.
    (c) Eligible Employer.--For purposes of this section, the term 
``eligible employer'' has the same meaning given such term in section 
408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The 
determination of whether an employer is an eligible employer under this 
section shall be made as of the date of the request described in 
subsection (a).
    (d) Effective Date.--The provisions of this section shall apply 
with respect to requests made after December 31, 2000.

SEC. 307. DEDUCTION LIMITS.

    (a) In General.--Section 404(a) (relating to general rule) is 
amended by adding at the end the following:
            ``(12) Definition of compensation.--For purposes of 
        paragraphs (3), (7), (8), and (9), the term `compensation' 
        shall include amounts treated as participant's compensation 
        under subparagraph (C) or (D) of section 415(c)(3).''.
    (b) Conforming Amendment.--Subparagraph (B) of section 404(a)(3) is 
amended by striking the last sentence thereof.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 308. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
              CONTRIBUTIONS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to deferred compensation, etc.) is amended by inserting after 
section 402 the following new section:

``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
              CONTRIBUTIONS.

    ``(a) General Rule.--If an applicable retirement plan includes a 
qualified plus contribution program--
            ``(1) any designated plus contribution made by an employee 
        pursuant to the program shall be treated as an elective 
        deferral for purposes of this chapter, except that such 
        contribution shall not be excludable from gross income, and
            ``(2) such plan (and any arrangement which is part of such 
        plan) shall not be treated as failing to meet any requirement 
        of this chapter solely by reason of including such program.
    ``(b) Qualified Plus Contribution Program.--For purposes of this 
section--
            ``(1) In general.--The term `qualified plus contribution 
        program' means a program under which an employee may elect to 
        make designated plus contributions in lieu of all or a portion 
        of elective deferrals the employee is otherwise eligible to 
        make under the applicable retirement plan.
            ``(2) Separate accounting required.--A program shall not be 
        treated as a qualified plus contribution program unless the 
        applicable retirement plan--
                    ``(A) establishes separate accounts (`designated 
                plus accounts') for the designated plus contributions 
                of each employee and any earnings properly allocable to 
                the contributions, and
                    ``(B) maintains separate recordkeeping with respect 
                to each account.
    ``(c) Definitions and Rules Relating to Designated Plus 
Contributions.--For purposes of this section--
            ``(1) Designated plus contribution.--The term `designated 
        plus contribution' means any elective deferral which--
                    ``(A) is excludable from gross income of an 
                employee without regard to this section, and
                    ``(B) the employee designates (at such time and in 
                such manner as the Secretary may prescribe) as not 
                being so excludable.
            ``(2) Designation limits.--The amount of elective deferrals 
        which an employee may designate under paragraph (1) shall not 
        exceed the excess (if any) of--
                    ``(A) the maximum amount of elective deferrals 
                excludable from gross income of the employee for the 
                taxable year (without regard to this section), over
                    ``(B) the aggregate amount of elective deferrals of 
                the employee for the taxable year which the employee 
                does not designate under paragraph (1).
            ``(3) Rollover contributions.--
                    ``(A) In general.--A rollover contribution of any 
                payment or distribution from a designated plus account 
                which is otherwise allowable under this chapter may be 
                made only if the contribution is to--
                            ``(i) another designated plus account of 
                        the individual from whose account the payment 
                        or distribution was made, or
                            ``(ii) a Roth IRA of such individual.
                    ``(B) Coordination with limit.--Any rollover 
                contribution to a designated plus account under 
                subparagraph (A) shall not be taken into account for 
                purposes of paragraph (1).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) Exclusion.--Any qualified distribution from a 
        designated plus account shall not be includible in gross 
        income.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' has the meaning given such term by 
                section 408A(d)(2)(A) (without regard to clause (iv) 
                thereof).
                    ``(B) Distributions within nonexclusion period.--A 
                payment or distribution from a designated plus account 
                shall not be treated as a qualified distribution if 
                such payment or distribution is made within the 5-
                taxable-year period beginning with the earlier of--
                            ``(i) the first taxable year for which the 
                        individual made a designated plus contribution 
                        to any designated plus account established for 
                        such individual under the same applicable 
                        retirement plan, or
                            ``(ii) if a rollover contribution was made 
                        to such designated plus account from a 
                        designated plus account previously established 
                        for such individual under another applicable 
                        retirement plan, the first taxable year for 
                        which the individual made a designated plus 
                        contribution to such previously established 
                        account.
                    ``(C) Distributions of excess deferrals and 
                earnings.--The term `qualified distribution' shall not 
                include any distribution of any excess deferral under 
                section 402(g)(2) and any income on the excess 
                deferral.
            ``(3) Aggregation rules.--Section 72 shall be applied 
        separately with respect to distributions and payments from a 
        designated plus account and other distributions and payments 
        from the plan.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Applicable retirement plan.--The term `applicable 
        retirement plan' means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a), 
                and
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b).
            ``(2) Elective deferral.--The term `elective deferral' 
        means any elective deferral described in subparagraph (A) or 
        (C) of section 402(g)(3).''.
    (b) Excess Deferrals.--Section 402(g) (relating to limitation on 
exclusion for elective deferrals) is amended--
            (1) by adding at the end of paragraph (1) the following new 
        sentence: ``The preceding sentence shall not apply to so much 
        of such excess as does not exceed the designated plus 
        contributions of the individual for the taxable year.'', and
            (2) by inserting ``(or would be included but for the last 
        sentence thereof)'' after ``paragraph (1)'' in paragraph 
        (2)(A).
    (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is amended by 
adding at the end the following:
                ``If any portion of an eligible rollover distribution 
                is attributable to payments or distributions from a 
                designated plus account (as defined in section 402A), 
                an eligible retirement plan with respect to such 
                portion shall include only another designated plus 
                account and a Roth IRA.''.
    (d) Reporting Requirements.--
            (1) W-2 information.--Section 6051(a)(8) is amended by 
        inserting ``, including the amount of designated plus 
        contributions (as defined in section 402A)'' before the comma 
        at the end.
            (2) Information.--Section 6047 is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Designated Plus Contributions.--The Secretary shall require 
the plan administrator of each applicable retirement plan (as defined 
in section 402A) to make such returns and reports regarding designated 
plus contributions (as so defined) to the Secretary, participants and 
beneficiaries of the plan, and such other persons as the Secretary may 
prescribe.''.
    (e) Conforming Amendments.--
            (1) Section 408A(e) is amended by adding after the first 
        sentence the following new sentence: ``Such term includes a 
        rollover contribution described in section 402A(c)(3)(A).''.
            (2) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 402 the following new item:

                              ``Sec. 402A. Optional treatment of 
                                        elective deferrals as plus 
                                        contributions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 309. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.

    (a) In General.--Subparagraph (A) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(A)) is amended--
            (1) in clause (i), by inserting ``other than a new single-
        employer plan (as defined in subparagraph (F)) maintained by a 
        small employer (as so defined),'' after ``single-employer 
        plan,'',
            (2) in clause (iii), by striking the period at the end and 
        inserting ``, and'', and
            (3) by adding at the end the following new clause:
            ``(iv) in the case of a new single-employer plan (as 
        defined in subparagraph (F)) maintained by a small employer (as 
        so defined) for the plan year, $5 for each individual who is a 
        participant in such plan during the plan year.''.
    (b) Definition of New Single-Employer Plan.--Section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)) is amended by adding at the end the following new 
subparagraph:
    ``(F)(i) For purposes of this paragraph, a single-employer plan 
maintained by a contributing sponsor shall be treated as a new single-
employer plan for each of its first 5 plan years if, during the 36-
month period ending on the date of the adoption of such plan, the 
sponsor or any member of such sponsor's controlled group (or any 
predecessor of either) had not established or maintained a plan to 
which this title applies with respect to which benefits were accrued 
for substantially the same employees as are in the new single-employer 
plan.
    ``(ii)(I) For purposes of this paragraph, the term `small employer' 
means an employer which on the first day of any plan year has, in 
aggregation with all members of the controlled group of such employer, 
100 or fewer employees.
    ``(II) In the case of a plan maintained by two or more contributing 
sponsors that are not part of the same controlled group, the employees 
of all contributing sponsors and controlled groups of such sponsors 
shall be aggregated for purposes of determining whether any 
contributing sponsor is a small employer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plans established after December 31, 2000.

SEC. 310. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND SMALL PLANS.

    (a) New Plans.--Subparagraph (E) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended by adding at the end the following new 
clause:
    ``(v) In the case of a new defined benefit plan, the amount 
determined under clause (ii) for any plan year shall be an amount equal 
to the product of the amount determined under clause (ii) and the 
applicable percentage. For purposes of this clause, the term 
`applicable percentage' means--
            ``(I) 0 percent, for the first plan year.
            ``(II) 20 percent, for the second plan year.
            ``(III) 40 percent, for the third plan year.
            ``(IV) 60 percent, for the fourth plan year.
            ``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as defined in 
section 3(35)) maintained by a contributing sponsor shall be treated as 
a new defined benefit plan for its first 5 plan years if, during the 
36-month period ending on the date of the adoption of the plan, the 
sponsor and each member of any controlled group including the sponsor 
(or any predecessor of either) did not establish or maintain a plan to 
which this title applies with respect to which benefits were accrued 
for substantially the same employees as are in the new plan.''.
    (b) Small Plans.--Paragraph (3) of section 4006(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is amended--
            (1) by striking ``The'' in subparagraph (E)(i) and 
        inserting ``Except as provided in subparagraph (G), the'', and
            (2) by inserting after subparagraph (F) the following new 
        subparagraph:
    ``(G)(i) In the case of an employer who has 25 or fewer employees 
on the first day of the plan year, the additional premium determined 
under subparagraph (E) for each participant shall not exceed $5 
multiplied by the number of participants in the plan as of the close of 
the preceding plan year.
    ``(ii) For purposes of clause (i), whether an employer has 25 or 
fewer employees on the first day of the plan year is determined taking 
into consideration all of the employees of all members of the 
contributing sponsor's controlled group. In the case of a plan 
maintained by two or more contributing sponsors, the employees of all 
contributing sponsors and their controlled groups shall be aggregated 
for purposes of determining whether 25-or-fewer-employees limitation 
has been satisfied.''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to plans established after December 31, 2000.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to plan years beginning after December 31, 2000.

                Subtitle B--Enhancing Fairness for Women

SEC. 321. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.

    (a) In General.--Section 414 (relating to definitions and special 
rules) is amended by adding at the end the following new subsection:
    ``(v) Catchup Contributions for Individuals Age 50 or Over.--
            ``(1) In general.--An applicable employer plan shall not be 
        treated as failing to meet any requirement of this title solely 
        because the plan permits an eligible participant to make 
        additional elective deferrals in any plan year.
            ``(2) Limitation on amount of additional deferrals.--
                    ``(A) In general.--A plan shall not permit 
                additional elective deferrals under paragraph (1) for 
any year in an amount greater than the lesser of--
                            ``(i) the applicable percentage of the 
                        applicable dollar amount for such elective 
                        deferrals for such year, or
                            ``(ii) the excess (if any) of--
                                    ``(I) the participant's 
                                compensation for the year, over
                                    ``(II) any other elective deferrals 
                                of the participant for such year which 
                                are made without regard to this 
                                subsection.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph, the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years                                      The applicable
beginning in:                                            percentage is:
    2001..........................................          10 percent 
    2002..........................................          20 percent 
    2003..........................................          30 percent 
    2004..........................................          40 percent 
    2005 and thereafter...........................          50 percent.

            ``(3) Treatment of contributions.--In the case of any 
        contribution to a plan under paragraph (1)--
                    ``(A) such contribution shall not, with respect to 
                the year in which the contribution is made--
                            ``(i) be subject to any otherwise 
                        applicable limitation contained in section 
                        402(g), 402(h), 403(b), 404(a), 404(h), 408, 
                        415, or 457, or
                            ``(ii) be taken into account in applying 
                        such limitations to other contributions or 
                        benefits under such plan or any other such 
                        plan, and
                    ``(B) such plan shall not be treated as failing to 
                meet the requirements of section 401(a)(4), 401(a)(26), 
                401(k)(3), 401(k)(11), 401(k)(12), 401(m), 403(b)(12), 
                408(k), 408(p), 408B, 410(b), or 416 by reason of the 
                making of (or the right to make) such contribution.
            ``(4) Eligible participant.--For purposes of this 
        subsection, the term `eligible participant' means, with respect 
        to any plan year, a participant in a plan--
                    ``(A) who has attained the age of 50 before the 
                close of the plan year, and
                    ``(B) with respect to whom no other elective 
                deferrals may (without regard to this subsection) be 
                made to the plan for the plan year by reason of the 
                application of any limitation or other restriction 
                described in paragraph (3) or contained in the terms of 
                the plan.
            ``(5) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Applicable dollar amount.--The term 
                `applicable dollar amount' means, with respect to any 
                year, the amount in effect under section 402(g)(1)(B), 
                408(p)(2)(E)(i), or 457(e)(15)(A), whichever is 
                applicable to an applicable employer plan, for such 
                year.
                    ``(B) Applicable employer plan.--The term 
                `applicable employer plan' means--
                            ``(i) an employees' trust described in 
                        section 401(a) which is exempt from tax under 
                        section 501(a),
                            ``(ii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iii) an eligible deferred compensation 
                        plan under section 457 of an eligible employer 
                        as defined in section 457(e)(1)(A), and
                            ``(iv) an arrangement meeting the 
                        requirements of section 408 (k) or (p).
                    ``(C) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C).
                    ``(D) Exception for section 457 plans.--This 
                subsection shall not apply to an applicable employer 
                plan described in subparagraph (B)(iii) for any year to 
                which section 457(b)(3) applies.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 2000.

SEC. 322. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) Equitable Treatment.--
            (1) In general.--Subparagraph (B) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``25 percent'' and inserting ``100 
        percent''.
            (2) Application to section 403(b).--Section 403(b) is 
        amended--
                    (A) by striking ``the exclusion allowance for such 
                taxable year'' in paragraph (1) and inserting ``the 
                applicable limit under section 415'',
                    (B) by striking paragraph (2), and
                    (C) by inserting ``or any amount received by a 
                former employee after the 5th taxable year following 
                the taxable year in which such employee was 
                terminated'' before the period at the end of the second 
                sentence of paragraph (3).
            (3) Conforming amendments.--
                    (A) Subsection (f) of section 72 is amended by 
                striking ``section 403(b)(2)(D)(iii))'' and inserting 
                ``section 403(b)(2)(D)(iii), as in effect before the 
                enactment of the Wage and Employment Growth Act of 
                1999)''.
                    (B) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (C) Section 415(a)(2) is amended by striking ``, 
                and the amount of the contribution for such portion 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2)''.
                    (D) Section 415(c)(3) is amended by adding at the 
                end the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' means the participant's 
                includible compensation determined under section 
                403(b)(3).''.
                    (E) Section 415(c) is amended by striking paragraph 
                (4).
                    (F) Section 415(c)(7) is amended to read as 
                follows:
            ``(7) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church or a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''.
                    (G) Subparagraph (B) of section 402(g)(7) (as 
                redesignated by section 211) is amended by inserting 
                before the period at the end the following: ``(as in 
                effect before the enactment of the Wage and Employment 
                Growth Act of 1999)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Special Rules for Sections 403(b) and 408.--
            (1) In general.--Subsection (k) of section 415 is amended 
        by adding at the end the following new paragraph:
            ``(4) Special rules for sections 403(b) and 408.--For 
        purposes of this section, any annuity contract described in 
        section 403(b) for the benefit of a participant shall be 
        treated as a defined contribution plan maintained by each 
        employer with respect to which the participant has the control 
        required under subsection (b) or (c) of section 414 (as 
        modified by subsection (h)). For purposes of this section, any 
        contribution by an employer to a simplified employee pension 
        plan for an individual for a taxable year shall be treated as 
        an employer contribution to a defined contribution plan for 
        such individual for such year.''.
            (2) Effective date.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to limitation years beginning after 
                December 31, 1999.
                    (B) Exclusion allowance.--Effective for limitation 
                years beginning in 2000, in the case of any annuity 
                contract described in section 403(b) of the Internal 
                Revenue Code of 1986, the amount of the contribution 
                disqualified by reason of section 415(g) of such Code 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2) of such Code.
            (3) Modification of 403(b) exclusion allowance to conform 
        to 415 modification.--The Secretary of the Treasury shall 
        modify the regulations regarding the exclusion allowance under 
        section 403(b)(2) of the Internal Revenue Code of 1986 
to render void the requirement that contributions to a defined benefit 
pension plan be treated as previously excluded amounts for purposes of 
the exclusion allowance. For taxable years beginning after December 31, 
1999, such regulations shall be applied as if such requirement were 
void.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subparagraph (B) of section 457(b)(2) 
        (relating to salary limitation on eligible deferred 
        compensation plans) is amended by striking ``33\1/3\ percent'' 
        and inserting ``100 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 323. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CONTRIBUTIONS.

    (a) Amendments to 1986 Code.--Section 411(a) (relating to minimum 
vesting standards) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (12), a plan'', and
            (2) by adding at the end the following:
            ``(12) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A)), paragraph (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    2.............................................                  20 
    3.............................................                  40 
    4.............................................                  60 
    5.............................................                  80 
    6.............................................              100.''.

    (b) Amendments to ERISA.--Section 203(a) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (4), a plan'', and
            (2) by adding at the end the following:
            ``(4) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph 
        (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    2.............................................                  20 
    3.............................................                  40 
    4.............................................                  60 
    5.............................................                  80 
    6.............................................              100.''.

    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        for plan years beginning after December 31, 2000.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to one or more collective bargaining 
        agreements between employee representatives and one or more 
        employers ratified by the date of the enactment of this Act, 
        the amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of the 
                        enactment), or
                            (ii) January 1, 2001, or
                    (B) January 1, 2005.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.

SEC. 324. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

    (a) Simplification and Finalization of Minimum Distribution 
Requirements.--
            (1) In general.--The Secretary of the Treasury shall--
                    (A) simplify and finalize the regulations relating 
                to minimum distribution requirements under sections 
                401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 
                457(d)(2) of the Internal Revenue Code of 1986, and
                    (B) modify such regulations to--
                            (i) reflect current life expectancy, and
                            (ii) revise the required distribution 
                        methods so that, under reasonable assumptions, 
                        the amount of the required minimum distribution 
does not decrease over a participant's life expectancy.
            (2) Fresh start.--Notwithstanding subparagraph (D) of 
        section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life expectancy.
            (3) Effective date for regulations.--Regulations referred 
        to in paragraph (1) shall be effective for years beginning 
        after December 31, 2000, and shall apply in such years without 
        regard to whether an individual had previously begun receiving 
        minimum distributions.
    (b) Repeal of Rule Where Distributions Had Begun Before Death 
Occurs.--
            (1) In general.--Subparagraph (B) of section 401(a)(9) is 
        amended by striking clause (i) and redesignating clauses (ii), 
        (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
            (2) Conforming changes.--
                    (A) Clause (i) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``for other cases'' in the 
                        heading, and
                            (ii) by striking ``the distribution of the 
                        employee's interest has begun in accordance 
                        with subparagraph (A)(ii)'' and inserting ``his 
                        entire interest has been distributed to him,''.
                    (B) Clause (ii) of section 401(a)(9)(B) (as so 
                redesignated) is amended by striking ``clause (ii)'' 
                and inserting ``clause (i)''.
                    (C) Clause (iii) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``clause (iii)(I)'' and 
                        inserting ``clause (ii)(I)'',
                            (ii) by striking ``clause (iii)(III)'' in 
                        subclause (I) and inserting ``clause 
                        (ii)(III)'',
                            (iii) by striking ``the date on which the 
                        employee would have attained the age 70\1/2\,'' 
                        in subclause (I) and inserting ``April 1 of the 
                        calendar year following the calendar year in 
                        which the spouse attains 70\1/2\,'', and
                            (iv) by striking ``the distributions to 
                        such spouse begin,'' in subclause (II) and 
                        inserting ``his entire interest has been 
                        distributed to him,''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (c) Reduction in Excise Tax.--
            (1) In general.--Subsection (a) of section 4974 is amended 
        by striking ``50 percent'' and inserting ``10 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 325. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 
              PLAN BENEFITS UPON DIVORCE.

    (a) In General.--Section 414(p)(11) (relating to application of 
rules to governmental and church plans) is amended--
            (1) by inserting ``or an eligible deferred compensation 
        plan (within the meaning of section 457(b))'' after 
        ``subsection (e))'', and
            (2) in the heading, by striking ``governmental and church 
        plans'' and inserting ``certain other plans''.
    (b) Waiver of Certain Distribution Requirements.--Paragraph (10) of 
section 414(p) is amended by striking ``and section 409(d)'' and 
inserting ``section 409(d), and section 457(d)''.
    (c) Tax Treatment of Payments From a Section 457 Plan.--Subsection 
(p) of section 414 is amended by redesignating paragraph (12) as 
paragraph (13) and inserting after paragraph (11) the following new 
paragraph:
            ``(12) Tax treatment of payments from a section 457 plan.--
        If a distribution or payment from an eligible deferred 
        compensation plan described in section 457(b) is made pursuant 
        to a qualified domestic relations order, rules similar to the 
        rules of section 402(e)(1)(A) shall apply to such distribution 
        or payment.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to transfers, distributions, and payments made after December 31, 
2000.

SEC. 326. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP WITHDRAWALS 
              FROM CASH OR DEFERRED ARRANGEMENTS.

    (a) In General.--The Secretary of the Treasury shall revise the 
regulations relating to hardship distributions under section 
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide 
that the period an employee is prohibited from making elective and 
employee contributions in order for a distribution to be deemed 
necessary to satisfy financial need shall be equal to 6 months.
    (b) Effective Date.--The revised regulations under subsection (a) 
shall apply to years beginning after December 31, 2000.

          Subtitle C--Increasing Portability for Participants

SEC. 331. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

    (a) Rollovers From and to Section 457 Plans.--
            (1) Rollovers from section 457 plans.--
                    (A) In general.--Section 457(e) (relating to other 
                definitions and special rules) is amended by adding at 
                the end the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan established and maintained 
                by an employer described in subsection (e)(1)(A), if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4) without regard to subparagraph (C) 
                        thereof),
                            ``(ii) the employee transfers any portion 
                        of the property such employee receives in such 
                        distribution to an eligible retirement plan 
                        described in section 402(c)(8)(B), and
                            ``(iii) in the case of a distribution of 
                        property other than money, the amount so 
                        transferred consists of the property 
                        distributed,
                then such distribution (to the extent so transferred) 
                shall not be includible in gross income for the taxable 
                year in which paid.
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) (other than paragraph 
                (4)(C)) and (9) of section 402(c) and section 402(f) 
                shall apply for purposes of subparagraph (A).
                    ``(C) Reporting.--Rollovers under this paragraph 
                shall be reported to the Secretary in the same manner 
                as rollovers from qualified retirement plans (as 
                defined in section 4974(c)).''.
                    (B) Deferral limit determined without regard to 
                rollover amounts.--Section 457(b)(2) (defining eligible 
                deferred compensation plan) is amended by inserting 
                ``(other than rollover amounts)'' after ``taxable 
                year''.
                    (C) Direct rollover.--Paragraph (1) of section 
                457(d) is amended by striking ``and'' at the end of 
                subparagraph (A), by striking the period at the end of 
                subparagraph (B) and inserting ``, and'', and by 
                inserting after subparagraph (B) the following:
                    ``(C) in the case of a plan maintained by an 
                employer described in subsection (e)(1)(A), the plan 
                meets requirements similar to the requirements of 
                section 401(a)(31).
        Any amount transferred in a direct trustee-to-trustee transfer 
        in accordance with section 401(a)(31) shall not be includible 
        in gross income for the taxable year of transfer.''.
                    (D) Withholding.--
                            (i) Paragraph (12) of section 3401(a) is 
                        amended by adding at the end the following:
                    ``(E) under or to an eligible deferred compensation 
                plan which, at the time of such payment, is a plan 
                described in section 457(b) maintained by an employer 
                described in section 457(e)(1)(A); or''.
                            (ii) Paragraph (3) of section 3405(c) is 
                        amended to read as follows:
            ``(3) Eligible rollover distribution.--For purposes of this 
        subsection, the term `eligible rollover distribution' has the 
        meaning given such term by section 402(f)(2)(A).''.
                            (iii) Liability for withholding.--
                        Subparagraph (B) of section 3405(d)(2) is 
                        amended by striking ``or'' at the end of clause 
                        (ii), by striking the period at the end of 
                        clause (iii) and inserting ``, or'', and by 
                        adding at the end the following:
                            ``(iv) section 457(b).''.
            (2) Rollovers to section 457 plans.--
                    (A) In general.--Section 402(c)(8)(B) (defining 
                eligible retirement plan) is amended by striking 
                ``and'' at the end of clause (iii), by striking the 
period at the end of clause (iv) and inserting ``, and'', and by 
inserting after clause (iv) the following new clause:
                            ``(v) an eligible deferred compensation 
                        plan described in section 457(b) of an employer 
                        described in section 457(e)(1)(A).''.
                    (B) Separate accounting.--Section 402(c) is amended 
                by adding at the end the following new paragraph:
            ``(11) Separate accounting.--Unless a plan described in 
        clause (v) of paragraph (8)(B) agrees to separately account for 
        amounts rolled into such plan from eligible retirement plans 
        not described in such clause, the plan described in such clause 
        may not accept transfers or rollovers from such retirement 
        plans.''.
                    (C) 10 percent additional tax.--Subsection (t) of 
                section 72 (relating to 10-percent additional tax on 
                early distributions from qualified retirement plans) is 
                amended by adding at the end the following new 
                paragraph:
            ``(9) Special rule for rollovers to section 457 plans.--For 
        purposes of this subsection, a distribution from an eligible 
        deferred compensation plan (as defined in section 457(b)) of an 
        employer described in section 457(e)(1)(A) shall be treated as 
        a distribution from a qualified retirement plan described in 
        4974(c)(1) to the extent that such distribution is attributable 
        to an amount transferred to an eligible deferred compensation 
        plan from a qualified retirement plan (as defined in section 
        4974(c)).''.
    (b) Allowance of Rollovers From and to 403 (b) Plans.--
            (1) Rollovers from section 403 (b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.
            (2) Rollovers to section 403 (b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting ``, and'', and by inserting after clause (v) the 
        following new clause:
                            ``(vi) an annuity contract described in 
                        section 403(b).''.
    (c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to 
recipients of distributions eligible for rollover treatment) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(E) of the provisions under which distributions 
                from the eligible retirement plan receiving the 
                distribution may be subject to restrictions and tax 
                consequences which are different from those applicable 
                to distributions from the plan making such 
                distribution.''.
    (d) Spousal Rollovers.--Section 402(c)(9) (relating to rollover 
where spouse receives distribution after death of employee) is amended 
by striking ``; except that'' and all that follows up to the end 
period.
    (e) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.
            (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
            (3) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.
            (4) Subparagraph (A) of section 402(f)(2) is amended by 
        striking ``or paragraph (4) of section 403(a)'' and inserting 
        ``, paragraph (4) of section 403(a), subparagraph (A) of 
        section 403(b)(8), or subparagraph (A) of section 457(e)(16)''.
            (5) Paragraph (1) of section 402(f) is amended by striking 
        ``from an eligible retirement plan''.
            (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
        amended by striking ``another eligible retirement plan'' and 
        inserting ``an eligible retirement plan''.
            (7) Subparagraph (B) of section 403(b)(8) is amended to 
        read as follows:
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) and (9) of section 402(c) 
                and section 402(f) shall apply for purposes of 
                subparagraph (A), except that section 402(f) shall be 
                applied to the payor in lieu of the plan 
                administrator.''.
            (8) Section 408(a)(1) is amended by striking ``or 
        403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
            (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
        amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.
            (10) Section 415(c)(2) is amended by striking ``and 
        408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
            (11) Section 4973(b)(1)(A) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
    (f) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 2000.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of any amendment made by this section.

SEC. 332. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by adding ``or'' at the end of clause (i), 
by striking clauses (ii) and (iii), and by adding at the end the 
following:
                            ``(ii) the entire amount received 
                        (including money and any other property) is 
                        paid into an eligible retirement plan for the 
                        benefit of such individual not later than the 
                        60th day after the date on which the payment or 
                        distribution is received, except that the 
                        maximum amount which may be paid into such plan 
                        may not exceed the portion of the amount 
                        received which is includible in gross income 
                        (determined without regard to this paragraph).
                For purposes of clause (ii), the term `eligible 
                retirement plan' means an eligible retirement plan 
                described in clause (iii), (iv), (v), or (vi) of 
                section 402(c)(8)(B).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 403(b) is amended by striking 
        ``section 408(d)(3)(A)(iii)'' and inserting ``section 
        408(d)(3)(A)(ii)''.
            (2) Clause (i) of section 408(d)(3)(D) is amended by 
        striking ``(i), (ii), or (iii)'' and inserting ``(i) or (ii)''.
            (3) Subparagraph (G) of section 408(d)(3) is amended to 
        read as follows:
                    ``(G) Simple retirement accounts.--In the case of 
                any payment or distribution out of a simple retirement 
                account (as defined in subsection (p)) to which section 
                72(t)(6) applies, this paragraph shall not apply unless 
                such payment or distribution is paid into another 
                simple retirement account.''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 2000.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of the amendments made by this section.

SEC. 333. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) Rollovers From Exempt Trusts.--Paragraph (2) of section 402(c) 
(relating to maximum amount which may be rolled over) is amended by 
adding at the end the following: ``The preceding sentence shall not 
apply to such distribution to the extent--
                    ``(A) such portion is transferred in a direct 
                trustee-to-trustee transfer to a qualified trust which 
                is part of a plan which is a defined contribution plan 
                and which agrees to separately account for amounts so 
                transferred, including separately accounting for the 
                portion of such distribution which is includible in 
                gross income and the portion of such distribution which 
                is not so includible, or
                    ``(B) such portion is transferred to an eligible 
                retirement plan described in clause (i) or (ii) of 
                paragraph (8)(B).''.
    (b) Optional Direct Transfer of Eligible Rollover Distributions.--
Subparagraph (B) of section 401(a)(31) (relating to limitation) is 
amended by adding at the end the following: ``The preceding sentence 
shall not apply to such distribution if the plan to which such 
distribution is transferred--
                            ``(i) agrees to separately account for 
                        amounts so transferred, including separately 
                        accounting for the portion of such distribution 
                        which is includible in gross income and the 
                        portion of such distribution which is not so 
                        includible, or
                            ``(ii) is an eligible retirement plan 
                        described in clause (i) or (ii) of section 
                        402(c)(8)(B).''.
    (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) of 
section 408(d) (relating to special rules for applying section 72) is 
amended by inserting at the end the following:
                    ``(H) Application of section 72.--
                            ``(i) In general.--If--
                                    ``(I) a distribution is made from 
                                an individual retirement plan, and
                                    ``(II) a rollover contribution is 
                                made to an eligible retirement plan 
                                described in section 402(c)(8)(B)(iii), 
                                (iv), (v), or (vi) with respect to all 
                                or part of such distribution,
                        then, notwithstanding paragraph (2), the rules 
                        of clause (ii) shall apply for purposes of 
                        applying section 72.
                            ``(ii) Applicable rules.--In the case of a 
                        distribution described in clause (i)--
                                    ``(I) section 72 shall be applied 
                                separately to such distribution,
                                    ``(II) notwithstanding the pro rata 
                                allocation of income on, and investment 
                                in, the contract to distributions under 
                                section 72, the portion of such 
                                distribution rolled over to an eligible 
                                retirement plan described in clause (i) 
                                shall be treated as from income on the 
                                contract (to the extent of the 
                                aggregate income on the contract from 
                                all individual retirement plans of the 
                                distributee), and
                                    ``(III) appropriate adjustments 
                                shall be made in applying section 72 to 
                                other distributions in such taxable 
                                year and subsequent taxable years.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2000.

SEC. 334. HARDSHIP EXCEPTION TO 60-DAY RULE.

    (a) Exempt Trusts.--Paragraph (3) of section 402(c) (relating to 
transfer must be made within 60 days of receipt) is amended to read as 
follows:
            ``(3) Transfer must be made within 60 days of receipt.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.
                    ``(B) Hardship exception.--The Secretary may waive 
                the 60-day requirement under subparagraph (A) where the 
                failure to waive such requirement would be against 
                equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such requirement.''.
    (b) IRAs.--Paragraph (3) of section 408(d) (relating to rollover 
contributions), as amended by section 229, is amended by adding after 
subparagraph (H) the following new subparagraph:
                    ``(I) Waiver of 60-day requirement.--The Secretary 
                may waive the 60-day requirement under subparagraphs 
                (A) and (D) where the failure to waive such requirement 
                would be against equity or good conscience, including 
                casualty, disaster, or other events beyond the 
                reasonable control of the individual subject to such 
                requirement.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 335. TREATMENT OF FORMS OF DISTRIBUTION.

    (a) Plan Transfers.--
            (1) Amendment to internal revenue code of 1986.--Paragraph 
        (6) of section 411(d) (relating to accrued benefit not to be 
        decreased by amendment) is amended by adding at the end the 
        following:
                    ``(D) Plan transfers.--
                            ``(i) A defined contribution plan (in this 
                        subparagraph referred to as the `transferee 
                        plan') shall not be treated as failing to meet 
                        the requirements of this subsection merely 
because the transferee plan does not provide some or all of the forms 
of distribution previously available under another defined contribution 
plan (in this subparagraph referred to as the `transferor plan') to the 
extent that--
                                    ``(I) the forms of distribution 
                                previously available under the 
                                transferor plan applied to the account 
                                of a participant or beneficiary under 
                                the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan,
                                    ``(II) the terms of both the 
                                transferor plan and the transferee plan 
                                authorize the transfer described in 
                                subclause (I),
                                    ``(III) the transfer described in 
                                subclause (I) was made pursuant to a 
                                voluntary election by the participant 
                                or beneficiary whose account was 
                                transferred to the transferee plan,
                                    ``(IV) the election described in 
                                subclause (III) was made after the 
                                participant or beneficiary received a 
                                notice describing the consequences of 
                                making the election,
                                    ``(V) if the transferor plan 
                                provides for an annuity as the normal 
                                form of distribution under the plan in 
                                accordance with section 417, the 
                                transfer is made with the consent of 
                                the participant's spouse (if any), and 
                                such consent meets requirements similar 
                                to the requirements imposed by section 
                                417(a)(2), and
                                    ``(VI) the transferee plan allows 
                                the participant or beneficiary 
                                described in clause (iii) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.
                            ``(ii) Clause (i) shall apply to plan 
                        mergers and other transactions having the 
                        effect of a direct transfer, including 
                        consolidations of benefits attributable to 
                        different employers within a multiple employer 
                        plan.
                    ``(E) Elimination of form of distribution.--Except 
                to the extent provided in regulations, a defined 
                contribution plan shall not be treated as failing to 
                meet the requirements of this section merely because of 
                the elimination of a form of distribution previously 
                available thereunder. This subparagraph shall not apply 
                to the elimination of a form of distribution with 
                respect to any participant unless--
                            ``(i) a single sum payment is available to 
                        such participant at the same time or times as 
                        the form of distribution being eliminated, and
                            ``(ii) such single sum payment is based on 
                        the same or greater portion of the 
                        participant's account as the form of 
                        distribution being eliminated.''.
            (2) Amendment to erisa.--Section 204(g) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
        amended by adding at the end the following:
    ``(4)(A) A defined contribution plan (in this subparagraph referred 
to as the `transferee plan') shall not be treated as failing to meet 
the requirements of this subsection merely because the transferee plan 
does not provide some or all of the forms of distribution previously 
available under another defined contribution plan (in this subparagraph 
referred to as the `transferor plan') to the extent that--
            ``(i) the forms of distribution previously available under 
        the transferor plan applied to the account of a participant or 
        beneficiary under the transferor plan that was transferred from 
        the transferor plan to the transferee plan pursuant to a direct 
        transfer rather than pursuant to a distribution from the 
        transferor plan;
            ``(ii) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in clause (i);
            ``(iii) the transfer described in clause (i) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan;
            ``(iv) the election described in clause (iii) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election;
            ``(v) if the transferor plan provides for an annuity as the 
        normal form of distribution under the plan in accordance with 
        section 205, the transfer is made with the consent of the 
        participant's spouse (if any), and such consent meets 
        requirements similar to the requirements imposed by section 
        205(c)(2); and
            ``(vi) the transferee plan allows the participant or 
        beneficiary described in clause (iii) to receive any 
        distribution to which the participant or beneficiary is 
        entitled under the transferee plan in the form of a single sum 
        distribution.
    ``(B) Subparagraph (A) shall apply to plan mergers and other 
transactions having the effect of a direct transfer, including 
consolidations of benefits attributable to different employers within a 
multiple employer plan.
    ``(5) Elimination of form of distribution.--Except to the extent 
provided in regulations, a defined contribution plan shall not be 
treated as failing to meet the requirements of this section merely 
because of the elimination of a form of distribution previously 
available thereunder. This paragraph shall not apply to the elimination 
of a form of distribution with respect to any participant unless--
            ``(A) a single sum payment is available to such participant 
        at the same time or times as the form of distribution being 
        eliminated; and
            ``(B) such single sum payment is based on the same or 
        greater portion of the participant's account as the form of 
        distribution being eliminated.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Regulations.--
            (1) Amendment to internal revenue code of 1986.--The last 
        sentence of paragraph (6)(B) of section 411(d) (relating to 
        accrued benefit not to be decreased by amendment) is amended to 
        read as follows: ``The Secretary shall by regulations provide 
        that this subparagraph shall not apply to any plan amendment 
        that does not adversely affect the rights of participants in a 
        material manner.''.
            (2) Amendment to erisa.--The last sentence of section 
        204(g)(2) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows: 
        ``The Secretary of the Treasury shall by regulations provide 
        that this paragraph shall not apply to any plan amendment that 
        does not adversely affect the rights of participants in a 
        material manner.''.
            (3) Secretary directed.--Not later than December 31, 2001, 
        the Secretary of the Treasury is directed to issue final 
        regulations under section 411(d)(6) of the Internal Revenue 
        Code of 1986 and section 204(g) of the Employee Retirement 
        Income Security Act of 1974, including the regulations required 
        by the amendments made by this subsection. Such regulations 
        shall apply to plan years beginning after December 31, 2001, or 
        such earlier date as is specified by the Secretary of the 
        Treasury.

SEC. 336. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

    (a) Modification of Same Desk Exception.--
            (1) Section 401(k).--
                    (A) Section 401(k)(2)(B)(i)(I) (relating to 
                qualified cash or deferred arrangements) is amended by 
                striking ``separation from service'' and inserting 
                ``severance from employment''.
                    (B) Subparagraph (A) of section 401(k)(10) 
                (relating to distributions upon termination of plan or 
                disposition of assets or subsidiary) is amended to read 
                as follows:
                    ``(A) In general.--An event described in this 
                subparagraph is the termination of the plan without 
                establishment or maintenance of another defined 
                contribution plan (other than an employee stock 
                ownership plan as defined in section 4975(e)(7)).''.
                    (C) Section 401(k)(10) is amended--
                            (i) in subparagraph (B)--
                                    (I) by striking ``An event'' in 
                                clause (i) and inserting ``A 
                                termination'', and
                                    (II) by striking ``the event'' in 
                                clause (i) and inserting ``the 
                                termination'',
                            (ii) by striking subparagraph (C), and
                            (iii) by striking ``or disposition of 
                        assets or subsidiary'' in the heading.
            (2) Section 403(b).--
                    (A) Paragraphs (7)(A)(ii) and (11)(A) of section 
                403(b) are each amended by striking ``separates from 
                service'' and inserting ``has a severance from 
                employment''.
                    (B) The heading for paragraph (11) of section 
                403(b) is amended by striking ``separation from 
service'' and inserting ``severance from employment''.
            (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
        amended by striking ``is separated from service'' and inserting 
        ``has a severance from employment''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 337. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT 
              PLANS.

    (a) 403(b) Plans.--Subsection (b) of section 403 is amended by 
adding at the end the following new paragraph:
            ``(13) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (b) 457 Plans.--
            (1) Subsection (e) of section 457 is amended by adding 
        after paragraph (16) the following new paragraph:
            ``(17) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
            (2) Section 457(b)(2) is amended by striking ``(other than 
        rollover amounts)'' and inserting ``(other than rollover 
        amounts and amounts received in a transfer referred to in 
        subsection (e)(17))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 2000.

SEC. 338. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF CASH-OUT 
              AMOUNTS.

    (a) Qualified Plans.--
            (1) Amendment to internal revenue code of 1986.--Section 
        411(a)(11) (relating to restrictions on certain mandatory 
        distributions) is amended by adding at the end the following:
                    ``(D) Special rule for rollover contributions.--A 
                plan shall not fail to meet the requirements of this 
                paragraph if, under the terms of the plan, the present 
                value of the nonforfeitable accrued benefit is 
                determined without regard to that portion of such 
                benefit which is attributable to rollover contributions 
                (and earnings allocable thereto). For purposes of this 
                subparagraph, the term `rollover contributions' means 
                any rollover contribution under sections 402(c), 
                403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 
                457(e)(16).''.
            (2) Amendment to erisa.--Section 203(e) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
        amended by adding at the end the following:
    ``(4) A plan shall not fail to meet the requirements of this 
subsection if, under the terms of the plan, the present value of the 
nonforfeitable accrued benefit is determined without regard to that 
portion of such benefit which is attributable to rollover contributions 
(and earnings allocable thereto). For purposes of this subparagraph, 
the term `rollover contributions' means any rollover contribution under 
sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) 
of the Internal Revenue Code of 1986.''.
    (b) Eligible Deferred Compensation Plans.--Clause (i) of section 
457(e)(9)(A) is amended by striking ``such amount'' and inserting ``the 
portion of such amount which is not attributable to rollover 
contributions (as defined in section 411(a)(11)(D))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 339. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR SECTION 
              457 PLANS.

    (a) Minimum Distribution Requirements.--Paragraph (2) of section 
457(d) (relating to distribution requirements) is amended to read as 
follows:
            ``(2) Minimum distribution requirements.--A plan meets the 
        minimum distribution requirements of this paragraph if such 
        plan meets the requirements of section 401(a)(9).''.
    (b) Inclusion in Gross Income.--
            (1) Year of inclusion.--Subsection (a) of section 457 
        (relating to year of inclusion in gross income) is amended to 
        read as follows:
    ``(a) Year of Inclusion in Gross Income.--
            ``(1) In general.--Any amount of compensation deferred 
        under an eligible deferred compensation plan, and any income 
        attributable to the amounts so deferred, shall be includible in 
        gross income only for the taxable year in which such 
        compensation or other income--
                    ``(A) is paid to the participant or other 
                beneficiary, in the case of a plan of an eligible 
                employer described in subsection (e)(1)(A), and
                    ``(B) is paid or otherwise made available to the 
                participant or other beneficiary, in the case of a plan 
                of an eligible employer described in subsection 
                (e)(1)(B).
            ``(2) Special rule for rollover amounts.--To the extent 
        provided in section 72(t)(9), section 72(t) shall apply to any 
        amount includible in gross income under this subsection.''.
            (2) Conforming amendments.--
                    (A) So much of paragraph (9) of section 457(e) as 
                precedes subparagraph (A) is amended to read as 
                follows:
            ``(9) Benefits of tax exempt organization plans not treated 
        as made available by reason of certain elections, etc.--In the 
        case of an eligible deferred compensation plan of an employer 
        described in subsection (e)(1)(B)--''.
                    (B) Section 457(d) is amended by adding at the end 
                the following new paragraph:
            ``(3) Special rule for government plan.--An eligible 
        deferred compensation plan of an employer described in 
        subsection (e)(1)(A) shall not be treated as failing to meet 
        the requirements of this subsection solely by reason of making 
        a distribution described in subsection (e)(9)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

       Subtitle D--Strengthening Pension Security and Enforcement

SEC. 341. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.

    (a) Amendment to Internal Revenue Code of 1986.--Section 412(c)(7) 
(relating to full-funding limitation) is amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage'', and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................        160 
                    2002...................................        165 
                    2003...................................     170.''.

    (b) Amendment to ERISA.--Section 302(c)(7) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is 
amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage'', and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................        160 
                    2002...................................        165 
                    2003...................................     170.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 342. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND APPLIED TO 
              ALL DEFINED BENEFIT PLANS.

    (a) In General.--Subparagraph (D) of section 404(a)(1) (relating to 
special rule in case of certain plans) is amended to read as follows:
                    ``(D) Special rule in case of certain plans.--
                            ``(i) In general.--In the case of any 
                        defined benefit plan, except as provided in 
                        regulations, the maximum amount deductible 
                        under the limitations of this paragraph shall 
not be less than the unfunded termination liability (determined as if 
the proposed termination date referred to in section 
4041(b)(2)(A)(i)(II) of the Employee Retirement Income Security Act of 
1974 were the last day of the plan year).
                            ``(ii) Plans with less than 100 
                        participants.--For purposes of this 
                        subparagraph, in the case of a plan which has 
                        less than 100 participants for the plan year, 
                        termination liability shall not include the 
                        liability attributable to benefit increases for 
                        highly compensated employees (as defined in 
                        section 414(q)) resulting from a plan amendment 
                        which is made or becomes effective, whichever 
                        is later, within the last 2 years before the 
                        termination date.
                            ``(iii) Rule for determining number of 
                        participants.--For purposes of determining 
                        whether a plan has more than 100 participants, 
                        all defined benefit plans maintained by the 
                        same employer (or any member of such employer's 
                        controlled group (within the meaning of section 
                        412(l)(8)(C))) shall be treated as one plan, 
                        but only employees of such member or employer 
                        shall be taken into account.
                            ``(iv) Plans established and maintained by 
                        professional service employers.--Clause (i) 
                        shall not apply to a plan described in section 
                        4021(b)(13) of the Employee Retirement Income 
                        Security Act of 1974.''.
    (b) Conforming Amendment.--Paragraph (6) of section 4972(c) is 
amended to read as follows:
            ``(6) Exceptions.--In determining the amount of 
        nondeductible contributions for any taxable year, there shall 
        not be taken into account so much of the contributions to one 
        or more defined contribution plans which are not deductible 
        when contributed solely because of section 404(a)(7) as does 
        not exceed the greater of--
                    ``(A) the amount of contributions not in excess of 
                6 percent of compensation (within the meaning of 
                section 404(a)) paid or accrued (during the taxable 
                year for which the contributions were made) to 
                beneficiaries under the plans, or
                    ``(B) the sum of--
                            ``(i) the amount of contributions described 
                        in section 401(m)(4)(A), plus
                            ``(ii) the amount of contributions 
                        described in section 402(g)(3)(A).
        For purposes of this paragraph, the deductible limits under 
        section 404(a)(7) shall first be applied to amounts contributed 
        to a defined benefit plan and then to amounts described in 
        subparagraph (B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 343. MISSING PARTICIPANTS.

    (a) In General.--Section 4050 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating 
subsection (c) as subsection (e) and by inserting after subsection (b) 
the following:
    ``(c) Multiemployer Plans.--The corporation shall prescribe rules 
similar to the rules in subsection (a) for multiemployer plans covered 
by this title that terminate under section 4041A.
    ``(d) Plans Not Otherwise Subject to Title.--
            ``(1) Transfer to corporation.--The plan administrator of a 
        plan described in paragraph (4) may elect to transfer a missing 
        participant's benefits to the corporation upon termination of 
        the plan.
            ``(2) Information to the corporation.--To the extent 
        provided in regulations, the plan administrator of a plan 
        described in paragraph (4) shall, upon termination of the plan, 
        provide the corporation information with respect to benefits of 
        a missing participant if the plan transfers such benefits--
                    ``(A) to the corporation, or
                    ``(B) to an entity other than the corporation or a 
                plan described in paragraph (4)(B)(ii).
            ``(3) Payment by the corporation.--If benefits of a missing 
        participant were transferred to the corporation under paragraph 
        (1), the corporation shall, upon location of the participant or 
        beneficiary, pay to the participant or beneficiary the amount 
        transferred (or the appropriate survivor benefit) either--
                    ``(A) in a single sum (plus interest), or
                    ``(B) in such other form as is specified in 
                regulations of the corporation.
            ``(4) Plans described.--A plan is described in this 
        paragraph if--
                    ``(A) the plan is a pension plan (within the 
                meaning of section 3(2))--
                            ``(i) to which the provisions of this 
                        section do not apply (without regard to this 
                        subsection), and
                            ``(ii) which is not a plan described in 
                        paragraphs (2) through (11) of section 4021(b), 
                        and
                    ``(B) at the time the assets are to be distributed 
                upon termination, the plan--
                            ``(i) has missing participants, and
                            ``(ii) has not provided for the transfer of 
                        assets to pay the benefits of all missing 
                        participants to another pension plan (within 
                        the meaning of section 3(2)).
            ``(5) Certain provisions not to apply.--Subsections (a)(1) 
        and (a)(3) shall not apply to a plan described in paragraph 
        (4).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after final regulations implementing subsections 
(c) and (d) of section 4050 of the Employee Retirement Income Security 
Act of 1974 (as added by subsection (a)), respectively, are prescribed.

SEC. 344. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) In General.--Section 105(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to read as 
follows:
    ``(a)(1) Except as provided in paragraph (2)--
            ``(A) The administrator of an individual account plan shall 
        furnish a pension benefit statement--
                    ``(i) to a plan participant at least once annually, 
                and
                    ``(ii) to a plan beneficiary upon written request.
            ``(B) The administrator of a defined benefit plan shall 
        furnish a pension benefit statement--
                    ``(i) at least once every 3 years to each 
                participant with a nonforfeitable accrued benefit who 
                is employed by the employer maintaining the plan at the 
                time the statement is furnished to participants, and
                    ``(ii) to a participant or beneficiary of the plan 
                upon written request.
    ``(2) Notwithstanding paragraph (1), the administrator of a plan to 
which more than 1 unaffiliated employer is required to contribute shall 
only be required to furnish a pension benefit statement under paragraph 
(1) upon the written request of a participant or beneficiary of the 
plan.
    ``(3) A pension benefit statement under paragraph (1)--
            ``(A) shall indicate, on the basis of the latest available 
        information--
                    ``(i) the total benefits accrued, and
                    ``(ii) the nonforfeitable pension benefits, if any, 
                which have accrued, or the earliest date on which 
                benefits will become nonforfeitable,
            ``(B) shall be communicated in a manner calculated to be 
        understood by the average plan participant, and
            ``(C) may be provided in written, electronic, telephonic, 
        or other appropriate form.
    ``(4) In the case of a defined benefit plan, the requirements of 
paragraph (1)(B)(i) shall be treated as met with respect to a 
participant if the administrator provides the participant at least once 
each year with notice of the availability of the pension benefit 
statement and the ways in which the participant may obtain such 
statement. Such notice shall be provided in written, electronic, 
telephonic, or other appropriate form, and may be included with other 
communications to the participant if done in a manner reasonably 
designed to attract the attention of the participant.''.
    (b) Conforming Amendments.--
            (1) Section 105 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1025) is amended by striking subsection 
        (d).
            (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
        amended to read as follows:
    ``(b) In no case shall a participant or beneficiary of a plan be 
entitled to more than one statement described in subsection (a)(1)(A) 
or (a)(1)(B)(ii), whichever is applicable, in any 12-month period.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 345. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RESPONSIBILITY.

    (a) Imposition and Amount of Penalty Made Discretionary.--Section 
502(l)(1) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1132(l)(1)) is amended--
            (1) by striking ``shall'' and inserting ``may'', and
            (2) by striking ``equal to'' and inserting ``not greater 
        than''.
    (b) Applicable Recovery Amount.--Section 502(l)(2) of such Act (29 
U.S.C. 1132(l)(2)) is amended to read as follows:
    ``(2) For purposes of paragraph (1), the term `applicable recovery 
amount' means any amount which is recovered from any fiduciary or other 
person (or from any other person on behalf of any such fiduciary or 
other person) with respect to a breach or violation described in 
paragraph (1) on or after the 30th day following receipt by such 
fiduciary or other person of written notice from the Secretary of the 
violation, whether paid voluntarily or by order of a court in a 
judicial proceeding instituted by the Secretary under subsection (a)(2) 
or (a)(5). The Secretary may, in the Secretary's sole discretion, 
extend the 30-day period described in the preceding sentence.''.
    (c) Other Rules.--Section 502(l) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(l)) is amended by adding at the 
end the following:
    ``(5) A person shall be jointly and severally liable for the 
penalty described in paragraph (1) to the same extent that such person 
is jointly and severally liable for the applicable recovery amount on 
which the penalty is based.
    ``(6) No penalty shall be assessed under this subsection unless the 
person against whom the penalty is assessed is given notice and 
opportunity for a hearing with respect to the violation and applicable 
recovery amount.''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to any breach of fiduciary responsibility or other 
        violation of part 4 of subtitle B of title I of the Employee 
        Retirement Income Security Act of 1974 occurring on or after 
        the date of enactment of this Act.
            (2) Transition rule.--In applying the amendment made by 
        subsection (b) (relating to applicable recovery amount), a 
        breach or other violation occurring before the date of 
        enactment of this Act which continues after the 180th day after 
        such date (and which may have been discontinued at any time 
        during its existence) shall be treated as having occurred after 
        such date of enactment.

SEC. 346. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

    (a) In General.--Subsection (c) of section 4972 (relating to 
nondeductible contributions) is amended by adding at the end the 
following new paragraph:
            ``(7) Defined benefit plan exception.--In determining the 
        amount of nondeductible contributions for any taxable year, an 
        employer may elect for such year not to take into account any 
        contributions to a defined benefit plan except to the extent 
        that such contributions exceed the full-funding limitation (as 
        defined in section 412(c)(7), determined without regard to 
        subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 347. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED BENEFIT 
              PLANS SIGNIFICANTLY REDUCING FUTURE BENEFIT ACCRUALS.

    (a) Amendment to 1986 Code.--Chapter 43 (relating to qualified 
pension, etc., plans) is amended by adding at the end the following new 
section:

``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT ACCRUALS TO 
              SATISFY NOTICE REQUIREMENTS.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of any applicable pension plan to meet the requirements of 
subsection (e) with respect to any applicable individual.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to any applicable 
        individual shall be $100 for each day in the noncompliance 
        period with respect to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period beginning on the date the failure first 
        occurs and ending on the date the failure is corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Overall limitation for unintentional failures.--In 
        the case of failures that are due to reasonable cause and not 
        to willful neglect, the tax imposed by subsection (a) for 
        failures during the taxable year of the employer (or, in the 
        case of a multiemployer plan, the taxable year of the trust 
        forming part of the plan) shall not exceed $500,000.  For 
purposes of the preceding sentence, all multiemployer plans of which 
the same trust forms a part shall be treated as one plan. For purposes 
of this paragraph, if not all persons who are treated as a single 
employer for purposes of this section have the same taxable year, the 
taxable years taken into account shall be determined under principles 
similar to the principles of section 1561.
            ``(2) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive relative to the failure involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Notice Requirements for Plans Significantly Reducing Benefit 
Accruals.--
            ``(1) In general.--If an applicable pension plan is amended 
        to provide for a significant reduction in the rate of future 
        benefit accrual, the plan administrator shall provide written 
        notice to each applicable individual (and to each employee 
        organization representing applicable individuals).
            ``(2) Notice.--The notice required by paragraph (1) shall 
        be written in a manner calculated to be understood by the 
        average plan participant and shall provide sufficient 
        information (as determined in accordance with regulations 
        prescribed by the Secretary) to allow applicable individuals to 
        understand the effect of the plan amendment.
            ``(3) Timing of notice.--Except as provided in regulations, 
        the notice required by paragraph (1) shall be provided within a 
        reasonable time before the effective date of the plan 
        amendment.
            ``(4) Designees.--Any notice under paragraph (1) may be 
        provided to a person designated, in writing, by the person to 
        which it would otherwise be provided.
            ``(5) Notice before adoption of amendment.--A plan shall 
        not be treated as failing to meet the requirements of paragraph 
        (1) merely because notice is provided before the adoption of 
        the plan amendment if no material modification of the amendment 
        occurs before the amendment is adopted.
    ``(f) Applicable Individual; Applicable Pension Plan.--For purposes 
of this section--
            ``(1) Applicable individual.--The term `applicable 
        individual' means, with respect to any plan amendment--
                    ``(A) any participant in the plan, and
                    ``(B) any beneficiary who is an alternate payee 
                (within the meaning of section 414(p)(8)) under an 
                applicable qualified domestic relations order (within 
                the meaning of section 414(p)(1)(A)),
        who may reasonably be expected to be affected by such plan 
        amendment.
            ``(2) Applicable pension plan.--The term `applicable 
        pension plan' means--
                    ``(A) any defined benefit plan, or
                    ``(B) an individual account plan which is subject 
                to the funding standards of section 412,
        which had 100 or more participants who had accrued a benefit, 
        or with respect to whom contributions were made, under the plan 
        (whether or not vested) as of the last day of the plan year 
        preceding the plan year in which the plan amendment becomes 
        effective. Such term shall not include a governmental plan 
        (within the meaning of section 414(d)) or a church plan (within 
        the meaning of section 414(e)) with respect to which the 
        election provided by section 410(d) has not been made.''.
    (b) Amendment to ERISA.--Section 204(h) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054(h)) is amended by adding at 
the end the following new paragraph:
    ``(3)(A) A plan to which paragraph (1) applies shall not be treated 
as meeting the requirements of such paragraph unless, in addition to 
any notice required to be provided to an individual or organization 
under such paragraph, the plan administrator provides the notice 
described in subparagraph (B).
    ``(B) The notice required by subparagraph (A) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall provide sufficient information (as determined in accordance with 
regulations prescribed by the Secretary of the Treasury) to allow 
individuals to understand the effect of the plan amendment.
    ``(C) Except as provided in regulations prescribed by the Secretary 
of the Treasury, the notice required by subparagraph (A) shall be 
provided within a reasonable time before the effective date of the plan 
amendment.
    ``(D) A plan shall not be treated as failing to meet the 
requirements of subparagraph (A) merely because  notice is provided 
before the adoption of the plan amendment if no material modification 
of the amendment occurs before the amendment is adopted.''.
    (c) Clerical Amendment.--The table of sections for chapter 43 is 
amended by adding at the end the following new item:

                               ``Sec. 4980F. Failure of applicable 
                                        plans reducing benefit accruals 
                                        to satisfy notice 
                                        requirements.''.

    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan amendments taking effect on or after the date of 
        the enactment of this Act.
            (2) Transition.--Until such time as the Secretary of the 
        Treasury issues regulations under sections 4980F(e)(2) and (3) 
        of the Internal Revenue Code of 1986 and section 204(h)(3) of 
        the Employee Retirement Income Security Act of 1974 (as added 
        by the amendments made by this section), a plan shall be 
        treated as meeting the requirements of such sections if it 
        makes a good faith effort to comply with such requirements.
            (3) Special rule.--The period for providing any notice 
        required by the amendments made by this section shall not end 
        before the date which is 3 months after the date of the 
        enactment of this Act.

SEC. 348. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS TO 401(K) 
              PLANS.

    (a) In General.--Section 1524(b) of the Taxpayer Relief Act of 1997 
is amended to read as follows:
    ``(b) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to elective 
        deferrals for plan years beginning after December 31, 1998.
            ``(2) Nonapplication to previously acquired property.--The 
        amendments made by this section shall not apply to any elective 
        deferral which is invested in assets consisting of qualifying 
        employer securities, qualifying employer real property, or 
        both, if such assets were acquired before January 1, 1999.''.
    (b) Effective Date.--The amendment made by this section shall apply 
as if included in the provision of the Taxpayer Relief Act of 1997 to 
which it relates.

SEC. 349. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--Paragraph (11) of section 415(b) (relating 
to limitation for defined benefit plans) is amended to read as follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 350. TECHNICAL CORRECTIONS TO SAVER ACT.

    Section 517 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1147) is amended--
            (1) in subsection (a), by striking ``2001 and 2005 on or 
        after September 1 of each year involved'' and inserting ``2001, 
        2005, and 2009 in the month of September of each year 
        involved'';
            (2) in subsection (b), by adding at the end the following 
        new sentence: ``To effectuate the purposes of this paragraph, 
        the Secretary may enter into a cooperative agreement, pursuant 
        to the Federal Grant and Cooperative Agreement Act of 1977 (31 
        U.S.C. 6301 et seq.), with the American Savings Education 
        Council.'';
            (3) in subsection (e)(2)--
                    (A) by striking subparagraph (D) and inserting the 
                following:
                    ``(D) the Chairman and Ranking Member of the 
                Subcommittee on Labor, Health and Human Services, and 
                Education of the Committee on Appropriations of the 
                House of Representatives and the Chairman and Ranking 
                Member of the Subcommittee on Labor, Health and Human 
                Services, and Education of the Committee on 
                Appropriations of the Senate;'';
                    (B) by redesignating subparagraph (G) as 
                subparagraph (J); and
                    (C) by inserting after subparagraph (F) the 
                following new subparagraphs:
                    ``(G) the Chairman and Ranking Member of the 
                Committee on Finance of the Senate;
                    ``(H) the Chairman and Ranking Member of the 
                Committee on Ways and Means of the House of 
                Representatives;
                    ``(I) the Chairman and Ranking Member of the 
                Subcommittee on Employer-Employee Relations of the 
                Committee on Education and the Workforce of the House 
                of Representatives; and'';
            (4) in subsection (e)(3)(A)--
                    (A) by striking ``There shall be no more than 200 
                additional participants.'' and inserting ``The 
participants in the National Summit shall also include additional 
participants appointed under this subparagraph.'';
                    (B) by striking ``one-half shall be appointed by 
                the President,'' in clause (i) and inserting ``not more 
                than 100 participants shall be appointed under this 
                clause by the President,'', and by striking ``and'' at 
                the end of clause (i);
                    (C) by striking ``one-half shall be appointed by 
                the elected leaders of Congress'' in clause (ii) and 
                inserting ``not more than 100 participants shall be 
                appointed under this clause by the elected leaders of 
                Congress'', and by striking the period at the end of 
                clause (ii) and inserting ``; and''; and
                    (D) by adding at the end the following new clause:
                            ``(iii) The President, in consultation with 
                        the elected leaders of Congress referred to in 
                        subsection (a), may appoint under this clause 
                        additional participants to the National Summit. 
                        The number of such additional participants 
                        appointed under this clause may not exceed the 
                        lesser of 3 percent of the total number of all 
                        additional participants appointed under this 
                        paragraph, or 10. Such additional participants 
                        shall be appointed from persons nominated by 
                        the organization referred to in subsection 
                        (b)(2) which is made up of private sector 
                        businesses and associations partnered with 
                        Government entities to promote long term 
                        financial security in retirement through 
                        savings and with which the Secretary is 
                        required thereunder to consult and cooperate 
                        and shall not be Federal, State, or local 
                        government employees.'';
            (5) in subsection (e)(3)(B), by striking ``January 31, 
        1998'' in subparagraph (B) and inserting ``May 1, 2001, May 1, 
        2005, and May 1, 2009, for each of the subsequent summits, 
        respectively'';
            (6) in subsection (f)(1)(C), by inserting ``, no later than 
        90 days prior to the date of the commencement of the National 
        Summit,'' after ``comment'' in paragraph (1)(C);
            (7) in subsection (g), by inserting ``, in consultation 
        with the congressional leaders specified in subsection 
        (e)(2),'' after ``report'';
            (8) in subsection (i)--
                    (A) by striking ``beginning on or after October 1, 
                1997'' in paragraph (1) and inserting ``2001, 2005, and 
                2009''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) Reception and representation authority.--The 
        Secretary is hereby granted reception and representation 
        authority limited specifically to the events at the National 
        Summit. The Secretary shall use any private contributions 
        received in connection with the National Summit prior to using 
        funds appropriated for purposes of the National Summit pursuant 
        to this paragraph.''; and
            (9) in subsection (k)--
                    (A) by striking ``shall enter into a contract on a 
                sole-source basis'' and inserting ``may enter into a 
                contract on a sole-source basis''; and
                    (B) by striking ``fiscal year 1998'' and inserting 
                ``fiscal years 2001, 2005, and 2009''.

SEC. 351. MODEL SPOUSAL CONSENT LANGUAGE AND QUALIFIED DOMESTIC 
              RELATIONS ORDER.

    (a) Model Spousal Consent Language.--Section 205(c) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)) is amended 
by adding at the end the following new paragraph:
    ``(9) Not later than January 1, 2001, the Secretary of Labor shall 
develop model language for the spousal consent required under paragraph 
(2) which--
            ``(A) is written in a manner calculated to be understood by 
        the average person, and
            ``(B) discloses in plain terms whether--
                    ``(i) the waiver is irrevocable, and
                    ``(ii) the waiver may be revoked by a qualified 
                domestic relations order.''.
    (b) Model Qualified Domestic Relations Order.--Section 206(d)(3) of 
such Act (29 U.S.C. 1056(d)(3)) is amended by adding at the end the 
following new subparagraph:
    ``(O) Not later than January 1, 2001, the Secretary shall develop 
language for a qualified domestic relations order which meets--
            ``(i) the requirements of subparagraph (B)(i), and
            ``(ii) the requirements of this Act related to the need to 
        consider the treatment of any lump sum payment, qualified joint 
        and survivor annuity, or qualified preretirement survivor 
        annuity.''.
    (c) Publicity.--The Secretary of Labor shall include publicity for 
the model language required by the amendments made by this section in 
the pension outreach efforts undertaken by each Secretary.

SEC. 352. ELIMINATION OF ERISA DOUBLE JEOPARDY.

    (a) Elimination of Second Lawsuits by the Secretary.--Section 
502(h) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1132(h)) is amended--
            (1) by inserting ``(1)'' after ``(h)'', and
            (2) by adding at the end the following:
    ``(2) In any case in which--
            ``(A) a complaint in an action brought against a person 
        under subsection (a)(2) is served in accordance with paragraph 
        (1), and
            ``(B) the action is maintained as a class action or 
        derivative action under the Federal Rules of Civil Procedure,
            ``(C) the action is resolved by a court-approved settlement 
        agreement,
            ``(D) the complaint is served upon the Secretary at least 
        90 days prior to final court approval of the settlement 
        agreement, and
            ``(E) the Secretary receives a fully executed copy of the 
        settlement agreement within the time established by the court 
        for notifying the plan's participants of the proposed 
        compromise pursuant to Rule 23 or 23.1 of the Federal Rules of 
        Civil Procedure,
the Secretary shall be barred from litigating any claim against such 
person under subsection (a)(2) that was, or could have been, brought in 
that action with respect to the same plan. Notwithstanding this 
paragraph, the Secretary shall not be barred from litigating any claim 
against such person under subsection (a)(2) if the Secretary filed a 
complaint under subsection (a)(2) prior to the final court approval of 
the settlement agreement.''.
    (b) Effective Date.--The amendments made by this section are 
effective with respect to all actions or claims commenced by the 
Secretary that are pending on or after the date of the enactment of 
this Act.

                Subtitle E--Reducing Regulatory Burdens

SEC. 361. MODIFICATION OF TIMING OF PLAN VALUATIONS.

    (a) In General.--Section 412(c)(9) (relating to annual valuation) 
is amended--
            (1) by striking ``For purposes'' and inserting the 
        following:
                    ``(A) In general.--For purposes'', and
            (2) by adding at the end the following:
                    ``(B) Election to use prior year valuation.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), if, for any plan year--
                                    ``(I) an election is in effect 
                                under this subparagraph with respect to 
                                a plan, and
                                    ``(II) the assets of the plan are 
                                not less than 125 percent of the plan's 
                                current liability (as defined in 
                                paragraph (7)(B)), determined as of the 
                                valuation date for the preceding plan 
                                year,
                        then this section shall be applied using the 
                        information available as of such valuation 
                        date.
                            ``(ii) Exceptions.--
                                    ``(I) Actual valuation every 3 
                                years.--Clause (i) shall not apply for 
                                more than 2 consecutive plan years and 
                                valuation shall be under subparagraph 
                                (A) with respect to any plan year to 
                                which clause (i) does not apply by 
                                reason of this subclause.
                                    ``(II) Regulations.--Clause (i) 
                                shall not apply to the extent that more 
                                frequent valuations are required under 
                                the regulations under subparagraph (A).
                            ``(iii) Adjustments.--Information under 
                        clause (i) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Election.--An election under this 
                        subparagraph, once made, shall be irrevocable 
                        without the consent of the Secretary.''.
    (b) Amendments to ERISA.--Paragraph (9) of section 302(c) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
amended--
            (1) by inserting ``(A)'' after ``(9)'', and
            (2) by adding at the end the following:
    ``(B)(i) Except as provided in clause (ii), if, for any plan year--
            ``(I) an election is in effect under this subparagraph with 
        respect to a plan, and
            ``(II) the assets of the plan are not less than 125 percent 
        of the plan's current liability (as defined  in paragraph 
(7)(B)), determined as of the valuation date for the preceding plan 
year,
then this section shall be applied using the information available as 
of such valuation date.
    ``(ii)(I) Clause (i) shall not apply for more than 2 consecutive 
plan years and valuation shall be under subparagraph (A) with respect 
to any plan year to which clause (i) does not apply by reason of this 
subclause.
    ``(II) Clause (i) shall not apply to the extent that more frequent 
valuations are required under the regulations under subparagraph (A).
    ``(iii) Information under clause (i) shall, in accordance with 
regulations, be actuarially adjusted to reflect significant differences 
in participants.
    ``(iv) An election under this subparagraph, once made, shall be 
irrevocable without the consent of the Secretary of the Treasury.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 362. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND 
              DEDUCTION.

    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:
                            ``(iii) is, at the election of such 
                        participants or their beneficiaries--
                                    ``(I) payable as provided in clause 
                                (i) or (ii), or
                                    ``(II) paid to the plan and 
                                reinvested in qualifying employer 
                                securities, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 363. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.

    (a) In General.--Paragraph (4) of section 1114(c) of the Tax Reform 
Act of 1986 is hereby repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to plan years beginning after December 31, 1999.

SEC. 364. EMPLOYEES OF TAX-EXEMPT ENTITIES.

    (a) In General.--The Secretary of the Treasury shall modify 
Treasury Regulations section 1.410(b)-6(g) to provide that employees of 
an organization described in section 403(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 who are eligible to make contributions under 
section 403(b) of such Code pursuant to a salary reduction agreement 
may be treated as excludable with respect to a plan under section 401 
(k) or (m) of such Code that is provided under the same general 
arrangement as a plan under such section 401(k), if--
            (1) no employee of an organization described in section 
        403(b)(1)(A)(i) of such Code is eligible to participate in such 
        section 401(k) plan or section 401(m) plan, and
            (2) 95 percent of the employees who are not employees of an 
        organization described in section 403(b)(1)(A)(i) of such Code 
        are eligible to participate in such plan under such section 401 
        (k) or (m).
    (b) Effective Date.--The modification required by subsection (a) 
shall apply as of the same date set forth in section 1426(b) of the 
Small Business Job Protection Act of 1996.

SEC. 365. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED RETIREMENT 
              ADVICE.

    (a) In General.--Subsection (a) of section 132 (relating to 
exclusion from gross income) is amended by striking ``or'' at the end 
of paragraph (5), by striking the period at the end of paragraph (6) 
and inserting ``, or'', and by adding at the end the following new 
paragraph:
            ``(7) qualified retirement planning services.''.
    (b) Qualified Retirement Planning Services Defined.--Section 132 is 
amended by redesignating subsection (m) as subsection (n) and by 
inserting after subsection (l) the following:
    ``(m) Qualified Retirement Planning Services.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified retirement planning services' means any retirement 
        planning service provided to an employee and his spouse by an 
        employer maintaining a qualified employer plan.
            ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
        apply in the case of highly compensated employees only if such 
        services are available on substantially the same terms to each 
        member of the group of employees normally provided education 
        and information regarding the employer's qualified employer 
        plan.
            ``(3) Qualified employer plan.--For purposes of this 
        subsection, the term `qualified employer plan' means a plan, 
        contract, pension, or account described in section 
        219(g)(5).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 366. REPORTING SIMPLIFICATION.

    (a) Simplified Annual Filing Requirement for Owners and Their 
Spouses.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the requirements for filing annual returns with respect to one-
        participant retirement plans to ensure that such plans with 
        assets of $250,000 or less as of the close of the plan year 
        need not file a return for that year.
            (2) One-participant retirement plan defined.--For purposes 
        of this subsection, the term ``one-participant retirement 
        plan'' means a retirement plan that--
                    (A) on the first day of the plan year--
                            (i) covered only the employer (and the 
                        employer's spouse) and the employer owned the 
                        entire business (whether or not incorporated), 
                        or
                            (ii) covered only one or more partners (and 
                        their spouses) in a business partnership 
                        (including partners in an S or C corporation),
                    (B) meets the minimum coverage requirements of 
                section 410(b) of the Internal Revenue Code of 1986 
                without being combined with any other plan of the 
                business that covers the employees of the business,
                    (C) does not provide benefits to anyone except the 
                employer (and the employer's spouse) or the partners 
                (and their spouses),
                    (D) does not cover a business that is a member of 
                an affiliated service group, a controlled group of 
                corporations, or a group of businesses under common 
                control, and
                    (E) does not cover a business that leases 
                employees.
            (3) Other definitions.--Terms used in paragraph (2) which 
        are also used in section 414 of the Internal Revenue Code of 
        1986 shall have the respective meanings given such terms by 
        such section.
    (b) Simplified Annual Filing Requirement for Plans With Fewer Than 
25 Employees.--In the case of a retirement plan which covers less than 
25 employees on the first day of the plan year and meets the 
requirements described in subparagraphs (B), (D), and (E) of subsection 
(a)(2), the Secretary of the Treasury shall provide for the filing of a 
simplified annual return that is substantially similar to the annual 
return required to be filed by a one-participant retirement plan.
    (c) Effective Date.--The provisions of this section shall take 
effect on January 1, 2001.

SEC. 367. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

    The Secretary of the Treasury shall continue to update and improve 
the Employee Plans Compliance Resolution System (or any successor 
program) giving special attention to--
            (1) increasing the awareness and knowledge of small 
        employers concerning the availability and use of the program,
            (2) taking into account special concerns and circumstances 
        that small employers face with respect to compliance and 
        correction of compliance failures,
            (3) extending the duration of the self-correction period 
        under the Administrative Policy Regarding Self-Correction for 
        significant compliance failures,
            (4) expanding the availability to correct insignificant 
        compliance failures under the Administrative Policy Regarding 
        Self-Correction during audit, and
            (5) assuring that any tax, penalty, or sanction that is 
        imposed by reason of a compliance failure is not excessive and 
        bears a reasonable relationship to the nature, extent, and 
        severity of the failure.

SEC. 368. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

    (a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)(5)) is amended to read as follows:
    ``(5)(A) For purposes of this paragraph, the term `majority owner' 
means an individual who, at any time during the 60-month period ending 
on the date the determination is being made--
            ``(i) owns the entire interest in an unincorporated trade 
        or business,
            ``(ii) in the case of a partnership, is a partner who owns, 
        directly or indirectly, 50 percent or more of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(iii) in the case of a corporation, owns, directly or 
        indirectly, 50 percent or more in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).
    ``(B) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall equal the 
product of--
            ``(i) a fraction (not to exceed 1) the numerator of which 
        is the number of years from the later of the effective date or 
        the adoption date of the plan to the termination date, and the 
        denominator of which is 10, and
            ``(ii) the amount of benefits that would be guaranteed 
        under this section if the participant were not a majority 
        owner.''.
    (b) Modification of Allocation of Assets.--
            (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
        striking ``section 4022(b)(5)'' and inserting ``section 
        4022(b)(5)(B)''.
            (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
        amended--
                    (A) by striking ``(5)'' in paragraph (2) and 
                inserting ``(4), (5),'', and
                    (B) by redesignating paragraphs (3) through (6) as 
                paragraphs (4) through (7), respectively, and by 
                inserting after paragraph (2) the following:
            ``(3) If assets available for allocation under paragraph 
        (4) of subsection (a) are insufficient to satisfy in full the 
        benefits of all individuals who are described in that 
        paragraph, the assets shall be allocated first to benefits 
        described in subparagraph (A) of that paragraph. Any remaining 
        assets shall then be allocated to benefits described in 
        subparagraph (B) of that paragraph. If assets allocated to such 
        subparagraph (B) are insufficient to satisfy in full the 
        benefits described in that subparagraph, the assets shall be 
        allocated pro rata among individuals on the basis of the 
        present value (as of the termination date) of their respective 
        benefits described in that subparagraph.''.
    (c) Conforming Amendments.--
            (1) Section 4021 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1321) is amended--
                    (A) in subsection (b)(9), by striking ``as defined 
                in section 4022(b)(6)'', and
                    (B) by adding at the end the following:
    ``(d) For purposes of subsection (b)(9), the term `substantial 
owner' means an individual who, at any time during the 60-month period 
ending on the date the determination is being made--
            ``(1) owns the entire interest in an unincorporated trade 
        or business,
            ``(2) in the case of a partnership, is a partner who owns, 
        directly or indirectly, more than 10 percent of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(3) in the case of a corporation, owns, directly or 
        indirectly, more than 10 percent in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).''.
    (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is 
amended by striking ``section 4022(b)(6)'' and inserting ``section 
4021(d)''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan 
        terminations--
                    (A) under section 4041(c) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1341(c)) with respect to which notices of intent to 
                terminate are provided under section 4041(a)(2) of such 
                Act (29 U.S.C. 1341(a)(2)) after December 31, 2000, and
                    (B) under section 4042 of such Act (29 U.S.C. 1342) 
                with respect to which proceedings are instituted by the 
                corporation after such date.
            (2) Conforming amendments.--The amendments made by 
        subsection (c) shall take effect on the date of the enactment 
        of this Act.

SEC. 369. MODIFICATION OF EXCLUSION FOR EMPLOYER PROVIDED TRANSIT 
              PASSES.

    (a) In General.--Section 132(f)(3) (relating to cash 
reimbursements) is amended by striking the last sentence.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

SEC. 370. REPEAL OF THE MULTIPLE USE TEST.

    (a) In General.--Paragraph (9) of section 401(m) is amended to read 
as follows:
            ``(9) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 371. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE OF 
              BUSINESS RULES.

    (a) Nondiscrimination.--
            (1) In general.--The Secretary of the Treasury shall, by 
        regulation, provide that a plan shall be deemed to satisfy the 
        requirements of section 401(a)(4) of the Internal Revenue Code 
        of 1986 if such plan satisfies the facts and circumstances test 
        under section 401(a)(4) of such Code, as in effect before 
        January 1, 1994, but only if--
                    (A) the plan satisfies conditions prescribed by the 
                Secretary to appropriately limit the availability of 
                such test, and
                    (B) the plan is submitted to the Secretary for a 
                determination of whether it satisfies such test.
        Subparagraph (B) shall only apply to the extent provided by the 
        Secretary.
            (2) Effective dates.--
                    (A) Regulations.--The regulation required by 
                paragraph (1) shall apply to years beginning after 
                December 31, 2000.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                paragraph (1)(A) shall not apply before the first year 
                beginning not less than 120 days after the date on 
                which such condition is prescribed.
    (b) Coverage Test.--
            (1) In general.--Section 410(b)(1) (relating to minimum 
        coverage requirements) is amended by adding at the end the 
        following:
                    ``(D) In the case that the plan fails to meet the 
                requirements of subparagraphs (A), (B) and (C), the 
                plan--
                            ``(i) satisfies subparagraph (B), as in 
                        effect immediately before the enactment of the 
                        Tax Reform Act of 1986,
                            ``(ii) is submitted to the Secretary for a 
                        determination of whether it satisfies the 
                        requirement described in clause (i), and
                            ``(iii) satisfies conditions prescribed by 
                        the Secretary by regulation that appropriately 
                        limit the availability of this subparagraph.
                Clause (ii) shall apply only to the extent provided by 
                the Secretary.''.
            (2) Effective dates.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to years beginning after December 31, 
                2000.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                regulations prescribed by the Secretary under section 
                410(b)(1)(D) of the Internal Revenue Code of 1986 shall 
                not apply before the first year beginning not less than 
                120 days after the date on which such condition is 
                prescribed.
    (c) Line of Business Rules.--The Secretary of the Treasury shall, 
on or before December 31, 2000, modify the existing regulations issued 
under section 414(r) of the Internal Revenue Code of 1986 in order to 
expand (to the extent that the Secretary determines appropriate) the 
ability of a pension plan to demonstrate compliance with the line of 
business requirements based upon the facts and circumstances 
surrounding the design and operation of the plan, even though the plan 
is unable to satisfy the mechanical tests currently used to determine 
compliance.

SEC. 372. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

    (a) In General.--Subparagraph (G) of section 401(a)(5), 
subparagraph (H) of section 401(a)(26), subparagraph (G) of section 
401(k)(3), and paragraph (2) of section 1505(d) of the Taxpayer Relief 
Act of 1997 are each amended by inserting ``or by an international 
organization which is described in section 414(d)'' after ``or 
instrumentality thereof)''.
    (b) Conforming Amendments.--
            (1) The headings for subparagraph (G) of section 401(a)(5) 
        and subparagraph (H) of section 401(a)(26) are each amended by 
        inserting ``and international organization'' after 
        ``governmental''.
            (2) Subparagraph (G) of section 401(k)(3) is amended by 
        inserting ``State and local governmental and international 
        organization plans.--'' after ``(G)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 373. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) In general.--Subparagraph (A) of section 205(c)(7) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1055) is amended by striking ``90-day'' and inserting ``180-
        day''.
            (2) Modification of regulations.--The Secretary of the 
        Treasury shall modify the regulations of such Secretary under 
        part 2 of subtitle B of title I of the Employee Retirement 
        Income Security Act of 1974 to the extent that they relate to 
        sections 203(e) and 205 of such Act to substitute ``180 days'' 
        for ``90 days'' each place it appears.
            (3) Effective date.--The amendments made by paragraph (1) 
        and the modifications required by paragraph (2) shall apply to 
        years beginning after December 31, 2000.
    (b) Consent Regulation Inapplicable to Certain Distributions.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 205 of the Employee Retirement 
        Income Security Act of 1974 to provide that the description of 
        a participant's right, if any, to defer receipt of a 
        distribution shall also describe the consequences of failing to 
        defer such receipt.
            (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        2000.

SEC. 374. ANNUAL REPORT DISSEMINATION.

    (a) In General.--Section 104(b)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is amended by 
striking ``shall furnish'' and inserting ``shall make available for 
examination (and, upon request, shall furnish)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to reports for years beginning after December 31, 1998.

SEC. 375. EXCESS BENEFIT PLANS.

    (a) In General.--Section 3(36) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(36)) is amended to read as 
follows:
    ``(36) The term `excess benefit plan' means a plan, without regard 
to whether such plan is funded, maintained by an employer solely for 
the purpose of providing benefits to employees in excess of any 
limitation imposed by section 401(a)(17) or 415 of the Internal Revenue 
Code of 1986 or any other limitation on contributions or benefits in 
such Code on plans to which any of such sections apply. To the extent 
that a separable part of a plan (as determined by the Secretary of 
Labor) maintained by an employer is maintained for such purpose, that 
part shall be treated as a separate plan which is an excess benefit 
plan.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1999.

SEC. 376. BENEFIT SUSPENSION NOTICE.

    (a) Modification of Regulation.--The Secretary of Labor shall 
modify the regulation under section 203(a)(3)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to 
provide that, except in the case of employment, subsequent to the 
commencement of payment of benefits, with a former employer, the 
notification required by such regulation--
            (1) may be included in the summary plan description for the 
        plan furnished in accordance with section 104(b) of such Act 
        (29 U.S.C. 1024(b)), rather than in a separate notice, and
            (2) need not include a copy of the relevant plan 
        provisions.
    (c) Effective Date.--The modification made under this section shall 
apply to plan years beginning after December 31, 1999.

SEC. 377. CLARIFICATION OF CHURCH WELFARE PLAN STATUS UNDER STATE 
              INSURANCE LAW.

    For purposes of determining the status under State insurance law of 
a church plan (as defined in section 414(e) of the Internal Revenue 
Code and section 3(33) of the Employee Retirement Income Security Act 
that is a welfare plan (as defined in section 3(1)), such church plan 
(and any trust under such plan) shall be deemed a single-employer plan 
that--
            (1) reimburses costs from general church assets;
            (2) purchases insurance coverage with general church 
        assets; or
            (3) both.
For purposes of this paragraph, the term ``reimbursing costs from 
general church assets'' means engaging in a practice that does not have 
the effect of transferring or spreading risk. The scope of this 
paragraph is limited to determining the status of a church welfare plan 
under State insurance law, and does not otherwise recharacterized the 
status, or modify or affect the rights, of any plan participant, 
including those who make plan contributions.

                      Subtitle F--Plan Amendments

SEC. 381. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment--
            (1) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A), and
            (2) such plan shall not fail to meet the requirements of 
        section 411(d)(6) of the Internal Revenue Code of 1986 by 
        reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this title, 
                or pursuant to any regulation issued under this title, 
                and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2003.
        In the case of a government plan (as defined in section 414(d) 
        of the Internal Revenue Code of 1986), this paragraph shall be 
        applied by substituting ``2005'' for ``2003''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect, and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

  TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK 
                                 CREDIT

SEC. 401. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK CREDIT.

    (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f) (relating 
to termination) are each amended by striking ``June 30, 1999'' and 
inserting ``December 31, 2001''.
    (b) Clarification of First Year of Employment.--Paragraph (2) of 
section 51(i) is amended by striking ``during which he was not a member 
of a targeted group''.
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after June 30, 
1999.

                       TITLE V--ESTATE TAX RELIEF

          Subtitle A--Reductions of Estate and Gift Tax Rates

SEC. 501. REDUCTIONS OF ESTATE AND GIFT TAX RATES.

    (a) Maximum Rate of Tax Reduced to 50 Percent.--
            (1) In general.--The table contained in section 2001(c)(1) 
        is amended by striking the two highest brackets and inserting 
        the following:

    ``Over $2,500,000..............
                                        $1,025,800, plus 50% of the 
                                                excess over 
                                                $2,500,000.''.

            (2) Phase-in of reduced rate.--Subsection (c) of section 
        2001 is amended by adding at the end the following new 
        paragraph:
            ``(3) Phase-in of reduced rate.--In the case of decedents 
        dying, and gifts made, during 2001, the last item in the table 
        contained in paragraph (1) shall be applied by substituting 
        `53%' for `50%'.''.
    (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) of 
section 2001 is amended by striking paragraph (2) and redesignating 
paragraph (3), as added by subsection (a), as paragraph (2).
    (c) Additional Reductions of Rates of Tax.--Subsection (c) of 
section 2001, as so amended, is amended by adding at the end the 
following new paragraph:
            ``(3) Phasedown of tax.--In the case of estates of 
        decedents dying, and gifts made, during any calendar year after 
        2002--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the tentative tax under this 
                subsection shall be determined by using a table 
                prescribed by the Secretary (in lieu of using the table 
                contained in paragraph (1)) which is the same as such 
                table; except that--
                            ``(i) each of the rates of tax shall be 
                        reduced by the number of percentage points 
                        determined under subparagraph (B), and
                            ``(ii) the amounts setting forth the tax 
                        shall be adjusted to the extent necessary to 
                        reflect the adjustments under clause (i).
                    ``(B) Percentage points of reduction.--

                  
                                                        The number of  
                ``For calendar year:
                                                  percentage points is:
                    2003...................................        1.0 
                    2004 and thereafter....................        2.0.

                    ``(C) Coordination with credit for state death 
                taxes.--Rules similar to the rules of subparagraph (A) 
                shall apply to the table contained in section 2011(b) 
                except that the Secretary shall prescribe percentage 
                point reductions which maintain the proportionate 
                relationship (as in effect before any reduction under 
                this paragraph) between the credit under section 2011 
                and the tax rates under subsection (c).''.
    (d) Effective Dates.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to estates of decedents 
        dying, and gifts made, after December 31, 2000.
            (2) Subsection (c).--The amendment made by subsection (c) 
        shall apply to estates of decedents dying, and gifts made, 
        after December 31, 2002.

   Subtitle B--Unified Credit Replaced With Unified Exemption Amount

SEC. 511. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH 
              UNIFIED EXEMPTION AMOUNT.

    (a) In General.--
            (1) Estate tax.--Part IV of subchapter A of chapter 11 is 
        amended by inserting after section 2051 the following new 
        section:

``SEC. 2052. EXEMPTION.

    ``(a) In general.--For purposes of the tax imposed by section 2001, 
the value of the taxable estate shall be determined by deducting from 
the value of the gross estate an amount equal to the excess (if any) 
of--
            ``(1) the exemption amount for the calendar year in which 
        the decedent died, over
            ``(2) the sum of--
                    ``(A) the aggregate amount allowed as an exemption 
                under section 2521 with respect to gifts made by the 
                decedent after December 31, 2000, and
                    ``(B) the aggregate amount of gifts made by the 
                decedent for which credit was allowed by section 2505 
                (as in effect on the day before the date of the 
                enactment of the Wage and Employment Growth Act of 
                1999).
Gifts which are includible in the gross estate of the decedent shall 
not be taken into account in determining the amounts under paragraph 
(2).
    ``(b) Exemption Amount.--For purposes of subsection (a), the term 
`exemption amount' means the amount determined in accordance with the 
following table:

``In the case of
                                                          The exemption
  calendar year:
                                                             amount is:
        2001.........................................         $675,000 
        2002 and 2003................................         $700,000 
        2004.........................................         $850,000 
        2005.........................................         $950,000 
        2006 or thereafter...........................    $1,000,000.''.

            (2) Gift tax.--Subchapter C of chapter 12 (relating to 
        deductions) is amended by inserting before section 2522 the 
        following new section:

``SEC. 2521. EXEMPTION.

    ``In computing taxable gifts for any calendar year, there shall be 
allowed as a deduction in the case of a citizen or resident of the 
United States an amount equal to the excess of--
            ``(1) the exemption amount determined under section 2052 
        for such calendar year, over
            ``(2) the sum of--
                    ``(A) the aggregate amount allowed as an exemption 
                under this section for all preceding calendar years 
                after 2000, and
                    ``(B) the aggregate amount of gifts for which 
                credit was allowed by section 2505 (as in effect on the 
                day before the date of the enactment of the Wage and 
                Employment Growth Act of 1999).''.
    (b) Repeal of Unified Credits.--
            (1) Section 2010 (relating to unified credit against estate 
        tax) is hereby repealed.
            (2) Section 2505 (relating to unified credit against gift 
        tax) is hereby repealed.
    (c) Conforming Amendments.--
            (1) Subparagraph (B) of section 2001(b)(1) is amended by 
        inserting before the comma ``reduced by the amount described in 
        section 2052(a)(2)(B)''.
            (2)(A) Subsection (b) of section 2011 is amended--
                    (i) by striking ``adjusted'' in the table, and
                    (ii) by striking the last sentence.
            (B) Subsection (f) of section 2011 is amended by striking 
        ``, reduced by the amount of the unified credit provided by 
        section 2010''.
            (3) Subsection (a) of section 2012 is amended by striking 
        ``and the unified credit provided by section 2010''.
            (4)(A) Subsection (b) of section 2013 is amended by 
        inserting before the period at the end of the first sentence 
        ``and increased by the exemption allowed under section 2052 or 
        2106(a)(4) (or the corresponding provisions of prior law) in 
        determining the taxable estate of the transferor for purposes 
        of the estate tax''.
            (B) Subparagraph (A) of section 2013(c)(1) is amended by 
        striking ``2010,''.
            (5) Paragraph (2) of section 2014(b) is amended by striking 
        ``2010,''.
            (6) Clause (ii) of section 2056A(b)(12)(C) is amended to 
        read as follows:
                            ``(ii) to treat any reduction in the tax 
                        imposed by paragraph (1)(A) by reason of the 
                        credit allowable under section 2010 (as in 
                        effect on the day before the date of the 
                        enactment of the Wage and Employment Growth Act 
                        of 1999) or the exemption allowable under 
                        section 2052 with respect to the decedent as a 
                        credit under section 2505 (as so in effect) or 
                        exemption under section 2521 (as the case may 
                        be) allowable to such surviving spouse for 
                        purposes of determining the amount of the 
                        exemption allowable under section 2521 with 
                        respect to taxable gifts made by the surviving 
                        spouse during the year in which the spouse 
                        becomes a citizen or any subsequent year,''.
            (7) Paragraph (3) of section 2057(a) is amended to read as 
        follows:
            ``(3) Coordination with exemption amount.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if this section applies to an estate, 
                the exemption amount under section 2052 shall be 
                $625,000.
                    ``(B) Increase in exemption amount if deduction is 
                less than $675,000.--If the deduction allowed by this 
                section is less than $675,000, the amount of the 
                exemption amount under section 2052 shall be increased 
                (but not above the amount which would apply to the 
                estate without regard to this section) by the excess of 
                $675,000 over the amount of the deduction allowed.''.
            (8)(A) Subparagraph (B) of section 2101(b)(1) is amended by 
        inserting before the comma ``reduced by the aggregate amount of 
        gifts for which credit was allowed by section 2505 (as in 
        effect on the day before the date of the enactment of the Wage 
        and Employment Growth Act of 1999)''
            (B) Subsection (b) of section 2101 is amended by striking 
        the last sentence.
            (9) Section 2102 is amended by striking subsection (c).
            (10) Subsection (a) of section 2106 is amended by adding at 
        the end the following new paragraph:
            ``(4) Exemption.--
                    ``(A) In general.--An exemption of $60,000.
                    ``(B) Residents of possessions of the united 
                states.--In the case of a decedent who is considered to 
                be a nonresident not a citizen of the United States 
                under section 2209, the exemption under this paragraph 
                shall be the greater of--
                            ``(i) $60,000, or
                            ``(ii) that proportion of $175,000 which 
                        the value of that part of the decedent's gross 
                        estate which at the time of his death is 
                        situated in the United States bears to the 
                        value of his entire gross estate wherever 
                        situated.
                    ``(C) Special rules.--
                            ``(i) Coordination with treaties.--To the 
                        extent required under any treaty obligation of 
                        the United States, the exemption allowed under 
                        this paragraph shall be equal to the amount 
                        which bears the same ratio to the exemption 
                        amount under section 2052 (for the calendar 
                        year in which the decedent died) as the value 
                        of the part of the decedent's gross estate 
                        which at the time of his death is situated in 
                        the United States bears to the value of his 
                        entire gross estate wherever situated. For 
                        purposes of the preceding sentence, property 
                        shall not be treated as situated in the United 
                        States if such property is exempt from the tax 
                        imposed by this subchapter under any treaty 
                        obligation of the United States.
                            ``(ii) Coordination with gift tax exemption 
                        and unified credit.--If an exemption has been 
                        allowed under section 2521 (or a credit has 
                        been allowed under section 2505 as in effect on 
                        the day before the date of the enactment of the 
                        Wage and  Employment Growth Act of 1999) with 
respect to any gift made by the decedent, each dollar amount contained 
in subparagraph (A) or (B) or the exemption amount applicable under 
clause (i) of this subparagraph (whichever applies) shall be reduced by 
the exemption so allowed under 2521 (or, in the case of such a credit, 
by the amount of the gift for which the credit was so allowed).''.
            (11)(A) Subsection (a) of section 2107 is amended by adding 
        at the end the following new paragraph:
            ``(3) Limitation on exemption amount.--Subparagraphs (B) 
        and (C) of section 2106(a)(4) shall not apply in applying 
        section 2106 for purposes of this section.''.
            (B) Subsection (c) of section 2107 is amended--
                            (i) by striking paragraph (1) and by 
                        redesignating paragraphs (2) and (3) as 
                        paragraphs (1) and (2), respectively, and
                            (ii) by striking the second sentence of 
                        paragraph (2) (as so redesignated).
            (12) Section 2206 is amended by striking ``the taxable 
        estate'' in the first sentence and inserting ``the sum of the 
        taxable estate and the amount of the exemption allowed under 
        section 2052 or 2106(a)(4) in computing the taxable estate''.
            (13) Section 2207 is amended by striking ``the taxable 
        estate'' in the first sentence and inserting ``the sum of the 
        taxable estate and the amount of the exemption allowed under 
        section 2052 or 2106(a)(4) in computing the taxable estate''.
            (14) Subparagraph (B) of section 2207B(a)(1) is amended to 
        read as follows:
                    ``(B) the sum of the taxable estate and the amount 
                of the exemption allowed under section 2052 or 
                2106(a)(4) in computing the taxable estate.''.
            (15) Subsection (a) of section 2503 is amended by striking 
        ``section 2522'' and inserting ``section 2521''.
            (16) Paragraph (1) of section 6018(a) is amended by 
        striking ``the applicable exclusion amount in effect under 
        section 2010(c)'' and inserting ``the exemption amount under 
        section 2052''.
            (17) Subparagraph (A) of section 6601(j)(2) is amended to 
        read as follows:
                    ``(A) the amount of the tax which would be imposed 
                by chapter 11 on an amount of taxable estate equal to 
                $1,000,000, or''.
            (18) The table of sections for part II of subchapter A of 
        chapter 11 is amended by striking the item relating to section 
        2010.
            (19) The table of sections for part IV of subchapter A of 
        chapter 11 is amended by inserting after the item relating to 
        section 2051 the following new item:

                              ``Sec. 2052. Exemption.''.

            (20) The table of sections for subchapter A of chapter 12 
        is amended by striking the item relating to section 2505.
            (21) The table of sections for subchapter C of chapter 12 
        is amended by inserting before the item relating to section 
        2522 the following new item:

                              ``Sec. 2521. Exemption.''.

    (d) Effective Date.--The amendments made by this section--
            (1) insofar as they relate to the tax imposed by chapter 11 
        of the Internal Revenue Code of 1986, shall apply to estates of 
        decedents dying after December 31, 2000, and
            (2) insofar as they relate to the tax imposed by chapter 12 
        of such Code, shall apply to gifts made after December 31, 
        2000.

     Subtitle C--Modifications of Generation-skipping Transfer Tax

SEC. 521. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME TRANSFERS TO 
              TRUSTS; RETROACTIVE ALLOCATIONS.

    (a) In General.--Section 2632 (relating to special rules for 
allocation of GST exemption) is amended by redesignating subsection (c) 
as subsection (e) and by inserting after subsection (b) the following 
new subsections:
    ``(c) Deemed Allocation to Certain Lifetime Transfers to GST 
Trusts.--
            ``(1) In general.--If any individual makes an indirect skip 
        during such individual's lifetime, any unused portion of such 
        individual's GST exemption shall be allocated to the property 
        transferred to the extent necessary to make the inclusion ratio 
        for such property zero. If the amount of the indirect skip 
        exceeds such unused portion, the entire unused portion shall be 
        allocated to the property transferred.
            ``(2) Unused portion.--For purposes of paragraph (1), the 
        unused portion of an individual's  GST exemption is that 
portion of such exemption which has not previously been--
                    ``(A) allocated by such individual,
                    ``(B) treated as allocated under subsection (b) 
                with respect to a direct skip occurring during or 
                before the calendar year in which the indirect skip is 
                made, or
                    ``(C) treated as allocated under paragraph (1) with 
                respect to a prior indirect skip.
            ``(3) Definitions.--
                    ``(A) Indirect skip.--For purposes of this 
                subsection, the term `indirect skip' means any transfer 
                of property (other than a direct skip) subject to the 
                tax imposed by chapter 12 made to a GST trust.
                    ``(B) GST trust.--The term `GST trust' means a 
                trust that could have a generation-skipping transfer 
                with respect to the transferor unless--
                            ``(i) the trust instrument provides that 
                        more than 25 percent of the trust corpus must 
                        be distributed to or may be withdrawn by 1 or 
                        more individuals who are non-skip persons--
                                    ``(I) before the date that the 
                                individual attains age 46,
                                    ``(II) on or before one or more 
                                dates specified in the trust instrument 
                                that will occur before the date that 
                                such individual attains age 46, or
                                    ``(III) upon the occurrence of an 
                                event that, in accordance with 
                                regulations prescribed by the 
                                Secretary, may reasonably be expected 
                                to occur before the date that such 
                                individual attains age 46;
                            ``(ii) the trust instrument provides that 
                        more than 25 percent of the trust corpus must 
                        be distributed to or may be withdrawn by one or 
                        more individuals who are non-skip persons and 
                        who are living on the date of death of another 
                        person identified in the instrument (by name or 
                        by class) who is more than 10 years older than 
                        such individuals;
                            ``(iii) the trust instrument provides that, 
                        if one or more individuals who are non-skip 
                        persons die on or before a date or event 
                        described in clause (i) or (ii), more than 25 
                        percent of the trust corpus either must be 
                        distributed to the estate or estates of one or 
                        more of such individuals or is subject to a 
                        general power of appointment exercisable by one 
                        or more of such individuals;
                            ``(iv) the trust is a trust any portion of 
                        which would be included in the gross estate of 
                        a non-skip person (other than the transferor) 
                        if such person died immediately after the 
                        transfer;
                            ``(v) the trust is a charitable lead 
                        annuity trust (within the meaning of section 
                        2642(e)(3)(A)) or a charitable remainder 
                        annuity trust or a charitable remainder 
                        unitrust (within the meaning of section 
                        664(d)); or
                            ``(vi) the trust is a trust with respect to 
                        which a deduction was allowed under section 
                        2522 for the amount of an interest in the form 
                        of the right to receive annual payments of a 
                        fixed percentage of the net fair market value 
                        of the trust property (determined yearly) and 
                        which is required to pay principal to a non-
                        skip person if such person is alive when the 
                        yearly payments for which the deduction was 
                        allowed terminate.
                For purposes of this subparagraph, the value of 
                transferred property shall not be considered to be 
                includible in the gross estate of a non-skip person or 
                subject to a right of withdrawal by reason of such 
                person holding a right to withdraw so much of such 
                property as does not exceed the amount referred to in 
                section 2503(b) with respect to any transferor, and it 
                shall be assumed that powers of appointment held by 
                non-skip persons will not be exercised.
            ``(4) Automatic allocations to certain gst trusts.--For 
        purposes of this subsection, an indirect skip to which section 
        2642(f) applies shall be deemed to have been made only at the 
        close of the estate tax inclusion period. The fair market value 
        of such transfer shall be the fair market value of the trust 
        property at the close of the estate tax inclusion period.
            ``(5) Applicability and effect.--
                    ``(A) In general.--An individual--
                            ``(i) may elect to have this subsection not 
                        apply to--
                                    ``(I) an indirect skip, or
                                    ``(II) any or all transfers made by 
                                such individual to a particular trust, 
                                and
                            ``(ii) may elect to treat any trust as a 
                        GST trust for purposes of this subsection with 
                        respect to any or all transfers made by such 
                        individual to such trust.
                    ``(B) Elections.--
                            ``(i) Elections with respect to indirect 
                        skips.--An election under subparagraph 
                        (A)(i)(I) shall be deemed to be timely if filed 
                        on a timely filed gift tax return for the 
                        calendar year in which the transfer was made or 
                        deemed to have been made pursuant to paragraph 
                        (4) or on such later date or dates as may be 
                        prescribed by the Secretary.
                            ``(ii) Other elections.--An election under 
                        clause (i)(II) or (ii) of subparagraph (A) may 
                        be made on a timely filed gift tax return for 
                        the calendar year for which the election is to 
                        become effective.
    ``(d) Retroactive Allocations.--
            ``(1) In general.--If--
                    ``(A) a non-skip person has an interest or a future 
                interest in a trust to which any transfer has been 
                made,
                    ``(B) such person--
                            ``(i) is a lineal descendant of a 
                        grandparent of the transferor or of a 
                        grandparent of the transferor's spouse or 
                        former spouse, and
                            ``(ii) is assigned to a generation below 
                        the generation assignment of the transferor, 
                        and
                    ``(C) such person predeceases the transferor,
        then the transferor may make an allocation of any of such 
        transferor's unused GST exemption to any previous transfer or 
        transfers to the trust on a chronological basis.
            ``(2) Special rules.--If the allocation under paragraph (1) 
        by the transferor is made on a gift tax return filed on or 
        before the date prescribed by section 6075(b) for gifts made 
        within the calendar year within which the non-skip person's 
        death occurred--
                    ``(A) the value of such transfer or transfers for 
                purposes of section 2642(a) shall be determined as if 
                such allocation had been made on a timely filed gift 
                tax return for each calendar year within which each 
                transfer was made,
                    ``(B) such allocation shall be effective 
                immediately before such death, and
                    ``(C) the amount of the transferor's unused GST 
                exemption available to be allocated shall be determined 
                immediately before such death.
            ``(3) Future interest.--For purposes of this subsection, a 
        person has a future interest in a trust if the trust may permit 
        income or corpus to be paid to such person on a date or dates 
        in the future.''.
    (b) Conforming Amendment.--Paragraph (2) of section 2632(b) is 
amended by striking ``with respect to a direct skip'' and inserting 
``or subsection (c)(1)''.
    (c) Effective Dates.--
            (1) Deemed allocation.--Section 2632(c) of the Internal 
        Revenue Code of 1986 (as added by subsection (a)), and the 
        amendment made by subsection (b), shall apply to transfers 
        subject to chapter 11 or 12 made after December 31, 1999, and 
        to estate tax inclusion periods ending after December 31, 1999.
            (2) Retroactive allocations.--Section 2632(d) of the 
        Internal Revenue Code of 1986 (as added by subsection (a)) 
        shall apply to deaths of non-skip persons occurring after the 
        date of the enactment of this Act.

SEC. 522. SEVERING OF TRUSTS.

    (a) In General.--Subsection (a) of section 2642 (relating to 
inclusion ratio) is amended by adding at the end the following new 
paragraph:
            ``(3) Severing of trusts.--
                    ``(A) In general.--If a trust is severed in a 
                qualified severance, the trusts resulting from such 
                severance shall be treated as separate trusts 
                thereafter for purposes of this chapter.
                    ``(B) Qualified severance.--For purposes of 
                subparagraph (A)--
                            ``(i) In general.--The term `qualified 
                        severance' means the division of a single trust 
                        and the creation (by any means available under 
                        the governing instrument or under local law) of 
                        two or more trusts if--
                                    ``(I) the single trust was divided 
                                on a fractional basis, and
                                    ``(II) the terms of the new trusts, 
                                in the aggregate, provide for the same 
                                succession of interests of 
                                beneficiaries as are provided in the 
                                original trust.
                            ``(ii) Trusts with inclusion ratio greater 
                        than zero.--If a trust has an inclusion ratio 
                        of greater than zero and less than 1, a 
                        severance is a qualified severance only if the 
                        single trust is divided into two trusts, one of 
                        which receives a fractional share of the total 
                        value of all trust assets equal to the 
                        applicable fraction of the single trust 
                        immediately before the severance. In such case, 
                        the trust receiving such fractional share shall 
                        have an inclusion ratio of zero and the other 
                        trust shall have an inclusion ratio of 1.
                            ``(iii) Regulations.--The term `qualified 
                        severance' includes any other severance 
                        permitted under regulations prescribed by the 
                        Secretary.
                    ``(C) Timing and manner of severances.--A severance 
                pursuant to this paragraph may be made at any time. The 
                Secretary shall prescribe by forms or regulations the 
                manner in which the qualified severance shall be 
                reported to the Secretary.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to severances after the date of the enactment of this Act.

SEC. 523. MODIFICATION OF CERTAIN VALUATION RULES.

    (a) Gifts for Which Gift Tax Return Filed or Deemed Allocation 
Made.--Paragraph (1) of section 2642(b) (relating to valuation rules, 
etc.) is amended to read as follows:
            ``(1) Gifts for which gift tax return filed or deemed 
        allocation made.--If the allocation of the GST exemption to any 
        transfers of property is made on a gift tax return filed on or 
        before the date prescribed by section 6075(b) for such transfer 
        or is deemed to be made under section 2632 (b)(1) or (c)(1)--
                    ``(A) the value of such property for purposes of 
                subsection (a) shall be its value as finally determined 
                for purposes of chapter 12 (within the meaning of 
                section 2001(f)(2)), or, in the case of an allocation 
                deemed to have been made at the close of an estate tax 
                inclusion period, its value at the time of the close of 
                the estate tax inclusion period, and
                    ``(B) such allocation shall be effective on and 
                after the date of such transfer, or, in the case of an 
                allocation deemed to have been made at the close of an 
                estate tax inclusion period, on and after the close of 
                such estate tax inclusion period.''.
    (b) Transfers at Death.--Subparagraph (A) of section 2642(b)(2) is 
amended to read as follows:
                    ``(A) Transfers at death.--If property is 
                transferred as a result of the death of the transferor, 
                the value of such property for purposes of subsection 
                (a) shall be its value as finally determined for 
                purposes of chapter 11; except that, if the 
                requirements prescribed by the Secretary respecting 
                allocation of post-death changes in value are not met, 
                the value of such property shall be determined as of 
                the time of the distribution concerned.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by section 1431 of the Tax 
Reform Act of 1986.

SEC. 524. RELIEF PROVISIONS.

    (a) In General.--Section 2642 is amended by adding at the end the 
following new subsection:
    ``(g) Relief Provisions.--
            ``(1) Relief for late elections.--
                    ``(A) In general.--The Secretary shall by 
                regulation prescribe such circumstances and procedures 
                under which extensions of time will be granted to 
                make--
                            ``(i) an allocation of GST exemption 
                        described in paragraph (1) or (2) of subsection 
                        (b), and
                            ``(ii) an election under subsection (b)(3) 
                        or (c)(5) of section 2632.
                Such regulations shall include procedures for 
                requesting comparable relief with respect to transfers 
                made before the date of the enactment of this 
                paragraph.
                    ``(B) Basis for determinations.--In determining 
                whether to grant relief under this paragraph, the 
                Secretary shall take into account all relevant 
                circumstances, including evidence of intent contained 
                in the trust instrument or instrument of transfer and 
                such other factors as the Secretary deems relevant. For 
                purposes of determining whether to grant relief under 
                this paragraph, the time for making the  allocation (or 
election) shall be treated as if not expressly prescribed by statute.
            ``(2) Substantial compliance.--An allocation of GST 
        exemption under section 2632 that demonstrates an intent to 
        have the lowest possible inclusion ratio with respect to a 
        transfer or a trust shall be deemed to be an allocation of so 
        much of the transferor's unused GST exemption as produces the 
        lowest possible inclusion ratio. In determining whether there 
        has been substantial compliance, all relevant circumstances 
        shall be taken into account, including evidence of intent 
        contained in the trust instrument or instrument of transfer and 
        such other factors as the Secretary deems relevant.''.
    (b) Effective Dates.--
            (1) Relief for late elections.--Section 2642(g)(1) of the 
        Internal Revenue Code of 1986 (as added by subsection (a)) 
        shall apply to requests pending on, or filed after, the date of 
        the enactment of this Act.
            (2) Substantial compliance.--Section 2642(g)(2) of such 
        Code (as so added) shall take effect on the date of the 
        enactment of this Act and shall apply to allocations made prior 
        to such date for purposes of determining the tax consequences 
        of generation-skipping transfers with respect to which the 
        period of time for filing claims for refund has not expired. No 
        implication is intended with respect to the availability of 
        relief for late elections or the application of a rule of 
        substantial compliance prior to the enactment of this 
        amendment.

                   Subtitle D--Conservation Easements

SEC. 531. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION EASEMENTS.

    (a) Where Land Is Located.--
            (1) In general.--Clause (i) of section 2031(c)(8)(A) 
        (defining land subject to a conservation easement) is amended--
                    (A) by striking ``25 miles'' both places it appears 
                and inserting ``50 miles'', and
                    (B) striking ``10 miles'' and inserting ``25 
                miles''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to estates of decedents dying after December 31, 
        1999.
    (b) Clarification of Date for Determining Value of Land and 
Easement.--
            (1) In general.--Section 2031(c)(2) (defining applicable 
        percentage) is amended by adding at the end the following new 
        sentence: ``The values taken into account under the preceding 
        sentence shall be such values as of the date of the 
        contribution referred to in paragraph (8)(B).''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to estates of decedents dying after December 31, 
        1997.

     TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND INDUSTRIES

           Subtitle A--American Community Renewal Act of 1999

SEC. 601. SHORT TITLE.

    This subtitle may be cited as the ``American Community Renewal Act 
of 1999''.

SEC. 602. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.

    (a) In General.--Chapter 1 is amended by adding at the end the 
following new subchapter:

                  ``Subchapter X--Renewal Communities

                              ``Part   I. Designation.
                              ``Part  II. Renewal community capital 
                                        gain; renewal community 
                                        business.
                              ``Part  III. Family development accounts.
                              ``Part   IV. Additional incentives.

                         ``PART I--DESIGNATION

                              ``Sec. 1400E. Designation of renewal 
                                        communities.

``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

    ``(a) Designation.--
            ``(1) Definitions.--For purposes of this title, the term 
        `renewal community' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as a renewal community 
                (hereinafter in this section referred to as a 
                `nominated area'); and
                    ``(B) which the Secretary of Housing and Urban 
                Development designates as a renewal community, after 
                consultation with--
                            ``(i) the Secretaries of Agriculture, 
                        Commerce, Labor, and the Treasury; the Director 
                        of the Office of Management and Budget; and the 
                        Administrator of the Small Business 
                        Administration; and
                            ``(ii) in the case of an area on an Indian 
                        reservation, the Secretary of the Interior.
            ``(2) Number of designations.--
                    ``(A) In general.--The Secretary of Housing and 
                Urban Development may designate not more than 15 
                nominated areas as renewal communities of which--
                            ``(i) only 5 may be designated during the 
                        first 12 months of the period referred to in 
                        paragraph (4)(B),
                            ``(ii) an additional 5 may be designated 
                        during the second 12 months of such period, and
                            ``(iii) the remaining 5 may be designated 
                        during the last 12 months of such period.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under paragraph (1), at least 3 must 
                be areas--
                            ``(i) which are within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 50,000,
                            ``(ii) which are outside of a metropolitan 
                        statistical area (within the meaning of section 
                        143(k)(2)(B)), or
                            ``(iii) which are determined by the 
                        Secretary of Housing and Urban Development, 
                        after consultation with the Secretary of 
                        Commerce, to be rural areas.
            ``(3) Areas designated based on degree of poverty, etc.--
                    ``(A) In general.--Except as otherwise provided in 
                this section, the nominated areas designated as renewal 
                communities under this subsection shall be those 
                nominated areas with the highest average ranking with 
                respect to the criteria described in subparagraphs (B), 
                (C), and (D) of subsection (c)(3). For purposes of the 
                preceding sentence, an area shall be ranked within each 
                such criterion on the basis of the amount by which the 
                area exceeds such criterion, with the area which 
                exceeds such criterion by the greatest amount given the 
                highest ranking.
                    ``(B) Exception where inadequate course of action, 
                etc.--An area shall not be designated under 
                subparagraph (A) if the Secretary of Housing and Urban 
                Development determines that the course of action 
                described in subsection (d)(2) with respect to such 
                area is inadequate.
                    ``(C) Priority for empowerment zones and enterprise 
                communities with respect to first half of 
                designations.--With respect to the first 10 
                designations made under this section--
                            ``(i) all shall be chosen from nominated 
                        areas which are empowerment zones or enterprise 
                        communities (and are otherwise eligible for 
                        designation under this section); and
                            ``(ii) two shall be areas described in 
                        paragraph (2)(B).
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Housing and Urban Development shall prescribe by 
                regulation no later than 4 months after the date of the 
                enactment of this section, after consultation with the 
                officials described in paragraph (1)(B)--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A);
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a renewal 
                        community; and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (d).
                    ``(B) Time limitations.--The Secretary of Housing 
                and Urban Development may designate nominated areas as 
                renewal communities only during the 36-month period 
                beginning on the first day of the first month following 
                the month in which the regulations described in 
                subparagraph (A) are prescribed.
                    ``(C) Procedural rules.--The Secretary of Housing 
                and Urban Development shall not make any designation of 
                a nominated area as a renewal community under paragraph 
                (2) unless--
                            ``(i) the local governments and the States 
                        in which the nominated area is located have the 
                        authority--
                                    ``(I) to nominate such area for 
                                designation as a renewal community;
                                    ``(II) to make the State and local 
                                commitments described in subsection 
                                (d); and
                                    ``(III) to provide assurances 
                                satisfactory to the Secretary of 
                                Housing and Urban Development that such 
                                commitments will be fulfilled,
                            ``(ii) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the Secretary 
                        of Housing and Urban Development shall by 
regulation prescribe; and
                            ``(iii) the Secretary of Housing and Urban 
                        Development determines that any information 
                        furnished is reasonably accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a renewal 
        community shall remain in effect during the period beginning on 
        the date of the designation and ending on the earliest of--
                    ``(A) December 31, 2007,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the Secretary of Housing and Urban 
                Development revokes such designation.
            ``(2) Revocation of designation.--The Secretary of Housing 
        and Urban Development may revoke the designation under this 
        section of an area if such Secretary determines that the local 
        government or the State in which the area is located--
                    ``(A) has modified the boundaries of the area, or
                    ``(B) is not complying substantially with, or fails 
                to make progress in achieving, the State or local 
                commitments, respectively, described in subsection (d).
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate a nominated area as a renewal 
        community under subsection (a) only if the area meets the 
        requirements of paragraphs (2) and (3) of this subsection.
            ``(2) Area requirements.--A nominated area meets the 
        requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments;
                    ``(B) the boundary of the area is continuous; and
                    ``(C) the area--
                            ``(i) has a population, of at least--
                                    ``(I) 4,000 if any portion of such 
                                area (other than a rural area described 
                                in subsection (a)(2)(B)(i)) is located 
                                within a metropolitan statistical area 
                                (within the meaning of section 
                                143(k)(2)(B)) which has a population of 
                                50,000 or greater; or
                                    ``(II) 1,000 in any other case; or
                            ``(ii) is entirely within an Indian 
                        reservation (as determined by the Secretary of 
                        the Interior).
            ``(3) Eligibility requirements.--A nominated area meets the 
        requirements of this paragraph if the State and the local 
        governments in which it is located certify (and the Secretary 
        of Housing and Urban Development, after such review of 
        supporting data as he deems appropriate, accepts such 
        certification) that--
                    ``(A) the area is one of pervasive poverty, 
                unemployment, and general distress;
                    ``(B) the unemployment rate in the area, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate;
                    ``(C) the poverty rate for each population census 
                tract within the nominated area is at least 20 percent; 
                and
                    ``(D) in the case of an urban area, at least 70 
                percent of the households living in the area have 
                incomes below 80 percent of the median income of 
                households within the jurisdiction of the local 
                government (determined in the same manner as under 
                section 119(b)(2) of the Housing and Community 
                Development Act of 1974).
            ``(4) Consideration of high incidence of crime.--The 
        Secretary of Housing and Urban Development shall take into 
        account, in selecting nominated areas for designation as 
        renewal communities under this section, the extent to which 
        such areas have a high incidence of crime.
            ``(5) Consideration of communities identified in gao 
        study.--The Secretary of Housing and Urban Development shall 
        take into account, in selecting nominated areas for designation 
as renewal communities under this section, if the area has census 
tracts identified in the May 12, 1998, report of the Government 
Accounting Office regarding the identification of economically 
distressed areas.
    ``(d) Required State and Local Commitments.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate any nominated area as a renewal 
        community under subsection (a) only if--
                    ``(A) the local government and the State in which 
                the area is located agree in writing that, during any 
                period during which the area is a renewal community, 
                such governments will follow a specified course of 
                action which meets the requirements of paragraph (2) 
                and is designed to reduce the various burdens borne by 
                employers or employees in such area; and
                    ``(B) the economic growth promotion requirements of 
                paragraph (3) are met.
            ``(2) Course of action.--
                    ``(A) In general.--A course of action meets the 
                requirements of this paragraph if such course of action 
                is a written document, signed by a State (or local 
                government) and neighborhood organizations, which 
                evidences a partnership between such State or 
                government and community-based organizations and which 
                commits each signatory to specific and measurable 
                goals, actions, and timetables. Such course of action 
                shall include at least five of the following:
                            ``(i) A reduction of tax rates or fees 
                        applying within the renewal community.
                            ``(ii) An increase in the level of 
                        efficiency of local services within the renewal 
                        community.
                            ``(iii) Crime reduction strategies, such as 
                        crime prevention (including the provision of 
                        such services by nongovernmental entities).
                            ``(iv) Actions to reduce, remove, simplify, 
                        or streamline governmental requirements 
                        applying within the renewal community.
                            ``(v) Involvement in the program by private 
                        entities, organizations, neighborhood 
                        organizations, and community groups, 
                        particularly those in the renewal community, 
                        including a commitment from such private 
                        entities to provide jobs and job training for, 
                        and technical, financial, or other assistance 
                        to, employers, employees, and residents from 
                        the renewal community.
                            ``(vi) State or local income tax benefits 
                        for fees paid for services performed by a 
                        nongovernmental entity which were formerly 
                        performed by a governmental entity.
                            ``(vii) The gift (or sale at below fair 
                        market value) of surplus real property (such as 
                        land, homes, and commercial or industrial 
                        structures) in the renewal community to 
                        neighborhood organizations, community 
                        development corporations, or private companies.
                    ``(B) Recognition of past efforts.--For purposes of 
                this section, in evaluating the course of action agreed 
                to by any State or local government, the Secretary of 
                Housing and Urban Development shall take into account 
                the past efforts of such State or local government in 
                reducing the various burdens borne by employers and 
                employees in the area involved.
            ``(3) Economic growth promotion requirements.--The economic 
        growth promotion requirements of this paragraph are met with 
        respect to a nominated area if the local government and the 
        State in which such area is located certify in writing that 
        such government and State, respectively, have repealed or 
        otherwise will not enforce within the area, if such area is 
        designated as a renewal community--
                    ``(A) licensing requirements for occupations that 
                do not ordinarily require a professional degree;
                    ``(B) zoning restrictions on home-based businesses 
                which do not create a public nuisance;
                    ``(C) permit requirements for street vendors who do 
                not create a public nuisance;
                    ``(D) zoning or other restrictions that impede the 
                formation of schools or child care centers; and
                    ``(E) franchises or other restrictions on 
                competition for businesses providing public services, 
                including but not limited to taxicabs, jitneys, cable 
                television, or trash hauling,
        except to the extent that such regulation of businesses and 
        occupations is necessary for and well-tailored to the 
        protection of health and safety.
    ``(e) Coordination With Treatment of Empowerment Zones and 
Enterprise Communities.--For purposes of this title, if there are in 
effect with respect to the same area both--
            ``(1) a designation as a renewal community; and
            ``(2) a designation as an empowerment zone or enterprise 
        community,
both of such designations shall be given full effect with respect to 
such area.
    ``(f) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Governments.--If more than one government seeks to 
        nominate an area as a renewal community, any reference to, or 
        requirement of, this section shall apply to all such 
        governments.
            ``(2) State.--The term `State' includes Puerto Rico, the 
        Virgin Islands of the United States, Guam, American Samoa, the 
        Northern Mariana Islands, and any other possession of the 
        United States.
            ``(3) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State;
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                Secretary of Housing and Urban Development; and
                    ``(C) the District of Columbia.
            ``(4) Application of rules relating to census tracts and 
        census data.--The rules of sections 1392(b)(4) and 1393(a)(9) 
        shall apply.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

                              ``Sec. 1400F. Renewal community capital 
                                        gain.
                              ``Sec. 1400G. Renewal community business 
                                        defined.

``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

    ``(a) General Rule.--Gross income does not include any qualified 
capital gain recognized on the sale or exchange of a qualified 
community asset held for more than 5 years.
    ``(b) Qualified Community Asset.--For purposes of this section--
            ``(1) In general.--The term `qualified community asset' 
        means--
                    ``(A) any qualified community stock;
                    ``(B) any qualified community partnership interest; 
                and
                    ``(C) any qualified community business property.
            ``(2) Qualified community stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified community stock' 
                means any stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer after December 31, 2000, and before 
                        January 1, 2008, at its original issue 
                        (directly or through an underwriter) from the 
                        corporation solely in exchange for cash;
                            ``(ii) as of the time such stock was 
                        issued, such corporation was a renewal 
                        community business (or, in the case of a new 
                        corporation, such corporation was being 
                        organized for purposes of being a renewal 
                        community business); and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as a renewal community 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified community partnership interest.--The term 
        `qualified community partnership interest' means any capital or 
        profits interest in a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after December 31, 2000, and before January 1, 2008;
                    ``(B) as of the time such interest was acquired, 
                such partnership was a renewal community business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being a renewal 
                community business); and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as a renewal community business.
        A rule similar to the rule of paragraph (2)(B) shall apply for 
        purposes of this paragraph.
            ``(4) Qualified community business property.--
                    ``(A) In general.--The term `qualified community 
                business property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) after December 31, 2000, and before 
                        January 1, 2008;
                            ``(ii) the original use of such property in 
                        the renewal community commences with the 
                        taxpayer; and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in a renewal community business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved (within the meaning of section 
                        1400B(b)(4)(B)(ii)) by the taxpayer before 
                        January 1, 2008; and
                            ``(ii) any land on which such property is 
                        located.
    ``(c) Certain Rules To Apply.--Rules similar to the rules of 
paragraphs (5), (6), and (7) of subsection (b), and subsections (e), 
(f), and (g), of section 1400B shall apply for purposes of this 
section.

``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

    ``For purposes of this part, the term `renewal community business' 
means any entity or proprietorship which would be a qualified business 
entity or qualified proprietorship under section 1397B if--
            ``(1) references to renewal communities were substituted 
        for references to empowerment zones in such section; and
            ``(2) `80 percent' were substituted for `50 percent' in 
        subsections (b)(2) and (c)(1) of such section.

                ``PART III--FAMILY DEVELOPMENT ACCOUNTS

                              ``Sec. 1400H. Family development accounts 
                                        for renewal community EITC 
                                        recipients.
                              ``Sec. 1400I. Designation of earned 
                                        income tax credit payments for 
                                        deposit to family development 
                                        account.

``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL COMMUNITY EITC 
              RECIPIENTS.

    ``(a) Allowance of Deduction.--
            ``(1) In general.--There shall be allowed as a deduction--
                    ``(A) in the case of a qualified individual, the 
                amount paid in cash for the taxable year by such 
                individual to any family development account for such 
                individual's benefit; and
                    ``(B) in the case of any person other than a 
                qualified individual, the amount paid in cash for the 
                taxable year by such person to any family development 
                account for the benefit of a qualified individual but 
                only if the amount so paid is designated for purposes 
                of this section by such individual.
            ``(2) Limitation.--
                    ``(A) In general.--The amount allowable as a 
                deduction to any individual for any taxable year by 
                reason of paragraph (1)(A) shall not exceed the lesser 
                of--
                            ``(i) $2,000, or
                            ``(ii) an amount equal to the compensation 
                        includible in the individual's gross income for 
                        such taxable year.
                    ``(B) Persons donating to family development 
                accounts of others.--The amount which may be designated 
                under paragraph (1)(B) by any qualified individual for 
                any taxable year of such individual shall not exceed 
                $1,000.
            ``(3) Special rules for certain married individuals.--Rules 
        similar to rules of section 219(c) shall apply to the 
        limitation in paragraph (2)(A).
            ``(4) Coordination with iras.--No deduction shall be 
        allowed under this section for any taxable year to any person 
        by reason of a payment to an account for the benefit of a 
        qualified individual if any amount is paid for such taxable 
        year into an individual retirement account (including a Roth 
        IRA) for the benefit of such individual.
            ``(5) Rollovers.--No deduction shall be allowed under this 
        section with respect to any rollover contribution.
    ``(b) Tax Treatment of Distributions.--
            ``(1) Inclusion of amounts in gross income.--Except as 
        otherwise provided in this subsection, any amount paid or 
        distributed out of a family development account shall be 
        included in gross income by the payee or distributee, as the 
        case may be.
            ``(2) Exclusion of qualified family development 
        distributions.--Paragraph (1) shall not apply to any qualified 
        family development distribution.
    ``(c) Qualified Family Development Distribution.--For purposes of 
this section--
            ``(1) In general.--The term `qualified family development 
        distribution' means any amount paid or distributed out of a 
        family development account which would otherwise be includible 
        in gross income, to the extent that such payment or 
        distribution is used exclusively to pay qualified family 
        development expenses for the holder of the account or the 
        spouse or dependent (as defined in section 152) of such holder.
            ``(2) Qualified family development expenses.--The term 
        `qualified family development expenses' means any of the 
        following:
                    ``(A) Qualified higher education expenses.
                    ``(B) Qualified first-time homebuyer costs.
                    ``(C) Qualified business capitalization costs.
                    ``(D) Qualified medical expenses.
                    ``(E) Qualified rollovers.
            ``(3) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' has the meaning given such term by 
                section 72(t)(7), determined by treating postsecondary 
                vocational educational schools as eligible educational 
                institutions.
                    ``(B) Postsecondary vocational education school.--
                The term `postsecondary vocational educational school' 
                means an area vocational education school (as defined 
                in subparagraph (C) or (D) of section 521(4) of the 
                Carl D. Perkins Vocational and Applied Technology 
                Education Act (20 U.S.C. 2471(4))) which is in any 
                State (as defined in section 521(33) of such Act), as 
                such sections are in effect on the date of the 
                enactment of this section.
                    ``(C) Coordination with other benefits.--The amount 
                of qualified higher education expenses for any taxable 
                year shall be reduced as provided in section 25A(g)(2).
            ``(4) Qualified first-time homebuyer costs.--The term 
        `qualified first-time homebuyer costs' means qualified 
        acquisition costs (as defined in section 72(t)(8) without 
        regard to subparagraph (B) thereof) with respect to a principal 
        residence (within the meaning of section 121) for a qualified 
        first-time homebuyer (as defined in section 72(t)(8)).
            ``(5) Qualified business capitalization costs.--
                    ``(A) In general.--The term `qualified business 
                capitalization costs' means qualified expenditures for 
                the capitalization of a qualified business pursuant to 
                a qualified plan.
                    ``(B) Qualified expenditures.--The term `qualified 
                expenditures' means expenditures included in a 
                qualified plan, including capital, plant, equipment, 
                working capital, and inventory expenses.
                    ``(C) Qualified business.--The term `qualified 
                business' means any trade or business other than any 
                trade or business--
                            ``(i) which consists of the operation of 
                        any facility described in section 144(c)(6)(B), 
                        or
                            ``(ii) which contravenes any law.
                    ``(D) Qualified plan.--The term `qualified plan' 
                means a business plan which meets such requirements as 
                the Secretary may specify.
            ``(6) Qualified medical expenses.--The term `qualified 
        medical expenses' means any amount paid during the taxable 
        year, not compensated for by insurance or otherwise, for 
        medical care (as defined in section 213(d)) of the taxpayer, 
        his spouse, or his dependent (as defined in section 152).
            ``(7) Qualified rollovers.--The term `qualified rollover' 
        means any amount paid from a family development account of a 
        taxpayer into another such account established for the benefit 
        of--
                    ``(A) such taxpayer, or
                    ``(B) any qualified individual who is--
                            ``(i) the spouse of such taxpayer, or
                            ``(ii) any dependent (as defined in section 
                        152) of the taxpayer.
        Rules similar to the rules of section 408(d)(3) shall apply for 
        purposes of this paragraph.
    ``(d) Tax Treatment of Accounts.--
            ``(1) In general.--Any family development account is exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a family development account by reason of 
        paragraph (2). Notwithstanding the preceding sentence, any such 
        account is subject to the taxes imposed by section 511 
        (relating to imposition of tax on unrelated business income of 
        charitable, etc., organizations). Notwithstanding any other 
        provision of this title (including  chapters 11 and 12), the 
basis of any person in such an account is zero.
            ``(2) Loss of exemption in case of prohibited 
        transactions.--For purposes of this section, rules similar to 
        the rules of section 408(e) shall apply.
            ``(3) Other rules to apply.--Rules similar to the rules of 
        paragraphs (4), (5), and (6) of section 408(d) shall apply for 
        purposes of this section.
    ``(e) Family Development Account.--For purposes of this title, the 
term `family development account' means a trust created or organized in 
the United States for the exclusive benefit of a qualified individual 
or his beneficiaries, but only if the written governing instrument 
creating the trust meets the following requirements:
            ``(1) Except in the case of a qualified rollover (as 
        defined in subsection (c)(7))--
                    ``(A) no contribution will be accepted unless it is 
                in cash; and
                    ``(B) contributions will not be accepted for the 
                taxable year in excess of $3,000.
            ``(2) The requirements of paragraphs (2) through (6) of 
        section 408(a) are met.
    ``(f) Qualified Individual.--For purposes of this section, the term 
`qualified individual' means, for any taxable year, an individual--
            ``(1) who is a bona fide resident of a renewal community 
        throughout the taxable year; and
            ``(2) to whom a credit was allowed under section 32 for the 
        preceding taxable year.
    ``(g) Other Definitions and Special Rules.--
            ``(1) Compensation.--The term `compensation' has the 
        meaning given such term by section 219(f)(1).
            ``(2) Married individuals.--The maximum deduction under 
        subsection (a) shall be computed separately for each 
        individual, and this section shall be applied without regard to 
        any community property laws.
            ``(3) Time when contributions deemed made.--For purposes of 
        this section, a taxpayer shall be deemed to have made a 
        contribution to a family development account on the last day of 
        the preceding taxable year if the contribution is made on 
        account of such taxable year and is made not later than the 
        time prescribed by law for filing the return for such taxable 
        year (not including extensions thereof).
            ``(4) Employer payments; custodial accounts.--Rules similar 
        to the rules of sections 219(f)(5) and 408(h) shall apply for 
        purposes of this section.
            ``(5) Reports.--The trustee of a family development account 
        shall make such reports regarding such account to the Secretary 
        and to the individual for whom the account is maintained with 
        respect to contributions (and the years to which they relate), 
        distributions, and such other matters as the Secretary may 
        require under regulations. The reports required by this 
        paragraph--
                    ``(A) shall be filed at such time and in such 
                manner as the Secretary prescribes in such regulations; 
                and
                    ``(B) shall be furnished to individuals--
                            ``(i) not later than January 31 of the 
                        calendar year following the calendar year to 
                        which such reports relate; and
                            ``(ii) in such manner as the Secretary 
                        prescribes in such regulations.
            ``(6) Investment in collectibles treated as 
        distributions.--Rules similar to the rules of section 408(m) 
        shall apply for purposes of this section.
    ``(h) Penalty for Distributions Not Used for Qualified Family 
Development Expenses.--
            ``(1) In general.--If any amount is distributed from a 
        family development account and is not used exclusively to pay 
        qualified family development expenses for the holder of the 
        account or the spouse or dependent (as defined in section 152) 
        of such holder, the tax imposed by this chapter for the taxable 
        year of such distribution shall be increased by 10 percent of 
        the portion of such amount which is includible in gross income.
            ``(2) Exception for certain distributions.--Paragraph (1) 
        shall not apply to distributions which are--
                    ``(A) made on or after the date on which the 
                account holder attains age 59\1/2\,
                    ``(B) made to a beneficiary (or the estate of the 
                account holder) on or after the death of the account 
                holder, or
                    ``(C) attributable to the account holder's being 
                disabled within the meaning of section 72(m)(7).
    ``(i) Application of Section.--This section shall apply to amounts 
paid to a family development account  for any taxable year beginning 
after December 31, 2000, and before January 1, 2008.

``SEC. 1400I. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR 
              DEPOSIT TO FAMILY DEVELOPMENT ACCOUNT.

    ``(a) In General.--With respect to the return of any qualified 
individual (as defined in section 1400H(f)) for the taxable year of the 
tax imposed by this chapter, such individual may designate that a 
specified portion (not less than $1) of any overpayment of tax for such 
taxable year which is attributable to the earned income tax credit 
shall be deposited by the Secretary into a family development account 
of such individual. The Secretary shall so deposit such portion 
designated under this subsection.
    ``(b) Manner and Time of Designation.--A designation under 
subsection (a) may be made with respect to any taxable year--
            ``(1) at the time of filing the return of the tax imposed 
        by this chapter for such taxable year, or
            ``(2) at any other time (after the time of filing the 
        return of the tax imposed by this chapter for such taxable 
        year) specified in regulations prescribed by the Secretary.
Such designation shall be made in such manner as the Secretary 
prescribes by regulations.
    ``(c) Portion Attributable to Earned Income Tax Credit.--For 
purposes of subsection (a), an overpayment for any taxable year shall 
be treated as attributable to the earned income tax credit to the 
extent that such overpayment does not exceed the credit allowed to the 
taxpayer under section 32 for such taxable year.
    ``(d) Overpayments Treated as Refunded.--For purposes of this 
title, any portion of an overpayment of tax designated under subsection 
(a) shall be treated as being refunded to the taxpayer as of the last 
date prescribed for filing the return of tax imposed by this chapter 
(determined without regard to extensions) or, if later, the date the 
return is filed.
    ``(e) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2007.

                    ``PART IV--ADDITIONAL INCENTIVES

                              ``Sec. 1400K. Commercial revitalization 
                                        deduction.
                              ``Sec. 1400L. Increase in expensing under 
                                        section 179.

``SEC. 1400K. COMMERCIAL REVITALIZATION DEDUCTION.

    ``(a) General Rule.--At the election of the taxpayer, either--
            ``(1) one-half of any qualified revitalization expenditures 
        chargeable to capital account with respect to any qualified 
        revitalization building shall be allowable as a deduction for 
        the taxable year in which the building is placed in service, or
            ``(2) a deduction for all such expenditures shall be 
        allowable ratably over the 120-month period beginning with the 
        month in which the building is placed in service.
The deduction provided by this section with respect to such expenditure 
shall be in lieu of any depreciation deduction otherwise allowable on 
account of such expenditure.
    ``(b) Qualified Revitalization Buildings and Expenditures.--For 
purposes of this section--
            ``(1) Qualified revitalization building.--The term 
        `qualified revitalization building' means any building (and its 
        structural components) if--
                    ``(A) such building is located in a renewal 
                community and is placed in service after December 31, 
                2000;
                    ``(B) a commercial revitalization deduction amount 
                is allocated to the building under subsection (d); and
                    ``(C) depreciation (or amortization in lieu of 
                depreciation) is allowable with respect to the building 
                (without regard to this section).
            ``(2) Qualified revitalization expenditure.--
                    ``(A) In general.--The term `qualified 
                revitalization expenditure' means any amount properly 
                chargeable to capital account--
                            ``(i) for property for which depreciation 
                        is allowable under section 168 (without regard 
                        to this section) and which is--
                                    ``(I) nonresidential real property; 
                                or
                                    ``(II) an addition or improvement 
                                to property described in subclause (I);
                            ``(ii) in connection with the construction 
                        of any qualified revitalization building which 
                        was not previously placed in service or in 
                        connection with the substantial rehabilitation 
                        (within the meaning of section 47(c)(1)(C)) of 
                        a building which was placed in service before 
                        the beginning of such rehabilitation; and
                            ``(iii) for land (including land which is 
                        functionally related to such property and 
                        subordinate thereto).
                    ``(B) Dollar limitation.--The aggregate amount 
                which may be treated as qualified revitalization 
                expenditures with respect to any  qualified 
revitalization building for any taxable year shall not exceed the 
excess of--
                            ``(i) $10,000,000, reduced by
                            ``(ii) any such expenditures with respect 
                        to the building taken into account by the 
                        taxpayer or any predecessor in determining the 
                        amount of the deduction under this section for 
                        all preceding taxable years.
                    ``(C) Certain expenditures not included.--The term 
                `qualified revitalization expenditure' does not 
                include--
                            ``(i) Acquisition costs.--The costs of 
                        acquiring any building or interest therein and 
                        any land in connection with such building to 
                        the extent that such costs exceed 30 percent of 
                        the qualified revitalization expenditures 
                        determined without regard to this clause.
                            ``(ii) Credits.--Any expenditure which the 
                        taxpayer may take into account in computing any 
                        credit allowable under this title unless the 
                        taxpayer elects to take the expenditure into 
                        account only for purposes of this section.
    ``(c) When Expenditures Taken Into Account.--Qualified 
revitalization expenditures with respect to any qualified 
revitalization building shall be taken into account for the taxable 
year in which the qualified revitalization building is placed in 
service. For purposes of the preceding sentence, a substantial 
rehabilitation of a building shall be treated as a separate building.
    ``(d) Limitation on Aggregate Deductions Allowable With Respect to 
Buildings Located in a State.--
            ``(1) In general.--The amount of the deduction determined 
        under this section for any taxable year with respect to any 
        building shall not exceed the commercial revitalization 
        deduction amount (in the case of an amount determined under 
        subsection (a)(2), the present value of such amount as 
        determined under the rules of section 42(b)(2)(C) by 
        substituting `100 percent' for `72 percent' in clause (ii) 
        thereof) allocated to such building under this subsection by 
        the commercial revitalization agency. Such allocation shall be 
        made at the same time and in the same manner as under 
        paragraphs (1) and (7) of section 42(h).
            ``(2) Commercial revitalization deduction amount for 
        agencies.--
                    ``(A) In general.--The aggregate commercial 
                revitalization deduction amount which a commercial 
                revitalization agency may allocate for any calendar 
                year is the amount of the State commercial 
                revitalization deduction ceiling determined under this 
                paragraph for such calendar year for such agency.
                    ``(B) State commercial revitalization deduction 
                ceiling.--The State commercial revitalization deduction 
                ceiling applicable to any State--
                            ``(i) for each calendar year after 2000 and 
                        before 2008 is $6,000,000 for each renewal 
                        community in the State; and
                            ``(ii) zero for each calendar year 
                        thereafter.
                    ``(C) Commercial revitalization agency.--For 
                purposes of this section, the term `commercial 
                revitalization agency' means any agency authorized by a 
                State to carry out this section.
    ``(e) Responsibilities of Commercial Revitalization Agencies.--
            ``(1) Plans for allocation.--Notwithstanding any other 
        provision of this section, the commercial revitalization 
        deduction amount with respect to any building shall be zero 
        unless--
                    ``(A) such amount was allocated pursuant to a 
                qualified allocation plan of the commercial 
                revitalization agency which is approved (in accordance 
                with rules similar to the rules of section 147(f)(2) 
                (other than subparagraph (B)(ii) thereof)) by the 
                governmental unit of which such agency is a part; and
                    ``(B) such agency notifies the chief executive 
                officer (or its equivalent) of the local jurisdiction 
                within which the building is located of such allocation 
                and provides such individual a reasonable opportunity 
                to comment on the allocation.
            ``(2) Qualified allocation plan.--For purposes of this 
        subsection, the term `qualified allocation plan' means any 
        plan--
                    ``(A) which sets forth selection criteria to be 
                used to determine priorities of the commercial 
                revitalization agency which are appropriate to local 
                conditions;
                    ``(B) which considers--
                            ``(i) the degree to which a project 
                        contributes to the implementation of a 
                        strategic  plan that is devised for a renewal 
community through a citizen participation process;
                            ``(ii) the amount of any increase in 
                        permanent, full-time employment by reason of 
                        any project; and
                            ``(iii) the active involvement of residents 
                        and nonprofit groups within the renewal 
                        community; and
                    ``(C) which provides a procedure that the agency 
                (or its agent) will follow in monitoring compliance 
                with this section.
    ``(f) Regulations.--For purposes of this section, the Secretary 
shall, by regulations, provide for the application of rules similar to 
the rules of section 49 and subsections (a) and (b) of section 50.
    ``(g) Termination.--This section shall not apply to any building 
placed in service after December 31, 2007.

``SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) General Rule.--In the case of a renewal community business 
(as defined in section 1400G), for purposes of section 179--
            ``(1) the limitation under section 179(b)(1) shall be 
        increased by the lesser of--
                    ``(A) $35,000; or
                    ``(B) the cost of section 179 property which is 
                qualified renewal property placed in service during the 
                taxable year; and
            ``(2) the amount taken into account under section 179(b)(2) 
        with respect to any section 179 property which is qualified 
        renewal property shall be 50 percent of the cost thereof.
    ``(b) Recapture.--Rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified renewal property 
which ceases to be used in a renewal community by a renewal community 
business.
    ``(c) Qualified Renewal Property.--For purposes of this section--
            ``(1) In general.--The term `qualified renewal property' 
        means any property to which section 168 applies (or would apply 
        but for section 179) if--
                    ``(A) such property was acquired by the taxpayer by 
                purchase (as defined in section 179(d)(2)) after 
                December 31, 2000, and before January 1, 2008; and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397C) if references to 
                renewal communities were substituted for references to 
                empowerment zones in section 1397C.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397C shall apply for purposes of 
        this section.''.

SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO 
              RENEWAL COMMUNITIES.

    (a) Extension.--Paragraph (2) of section 198(c) (defining targeted 
area) is amended by redesignating subparagraph (C) as subparagraph (D) 
and by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) Renewal communities included.--Except as 
                provided in subparagraph (B), such term shall include a 
                renewal community (as defined in section 1400E) with 
                respect to expenditures paid or incurred after December 
                31, 2000.''.
    (b) Extension of Termination Date for Renewal Communities.--
Subsection (h) of section 198 is amended by inserting before the period 
``(December 31, 2007, in the case of a renewal community, as defined in 
section 1400E).''.

SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL 
              COMMUNITIES.

    (a) Extension.--Subsection (c) of section 51 (relating to 
termination) is amended by adding at the end the following new 
paragraph:
            ``(5) Extension of credit for renewal communities.--
                    ``(A) In general.--In the case of an individual who 
                begins work for the employer after the date contained 
                in paragraph (4)(B), for purposes of section 38--
                            ``(i) in lieu of applying subsection (a), 
                        the amount of the work opportunity credit 
                        determined under this section for the taxable 
                        year shall be equal to--
                                    ``(I) 15 percent of the qualified 
                                first-year wages for such year; and
                                    ``(II) 30 percent of the qualified 
                                second-year wages for such year;
                            ``(ii) subsection (b)(3) shall be applied 
                        by substituting `$10,000' for `$6,000';
                            ``(iii) paragraph (4)(B) shall be applied 
                        by substituting for the date contained therein 
                        the last day for which the designation under 
                        section 1400E of the renewal  community 
referred to in subparagraph (B)(i) is in effect; and
                            ``(iv) rules similar to the rules of 
                        section 51A(b)(5)(C) shall apply.
                    ``(B) Qualified first- and second-year wages.--For 
                purposes of subparagraph (A)--
                            ``(i) In general.--The term `qualified 
                        wages' means, with respect to each 1-year 
                        period referred to in clause (ii) or (iii), as 
                        the case may be, the wages paid or incurred by 
                        the employer during the taxable year to any 
                        individual but only if--
                                    ``(I) the employer is engaged in a 
                                trade or business in a renewal 
                                community throughout such 1-year 
                                period;
                                    ``(II) the principal place of abode 
                                of such individual is in such renewal 
                                community throughout such 1-year 
                                period; and
                                    ``(III) substantially all of the 
                                services which such individual performs 
                                for the employer during such 1-year 
                                period are performed in such renewal 
                                community.
                            ``(ii) Qualified first-year wages.--The 
                        term `qualified first-year wages' means, with 
                        respect to any individual, qualified wages 
                        attributable to service rendered during the 1-
                        year period beginning with the day the 
                        individual begins work for the employer.
                            ``(iii) Qualified second-year wages.--The 
                        term `qualified second-year wages' means, with 
                        respect to any individual, qualified wages 
                        attributable to service rendered during the 1-
                        year period beginning on the day after the last 
                        day of the 1-year period with respect to such 
                        individual determined under clause (ii).''.
    (b) Congruent Treatment of Renewal Communities and Enterprise Zones 
for Purposes of Youth Residence Requirements.--
            (1) High-risk youth.--Subparagraphs (A)(ii) and (B) of 
        section 51(d)(5) are each amended by striking ``empowerment 
        zone or enterprise community'' and inserting ``empowerment 
        zone, enterprise community, or renewal community''.
            (2) Qualified summer youth employee.--Clause (iv) of 
        section 51(d)(7)(A) is amended by striking ``empowerment zone 
        or enterprise community'' and inserting ``empowerment zone, 
        enterprise community, or renewal community''.
            (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 
        51(d) are each amended by inserting ``or community'' in the 
        heading after ``zone''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to individuals who begin work for the employer 
        after December 31, 2000.

SEC. 605. CONFORMING AND CLERICAL AMENDMENTS.

    (a) Deduction for Contributions to Family Development Accounts 
Allowable Whether or Not Taxpayer Itemizes.--Subsection (a) of section 
62 (relating to adjusted gross income defined) is amended by inserting 
after paragraph (19) the following new paragraph:
            ``(20) Family development accounts.--The deduction allowed 
        by section 1400H(a)(1).''.
    (b) Tax on Excess Contributions.--
            (1) Tax imposed.--Subsection (a) of section 4973 is amended 
        by striking ``or'' at the end of paragraph (3), adding ``or'' 
        at the end of paragraph (4), and inserting after paragraph (4) 
        the following new paragraph:
            ``(5) a family development account (within the meaning of 
        section 1400H(e)),''.
            (2) Excess contributions.--Section 4973 is amended by 
        adding at the end the following new subsection:
    ``(g) Family Development Accounts.--For purposes of this section, 
in the case of family development accounts, the term `excess 
contributions' means the sum of--
            ``(1) the excess (if any) of--
                    ``(A) the amount contributed for the taxable year 
                to the accounts (other than a qualified rollover, as 
                defined in section 1400H(c)(7)), over
                    ``(B) the amount allowable as a deduction under 
                section 1400H for such contributions; and
            ``(2) the amount determined under this subsection for the 
        preceding taxable year reduced by the sum of--
                    ``(A) the distributions out of the accounts for the 
                taxable year which were included in the gross income of 
                the payee under section 1400H(b)(1);
                    ``(B) the distributions out of the accounts for the 
                taxable year to which rules similar to the rules of 
                section 408(d)(5) apply by reason of section 
                1400H(d)(3); and
                    ``(C) the excess (if any) of the maximum amount 
                allowable as a deduction under section 1400H for the 
                taxable year over the amount contributed to the account 
                for the taxable year.
For purposes of this subsection, any contribution which is distributed 
from the family development account in a distribution to which rules 
similar to the rules of section 408(d)(4) apply by reason of section 
1400H(d)(3) shall be treated as an amount not contributed.''.
    (c) Tax on Prohibited Transactions.--Section 4975 is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(6) Special rule for family development accounts.--An 
        individual for whose benefit a family development account is 
        established and any contributor to such account shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a family development 
        account by reason of the application of section 1400H(d)(2) to 
        such account.''; and
            (2) in subsection (e)(1), by striking ``or'' at the end of 
        subparagraph (E), by redesignating subparagraph (F) as 
        subparagraph (G), and by inserting after subparagraph (E) the 
        following new subparagraph:
                    ``(F) a family development account described in 
                section 1400H(e), or''.
    (d) Information Relating to Certain Trusts and Annuity Plans.--
Subsection (c) of section 6047 is amended--
            (1) by inserting ``or section 1400H'' after ``section 
        219''; and
            (2) by inserting ``, of any family development account 
        described in section 1400H(e),'', after ``section 408(a)''.
    (e) Inspection of Applications for Tax Exemption.--Clause (i) of 
section 6104(a)(1)(B) is amended by inserting ``a family development 
account described in section 1400H(e),'' after ``section 408(a),''.
    (f) Failure To Provide Reports on Family Development Accounts.--
Paragraph (2) of section 6693(a) is amended by striking ``and'' at the 
end of subparagraph (C), by striking the period and inserting 
``, and'' at the end of subparagraph (D), and by adding at the end the 
following new subparagraph:
                    ``(E) section 1400H(g)(6) (relating to family 
                development accounts).''.
    (g) Conforming Amendments Regarding Commercial Revitalization 
Deduction.--
            (1) Section 172 is amended by redesignating subsection (j) 
        as subsection (k) and by inserting after subsection (i) the 
        following new subsection:
    ``(j) No Carryback of Section 1400k Deduction Before Date of the 
Enactment.--No portion of the net operating loss for any taxable year 
which is attributable to any commercial revitalization deduction 
determined under section 1400K may be carried back to a taxable year 
ending before the date of the enactment of section 1400K.''.
            (2) Subparagraph (B) of section 48(a)(2) is amended by 
        inserting ``or commercial revitalization'' after 
        ``rehabilitation'' each place it appears in the text and 
        heading.
            (3) Subparagraph (C) of section 469(i)(3) is amended--
                    (A) by inserting ``or section 1400K'' after 
                ``section 42''; and
                    (B) by inserting ``and commercial revitalization 
                deduction'' after ``credit'' in the heading.
    (h) Clerical Amendments.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                              ``Subchapter X. Renewal Communities.''.

                     Subtitle B--Timber Incentives

SEC. 611. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF AMORTIZABLE 
              REFORESTATION EXPENDITURES.

    (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) 
(relating to amortization of reforestation expenditures) is amended by 
striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''.
    (b) Temporary Suspension of Increased Dollar Limitation.--
Subsection (b) of section 194(b) (relating to amortization of 
reforestation expenditures) is amended by adding at the end the 
following new paragraph:
            ``(5) Suspension of dollar limitation.--Paragraph (1) shall 
        not apply to taxable years beginning after December 31, 1999, 
        and before January 1, 2004.
    (c) Conforming Amendment.--Paragraph (1) of section 48(b) is 
amended by striking ``section 194(b)(1)'' and inserting ``section 
194(b)(1) and without regard to section 194(b)(5)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                   TITLE VII--REAL ESTATE PROVISIONS

         Subtitle A--Improvements in Low-Income Housing Credit

SEC. 701. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clauses (i) and (ii) of section 42(h)(3)(C) 
(relating to State housing credit ceiling) are amended to read as 
follows:
                            ``(i) the unused State housing credit 
                        ceiling (if any) of such State for the 
                        preceding calendar year,
                            ``(ii) the greater of--
                                    ``(I) the applicable amount under 
                                subparagraph (H) multiplied by the 
                                State population, or
                                    ``(II) $2,000,000,''.
    (b) Applicable Amount.--Paragraph (3) of section 42(h) (relating to 
housing credit dollar amount for agencies) is amended by adding at the 
end the following new subparagraph:
                    ``(H) Applicable amount of state ceiling.--For 
                purposes of subparagraph (C)(ii), the applicable amount 
                shall be determined under the following table:

                ``For calendar year:
                                              The applicable amount is:
                    2000...................................   $1.35    
                    2001...................................    1.45    
                    2002...................................    1.55    
                    2003...................................    1.65    
                    2004 and thereafter...................  1.75.''.   

    (c) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar 
amount for agencies), as amended by subsection (c), is amended by 
adding at the end the following new subparagraph:
                    ``(I) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2004, the $2,000,000 in 
                        subparagraph (C) and the $1.75 amount in 
                        subparagraph (H) shall each 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 such calendar year by 
                                substituting `calendar year 2003' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the amount in 
                                subparagraph (C), any increase under 
                                clause (i) which is not a multiple of 
                                $5,000 shall be rounded to the next 
                                lowest multiple of $5,000.
                                    ``(II) In the case of the amount in 
                                subparagraph (H), any increase under 
                                clause (i) which is not a multiple of 5 
                                cents shall be rounded to the next 
                                lowest multiple of 5 cents.''.
    (d) Conforming Amendments.--
            (1) Section 42(h)(3)(C), as amended by subsection (a), is 
        amended--
                    (A) by striking ``clause (ii)'' in the matter 
                following clause (iv) and inserting ``clause (i)'', and
                    (B) by striking ``clauses (i)'' in the matter 
                following clause (iv) and inserting ``clauses (ii)''.
            (2) Section 42(h)(3)(D)(ii) is amended--
                    (A) by striking ``subparagraph (C)(ii)'' and 
                inserting ``subparagraph (C)(i)'', and
                    (B) by striking ``clauses (i)'' in subclause (II) 
                and inserting ``clauses (ii)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

SEC. 702. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG 
              PROJECTS.

    (a) Selection Criteria.--Subparagraph (C) of section 42(m)(1) 
(relating to certain selection criteria must be used) is amended--
            (1) by inserting ``, including whether the project includes 
        the use of existing housing as part of a community 
        revitalization plan'' before the comma at the end of clause 
        (iii), and
            (2) by striking clauses (v), (vi), and (vii) and inserting 
        the following new clauses:
                            ``(v) tenant populations with special 
                        housing needs,
                            ``(vi) public housing waiting lists,
                            ``(vii) tenant populations of individuals 
                        with children, and
                            ``(viii) projects intended for eventual 
                        tenant ownership.''.
    (b) Preference for Community Revitalization Projects Located in 
Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B) is amended 
by striking ``and'' at the end of subclause (I), by adding ``and'' at 
the end of subclause (II), and by inserting after subclause (II) the 
following new subclause:
                                    ``(III) projects which are located 
                                in qualified census tracts (as defined 
                                in subsection (d)(5)(C)) and the 
                                development of which contributes to a 
                                concerted community revitalization 
                                plan,''.

SEC. 703. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES.

    (a) Market Study; Public Disclosure of Rationale for Not Following 
Credit Allocation Priorities.--Subparagraph (A) of section 42(m)(1) 
(relating to responsibilities of housing credit agencies) is amended by 
striking ``and'' at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting a comma, and by adding at the end 
the following new clauses:
                            ``(iii) a comprehensive market study of the 
                        housing needs of low-income individuals in the 
                        area to be served by the project is conducted 
                        before the credit allocation is made and at the 
                        developer's expense by a disinterested party 
                        who is approved by such agency, and
                            ``(iv) a written explanation is available 
                        to the general public for any allocation of a 
                        housing credit dollar amount which is not made 
                        in accordance with established priorities and 
                        selection criteria of the housing credit 
                        agency.''.
    (b) Site Visits.--Clause (iii) of section 42(m)(1)(B) (relating to 
qualified allocation plan) is amended by inserting before the period 
``and in monitoring for noncompliance with habitability standards 
through regular site visits''.

SEC. 704. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING WHICH IS 
              ELIGIBLE FOR CREDIT.

    (a) Adjusted Basis To Include Portion of Certain Buildings Used by 
Low-Income Individuals Who Are Not Tenants and by Project Employees.--
Paragraph (4) of section 42(d) (relating to special rules relating to 
determination of adjusted basis) is amended--
            (1) by striking ``subparagraph (B)'' in subparagraph (A) 
        and inserting ``subparagraphs (B) and (C)'',
            (2) by redesignating subparagraph (C) as subparagraph (D), 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Inclusion of basis of property used to 
                provide services for certain nontenants.--
                            ``(i) In general.--The adjusted basis of 
                        any building located in a qualified census 
                        tract (as defined in paragraph (5)(C)) shall be 
                        determined by taking into account the adjusted 
                        basis of property (of a character subject to 
                        the allowance for depreciation and not 
                        otherwise taken into account) used throughout 
                        the taxable year in providing any community 
                        service facility.
                            ``(ii) Limitation.--The increase in the 
                        adjusted basis of any building which is taken 
                        into account by reason of clause (i) shall not 
                        exceed 10 percent of the eligible basis of the 
                        qualified low-income housing project of which 
                        it is a part. For purposes of the preceding 
                        sentence, all community service facilities 
                        which are part of the same qualified low-income 
                        housing project shall be treated as one 
                        facility.
                            ``(iii) Community service facility.--For 
                        purposes of this subparagraph, the term 
                        `community service facility' means any facility 
                        designed to serve primarily individuals whose 
                        income is 60 percent or less of area median 
                        income (within the meaning of subsection 
                        (g)(1)(B)).''.
    (b) Certain Native American Housing Assistance Disregarded in 
Determining Whether Building Is Federally Subsidized for Purposes of 
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2) 
(relating to determination of whether building is federally subsidized) 
is amended--
            (1) in clause (i), by inserting ``or the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' after 
        ``this subparagraph)'', and
            (2) in the subparagraph heading, by inserting ``or native 
        american housing assistance'' after ``home assistance''.

SEC. 705. OTHER MODIFICATIONS.

    (a) Allocation of Credit Limit to Certain Buildings.--
            (1) The first sentence of section 42(h)(1)(E)(ii) is 
        amended by striking ``(as of'' the first place it appears and 
        inserting ``(as of the later of the date which is 6 months 
        after the date that the allocation was made or''.
            (2) The last sentence of section 42(h)(3)(C) is amended by 
        striking ``project which'' and inserting ``project which fails 
        to meet the 10 percent test under paragraph (1)(E)(ii) on a 
        date after the close of the calendar year in which the 
        allocation was made or which''.
    (b) Determination of Whether Buildings Are Located in High Cost 
Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is amended--
            (1) by inserting ``either'' before ``in which 50 percent'', 
        and
            (2) by inserting before the period ``or which has a poverty 
        rate of at least 25 percent''.

SEC. 706. CARRYFORWARD RULES.

    (a) In General.--Clause (ii) of section 42(h)(3)(D) (relating to 
unused housing credit carryovers allocated among certain States) is 
amended by striking ``the excess'' and all that follows and inserting 
``the excess (if any) of--
                                    ``(I) the unused State housing 
                                credit ceiling for the year preceding 
                                such year, over
                                    ``(II) the aggregate housing credit 
                                dollar amount allocated for such 
                                year.''.
    (b) Conforming Amendment.--The second sentence of section 
42(h)(3)(C) (relating to State housing credit ceiling) is amended by 
striking ``clauses (i) and (iii)'' and inserting ``clauses (i) through 
(iv)''.

SEC. 707. EFFECTIVE DATE.

    Except as otherwise provided in this subtitle, the amendments made 
by this subtitle shall apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 1999, and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to any building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.

    Subtitle B--Provisions Relating to Real Estate Investment Trusts

   PART I--TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
                              SUBSIDIARIES

SEC. 711. MODIFICATIONS TO ASSET DIVERSIFICATION TEST.

    (a) In General.--Subparagraph (B) of section 856(c)(4) is amended 
to read as follows:
                    ``(B)(i) not more than 25 percent of the value of 
                its total assets is represented by securities (other 
                than those includible under subparagraph (A)), and
                    ``(ii) except with respect to a taxable REIT 
                subsidiary and securities includible under subparagraph 
                (A)--
                            ``(I) not more than 5 percent of the value 
                        of its total assets is represented by 
                        securities of any one issuer,
                            ``(II) the trust does not hold securities 
                        possessing more than 10 percent of the total 
                        voting power of the outstanding securities of 
                        any one issuer, and
                            ``(III) the trust does not hold securities 
                        having a value of more than 10 percent of the 
                        total value of the outstanding securities of 
                        any one issuer.''.
    (b) Exception for Straight Debt Securities.--Subsection (c) of 
section 856 is amended by adding at the end the following new 
paragraph:
            ``(7) Straight debt safe harbor in applying paragraph 
        (4).--Securities of an issuer which are straight debt (as 
        defined in section 1361(c)(5) without regard to subparagraph 
        (B)(iii) thereof) shall not be taken into account in applying 
        paragraph (4)(B)(ii)(III) if--
                    ``(A) the issuer is an individual, or
                    ``(B) the only securities of such issuer which are 
                held by the trust or a taxable REIT subsidiary of the 
                trust are straight debt (as so defined), or
                    ``(C) the issuer is a partnership and the trust 
                holds at least a 20 percent profits interest in the 
                partnership.''.

SEC. 712. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
              SUBSIDIARIES.

    (a) Income From Taxable REIT Subsidiaries Not Treated as 
Impermissible Tenant Service Income.--Clause (i) of section 
856(d)(7)(C) (relating to exceptions to impermissible tenant service 
income) is amended by inserting ``or through a taxable REIT subsidiary 
of such trust'' after ``income''.
    (b) Certain Income From Taxable REIT Subsidiaries Not Excluded From 
Rents From Real Property.--
            (1) In general.--Subsection (d) of section 856 (relating to 
        rents from real property defined) is amended by adding at the 
        end the following new paragraphs:
            ``(8) Special rule for taxable reit subsidiaries.--For 
        purposes of this subsection, amounts paid to a real estate 
        investment trust by a taxable REIT subsidiary of such trust 
        shall not be excluded from rents from real property by reason 
        of paragraph (2)(B) if the requirements of either of the 
        following subparagraphs are met:
                    ``(A) Limited rental exception.--The requirements 
                of this subparagraph are met with respect to any 
                property if at least 90 percent of the leased space of 
                the property is rented to persons other than taxable 
                REIT subsidiaries of such trust and other than persons 
                described in section 856(d)(2)(B). The preceding 
                sentence shall apply only to the extent that the 
                amounts paid to the trust as rents from real property 
                (as defined in paragraph (1) without regard to 
                paragraph (2)(B)) from such property are substantially 
                comparable to such rents made by the other tenants of 
                the trust's property for comparable space.
                    ``(B) Exception for certain lodging facilities.--
                The requirements of this subparagraph are met with 
                respect to an interest in real property which is a 
                qualified lodging facility leased by the trust to a 
                taxable REIT subsidiary of the trust if the property is 
                operated on behalf of such subsidiary by a person who 
                is an eligible independent contractor.
            ``(9) Eligible independent contractor.--For purposes of 
        paragraph (8)(B)--
                    ``(A) In general.--The term `eligible independent 
                contractor' means, with respect to any qualified 
                lodging facility, any independent contractor if, at the 
                time such contractor enters into a management agreement 
                or other similar service contract with the taxable REIT 
                subsidiary to operate the facility, such contractor (or 
                any related person) is actively engaged in the trade or 
                business of operating qualified lodging facilities for 
                any person who is not a related person with respect to 
                the real estate investment trust or the taxable REIT 
                subsidiary.
                    ``(B) Special rules.--Solely for purposes of this 
                paragraph and paragraph (8)(B), a person shall not fail 
                to be treated as an independent contractor with respect 
                to any qualified lodging facility by reason of any of 
                the following:
                            ``(i) The taxable REIT subsidiary bears the 
                        expenses for the operation of the facility 
                        pursuant to the management agreement or other 
                        similar service contract.
                            ``(ii) The taxable REIT subsidiary receives 
                        the revenues from the operation of such 
                        facility, net of expenses for such operation 
                        and fees payable to the operator pursuant to 
                        such agreement or contract.
                            ``(iii) The real estate investment trust 
                        receives income from such person with respect 
                        to another property that is attributable to a 
                        lease of such other property to such person 
                        that was in effect as of the later of--
                                    ``(I) January 1, 1999, or
                                    ``(II) the earliest date that any 
                                taxable REIT subsidiary of such trust 
                                entered into a management agreement or 
                                other similar service contract with 
                                such person with respect to such 
                                qualified lodging facility.
                    ``(C) Renewals, etc., of existing leases.--For 
                purposes of subparagraph (B)(iii)--
                            ``(i) a lease shall be treated as in effect 
                        on January 1, 1999, without regard to its 
                        renewal after such date, so long as such 
                        renewal is pursuant to the terms of such lease 
                        as in effect on whichever of the dates under 
                        subparagraph (B)(iii) is the latest, and
                            ``(ii) a lease of a property entered into 
                        after whichever of the dates under subparagraph 
                        (B)(iii) is the latest shall be treated as in 
                        effect on such date if--
                                    ``(I) on such date, a lease of such 
                                property from the trust was in effect, 
                                and
                                    ``(II) under the terms of the new 
                                lease, such trust receives a 
                                substantially similar or lesser benefit 
in comparison to the lease referred to in subclause (I).
                    ``(D) Qualified lodging facility.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `qualified 
                        lodging facility' means any lodging facility 
                        unless wagering activities are conducted at or 
                        in connection with such facility by any person 
                        who is engaged in the business of accepting 
                        wagers and who is legally authorized to engage 
                        in such business at or in connection with such 
                        facility.
                            ``(ii) Lodging facility.--The term `lodging 
                        facility' means a hotel, motel, or other 
                        establishment more than one-half of the 
                        dwelling units in which are used on a transient 
                        basis.
                            ``(iii) Customary amenities and 
                        facilities.--The term `lodging facility' 
                        includes customary amenities and facilities 
                        operated as part of, or associated with, the 
                        lodging facility so long as such amenities and 
                        facilities are customary for other properties 
                        of a comparable size and class owned by other 
                        owners unrelated to such real estate investment 
                        trust.
                    ``(E) Operate includes manage.--References in this 
                paragraph to operating a property shall be treated as 
                including a reference to managing the property.
                    ``(F) Related person.--Persons shall be treated as 
                related to each other if such persons are treated as a 
                single employer under subsection (a) or (b) of section 
                52.''.
            (2) Conforming amendment.--Subparagraph (B) of section 
        856(d)(2) is amended by inserting ``except as provided in 
        paragraph (8),'' after ``(B)''.
            (3) Determining rents from real property.--
                    (A)(i) Paragraph (1) of section 856(d) is amended 
                by striking ``adjusted bases'' each place it occurs and 
                inserting ``fair market values''.
                    (ii) The amendment made by this subparagraph shall 
                apply to taxable years beginning after December 31, 
                2000.
                    (B)(i) Clause (i) of section 856(d)(2)(B) is 
                amended by striking ``number'' and inserting ``value''.
                    (ii) The amendment made by this subparagraph shall 
                apply to amounts received or accrued in taxable years 
                beginning after December 31, 2000, except for amounts 
                paid pursuant to leases in effect on July 12, 1999, or 
                pursuant to a binding contract in effect on such date 
                and at all times thereafter.

SEC. 713. TAXABLE REIT SUBSIDIARY.

    (a) In General.--Section 856 is amended by adding at the end the 
following new subsection:
    ``(l) Taxable REIT Subsidiary.--For purposes of this part--
            ``(1) In general.--The term `taxable REIT subsidiary' 
        means, with respect to a real estate investment trust, a 
        corporation (other than a real estate investment trust) if--
                    ``(A) such trust directly or indirectly owns stock 
                in such corporation, and
                    ``(B) such trust and such corporation jointly elect 
                that such corporation shall be treated as a taxable 
                REIT subsidiary of such trust for purposes of this 
                part.
        Such an election, once made, shall be irrevocable unless both 
        such trust and corporation consent to its revocation. Such 
        election, and any revocation thereof, may be made without the 
        consent of the Secretary.
            ``(2) 35 percent ownership in another taxable reit 
        subsidiary.--The term `taxable REIT subsidiary' includes, with 
        respect to any real estate investment trust, any corporation 
        (other than a real estate investment trust) with respect to 
        which a taxable REIT subsidiary of such trust owns directly or 
        indirectly--
                    ``(A) securities possessing more than 35 percent of 
                the total voting power of the outstanding securities of 
                such corporation, or
                    ``(B) securities having a value of more than 35 
                percent of the total value of the outstanding 
                securities of such corporation.
        The preceding sentence shall not apply to a qualified REIT 
        subsidiary (as defined in subsection (i)(2)). The rule of 
        section 856(c)(7) shall apply for purposes of subparagraph (B).
            ``(3) Exceptions.--The term `taxable REIT subsidiary' shall 
        not include--
                    ``(A) any corporation which directly or indirectly 
                operates or manages a lodging facility or a health care 
                facility, and
                    ``(B) any corporation which directly or indirectly 
                provides to any other person (under a franchise, 
                license, or otherwise) rights to any brand name under 
                which any lodging facility or health care facility is 
                operated.
        Subparagraph (B) shall not apply to rights provided to an 
        eligible independent contractor to operate or manage a lodging 
        facility if such rights are held by such corporation as a 
        franchisee, licensee, or in a similar capacity and such lodging 
        facility is either owned by such corporation or is leased to 
        such corporation from the real estate investment trust.
            ``(4) Definitions.--For purposes of paragraph (3)--
                    ``(A) Lodging facility.--The term `lodging 
                facility' has the meaning given to such term by 
                paragraph (9)(D)(ii).
                    ``(B) Health care facility.--The term `health care 
                facility' has the meaning given to such term by 
                subsection (e)(6)(D)(ii).''.
    (b) Conforming Amendment.--Paragraph (2) of section 856(i) is 
amended by adding at the end the following new sentence: ``Such term 
shall not include a taxable REIT subsidiary.''.

SEC. 714. LIMITATION ON EARNINGS STRIPPING.

    Paragraph (3) of section 163(j) (relating to limitation on 
deduction for interest on certain indebtedness) is amended by striking 
``and'' at the end of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
                    ``(C) any interest paid or accrued (directly or 
                indirectly) by a taxable REIT subsidiary (as defined in 
                section 856(l)) of a real estate investment trust to 
                such trust.''.

SEC. 715. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS.

    (a) In General.--Subsection (b) of section 857 (relating to method 
of taxation of real estate investment trusts and holders of shares or 
certificates of beneficial interest) is amended by redesignating 
paragraphs (7) and (8) as paragraphs (8) and (9), respectively, and by 
inserting after paragraph (6) the following new paragraph:
            ``(7) Income from redetermined rents, redetermined 
        deductions, and excess interest.--
                    ``(A) Imposition of tax.--There is hereby imposed 
                for each taxable year of the real estate investment 
                trust a tax equal to 100 percent of redetermined rents, 
                redetermined deductions, and excess interest.
                    ``(B) Redetermined rents.--
                            ``(i) In general.--The term `redetermined 
                        rents' means rents from real property (as 
                        defined in subsection 856(d)) the amount of 
                        which would (but for subparagraph (E)) be 
                        reduced on distribution, apportionment, or 
                        allocation under section 482 to clearly reflect 
                        income as a result of services furnished or 
                        rendered by a taxable REIT subsidiary of the 
                        real estate investment trust to a tenant of 
                        such trust.
                            ``(ii) Exception for certain services.--
                        Clause (i) shall not apply to amounts received 
                        directly or indirectly by a real estate 
                        investment trust for services described in 
                        paragraph (1)(B) or (7)(C)(i) of section 
                        856(d).
                            ``(iii) Exception for de minimis amounts.--
                        Clause (i) shall not apply to amounts described 
                        in section 856(d)(7)(A) with respect to a 
                        property to the extent such amounts do not 
                        exceed the one percent threshold described in 
                        section 856(d)(7)(B) with respect to such 
                        property.
                            ``(iv) Exception for comparably priced 
                        services.--Clause (i) shall not apply to any 
                        service rendered by a taxable REIT subsidiary 
                        of a real estate investment trust to a tenant 
                        of such trust if--
                                    ``(I) such subsidiary renders a 
                                significant amount of similar services 
                                to persons other than such trust and 
                                tenants of such trust who are unrelated 
                                (within the meaning of section 
                                856(d)(8)(F)) to such subsidiary, 
                                trust, and tenants, but
                                    ``(II) only to the extent the 
                                charge for such service so rendered is 
                                substantially comparable to the charge 
                                for the similar services rendered to 
                                persons referred to in subclause (I).
                            ``(v) Exception for certain separately 
                        charged services.--Clause (i) shall not apply 
                        to any service rendered by a taxable REIT 
                        subsidiary of a real estate investment trust to 
                        a tenant of such trust if--
                                    ``(I) the rents paid to the trust 
                                by tenants (leasing at least 25 percent 
                                of the net leasable space in the 
                                trust's property) who are not receiving 
                                such service from such subsidiary are 
                                substantially comparable to the rents 
                                paid by tenants leasing comparable 
                                space who are receiving such service 
                                from such subsidiary, and
                                    ``(II) the charge for such service 
                                from such subsidiary is separately 
                                stated.
                            ``(vi) Exception for certain services based 
                        on subsidiary's income from the services.--
                        Clause (i) shall not apply to any service 
                        rendered by a taxable REIT subsidiary of a real 
                        estate investment trust to a tenant of such 
                        trust if the gross income of such subsidiary 
                        from such service is not less than 150 percent 
                        of such subsidiary's direct cost in furnishing 
                        or rendering the service.
                            ``(vii) Exceptions granted by secretary.--
                        The Secretary may waive the tax otherwise 
                        imposed by subparagraph (A) if the trust 
                        establishes to the satisfaction of the 
                        Secretary that rents charged to tenants were 
                        established on an arms' length basis even 
                        though a taxable REIT subsidiary of the trust 
                        provided services to such tenants.
                    ``(C) Redetermined deductions.--The term 
                `redetermined deductions' means deductions (other than 
                redetermined rents) of a taxable REIT subsidiary of a 
                real estate investment trust if the amount of such 
                deductions would (but for subparagraph (E)) be 
                decreased on distribution, apportionment, or allocation 
                under section 482 to clearly reflect income as between 
                such subsidiary and such trust.
                    ``(D) Excess interest.--The term `excess interest' 
                means any deductions for interest payments by a taxable 
                REIT subsidiary of a real estate investment trust to 
                such trust to the extent that the interest payments are 
                in excess of a rate that is commercially reasonable.
                    ``(E) Coordination with section 482.--The 
                imposition of tax under subparagraph (A) shall be in 
                lieu of any distribution, apportionment, or allocation 
                under section 482.
                    ``(F) Regulatory authority.--The Secretary shall 
                prescribe such regulations as may be necessary or 
                appropriate to carry out the purposes of this 
                paragraph. Until the Secretary prescribes such 
                regulations, real estate investment trusts and their 
                taxable REIT subsidiaries may base their allocations on 
                any reasonable method.''.
    (b) Amount Subject to Tax Not Required To Be Distributed.--
Subparagraph (E) of section 857(b)(2) (relating to real estate 
investment trust taxable income) is amended by striking ``paragraph 
(5)'' and inserting ``paragraphs (5) and (7)''.

SEC. 716. EFFECTIVE DATE.

    (a) In General.--The amendments made by this part shall apply to 
taxable years beginning after December 31, 2000.
    (b) Transitional Rules Related to Section 711.--
            (1) Existing arrangements.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the amendment made by section 711 shall 
                not apply to a real estate investment trust with 
                respect to--
                            (i) securities of a corporation held 
                        directly or indirectly by such trust on July 
                        12, 1999,
                            (ii) securities of a corporation held by an 
                        entity on July 12, 1999, if such trust acquires 
                        control of such entity pursuant to a written 
                        binding contract in effect on such date and at 
                        all times thereafter before such acquisition,
                            (iii) securities received by such trust (or 
                        a successor) in exchange for, or with respect 
                        to, securities described in clause (i) or (ii) 
                        in a transaction in which gain or loss is not 
                        recognized, and
                            (iv) securities acquired directly or 
                        indirectly by such trust as part of a 
                        reorganization (as defined in section 368(a)(1) 
                        of the Internal Revenue Code of 1986) with 
                        respect to such trust if such securities are 
                        described in clause (i), (ii), or (iii) with 
                        respect to any other real estate investment 
                        trust.
                    (B) New trade or business or substantial new 
                assets.--Subparagraph (A) shall cease to apply to 
                securities of a corporation as of the first day after 
July 12, 1999, on which such corporation engages in a substantial new 
line of business, or acquires any substantial asset, other than--
                            (i) pursuant to a binding contract in 
                        effect on such date and at all times thereafter 
                        before the acquisition of such asset,
                            (ii) in a transaction in which gain or loss 
                        is not recognized by reason of section 1031 or 
                        1033 of the Internal Revenue Code of 1986, or
                            (iii) in a reorganization (as so defined) 
                        with another corporation the securities of 
                        which are described in paragraph (1)(A) of this 
                        subsection.
                    (C) Limitation on transition rules.--Subparagraph 
                (A) shall cease to apply to securities of a corporation 
                held, acquired, or received, directly or indirectly, by 
                a real estate investment trust as of the first day 
                after July 12, 1999, on which such trust acquires any 
                additional securities of such corporation other than--
                            (i) pursuant to a binding contract in 
                        effect on July 12, 1999, and at all times 
                        thereafter, or
                            (ii) in a reorganization (as so defined) 
                        with another corporation the securities of 
                        which are described in paragraph (1)(A) of this 
                        subsection.
            (2) Tax-free conversion.--If--
                    (A) at the time of an election for a corporation to 
                become a taxable REIT subsidiary, the amendment made by 
                section 1021 does not apply to such corporation by 
                reason of paragraph (1), and
                    (B) such election first takes effect before January 
                1, 2004,
        such election shall be treated as a reorganization qualifying 
        under section 368(a)(1)(A) of such Code.

                       PART II--HEALTH CARE REITS

SEC. 721. HEALTH CARE REITS.

    (a) Special Foreclosure Rule for Health Care Properties.--
Subsection (e) of section 856 (relating to special rules for 
foreclosure property) is amended by adding at the end the following new 
paragraph:
            ``(6) Special rule for qualified health care properties.--
        For purposes of this subsection--
                    ``(A) Acquisition at expiration of lease.--The term 
                `foreclosure property' shall include any qualified 
                health care property acquired by a real estate 
                investment trust as the result of the termination of a 
                lease of such property (other than a termination by 
                reason of a default, or the imminence of a default, on 
                the lease).
                    ``(B) Grace period.--In the case of a qualified 
                health care property which is foreclosure property 
                solely by reason of subparagraph (A), in lieu of 
                applying paragraphs (2) and (3)--
                            ``(i) the qualified health care property 
                        shall cease to be foreclosure property as of 
                        the close of the second taxable year after the 
                        taxable year in which such trust acquired such 
                        property, and
                            ``(ii) if the real estate investment trust 
                        establishes to the satisfaction of the 
                        Secretary that an extension of the grace period 
                        in clause (i) is necessary to the orderly 
                        leasing or liquidation of the trust's interest 
                        in such qualified health care property, the 
                        Secretary may grant one or more extensions of 
                        the grace period for such qualified health care 
                        property.
                Any such extension shall not extend the grace period 
                beyond the close of the 6th year after the taxable year 
                in which such trust acquired such qualified health care 
                property.
                    ``(C) Income from independent contractors.--For 
                purposes of applying paragraph (4)(C) with respect to 
                qualified health care property which is foreclosure 
                property by reason of subparagraph (A) or paragraph 
                (1), income derived or received by the trust from an 
                independent contractor shall be disregarded to the 
                extent such income is attributable to--
                            ``(i) any lease of property in effect on 
                        the date the real estate investment trust 
                        acquired the qualified health care property 
                        (without regard to its renewal after such date 
                        so long as such renewal is pursuant to the 
                        terms of such lease as in effect on such date), 
                        or
                            ``(ii) any lease of property entered into 
                        after such date if--
                                    ``(I) on such date, a lease of such 
                                property from the trust was in effect, 
                                and
                                    ``(II) under the terms of the new 
                                lease, such trust receives a 
                                substantially similar or lesser benefit 
                                in comparison to the lease referred to 
                                in subclause (I).
                    ``(D) Qualified health care property.--
                            ``(i) In general.--The term `qualified 
                        health care property' means any real property 
                        (including interests therein), and any personal 
                        property incident to such real property, 
                        which--
                                    ``(I) is a health care facility, or
                                    ``(II) is necessary or incidental 
                                to the use of a health care facility.
                            ``(ii) Health care facility.--For purposes 
                        of clause (i), the term `health care facility' 
                        means a hospital, nursing facility, assisted 
                        living facility, congregate care facility, 
                        qualified continuing care facility (as defined 
                        in section 7872(g)(4)), or other licensed 
                        facility which extends medical or nursing or 
                        ancillary services to patients and which, 
                        immediately before the termination, expiration, 
                        default, or breach of the lease of or mortgage 
                        secured by such facility, was operated by a 
                        provider of such services which was eligible 
                        for participation in the medicare program under 
                        title XVIII of the Social Security Act with 
                        respect to such facility.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

      PART III--CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES

SEC. 731. CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES.

    (a) Distribution Requirement.--Clauses (i) and (ii) of section 
857(a)(1)(A) (relating to requirements applicable to real estate 
investment trusts) are each amended by striking ``95 percent (90 
percent for taxable years beginning before January 1, 1980)'' and 
inserting ``90 percent''.
    (b) Imposition of Tax.--Clause (i) of section 857(b)(5)(A) 
(relating to imposition of tax in case of failure to meet certain 
requirements) is amended by striking ``95 percent (90 percent in the 
case of taxable years beginning before January 1, 1980)'' and inserting 
``90 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

 PART IV--CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT SERVICE 
                                 INCOME

SEC. 741. CLARIFICATION OF EXCEPTION FOR INDEPENDENT OPERATORS.

    (a) In General.--Paragraph (3) of section 856(d) (relating to 
independent contractor defined) is amended by adding at the end the 
following flush sentence:
        ``In the event that any class of stock of either the real 
        estate investment trust or such person is regularly traded on 
        an established securities market, only persons who own, 
        directly or indirectly, more than 5 percent of such class of 
        stock shall be taken into account as owning any of the stock of 
        such class for purposes of applying the 35 percent limitation 
        set forth in subparagraph (B) (but all of the outstanding stock 
        of such class shall be considered outstanding in order to 
        compute the denominator for purpose of determining the 
        applicable percentage of ownership).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

           PART V--MODIFICATION OF EARNINGS AND PROFITS RULES

SEC. 751. MODIFICATION OF EARNINGS AND PROFITS RULES.

    (a) Rules for Determining Whether Regulated Investment Company Has 
Earnings and Profits From Non-RIC Year.--Subsection (c) of section 852 
is amended by adding at the end the following new paragraph:
            ``(3) Distributions to meet requirements of subsection 
        (a)(2)(B).--Any distribution which is made in order to comply 
        with the requirements of subsection (a)(2)(B)--
                    ``(A) shall be treated for purposes of this 
                subsection and subsection (a)(2)(B) as made from the 
                earliest earnings and profits accumulated in any 
                taxable year to which the provisions of this part did 
                not apply rather than the most recently accumulated 
earnings and profits, and
                    ``(B) to the extent treated under subparagraph (A) 
                as made from accumulated earnings and profits, shall 
                not be treated as a distribution for purposes of 
                subsection (b)(2)(D) and section 855.''.
    (b) Clarification of Application of REIT Spillover Dividend Rules 
to Distributions To Meet Qualification Requirement.--Subparagraph (B) 
of section 857(d)(3) is amended by inserting before the period ``and 
section 858''.
    (c) Application of Deficiency Dividend Procedures.--Paragraph (1) 
of section 852(e) is amended by adding at the end the following new 
sentence: ``If the determination under subparagraph (A) is solely as a 
result of the failure to meet the requirements of subsection (a)(2), 
the preceding sentence shall also apply for purposes of applying 
subsection (a)(2) to the non-RIC year.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

              Subtitle C--Private Activity Bond Volume Cap

SEC. 761. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP ON PRIVATE 
              ACTIVITY BONDS.

    (a) In General.--The table contained in section 146(d)(2) (relating 
to per capita limit; aggregate limit) is amended to read as follows:
      

 
       ``Calendar Year           Per Capita Limit      Aggregate Limit
------------------------------------------------------------------------
  2000.......................         $55.00             165,000,000
  2001.......................          60.00             180,000,000
  2002.......................          65.00             195,000,000
  2003.......................          70.00             210,000,000
  2004 and thereafter........          75.00           225,000,000.''.

    (b) Effective Date.--The amendment made by this section shall apply 
to calendar years beginning after 1999.

 Subtitle D--Exclusion from gross income for certain forgiven mortgage 
                              obligations

SEC. 771. EXCLUSION FROM GROSS INCOME FOR CERTAIN FORGIVEN MORTGAGE 
              OBLIGATIONS.

    (a) In General.--Paragraph (1) of section 108(a) of the Internal 
Revenue Code of 1986 (relating to exclusion from gross income) is 
amended by striking ``or'' at the end of both subparagraphs (A) and 
(C), by striking the period at the end of subparagraph (D) and 
inserting ``, or'', and by inserting after subparagraph (D) the 
following new subparagraph:
                    ``(E) in the case of an individual, the 
                indebtedness discharged is qualified residential 
                indebtedness.''.
    (b) Qualified Residential Indebtedness Shortfall.--Section 108 of 
such Code (relating to discharge of indebtedness) is amended by adding 
at the end the following new subsection:
    ``(h) Qualified Residential Indebtedness.--
            ``(1) Limitations.--The amount excluded under subparagraph 
        (E) of subsection (a)(1) with respect to any qualified 
        residential indebtedness shall not exceed the excess (if any) 
        of--
                    ``(A) the outstanding principal amount of such 
                indebtedness (immediately before the discharge), over
                    ``(B) the sum of--
                            ``(i) the amount realized from the sale of 
                        the real property securing such indebtedness 
                        reduced by the cost of such sale, and
                            ``(ii) the outstanding principal amount of 
                        any other indebtedness secured by such 
                        property.
            ``(2) Qualified residential indebtedness.--
                    ``(A) In general.--The term `qualified residential 
                indebtedness' means indebtedness which--
                            ``(i) was incurred or assumed by the 
                        taxpayer in connection with real property used 
                        as a residence and is secured by such real 
                        property,
                            ``(ii) is incurred or assumed to acquire, 
                        construct, reconstruct, or substantially 
                        improve such real property, and
                            ``(iii) with respect to which such taxpayer 
                        makes an election to have this paragraph apply.
                    ``(B) Refinanced indebtedness.--Such term shall 
                include indebtedness resulting from the refinancing of 
                indebtedness under subparagraph (A)(ii), but only to 
                the extent the refinanced indebtedness does not exceed 
                the amount of the indebtedness being refinanced.
                    ``(C) Exceptions.--Such term shall not include 
                qualified farm indebtedness or qualified real property 
                business indebtedness.''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 108(a) of such Code is 
        amended--
                    (A) in subparagraph (A) by striking ``and (D)'' and 
                inserting ``(D), and (E)'', and
                    (B) by amending subparagraph (B) to read as 
                follows:
                    ``(B) Insolvency exclusion takes precedence over 
                qualified farm exclusion; qualified real property 
                business exclusion; and qualified residential shortfall 
                exclusion.--Subparagraphs (C), (D), and (E) of 
                paragraph (1) shall not apply to a discharge to the 
                extent the taxpayer is insolvent.''.
            (2) Paragraph (1) of section 108(b) of such Code is amended 
        by striking ``or (C)'' and inserting ``(C), or (E)''.
            (3) Subsection (c) of section 121 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(4) Special rule relating to discharge of indebtedness.--
        The amount of gain which (but for this paragraph) would be 
        excluded from gross income under subsection (a) with respect to 
        a principal residence shall be reduced by the amount excluded 
        from gross income under section 108(a)(1)(E) with respect to 
        such residence.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges after the date of the enactment of this Act.

                  TITLE VIII--MISCELLANEOUS PROVISIONS

SEC. 801. CREDIT FOR MODIFICATIONS TO INTER-CITY BUSES REQUIRED UNDER 
              THE AMERICANS WITH DISABILITIES ACT OF 1990.

    (a) In General.--Subsection (a) of section 44 (relating to 
expenditures to provide access to disabled individuals) is amended to 
read as follows:
    ``(a) General Rule.--For purposes of section 38, the amount of the 
disabled access credit determined under this section for any taxable 
year shall be an amount equal to the sum of--
            ``(1) in the case of an eligible small business, 50 percent 
        of so much of the eligible access expenditures for the taxable 
        year as exceed $250 but do not exceed $10,250, and
            ``(2) 50 percent of so much of the eligible bus access 
        expenditures for the taxable year with respect to each eligible 
        bus as exceed $250 but do not exceed $30,250.''.
    (b) Eligible Bus Access Expenditures.--Section 44 is amended by 
redesignating subsections (d) and (e) as subsections (e) and (f), 
respectively, and by inserting after subsection (c) the following new 
subsection:
    ``(d) Eligible Bus Access Expenditures.--For purposes of this 
section--
            ``(1) In general.--The term `eligible bus access 
        expenditures' means amounts paid or incurred by the taxpayer 
        for the purpose of enabling the taxpayer's eligible bus to 
        comply with applicable requirements under the Americans With 
        Disabilities Act of 1990 (as in effect on the date of the 
        enactment of this subsection).
            ``(2) Certain expenditures not included.--The amount of 
        eligible bus access expenditures otherwise taken into account 
        under subsection (a)(2) shall be reduced to the extent that 
        funds for such expenditures are received under any Federal, 
        State, or local program.
            ``(3) Eligible bus.--The term `eligible bus' means any 
        automobile bus eligible for a refund under section 6427(b) by 
        reason of transportation described in section 6427(b)(1)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999, and before 
January 1, 2012.

SEC. 802. CERTAIN EDUCATIONAL BENEFITS PROVIDED BY AN EMPLOYER TO 
              CHILDREN OF EMPLOYEES EXCLUDABLE FROM GROSS INCOME AS A 
              SCHOLARSHIP.

    (a) In General.--Section 117 (relating to qualified scholarships) 
is amended by adding at the end the following new subsection:
    ``(e) Employer-Provided Educational Benefits Provided to Children 
of Employees.--
            ``(1) In general.--In determining whether any amount is a 
        qualified scholarship for purposes of subsection (a), the fact 
        that such amount is provided in connection with an employment 
        relationship shall be disregarded if--
                    ``(A) such amount is provided by the employer to a 
                child (as defined in section 151(c)(3)) of an employee 
                of such employer,
                    ``(B) such amount is provided pursuant to a plan 
                which meets the nondiscrimination requirements of 
                subsection (d)(3), and
                    ``(C) amounts provided under such plan are in 
                addition to any other compensation payable to employees 
                and such plan does not provide employees with a choice 
                between such amounts and any other benefit.
        For purposes of subparagraph (C), the business practices of the 
        employer (as well as such plan) shall be taken into account.
            ``(2) Dollar limitations.--
                    ``(A) Per child.--The amount excluded from the 
                gross income of the employee by reason of paragraph (1) 
                for a taxable year with respect to amounts provided to 
                each child of such employee shall not exceed $2,000.
                    ``(B) Aggregate limit.--The amount excluded from 
                the gross income of the employee by reason of paragraph 
                (1) for a taxable year (after the application of 
                subparagraph (A)) shall not exceed the excess of the 
                dollar amount contained in section 127(a)(2) over the 
                amount excluded from the employee's gross income under 
                section 127 for such year.
            ``(3) Principal shareholders and owners.--Paragraph (1) 
        shall not apply to any amount provided to any child of any 
        individual if such individual (or such individual's spouse) 
        owns (on any day of the year) more than 5 percent of the stock 
        or of the capital or profits interest in the employer.
            ``(4) Degree requirement not to apply.--In the case of an 
        amount which is treated as a qualified scholarship by reason of 
        this subsection, subsection (a) shall be applied without regard 
        to the requirement that the recipient be a candidate for a 
        degree.
            ``(5) Certain other rules to apply.--Rules similar to the 
        rules of paragraphs (4), (5), and (7) of section 127(c) shall 
        apply for purposes of this subsection.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 803. TAX INCENTIVES FOR QUALIFIED UNITED STATES INDEPENDENT FILM 
              AND TELEVISION PRODUCTION.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
(relating to refundable credits) is amended by redesignating section 35 
as section 36 and by inserting after section 34 the following new 
section:

``SEC. 35. UNITED STATES INDEPENDENT FILM AND TELEVISION PRODUCTION 
              WAGE CREDIT.

    ``(a) Amount of Credit.--There shall be allowed as a credit against 
the tax imposed by this subtitle for the taxable year an amount equal 
to 20 percent of the qualified wages paid or incurred during the 
calendar year which ends with or within the taxable year.
    ``(b) Only First $20,000 of Wages per Year Taken Into Account.--
With respect to each qualified United States independent film and 
television production, the amount of qualified wages paid or incurred 
to each qualified United States independent film and television 
production employee which may be taken into account for a calendar year 
shall not exceed $20,000.
    ``(c) Qualified Wages.--For purposes of this section--
            ``(1) In general.--The term `qualified wages' means any 
        wages paid or incurred by an employer for services performed by 
        an employee while such employee is a qualified United States 
        independent film and television production employee.
            ``(2) Qualified united states independent film and 
        television production employee.--
                    ``(A) In general.--The term `qualified United 
                States independent film and television production 
                employee' means, with respect to any period, any 
                employee of an employer if substantially all of the 
                services performed during such period by such employee 
                for such employer are performed in an activity related 
                to any qualified United States independent film and 
                television production in a trade or business of the 
                employer.
                    ``(B) Certain individuals not eligible.--Such term 
                shall not include--
                            ``(i) any individual described in 
                        subparagraph (A), (B), or (C) of section 
                        51(i)(1), and
                            ``(ii) any 5-percent owner (as defined in 
                        section 416(i)(1)(B).
            ``(3) Coordination with other wage credits.--No credit 
        shall be allowed under any other provision of this chapter for 
        wages paid to any employee during any calendar year if the 
        employer is allowed a credit under this section for any of such 
        wages.
            ``(4) Wages.--The term `wages' has the same meaning as when 
        used in section 51.
    ``(d) Qualified United States Independent Film and Television 
Production.--For purposes of this section--
            ``(1) In general.--The term `qualified United States 
        independent film and television production' means any 
        production of any motion picture (whether released theatrically 
        or directly to video cassette or any other format), a mini 
series, or a pilot production for a dramatic series if--
                    ``(A) the production is produced in whole or in 
                substantial part within the United States (determined 
                on the basis of proportion of the qualified United 
                States independent film and television production 
                employees with respect to such production to total 
                employee performing services related to such 
                production),
                    ``(B) the production is created primarily for use 
                as public entertainment or for educational purposes, 
                and
                    ``(C) the total production cost of the production 
                is less than $10,000,000.
            ``(2) Public entertainment.--The term `public 
        entertainment' includes a motion picture film, video tape, or 
        television program intended for initial broadcast via the 
        public broadcast spectrum or delivered via cable distribution, 
        or productions that are submitted to a national organization 
        that rates films for violent or adult content. Such term does 
        not include any film or tape the market for which is primarily 
        topical, is otherwise essentially transitory in nature, or is 
        produced for private noncommercial use.
            ``(3) Total production cost.--The term `total production 
        cost' includes costs incurred in the delivery of the final 
        master copy but does not include development, acquisition, and 
        marketing costs of the qualified United States independent film 
        and television production.
    ``(e) Controlled Groups.--For purposes of this section--
            ``(1) all employers treated as a single employer under 
        subsection (a) or (b) of section 52 shall be treated as a 
        single employer for purposes of this subpart, and
            ``(2) the credit (if any) determined under this section 
        with respect to each such employer shall be its proportionate 
        share of the wages giving rise to such credit.
    ``(f) Certain Other Rules Made Applicable.--Rules similar to the 
rules of section 51(k) and subsections (c) and (d) of section 52 shall 
apply for purposes of this section.''.
    (b) Denial of Double Benefit.--Subsection (a) of section 280C is 
amended by inserting ``35,'' before ``45A(a),''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 is amended by striking the last item 
        and inserting the following new items:

                              ``Sec. 35. United States independent film 
                                        and television production wage 
                                        credit.
                              ``Sec. 36. Overpayments of tax.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid or incurred after the date of the enactment of this 
Act in taxable years ending after such date.
                                 <all>