II 109th CONGRESS 2d Session S. 2193 IN THE SENATE OF THE UNITED STATES January 25, 2006 Mrs. Hutchison 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 establish fairness in the treatment of certain pension plans maintained by churches, and for other purposes.

1.

Extending waiver of defined benefit compensation limit to participants in church plans who are not highly compensated employees

(a)

In general

Paragraph (11) of section 415(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following: Subparagraph (B) of paragraph (1) shall not apply to a plan maintained by an organization described in section 3121(w)(3) except with respect to highly compensated benefits. For purposes of this paragraph, the term highly compensated benefits means any benefits accrued for an employee in any year on or after the first year in which such employee is a highly compensated employee (as defined in section 414(q)) of the organization described in section 3121(w)(3). For purposes of applying paragraph (1)(B) to highly compensated benefits, all benefits of the employee otherwise taken into account (without regard to this paragraph) shall be taken into account.. (b)

Effective date

The amendments made by this section shall apply to plan years beginning after December 31, 2005.

2.

Equalizing treatment of retirement income accounts provided by churches with respect to acquisition indebtedness

(a)

In general

Section 514(c)(9)(C) of the Internal Revenue Code of 1986 (defining qualified organization) 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)a retirement income account (as defined in section 403(b)(9)(B)). . (b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2005.