I

103D CONGRESS

1ST SESSION H. R. 3232

To amend the Internal Revenue Code of 1986 to provide individuals receiving

State or local governmental pensions an exclusion equivalent to that

received by social security recipients.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 6, 1993

Mr. VOLKMER 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 provide

individuals receiving State or local governmental pensions

an exclusion equivalent to that received by social security

recipients.

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

3 That (a) part III of subchapter B of chapter 1 of the In4 ternal Revenue Code of 1986 (relating to items specifically

5 excluded from income) is amended by redesignating sec6 tion 137 as section 138 and by inserting after section 136

7 the following new section:
2

•HR 3232 IH

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

2 STATE OR LOCAL RETIREMENT SYSTEMS.

3 ‘‘(a) GENERAL RULE.—Gross income does not in4 clude any amount (otherwise includible in gross income)

5 received by an individual as a qualified governmental pen6 sion.

7 ‘‘(b) DOLLAR LIMITATION.—The aggregate amount

8 excluded under subsection (a) for the taxable year shall

9 not exceed—

10 ‘‘(1) the social security exclusion amount appli11 cable to the taxpayer for such year, reduced by

12 ‘‘(2) the sum of—

13 ‘‘(A) the aggregate amount excluded from

14 gross income under section 72(b) with respect

15 to any qualified governmental pension, and

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

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

18 taxpayer during such year which were excluded

19 from gross income.

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

21 ‘‘(1) QUALIFIED GOVERNMENTAL PENSION.—

22 The term ‘qualified governmental pension’ means

23 any pension or annuity received under a State or

24 local retirement system to the extent such pension or

25 annuity is not attributable to service—
3

•HR 3232 IH

1 ‘‘(A) which constitutes employment for

2 purposes of chapter 21 (relating to the Federal

3 Insurance Contributions Act), or

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

5 made pursuant to section 218 of the Social Se6 curity Act.

7 ‘‘(2) SOCIAL SECURITY EXCLUSION AMOUNT.—

8 The social security exclusion amount applicable to

9 any taxpayer for any taxable year is the portion of

10 the aggregate amount received as a qualified govern11 mental pension by such individual during such tax12 able year which would not be includible in gross in13 come if the amounts so received were social security

14 benefits (as defined in section 86(d)). For purposes

15 of the preceding sentence, amounts received as a

16 qualified governmental pension during such taxable

17 year shall not be taken into account to the extent

18 such amounts exceed the applicable maximum bene19 fit amount.

20 ‘‘(3) APPLICABLE MAXIMUM BENEFIT

21 AMOUNT.—The term ‘applicable maximum benefit

22 amount’ means—

23 ‘‘(A) in the case of an unmarried individ24 ual, the maximum individual social security

25 benefit,
4

•HR 3232 IH

1 ‘‘(B) in the case of a joint return, 150 per2 cent of the maximum individual social security

3 benefit, or

4 ‘‘(C) in the case of a married individual fil5 ing a separate return, 75 percent of the maxi6 mum individual social security benefit.

7 For purposes of the preceding sentence, marital sta8 tus shall be determined under section 143.

9 ‘‘(4) MAXIMUM INDIVIDUAL SOCIAL SECURITY

10 BENEFIT.—

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

12 individual social security benefit’ means, with

13 respect to any taxable year, the maximum total

14 amount (as certified by the Secretary of Health

15 and Human Services to the Secretary) which

16 could be paid for all months in the calendar

17 year ending in the taxable year as old-age in18 surance benefits under section 202(a) of the So19 cial Security Act (without regard to any reduc20 tion, deduction, or offset under section 202(k)

21 or section 203 of such Act) to any individual

22 who attained age 65, and filed application for

23 such benefits, on the first day of such calendar

24 year.
5

•HR 3232 IH

1 ‘‘(B) PART YEARS.—In the case of an indi2 vidual who receives a qualified governmental

3 pension with respect to a period of less than a

4 full taxable year, the maximum individual social

5 security benefit for such individual for such

6 year shall be reduced as provided in regulations

7 prescribed by the Secretary to properly cor8 respond to such period.

9 ‘‘(5) STATE OR LOCAL RETIREMENT SYSTEM.—

10 The term ‘State or local retirement system’ means

11 any pension, annuity, retirement, or similar fund or

12 system established by a State, any political subdivi13 sion of a State, or the District of Columbia.’’

14 (b) Subparagraph (A) of section 86(b)(2) of such

15 Code (defining modified adjusted gross income) is amend16 ed by inserting ‘‘137,’’ before ‘‘911’’.

17 (c) The table of sections for part III of subchapter

18 B of chapter 1 of such Code (relating to items specifically

19 excluded from income) is amended by redesignating the

20 item relating to section 137 as section 138 and by insert21 ing after the item relating to section 136 the following

22 new item:

‘‘Sec. 137. Certain pensions and annuities under State or local retirement systems.’’
6

•HR 3232 IH

1 (d) The amendments made by this Act shall apply

2 to taxable years beginning after the date of the enactment

3 of this Act.

Æ