[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 364 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 364

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 16, 2011

   Mr. Pryor (for himself, Mr. Brown of Massachusetts, and Mr. Kohl) 
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 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 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 SAVINGS ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, a Small 
Business Savings Account shall be treated for purposes of this title in 
the same manner as an individual retirement plan.
    ``(b) Small Business Savings Account.--For purposes of this title, 
the term `Small Business Savings Account' means a tax preferred savings 
plan which is designated at the time of establishment of the plan as a 
Small Business 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 
        Savings Account.
            ``(2) Contribution limit.--
                    ``(A) In general.--The aggregate amount of 
                contributions for any taxable year to all Small 
                Business 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 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, 2011, 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 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 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 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 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 Savings Account 
                which is not a qualified distribution, such 
                distribution shall be treated as made from 
                contributions to the Small Business Savings Account to 
                the extent that such distribution, when added to all 
                previous distributions from the Small Business Savings 
                Account, does not exceed the aggregate amount of 
                contributions to the Small Business Savings Account.
                    ``(B) Treatment of amounts remaining in account.--
                Any remaining amount in a Small Business 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 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 Savings Accounts.--For 
purposes of this section, in the case of contributions to all Small 
Business 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 Savings Accounts.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2010.
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