IRA Savings Opportunity Act of 1997

Summary: IRA Savings Opportunity Act of 1997 - Amends the Internal Revenue Code, with respect to retirement savings plans, to, among other things: (1) double income limitations; (2) permit a worker without an employer plan to contribute an additional $2,000 to a plan; and (3) allow a credit of 20 percent, subject to income limitations, for amounts which would otherwise be allowed as a qualified retirement deduction.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``IRA Savings Opportunity Act of 
1997''.

SEC. 2. MODIFICATIONS TO INDIVIDUAL RETIREMENT PLANS.

    (a) Increase in Income Limitations.--Subparagraph (B) of section 
219(g)(3) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``$40,000'' in clause (i) and inserting 
        ``$80,000, and
            (2) by striking ``$25,000'' in clause (ii) and inserting 
        ``$50,000''.
    (b) Extension of Phaseout Range.--Clause (ii) of section 
219(g)(2)(A) of such Code is amended by striking ``$10,000'' and 
inserting ``$20,000''.
    (c) Additional $2,000 of Nondeductible Contributions Permitted for 
Certain Individuals Who Are Not Active Participants in Employer 
Plans.--
            (1) In general.--Subparagraph (B) of section 408(o)(2) of 
        such Code (relating to nondeductible limit) is amended by 
        adding at the end the following new clause:
                            ``(iii) Additional $2,000 of nondeductible 
                        contributions permitted for certain individuals 
                        who are not active participants in employer 
                        plans.--
                                    ``(I) In general.--In the case of 
                                an individual who is not an active 
                                participant (as defined in section 
                                219(g)) for any part of any plan year 
                                ending with or within the taxable year, 
                                the amount determined under clause 
                                (i)(I) shall be increased by $2,000.
                                    ``(II) Reduction based on adjusted 
                                gross income.--The $2,000 amount in 
                                subclause (I) shall be reduced (but not 
                                below zero) by an amount which bears 
                                the same ratio to $2,000 as the excess 
                                of the taxpayer's adjusted gross income 
                                (as determined under section 219(g)(3)) 
                                for the taxable year over the 
                                applicable dollar amount (as defined in 
                                such section) bears to $20,000. The 
                                rules of subparagraphs (B) and (C) of 
                                paragraph (2), and paragraph (4), of 
                                section 219(g) shall apply for purposes 
                                of the preceding sentence.''
            (2) Conforming amendments.--
                    (A) Subsections (a)(1), (b), and (j) of section 408 
                of such Code are each amended by striking ``$2,000'' 
                and inserting ``$4,000''.
                    (B) The last sentence of section 408(d)(5) of such 
                Code is amended by striking before the period ``and by 
                treating the limitation under section 219(b)(1)(A) as 
                being $4,000''.
                    (C) The last sentence of section 4973(b) of such 
                Code (relating to excess contributions) is amended to 
                read as follows: ``For purposes of paragraphs (1)(B) 
                and (2)(C), the amount allowable as a deduction under 
                section 219 shall be computed without regard to section 
                219(g) and by treating the limitation under section 
                219(b)(1)(A) as being $4,000.''
    (d) Eligibility for IRA Deduction Determined Without Regard to 
Spouse's Participation in Pension Plan.--Paragraph (1) of section 
219(g) of such Code (relating to limitation on deduction for active 
participants in certain pension plans) is amended by striking ``or the 
individual's spouse''.
    (e) Alternative Credit for Lower Income Taxpayers.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of such Code (relating to nonrefundable personal 
        credits) is amended by inserting after section 23 the following 
        new section:

``SEC. 24. RETIREMENT SAVINGS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 20 percent of the amount which 
would (but for subsection (c)) be allowed as a deduction under section 
219 for such taxable year.
    ``(b) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The amount of the credit which would 
        (but for this subsection) be allowed under subsection (a) for 
        the taxable year shall be reduced (but not below zero) by an 
        amount which bears the same ratio to such amount of credit as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's adjusted gross income 
                        for such taxable year, over
                            ``(ii) the applicable dollar amount, bears 
                        to
                    ``(B) $10,000.
            ``(2) Rounding.--Any amount determined under this 
        subsection which is not a multiple of $10 shall be rounded to 
        the next lowest $10.
            ``(3) Applicable dollar amount.--For purposes of this 
        subsection, the term `applicable dollar amount' means--
                    ``(A) in the case of a taxpayer filing a joint 
                return, $40,000,
                    ``(B) in the case of any other taxpayer (other than 
                a married individual filing a separate return), 
                $25,000, and
                    ``(C) in the case of a married individual filing a 
                separate return, zero.
        The rule of section 219(g)(4) shall apply for purposes of this 
        paragraph.
    ``(c) Coordination With Deduction.--No deduction shall be allowed 
under section 219 for amount paid by or on behalf of an individual for 
any taxable year if any such amount (with respect to such individual) 
is taken into account in determining the credit under this section for 
such year.''
            (2) Clerical amendment.--The table of sections for such 
        subpart A is amended by inserting after the item relating to 
        section 23 the following new item:

                              ``Sec. 24. Retirement savings.''
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. COORDINATION OF IRA DEDUCTION LIMIT WITH ELECTIVE DEFERRAL 
              LIMIT.

    (a) In General.--Section 219(b) of the Internal Revenue Code of 
1986 (relating to maximum amount of deduction) is amended by adding at 
the end the following new paragraph:
            ``(5) Coordination with elective deferral limit.--The 
        amount determined under paragraph (1) and subsection (c)(1)(A) 
        with respect to any individual for any taxable year shall not 
        exceed the excess (if any) of--
                    ``(A) the limitation applicable for the taxable 
                year under section 402(g)(1), over
                    ``(B) the elective deferrals (as defined in section 
                402(g)(3)) of such individual for such taxable year.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.