[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 2985 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 2985

  To amend the Internal Revenue Code of 1986 to establish a new Small 
                   Business Startup Savings Account.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 4, 2010

   Mr. Pryor 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 a new Small 
                   Business Startup Savings Account.

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

SECTION 1. ESTABLISHMENT OF SMALL BUSINESS STARTUP SAVINGS ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 408A the following new section:

``SEC. 408B. SMALL BUSINESS STARTUP SAVINGS ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, a Small 
Business Startup Savings Account shall be treated for purposes of this 
title in the same manner as an individual retirement plan.
    ``(b) Small Business Startup Savings Account.--For purposes of this 
title, the term `Small Business Startup Savings Account' means a tax 
preferred savings plan which is designated at the time of establishment 
of the plan as a Small Business Startup Savings Account. Such 
designation shall be made in such manner as the Secretary may 
prescribe.
    ``(c) Treatment of Contributions.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to a Small Business 
        Startup Savings Account.
            ``(2) Contribution limit.--
                    ``(A) In general.--The aggregate amount of 
                contributions for any taxable year to all Small 
                Business Startup Savings Accounts maintained for the 
                benefit of an individual shall not exceed $10,000.
                    ``(B) Aggregate limitation.--The aggregate of the 
                amounts which may be taken into account under 
                subparagraph (A) for all taxable years with respect to 
                all Small Business Startup Savings Accounts maintained 
                for the benefit of an individual shall not exceed 
                $150,000.
                    ``(C) Cost of living adjustment.--The Secretary 
                shall adjust annually the $10,000 amount in 
                subparagraph (A) for increases in the cost-of-living at 
                the same time and in the same manner as adjustments 
                under section 415(d); except that the base period shall 
                be the calendar quarter beginning July 1, 2010, and any 
                increase which is not a multiple of $500 shall be 
                rounded to the next lowest multiple of $500.
            ``(3) Contributions permitted after age 70\1/2\.--
        Contributions to a Small Business Startup Savings Account may 
        be made even after the individual for whom the account is 
        maintained has attained age 70\1/2\.
            ``(4) Rollovers from retirement plans not allowed.--A 
        taxpayer shall not be allowed to make a qualified rollover 
        contribution to a Small Business Startup Savings Account from 
        any qualified retirement plan (as defined in section 4974(c)).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) General rules.--
                    ``(A) Limitations on distributions.--All qualified 
                distributions from a Small Business Startup Savings 
                Account--
                            ``(i) shall be limited to a single 
                        business, and
                            ``(ii) must be disbursed not later than the 
                        last day of the 5th taxable year beginning 
                        after the initial disbursement.
                    ``(B) Exclusions from gross income.--Any qualified 
                distribution from a Small Business Startup Savings 
                Account shall not be includible in gross income.
            ``(2) Qualified distribution.--For purposes of this 
        subsection, the term `qualified distribution' means any payment 
        or distribution made for operating capital, the purchase of 
        equipment or facilities, marketing, training, incorporation, 
        and accounting fees.
            ``(3) Nonqualified distributions.--
                    ``(A) In general.--In applying section 72 to any 
                distribution from a Small Business Startup Savings 
                Account which is not a qualified distribution, such 
                distribution shall be treated as made from 
                contributions to the Small Business Startup Savings 
                Account to the extent that such distribution, when 
                added to all previous distributions from the Small 
                Business Startup Savings Account, does not exceed the 
                aggregate amount of contributions to the Small Business 
                Startup Savings Account.
                    ``(B) Treatment of amounts remaining in account.--
                Any remaining amount in a Small Business Startup 
                Savings Account following the date described in 
                paragraph (1)(A)(ii) shall be treated as distributed 
                during the taxable year following such date and such 
                distribution shall not be treated as a qualified 
                distribution.
            ``(4) Rollovers to a roth ira.--Subject to the application 
        of the treatment of contributions in section 408A(c), 
        distributions from a Small Business Startup Savings Account may 
        be rolled over into a Roth IRA.''.
    (b) Excess Contributions.--Section 4973 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new 
subsection:
    ``(h) Excess Contributions to Small Business Startup Savings 
Accounts.--For purposes of this section, in the case of contributions 
to all Small Business Startup Savings Accounts (within the meaning of 
section 408B(b)) maintained for the benefit of an individual, the term 
`excess contributions' means the sum of--
            ``(1) the excess (if any) of--
                    ``(A) the amount contributed to such accounts for 
                the taxable year, over
                    ``(B) the amount allowable as a contribution under 
                section 408B(c)(2) for such taxable year, 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, and
                    ``(B) the excess (if any) of--
                            ``(i) the maximum amount allowable as a 
                        contribution under section 408B(c)(2) for such 
                        taxable year, over
                            ``(ii) the amount contributed to such 
                        accounts for such taxable year.''.
    (c) Conforming Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 408A 
the following new item:

``Sec. 408B. Small Business Startup Savings Accounts.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.
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