[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 60 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 60

    To amend the Internal Revenue Code of 1986 to provide equitable 
       treatment for contributions by employees to pension plans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 19, 1999

 Mr. Grassley introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide equitable 
       treatment for contributions by employees to pension plans.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Enhanced Savings 
Opportunities Act''.
    (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.

SEC. 2. 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 to read as follows:
                    ``(B) the participant's compensation.''
            (2) 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 on December 
                31, 1998)''.
                    (B) Section 403(b) is amended--
                            (i) by striking ``the exclusion allowance 
                        for such taxable year'' in paragraph (I) and 
                        inserting ``the applicable limit under section 
                        415'',
                            (ii) by striking paragraph (2), and
                            (iii) 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).
                    (C) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (D) 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)''.
                    (E) 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).''
                    (F) Section 415(c) is amended by striking paragraph 
                (4).
                    (G) 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, 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).''
                    (H) Section 415(e)(5) is amended--
                            (i) by striking ``(except in the case of a 
                        participant who has elected under subsection 
                        (c)(4)(D) to have the provisions of subsection 
                        (c)(4)(C) apply)'', and
                            (ii) by striking the last sentence.
                    (I) Section 415(n)(2)(B) is amended by striking 
                ``percentage''.
                    (J) Subparagraph (B) of section 402(g)(7) is 
                amended by inserting before the period at the end the 
                following: ``(as in effect on the date of the enactment 
                of the Enhanced Savings Opportunity Act)''.
    (b) Special Rules for Sections 403(b) and 408.--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.''
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--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''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 1999.
            (2) Special rules for sections 403(b) and 408.--The 
        amendment made by subsection (b) shall apply to limitation 
        years beginning after December 31, 2000.

SEC. 3. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              LIMITS.

    (a) In General.--Section 404 is amended by adding at the end the 
following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Limits.--Elective deferrals (as defined in section 402(g)(3)) shall not 
be subject to any limitations described in this section (other than 
subsection (a)), and such elective deferrals shall not be taken into 
account in applying such limitations to any other contributions.''
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1999.
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