To amend the Internal Revenue Code of 1986 to assist individuals who have lost their 401(k) savings to make additional retirement savings through individual retirement account contributions, and for other purposes.

Summary: Catch-Up Lost Retirement Savings Act - Amends the Internal Revenue Code to allow, until December 31, 2007, an individual who participated in a retirement plan under which the employer matched at least 50 percent of the employee's contribution with the employer's stock and whose employer filed for bankruptcy and was subject to a related prosecution resulting from business transactions to make three times the otherwise applicable deductible retirement contributions and to receive a credit for 50 percent for such contributions.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Catch-Up Lost Retirement Savings 
Act''.

SEC. 2. ALLOWANCE OF CATCH-UP PAYMENTS.

    (a) In General.--Section 219(b)(5) of the Internal Revenue Code of 
1986 (relating to deductible amount) is amended by redesignating 
subparagraph (C) as subparagraph (D) and by inserting after 
subparagraph (A) the following new subparagraph:
                    ``(C) Catch-up contributions for certain 
                individuals.--
                            ``(i) In general.--In the case of an 
                        eligible individual who elects to make a 
                        qualified retirement contribution in addition 
                        to the deductible amount determined under 
                        subparagraph (A)--
                                    ``(I) the deductible amount for any 
                                taxable year shall be increased by an 
                                amount equal to 3 times the applicable 
                                amount determined under subparagraph 
                                (B) for such taxable year, and
                                    ``(II) subparagraph (B) shall not 
                                apply.
                            ``(ii) Eligible individual.--For purposes 
                        of this subparagraph, the term `eligible 
                        individual' means, with respect to any taxable 
                        year, any individual who was a qualified 
                        participant in a qualified cash or deferred 
                        arrangement (as defined in section 401(k)) of 
                        an employer described in clause (ii) under 
                        which the employer matched at least 50 percent 
                        of the employee's contributions to such 
                        arrangement with stock of such employer.
                            ``(iii) Employer described.--An employer is 
                        described in this clause if, in any taxable 
                        year preceding the taxable year described in 
                        clause (ii)--
                                    ``(I) such employer (or any 
                                controlling corporation of such 
                                employer) was a debtor in a case under 
                                title 11 of the United States Code, or 
                                similar Federal or State law, and
                                    ``(II) such employer (or any other 
                                person) was subject to an indictment or 
                                conviction resulting from business 
                                transactions related to such case.
                            ``(iv) Qualified participant.--For purposes 
                        of clause (ii), the term `qualified 
                        participant' means any eligible individual who 
                        was a participant in the cash or deferred 
                        arrangement described in clause (i) at least 6 
                        months before the filing of the case described 
                        in clause (iii).
                            ``(v) Termination.--This subparagraph shall 
                        not apply to taxable years beginning after 
                        December 31, 2007.''.
    (b) Credit Allowed for Catch-Up Contributions.--Subpart A of part 
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25B the following new section:

``SEC. 25C. CERTAIN CATCH-UP IRA CONTRIBUTIONS.

    ``(a) Allowance of Credit.--In the case of an eligible individual 
who makes an election under section 219(b)(5)(C) for the taxable year, 
there shall be allowed as a credit against the tax imposed by this 
chapter for such taxable year an amount equal to 50 percent of so much 
of the qualified retirement savings contributions of the eligible 
individual for the taxable year as do not exceed the increase in the 
deductible amount determined under section 219(b)(5)(C).
    ``(b) Denial of Double Benefit.--No deduction or other credit shall 
be allowed with respect to any contribution to which a credit is 
allowed under subsection (a).
    ``(c) Investment in the Contract.--Notwithstanding any other 
provision of law, a qualified retirement savings contribution shall not 
fail to be included in determining the investment in the contract for 
purposes of section 72 by reason of the credit under this section.
    ``(d) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2007.''.
    (c) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 25B the 
following new item:

                              ``Sec. 25C. Certain catch-up IRA 
                                        contributions.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.