Retirement Savings Assistance Act

Summary: Retirement Savings Assistance Act - Amends the Internal Revenue Code to:  (1) permit specified additional pension contributions for an individual who has attained the age of 35 (but not the age of 50), and who was not a plan participant during the previous five years, until such individual attains the age of 50; and (2) increase the dollar and repeal the 25 percent defined contribution plan limits.

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Retirement Savings 
Assistance Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. ADDITIONAL SALARY REDUCTION CATCH-UP CONTRIBUTIONS.

    (a) Limitation on Exclusion for Elective Deferrals.--
            (1) In general.--Subsection (g) of section 402 is amended 
        by adding at the end the following:
            ``(10) Catch-up contributions for formerly unemployed and 
        out of the workforce individuals.--In the case of an individual 
        who has attained age 35 (and not attained age 50) and who has 
        not been an active participant in a plan under section 401(a), 
        403(b) or 457 during the five prior calendar years, the 
        limitation of paragraph (1) for such year and subsequent years 
        until attaining the age of 50, after the application of 
        paragraph (8), shall be increased by $2,000.
            ``(11) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (1) for 
        such year, after the application of paragraph (8), shall be 
        increased by $10,000.''
            (2) Cost-of-living adjustment.--Paragraph (5) of section 
        402(g) (relating to cost-of-living adjustment) is amended by 
        inserting ``and the $2,000 amount under paragraph (10) and the 
        $10,000 amount under paragraph (11)'' after ``paragraph (1)''.
    (b) Simple Retirement Accounts.--
            (1) In general.--Paragraph (2) of section 408(p) (relating 
        to qualified salary reduction arrangement) is amended by 
        redesignating subparagraph (E) as subparagraph (G) and by 
        inserting after subparagraph (D) the following new 
        subparagraphs:
                    ``(E) Catch-up contributions for formerly 
                unemployed and out of the workforce individuals.--In 
                the case of an individual who has attained age 35 (and 
                not attained age 50) and who has not been an active 
                participant in a plan under section 401(a), 403(b) or 
                457 during the five prior calendar years, the 
                limitation of subparagraph (A)(ii) for such year and 
                subsequent years until attaining the age of 50 shall be 
                increased by $2,000.
                    ``(F) Catch-up contributions for those approaching 
                retirement.--In the case of an individual who has 
                attained age 50 during any taxable year the limitation 
                of subparagraph (A)(ii) for such year shall be 
                increased by $10,000.''
            (2) Cost-of-living adjustment.--Subparagraph (G) of section 
        408(p)(2) (as so redesignated) is amended by inserting ``and 
        the $2,000 under subparagraph (E) and the $10,000 under 
        subparagraph (F)'' after ``subparagraph (A)(ii)''.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subsection (b) of section 457 (relating to 
        definition of eligible deferred compensation plan) is amended 
        by adding at the end of the following new paragraphs:
            ``(7) Catch-up contributions for formerly unemployed and 
        out of the workforce individuals.--In the case of an individual 
        who has attained age 35 (and not attained age 50) and who has 
        not been an active participant in a plan under section 401(a), 
        403(b) or 457 during the five prior calendar years, the 
        limitation of paragraph (2)(A) for such year and subsequent 
        years until attaining the age of 50 shall be increased by 
        $2,000.''
            ``(8) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (2)(A) 
        for such year shall be increased by $10,000.''
            (2) Cost-of-living adjustment.--Paragraph (15) of section 
        457(e) (relating to cost-of-living adjustment) is amended by 
        inserting ``, and the $2,000 amount specified in subsection 
        (b)(7) and the $10,000 amount specified in subsection (b)(8),'' 
        after ``(c)(1)''.
    (d) Conforming Amendments.--The additional catch-up contribution 
amounts made by subsections (a), (b) and (c) shall be deemed to satisfy 
IRC sections 401(a)(4), 401(k)(3) and 416, if these sections are 
otherwise satisfied.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1998.

SEC. 3. INCREASE IN OVERALL AND ``AFTER TAX'' CONTRIBUTION LIMIT.

    (a) Increase in Limit.--
            (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``$30,000'' and inserting ``$40,000''.
            (2) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) in paragraph (1)(C) by striking ``$30,000'' and 
                inserting ``$40,000'', and
                    (B) in paragraph (3)(D)--
                            (i) by striking ``$30,000'' in the heading 
                        and inserting ``$40,000,'' and
                            (ii) by striking ``October 1, 1993'' and 
                        inserting ``December 31, 1998''.
    (b) Repeal 25 Percent Limit.--Subparagraph (B) of section 415(c)(1) 
of the Internal Revenue Code of 1986 (relating to limitation for 
defined contribution plans) is amended to read as follows:
                    ``(B) the participant's compensation.''
    (c) Conforming Amendments.--
            (1) Section 403(b) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking ``the exclusion allowance for such 
                taxable year'' in paragraph (1) and inserting ``the 
                applicable limit under section 415'', and
                    (B) by striking paragraph (2).
            (2) Section 404(a)(10)(B) of such Code is amended by 
        striking ``, the exclusion allowance under section 
        403(b)(2),''.
            (3) Section 415(a)(2) of such Code is amended by striking 
        ``, and the amount of the contribution for such portion shall 
        reduce the exclusion allowance as provided in section 
        403(b)(2)''.
            (4) Section 415(c)(3) of such Code is amended by adding at 
        the end of the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' shall mean the 
                participant's includable compensation as determined 
                under regulations prescribed by the Secretary.''
            (5) Section 415(c) of such Code is amended by striking 
        paragraph (4).
            (6) Section 415(c)(7) of such Code is amended to read as 
        follows:
            ``(7) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church, a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''
            (7) Section 415(e)(5) of such Code is amended--
                    (A) by striking ``(except in the case of a 
                participant who has elected under subsection (c)(4)(D) 
                to have the provisions of subsection (c)(4)(C) 
                apply)'', and
                    (B) by striking the last sentence.
            (8) Section 415(n)(2)(B) of such Code is amended by 
        striking ``percentage''.
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.