I

103D CONGRESS

1ST SESSION H. R. 972

To amend the Internal Revenue Code of 1986 to exclude from gross income

that portion of a governmental pension which does not exceed the maximum benefits payable under title II of the Social Security Act which

could have been excluded from income for the taxable year.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 18, 1993

Mr. FRANK 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 exclude

from gross income that portion of a governmental pension which does not exceed the maximum benefits payable under title II of the Social Security Act which

could have been excluded from income for the taxable

year.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 972 IH

1 SECTION 1. EXCLUSION FOR CERTAIN PENSIONS AND AN2 NUITIES UNDER PUBLIC RETIREMENT SYS3 TEMS.

4 (a) IN GENERAL.—Part III of subchapter B of chap5 ter 1 of the Internal Revenue Code of 1986 (relating to

6 items specifically excluded from income) is amended by re7 designating section 137 as section 138 and by inserting

8 after section 136 the following new section:

9 ‘‘SEC. 137. CERTAIN PENSIONS AND ANNUITIES UNDER

10 PUBLIC RETIREMENT SYSTEMS.

11 ‘‘(a) GENERAL RULE.—In the case of an individual,

12 gross income does not include any amount (otherwise in13 cludable in gross income) received as a qualified govern14 mental pension.

15 ‘‘(b) LIMITATIONS.—

16 ‘‘(1) DOLLAR LIMITATION.—The aggregate

17 amount excluded under subsection (a) for the tax18 able year shall not exceed—

19 ‘‘(A) the maximum excludable social secu20 rity benefits of the taxpayer for such year,

21 reduced by

22 ‘‘(B) the social security benefits (within

23 the meaning of section 86(d)) received by the

24 taxpayer during such year which were excluded

25 from gross income.
3

•HR 972 IH

1 ‘‘(2) INDIVIDUAL MUST PERFORM THE SERV2 ICES GIVING RISE TO PENSION.—Subsection (a) shall

3 not apply to any qualified governmental pension re4 ceived by the taxpayer during the taxable year un5 less the taxpayer (or the spouse or former spouse of

6 the taxpayer) performed the services giving rise to

7 such pension.

8 ‘‘(c) DEFINITIONS.—For purposes of this section—

9 ‘‘(1) QUALIFIED GOVERNMENTAL PENSION.—

10 The term ‘qualified governmental pension’ means

11 any pension or annuity under a public retirement

12 system to the extent such pension or annuity is not

13 attributable to service—

14 ‘‘(A) which constitutes employment for

15 purposes of chapter 21 (relating to the Federal

16 Insurance Contributions Act), or

17 ‘‘(B) which is covered by an agreement

18 made pursuant to section 218 of the Social

19 Security Act.

20 ‘‘(2) MAXIMUM EXCLUDABLE SOCIAL SECURITY

21 BENEFITS.—The term ‘maximum excludable social

22 security benefits’ means an amount equal to so

23 much of the applicable maximum benefit amount for

24 the taxpayer for the taxable year which would be ex25 cluded from gross income if such benefit amount
4

•HR 972 IH

1 were treated as social security benefits (within the

2 meaning of section 86(d)) received during the tax3 able year.

4 ‘‘(3) APPLICABLE MAXIMUM BENEFIT

5 AMOUNT.—The term ‘applicable maximum benefit

6 amount’ means—

7 ‘‘(A) in the case of an unmarried individ8 ual, the maximum individual social security

9 benefit,

10 ‘‘(B) in the case of a joint return, 150 per11 cent of the maximum individual social security

12 benefit, or

13 ‘‘(C) in the case of a married individual fil14 ing a separate return, 75 percent of the maxi15 mum individual social security benefit.

16 For purposes of the preceding sentence, marital sta17 tus shall be determined under section 7703.

18 ‘‘(4) MAXIMUM INDIVIDUAL SOCIAL SECURITY

19 BENEFIT.—

20 ‘‘(A) IN GENERAL.—The term ‘maximum

21 individual social security benefit’ means, with

22 respect to any taxable year, the maximum total

23 amount (as certified by the Secretary of Health

24 and Human Services to the Secretary) which

25 could be paid for all months in the calendar
5

•HR 972 IH

1 year in which such taxable year begins as old2 age insurance benefits under section 202(a) of

3 the Social Security Act (without regard to any

4 reduction, deduction, or offset under section

5 202(k) or section 203 of such Act) to any indi6 vidual who attained age 65, and filed applica7 tion for such benefits, on the first day of such

8 calendar year.

9 ‘‘(B) PART YEARS.—In the case of an indi10 vidual who receives a qualified governmental

11 pension with respect to a period of less than a

12 full taxable year, the maximum individual social

13 security benefit for such individual for such

14 year shall be reduced as provided in regulations

15 prescribed by the Secretary to properly cor16 respond to such period.

17 ‘‘(5) PUBLIC RETIREMENT SYSTEM.—The term

18 ‘public retirement system’ means any pension, annu19 ity, retirement, or similar fund or system established

20 by the United States, a State, a possession of the

21 United States, any political subdivision of any of the

22 foregoing, or the District of Columbia.’’

23 (b) TECHNICAL AMENDMENT.—Subparagraph (A) of

24 section 86(b)(2) of such Code (defining modified adjusted
6

•HR 972 IH

1 gross income) is amended by inserting ‘‘137,’’ before

2 ‘‘911’’.

3 (c) CLERICAL AMENDMENT.—The table of sections

4 for part III of subchapter B of chapter 1 of such Code

5 is amended by redesignating the item relating to section

6 137 as section 138 and by inserting after the item relating

7 to section 136 the following new item:

‘‘Sec. 137. Certain pensions and annuities under public retirement

systems.’’

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

9 this Act shall apply to taxable years beginning after the

10 date of the enactment of this Act.

Æ