[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3817 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3817

To amend the Internal Revenue Code of 1986 to provide a tax credit for 
  certain entities making matching contributions to retirement plans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 3, 2006

  Mr. Talent 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 a tax credit for 
  certain entities making matching contributions to retirement plans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Match Act of 2006''.

SEC. 2. TAX CREDIT FOR MATCHING FUNDS FOR RETIREMENT PLANS.

    (a) Allowance of Credit.--
            (1) In general.--Subpart D of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        business related credits) is amended by adding at the end the 
        following new section:

``SEC. 45N. RETIREMENT PLAN INVESTMENT CREDIT.

    ``(a) Determination of Amount.--For purposes of section 38, the 
retirement plan investment credit determined under this section with 
respect to any eligible entity for any taxable year is an amount equal 
to the retirement investment provided by such eligible entity during 
the taxable year.
    ``(b) Retirement Investment.--For purposes of this section, the 
term `retirement investment' means, with respect to any taxable year, 
an amount equal to the sum of--
            ``(1) the aggregate amount of qualified savings matches 
        made by the eligible entity under an eligible retirement 
        matching program during the taxable year, plus
            ``(2) $20 with respect to each new participating individual 
        of the entity for the taxable year.
    ``(c) Eligible Retirement Matching Program.--For purposes of this 
section--
            ``(1) In general.--The term `eligible retirement matching 
        program' means a program of an eligible entity--
                    ``(A) under which such entity provides a qualified 
                savings match for the first $2,000 of qualified 
                retirement savings contributions made during the 
                taxable year of an eligible individual to a 
                participating retirement plan, and
                    ``(B) which is approved by the Secretary as meeting 
                the requirements of paragraph (2).
            ``(2) Program requirements.--A program shall not be an 
        eligible retirement matching program unless the program meets 
        the following requirements:
                    ``(A) The program requires that a deposit of any 
                qualified savings match shall be made not later than 90 
                days after receipt of the qualified retirement savings 
                contribution.
                    ``(B) The program requires that qualified savings 
                matches shall be provided on a uniform basis to 
                eligible individuals.
                    ``(C) The program requires that the eligible entity 
                shall not provide a qualified savings match to an 
                individual unless the eligible entity--
                            ``(i) has no knowledge or reason to believe 
                        the individual is not an eligible individual, 
                        and
                            ``(ii) exercises reasonable due diligence 
                        in determining whether an individual is an 
                        eligible individual for the taxable year in 
                        which the individual makes the qualified 
                        retirement savings contribution.
                    ``(D) The program requires that any qualified 
                retirement savings contribution, and any qualified 
                savings match attributable to such contribution, may 
                not be distributed before the first day of the calendar 
                year following the calendar year in which such 
                contribution was made.
                    ``(E) The program includes such procedures as 
                required by the Secretary in order to ensure that the 
                program operates pursuant to the requirements of this 
                section.
                    ``(F) The program meets such other requirements as 
                the Secretary may require.
            ``(3) Proof of status as an eligible individual.--In any 
        taxable year in which contributions or deferrals are made with 
        respect to a participating retirement plan by an individual, an 
        eligible entity--
                    ``(A) may require such individual--
                            ``(i) to certify that--
                                    ``(I) such individual understands 
                                the rules and requirements of the 
                                program, and
                                    ``(II) such individual is an 
                                eligible individual, or
                            ``(ii) to provide the eligible entity with 
                        the income eligibility certificate provided to 
                        such individual under section 7529, and
                    ``(B) may request that such individual disclose the 
                individual's Federal income tax return for the 
                immediately preceding taxable year or to grant the 
                eligible entity access to such return.
    ``(d) New Participating Individual.--For purposes of this section, 
the term `new participating individual' means an eligible individual 
who--
            ``(1) makes a qualified retirement savings contribution 
        during the taxable year of the eligible entity to a 
        participating retirement plan, and
            ``(2) has not made a qualified retirement savings 
        contribution to any eligible retirement plan maintained by the 
        eligible entity in any preceding taxable year of the eligible 
        entity.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Eligible entity.--
                    ``(A) In general.--The term `eligible entity' 
                means, with respect to any eligible retirement matching 
                program, any person which--
                            ``(i) has a relationship described in 
                        subparagraph (B) to the participating 
                        retirement plan under the program, and
                            ``(ii) is designated as the eligible entity 
                        under the program.
                    ``(B) Relationship described.--A person has a 
                relationship described in this subparagraph to a 
                participating retirement plan if such person is--
                            ``(i) the employer maintaining the plan,
                            ``(ii) the plan administrator,
                            ``(iii) the trustee of the plan, or
                            ``(iv) any other person specified under 
                        regulations prescribed by the Secretary.
            ``(2) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any taxable year, an individual 
                who--
                            ``(i) has attained the age of 18 as of the 
                        last day of such taxable year,
                            ``(ii) was not a student (as defined in 
                        section 151(c)(4)) for the immediately 
                        preceding taxable year,
                            ``(iii) is not an individual with respect 
                        to whom a deduction under section 151 is 
                        allowable to another taxpayer for a taxable 
                        year of the other taxpayer ending during the 
                        immediately preceding taxable year of the 
                        individual, and
                            ``(iv) is a taxpayer the modified adjusted 
                        gross income of whom for the immediately 
                        preceding taxable year does not exceed--
                                    ``(I) $50,000, in the case of a 
                                taxpayer described in section 1(a),
                                    ``(II) $37,500, in the case of a 
                                taxpayer described in section 1(b), and
                                    ``(III) $25,000, in the case of any 
                                other taxpayer.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A)(iv), the term `modified adjusted 
                gross income' means adjusted gross income determined 
                without regard to sections 911, 931, and 933.
                    ``(C) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2008, 
                each of the dollar amounts in subparagraph (A)(iv) 
                shall 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 2007` 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                Any increase determined under the preceding sentence 
                shall be rounded to the nearest multiple of $500.
            ``(3) Qualified savings match.--The term `qualified savings 
        match' means a contribution by an eligible entity on behalf of 
        an eligible individual to a participating retirement plan in an 
        amount equal to 50 percent of the qualified retirement savings 
        contribution made by such eligible individual during the 
        taxable year.
            ``(4) Qualified retirement savings contributions.--
                    ``(A) In general.--The term `qualified retirement 
                savings contributions' means, with respect to any 
                taxable year of an eligible individual--
                            ``(i) the amount of contributions made by 
                        such eligible individual to a participating 
                        retirement plan for such individual's benefit, 
                        or
                            ``(ii) the amount of elective deferrals 
                        made by or on behalf of such eligible 
                        individual under a participating retirement 
                        plan.
                    ``(B) Reduction for certain distributions.--
                            ``(i) In general.--The qualified retirement 
                        savings contributions determined under 
                        subparagraph (A) shall be reduced (but not 
                        below zero) by the aggregate distributions 
                        received by the individual during the testing 
                        period from all eligible retirement plans of 
                        such individual. The preceding sentence shall 
                        not apply to the portion of any distribution 
                        which is not includible in gross income by 
                        reason of a trustee-to-trustee transfer or a 
                        rollover distribution.
                            ``(ii) Testing period.--For purposes of 
                        clause (i), the testing period, with respect to 
                        a taxable year, is the period which includes 
                        such taxable year and the 2 preceding taxable 
                        years.
                            ``(iii) Excepted distributions.--There 
                        shall not be taken into account under clause 
                        (i)--
                                    ``(I) any distribution referred to 
                                in section 72(p), 401(k)(8), 401(m)(6), 
                                402(g)(2), 404(k), or 408(d)(4),
                                    ``(II) any distribution to which 
                                section 408A(d)(3) applies, and
                                    ``(III) any distribution to which 
                                subsection (f) applies.
                            ``(iv) Treatment of distributions received 
                        by spouse of individual.--For purposes of 
                        determining distributions received by an 
                        individual under clause (i) for any taxable 
                        year, any distribution received by the spouse 
                        of such individual shall be treated as received 
                        by such individual if such individual and 
                        spouse file a joint return for such taxable 
                        year and for the taxable year during which the 
                        spouse receives the distribution.
            ``(5) Participating retirement plan.--The term 
        `participating retirement plan' means any eligible retirement 
        plan which is part of an eligible retirement matching program.
            ``(6) Eligible retirement plan.--The term `eligible 
        retirement plan' has the meaning given such term under section 
        402(c)(8)(B).
    ``(f) Treatment of Disqualified Savings Matches.--
            ``(1) In general.--If any individual receives a 
        disqualified savings match in any taxable year, then--
                    ``(A) an amount equal to such disqualified savings 
                match plus any earnings attributable to such 
                disqualified savings match shall be distributed to such 
                individual, and
                    ``(B) the tax imposed under this chapter for such 
                taxable year on such eligible individual shall be 
                increased by an amount equal to 100 percent of such 
                disqualified savings match.
            ``(2) Treatment of distribution.--
                    ``(A) Income.--Notwithstanding section 72(x)--
                            ``(i) any disqualified savings match for 
                        any taxable year shall not be included in the 
                        gross income of the individual for the taxable 
                        year, and
                            ``(ii) the amount of any distribution made 
                        pursuant to paragraph (1)(A) shall not be 
                        included in gross income for the taxable year.
                    ``(B) Penalties.--Section 72(t) shall not apply to 
                any distribution made pursuant to paragraph (1)(A).
                    ``(C) Effect on plans.--A plan shall not be treated 
                as failing to meet the requirements of section 
                401(k)(2)(B), 403(b)(7)(A)(ii), or 403(b)(11) by reason 
                of any distribution made pursuant to paragraph (1)(A).
            ``(3) Disqualified savings match.--For purposes of this 
        subsection, the term `disqualified savings match' means, with 
        respect to any taxable year of an individual--
                    ``(A) in the case of an individual who is not an 
                eligible individual for such taxable year, any payment 
                under an eligible retirement matching program for which 
                an eligible entity claims a credit under subsection 
                (a), and
                    ``(B) in the case of an individual who is an 
                eligible individual for such taxable year, the amount 
                of aggregate qualified savings matches received under 
                one or more participating retirement plans which is in 
                excess of $1,000.
    ``(g) Special Rules.--
            ``(1) Denial of double benefit.--No deduction or credit 
        (other than under this section) shall be allowed under this 
        chapter with respect to any expense which is taken into account 
        under subsection (a) in determining the credit under this 
        section.
            ``(2) Coordination with pension plan rules.--
                    ``(A) In general.--Any qualified savings match 
                which is made by an eligible entity under an eligible 
                retirement matching program--
                            ``(i) shall not be treated as a matching 
                        contribution of the entity for purposes of this 
                        title, and
                            ``(ii) shall not be subject to any 
                        otherwise applicable limitation contained in 
                        section 402(g), 402(h), 403(b), 404(a), 404(h), 
                        408, 415, or 457, and shall not be taken into 
                        account in applying such limitations to other 
                        contributions or benefits under such plan or 
                        any other plan, with respect to the year in 
                        which the contribution is made.
                    ``(B) Effect on plans.--A 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)(3), 408(k)(6), 
                408(p), 410(b), or 416 by reason of any qualified 
                savings match made by an eligible entity under an 
                eligible retirement matching program.
    ``(h) Credit May Be Transferred.--
            ``(1) In general.--An eligible entity may transfer any 
        credit allowable to the eligible entity under subsection (a) to 
        any person other than to another eligible entity which is 
        exempt from tax under this title. The determination as to 
        whether a credit is allowable shall be made without regard to 
        the tax-exempt status of the eligible entity.
            ``(2) Consent required for revocation.--Any transfer under 
        paragraph (1) may be revoked only with the consent of the 
        Secretary.
            ``(3) Regulations.--The Secretary may prescribe such 
        regulations as necessary to ensure that any credit described in 
        paragraph (1) is claimed once and not retransferred by a 
        transferee.
    ``(i) Reports.--
            ``(1) In general.--Each eligible entity shall make such 
        reports to the Secretary and to eligible individuals 
        regarding--
                    ``(A) qualified savings matches provided under an 
                eligible retirement matching program,
                    ``(B) distributions from any participating 
                retirement plan account aggregating $10 or more during 
                any calendar year, and
                    ``(C) such other information as the Secretary may 
                require.
            ``(2) Time for making reports.--The reports required by 
        this subsection--
                    ``(A) shall be filed at such time and in such 
                manner as the Secretary prescribes, and
                    ``(B) shall be furnished to eligible 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.
    ``(j) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section.''.
            (2) Credit treated as business credit.--Section 38(b) of 
        such Code (relating to current year business credit) is amended 
        by striking ``and'' at the end of paragraph (29), by striking 
        the period at the end of paragraph (30) and inserting ``, 
        plus'', and by adding at the end the following new paragraph:
            ``(31) the retirement plan investment credit determined 
        under section 45N(a).''.
    (b) Treatment of Matching Contributions.--Section 72 of the 
Internal Revenue Code of 1986 is amended by redesignating subsection 
(x) as subsection (y) and by inserting after subsection (w) the 
following new subsection:
    ``(x) Treatment of Eligible Retirement Matching Program 
Contributions.--
            ``(1) In general.--If an eligible entity provides a 
        qualified savings match to an eligible retirement plan under an 
        eligible retirement matching program, then the amount of such 
        match--
                    ``(A) shall be treated as income to the eligible 
                individual, and
                    ``(B) shall be added to the investment on the 
                contract.
            ``(2) Definitions.--Any term used in this subsection which 
        is also used in section 45N shall have the meaning given such 
        term by section 45N.''.
    (c) Certificates of Eligibility.--Chapter 77 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
section:

``SEC. 7529. CERTIFICATE OF INCOME ELIGIBILITY FOR ELIGIBLE RETIREMENT 
              MATCHING PROGRAMS.

    ``(a) In General.--The Secretary shall establish a program for 
providing income eligibility certificates to taxpayers who meet the 
requirements of clauses (iii) and (iv) of section 45N(e)(2)(A).
    ``(b) Provision of Certificate Through Mail.--As soon as 
practicable after receiving a taxpayer's return for a taxable year, the 
Secretary shall mail such certificate to the taxpayer.''.
    (d) Penalty on Eligible Entities for Matching Contributions to 
Ineligible Individuals.--Part I of subchapter B of chapter 68 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 6720B. PAYMENT OF QUALIFIED MATCHING CONTRIBUTIONS TO INELIGIBLE 
              INDIVIDUALS.

    ``(a) In General.--If an eligible entity provides ineligible 
savings matches under an eligible retirement program to 10 percent or 
more of the individuals participating in such program during the 
taxable year, then such eligible entity shall pay a penalty in an 
amount equal to 25 percent of the credit allowed to such entity under 
section 45N for such taxable year.
    ``(b) Penalty in Case of Intentional Disregard.--If an eligible 
entity provides an ineligible savings match to an individual in any 
taxable year due to intentional disregard of whether such individual is 
an eligible individual, such eligible entity shall pay a penalty in an 
amount equal to 100 percent of the credit allowed to such entity under 
section 45N for such taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Ineligible savings match.--The term `ineligible 
        savings match' means a qualified savings match which is paid to 
        an individual who is not an eligible individual for the taxable 
        year in which the qualified savings match is paid.
            ``(2) Other definitions.--Any term used in this section 
        which is also used in section 45N shall have the meaning given 
        such term by section 45N.''.
    (e) Coordination With Savers' Credit.--Section 25B(c) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(3) Participation in eligible retirement matching 
        programs.--The term `eligible individual' shall not include any 
        individual who receives a qualified savings match under an 
        eligible retirement matching program under section 45N during 
        the taxable year.''.
    (f) Account Funds Disregarded for Purposes of Certain Means-Tested 
Federal Programs.--
            (1) Earned income credit.--Subparagraph (B) of section 
        32(c)(2) of the Internal Revenue Code of 1986 is amended by 
        striking ``and'' at the end of clause (v), by striking the 
        period at the end of clause (vi) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(vii) no qualified savings match (as 
                        defined in section 45N(e)(3)), including 
                        earnings thereon, paid as part of an eligible 
                        retirement matching program (as defined in 
                        section 45N(c)) shall be taken into account.''.
            (2) Other programs.--Notwithstanding any other provision of 
        Federal law that requires consideration of 1 or more financial 
        circumstances of an individual, for the purpose of determining 
        eligibility to receive, or the amount of, any assistance or 
        benefit authorized by such provision to be provided to or for 
        the benefit of such individual, the amount of any qualified 
        savings match (within the meaning of section 45N(e)(3) of the 
        Internal Revenue Code of 1986, as added by this Act), including 
        earnings thereon, paid to such individual under an eligible 
        retirement matching program (as defined in section 45N(c) of 
        such Code) shall be disregarded for such purpose.
    (g) Clerical Amendments.--
            (1) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

``Sec. 45N. Retirement plan investment credit.''.
            (2) The table of sections for part I of subchapter B of 
        chapter 68 of such Code is amended by adding at the end the 
        following new item:

``Sec. 6720B. Payment of qualified matching contributions to ineligible 
                            individuals.''.
            (3) The table of sections for chapter 77 of such Code is 
        amended by adding at the end the following new item:

``Sec. 7529. Certificate of income eligibility for eligible retirement 
                            matching programs.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2007.
                                 <all>