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104TH CONGRESS

1ST SESSION H. R. 334

To amend the Internal Revenue Code of 1986 to encourage savings by

increasing the amount of deductible contributions which may be made

to an individual retirement account.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. NEAL of Massachusetts introduced the following bill; which was referred

to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to encourage

savings by increasing the amount of deductible contributions which may be made to an individual retirement

account.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Individual Retirement

5 Improvement Act of 1995’’.
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1 SEC. 2. ACTIVE PARTICIPANTS ALLOWED DEDUCTIONS FOR

2 50 PERCENT OF CONTRIBUTIONS.

3 (a) GENERAL RULE.—Paragraph (1) of section

4 219(g) of the Internal Revenue Code of 1986 (relating to

5 limitation on deduction of active participants in certain

6 pension plans) is amended to read as follows:

7 ‘‘(1) IN GENERAL.—If (for any part of any plan

8 year ending with or within a taxable year) an indi9 vidual or the individual’s spouse is an active partici10 pant, the amount allowed as a deduction under sub11 section (a) for such taxable year shall be the sum

12 of—

13 ‘‘(A) 100 percent of the amount which

14 would have been allowable for such taxable year

15 if each of the dollar limitations contained in

16 subsections (b)(1)(A) and (c)(2) were reduced

17 (but not below zero) by the amount determined

18 under paragraph (2), plus

19 ‘‘(B) 50 percent of the excess of—

20 ‘‘(i) the amount which would have

21 been allowable for such taxable year with22 out regard to this subsection, over

23 ‘‘(ii) the amount determined under

24 subparagraph (A).

25 The percentage in subparagraph (B) shall be re26 duced (but not below 25 percent) by 1 percentage
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1 point for each $1,000 (or fraction thereof) by which

2 the adjusted gross income of the taxpayer for the

3 taxable year exceeds $200,000.’’

4 (b) EFFECTIVE DATE.—The amendment made by

5 this section shall apply to contributions for taxable years

6 beginning after December 31, 1994.

7 SEC. 3. HOMEMAKERS ELIGIBLE FOR FULL IRA DEDUC8 TION.

9 (a) SPOUSAL IRA COMPUTED ON BASIS OF COM10 PENSATION OF BOTH SPOUSES.—Subsection (c) of section

11 219 of the Internal Revenue Code of 1986 (relating to

12 special rules for certain married individuals) is amended

13 to read as follows:

14 ‘‘(c) SPECIAL RULES FOR CERTAIN MARRIED INDI15 VIDUALS.—

16 ‘‘(1) IN GENERAL.—In the case of an individual

17 to whom this paragraph applies for the taxable year,

18 the limitation of paragraph (1) of subsection (b)

19 shall be equal to the lesser of—

20 ‘‘(A) $2,000, or

21 ‘‘(B) the sum of—

22 ‘‘(i) the compensation includible in

23 such individual’s gross income for the tax24 able year, plus
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1 ‘‘(ii) the compensation includible in

2 the gross income of such individual’s

3 spouse for the taxable year reduced by the

4 amount allowable as a deduction under

5 subsection (a) to such spouse for such tax6 able year.

7 ‘‘(2) INDIVIDUALS TO WHOM PARAGRAPH (1)

8 APPLIES.—Paragraph (1) shall apply to any individ9 ual if—

10 ‘‘(A) such individual files a joint return for

11 the taxable year, and

12 ‘‘(B) the amount of compensation (if any)

13 includible in such individual’s gross income for

14 the taxable year is less than the compensation

15 includible in the gross income of such individ16 ual’s spouse for the taxable year.’’

17 (b) IRA ALLOWED FOR SPOUSES WHO ARE NOT AC18 TIVE PLAN PARTICIPANTS.—Section 219(g)(1) of the In19 ternal Revenue Code of 1986 is amended by striking ‘‘or

20 the individual’s spouse’’.

21 (c) CONFORMING AMENDMENTS.—

22 (1) Paragraph (2) of section 219(f) of the In23 ternal Revenue Code of 1986 (relating to other defi24 nitions and special rules) is amended by striking
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1 ‘‘subsections (b) and (c)’’ and inserting ‘‘subsection

2 (b)’’.

3 (2) Section 408(d)(5) of such Code is amended

4 by striking ‘‘$2,250’’ and inserting ‘‘$2,000’’.

5 (d) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after

7 December 31, 1994.

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