109 HR 5322 IH: Retirement Enhancement Act of 2006 U.S. House of Representatives 2006-05-09 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 5322 IN THE HOUSE OF REPRESENTATIVES May 9, 2006 Ms. Ginny Brown-Waite of Florida introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to increase the contribution limits for individual retirement plans, defined contribution plans, and salary reduction plans, and for other purposes.

1.

Short title

This Act may be cited as the Retirement Enhancement Act of 2006.

2.

Modification of limits on contributions to certain retirement accounts

(a)

Individual retirement accounts

(1)

In general

The table in subparagraph (A) of section 219(b)(5) of the Internal Revenue Code of 1986 (defining deductible amount) is amended to read as follows: For taxable years beginning in:The deductible amount is:2007 or 2008$8,0002009 or thereafter$10,000. . (2)

Cost of living adjustment

Clause (i) of section 219(b)(5)(C) of such Code is amended— (A)in the matter preceding subclause (I) by striking after 2008, the $5,000 and inserting after 2009, the $10,000, and (B)in subclause (II) by striking calendar year 2007 and inserting calendar year 2008. (3)

Increase in catch-up contribution amount

Subparagraph (B) of section 219(b)(5) of such Code is amended to read as follows: (B)

Catch-up contributions for individuals 50 or older

In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall be increased by $2,000.. (4)

Increase in limitation on deduction for active participants in certain pension plans

(A)

Joint returns

Clause (i) of section 219(g)(3)(B) of such Code is amended to read as follows: (i)In the case of a taxpayer filing a joint return for taxable years beginning in 2007 or thereafter, the applicable dollar amount is $240,000.. (B)

Returns other than joint and married filing separately

Clause (ii) of section 219(g)(3)(B) of such Code is amended to read as follows: (ii)In the case of any other taxpayer (other than a married individual filing a separate return), for taxable years beginning in 2007 or thereafter, the applicable dollar amount is $150,000.. (C)

Cost-of-living adjustment

Paragraph (3) of section 219(g) of such Code (relating to adjusted gross income; applicable dollar amount) is amended by adding at the end the following new subparagraph: (C)

Cost-of-living adjustment

(i)

In general

In the case of any taxable year beginning in a calendar year after 2007, the $240,000 amount in clause (i) and the $150,000 in clause (ii) of subparagraph (B) 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 the calendar year in which the taxable year begins, determined by substituting calendar year 2006 for calendar year 1992 in subparagraph (B) thereof. (ii)

Rounding rules

If any amount after adjustment under clause (i) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.. (b)

Increase in elective deferrals to qualified plans

(1)

In General

Subparagraph (A) of section 402(g)(1) of the Internal Revenue Code of 1986 (relating to general rule on limitation on exclusion for elective deferrals) is amended by striking the applicable dollar amount and inserting $30,000. (2)

Cost-of-living adjustment

Paragraph (4) of section 402(g) of such Code (relating to is amended cost-of-living adjustment) is amended— (A)by striking December 31, 2006 and inserting December 31, 2007, and (B)by striking $15,000 and inserting $30,000. (3)

Catch-up contributions

(A)

Plans other than Simple and 401(k) plans

Clause (i) of section 414(v)(2)(B) of such Code is amended by striking applicable dollar amount shall be determined and all that follows and inserting applicable dollar amount shall be $10,000. (B)

Simple and 401(k) plans

Clause (ii) of section 414(v)(2)(B) of such Code is amended by striking applicable dollar amount shall be determined and all that follows and inserting applicable dollar amount shall be $5,000. (C)

Inflation adjustment

Subparagraph (C) of section 414(v)(2) of such Code is amended— (i)by striking December 31, 2006 and inserting December 31, 2007, (ii)by striking $5,000 and inserting $10,000, and (iii)by striking $2,500 and inserting $5,000. (c)

Increase in elective deferrals to 457 plans

(1)

In general

Subparagraph (A) of section 457(b)(2) of such Code (defining eligible deferred compensation plan) is amended to read as follows: (A)$30,000, or. (2)

Cost-of-living adjustment

Paragraph (15) of section 457(e) of such Code (relating to other definitions and special rules) is amended to read as follows: (15)

Cost-of-living adjustment

In the case of taxable years beginning after December 31, 2007, the Secretary shall adjust the $30,000 amount under subsection (b)(2)(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, 2006, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.. (d)

Defined contribution plans

(1)

Dollar limit

Subparagraph (A) of section 415(c)(1) of such Code (relating to limitation for defined contribution plans) is amended by striking $40,000 and inserting $80,000. (2)

Cost-of-living adjustments

Subsection (d) of section 415 of such Code (relating to cost-of-living adjustments) is amended— (A)by striking $40,000 in paragraph (1)(C) and inserting $80,000, and (B)in paragraph (3)(D)— (i)by striking $40,000 in the heading and inserting $80,000, and (ii)by striking July 1, 2001 and inserting July 1, 2006. (e)

Simple Retirement Accounts

(1)

In general

Clause (i) of section 408(p)(2)(E) of such Code is amended by striking applicable dollar amount shall be determined and all that follows and inserting applicable dollar amount shall be $20,000. (2)

Cost-of-living adjustment

Clause (ii) of section 408(p)(2)(E) of such Code is amended— (A)by striking December 31, 2005 and inserting December 31, 2007, (B)by striking $10,000 and inserting $20,000, and (C)by striking July 1, 2004 and inserting July 1, 2006. (f)

Effective Date

The amendments made by this section shall apply to years beginning after December 31, 2006.

3.

One-time election to apply higher income thresholds under Savers credit

(a)

In general

Section 25B of the Internal Revenue Code of 1986 (relating to elective deferrals and IRA contributions by certain individuals) is amended by redesignating subsections (e), (f), (g), and (h) as subsections (f), (g), (h), and (i), respectively, and by inserting after subsection (d) the following new subsection: (e)

One-time election to apply higher income thresholds

(1)

In general

In the case of an eligible individual for whom an election is in effect under this subsection for any taxable year, subsection (b) shall be applied by substituting for each dollar amount specified in the table therein an amount equal to 200 percent of such dollar amount. (2)

Election applies only to 1 taxable year

An election to have paragraph (1) apply with respect to any eligible individual may not be made for any taxable year if such an election is in effect with respect to such individual for any other prior taxable year.. (b)

Credit made permanent

(1)

Repeal of termination

Section 25B of such Code, as amended by subsection (a), is amended by striking subsection (i). (2)

Repeal of EGTRRA sunset

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to section 618 of such Act (relating to nonrefundable credit to certain individuals for elective deferrals and IRA contributions). (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.