II 

114TH CONGRESS 

1ST SESSION S. 1262 

To amend the Internal Revenue Code of 1986 to establish tax-preferred 

Small Business Start-up Savings Accounts. 

IN THE SENATE OF THE UNITED STATES 

MAY 7, 2015 

Ms. HIRONO introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

tax-preferred Small Business Start-up Savings Accounts. 

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 ‘‘Small Business Start5 up Savings Accounts Act of 2015’’. 

6 SEC. 2. ESTABLISHMENT OF SMALL BUSINESS START-UP 

7 SAVINGS ACCOUNTS. 

8 (a) IN GENERAL.—Subpart A of part I of subchapter 

9 D of chapter 1 of the Internal Revenue Code of 1986 is 


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1 amended by inserting after section 408A the following new 

2 section: 

3 ‘‘SEC. 408B. SMALL BUSINESS START-UP SAVINGS AC4 COUNTS. 

5 ‘‘(a) GENERAL RULE.—Except as provided in this 

6 section, a Small Business Start-up Savings Account shall 

7 be treated for purposes of this title in the same manner 

8 as an individual retirement plan. 

9 ‘‘(b) SMALL BUSINESS START-UP SAVINGS AC10 COUNT.—For purposes of this title, the term ‘Small Busi11 ness Start-up Savings Account’ means an individual re12 tirement plan which is designated (in such manner as the 

13 Secretary may prescribe) at the time of establishment of 

14 the plan as a Small Business Start-up Savings Account. 

15 ‘‘(c) TREATMENT OF CONTRIBUTIONS.— 

16 ‘‘(1) NO DEDUCTION ALLOWED.—No deduction 

17 shall be allowed under section 219 for a contribution 

18 to a Small Business Start-up Savings Account. 

19 ‘‘(2) CONTRIBUTION LIMIT.— 

20 ‘‘(A) IN GENERAL.—The aggregate 

21 amount of contributions for any taxable year to 

22 all Small Business Start-up Savings Accounts 

23 maintained for the benefit of an individual shall 

24 not exceed $10,000. 


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1 ‘‘(B) AGGREGATE LIMITATION.—The ag2 gregate of the amount contributions for all tax3 able years with respect to all Small Business 

4 Start-up Savings Accounts maintained for the 

5 benefit of an individual shall not exceed 

6 $150,000. 

7 ‘‘(C) COST OF LIVING ADJUSTMENT.— 

8 ‘‘(i) IN GENERAL.—In the case of a 

9 taxable year beginning after 2016, the 

10 $10,000 amount in subparagraph (A) shall 

11 be increased by an amount equal to— 

12 ‘‘(I) such dollar amount, multi13 plied by 

14 ‘‘(II) the cost-of-living adjust15 ment determined under section 1(f)(3) 

16 for the calendar year in which the tax17 able year begins, determined by sub18 stituting ‘calendar year 2015’ for ‘cal19 endar year 1992’ in subparagraph (B) 

20 thereof. 

21 ‘‘(ii) ROUNDING.—If any amount as 

22 adjusted under clause (i) is not a multiple 

23 of $500, such amount shall be rounded to 

24 the next lowest multiple of $500. 


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1 ‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE

701 2 ⁄2.—Contributions to a Small Business Start-up 

3 Savings Account may be made even after the indi4 vidual for whom the account is maintained has attained age 701 5 ⁄2. 

6 ‘‘(4) ROLLOVERS FROM RETIREMENT PLANS

7 NOT ALLOWED.—A taxpayer shall not be allowed to 

8 make a qualified rollover contribution to a Small 

9 Business Start-up Savings Account from any eligible 

10 retirement plan (as defined in section 402(c)(8)(B)), 

11 except as may be provided by the Secretary in the 

12 case of a rollover from another Small Business 

13 Start-up Savings Account. 

14 ‘‘(5) INCOME BASED ON MODIFIED ADJUSTED

15 GROSS INCOME.— 

16 ‘‘(A) IN GENERAL.—In the case of a tax17 able year in which the taxpayer’s adjusted gross 

18 income exceeds $150,000 ($300,000 in the case 

19 of a joint return), the dollar amount in effect 

20 for such taxable year under subsection (c)(2) 

21 shall be reduced (but not below zero) by the 

22 amount determined under subparagraph (B). 

23 ‘‘(B) AMOUNT OF REDUCTION.—The 

24 amount determined under this subparagraph 


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1 shall be the amount which bears the same ratio 

2 to such limitation as— 

3 ‘‘(i) the excess of— 

4 ‘‘(I) the taxpayer’s adjusted 

5 gross income for such taxable year, 

6 over 

7 ‘‘(II) $150,000 ($300,000 in the 

8 case of a joint return), bears to 

9 ‘‘(ii) $25,000. 

10 ‘‘(C) MODIFIED ADJUSTED GROSS IN11 COME.—The term ‘modified adjusted gross in12 come’ means the adjusted gross income of the 

13 taxpayer for the taxable year increased by any 

14 amount excluded from gross income under sec15 tion 911, 931, or 933. 

16 ‘‘(d) TREATMENT OF DISTRIBUTIONS.— 

17 ‘‘(1) TAX TREATMENT.— 

18 ‘‘(A) EXCLUSION OF QUALIFIED DISTRIBU19 TIONS.—Any qualified distribution from a 

20 Small Business Start-up Savings Account shall 

21 not be includible in gross income. 

22 ‘‘(B) INCLUSION OF OTHER DISTRIBU23 TIONS.—Distributions from a Small Business 

24 Start-up Savings Account which is not a quali25 fied distribution shall be included in gross inVerDate Sep 11 2014 00:21 May 14, 2015 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1262.IS S1262

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1 come and, for purposes of section 1, treated as 

2 a net capital gain. 

3 ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 

4 of this subsection, the term ‘qualified distribution’ 

5 means, with respect to any taxable year, any pay6 ment or distribution from a Small Business Start-up 

7 Savings Account— 

8 ‘‘(A) to the extent the amount of such pay9 ment or distribution does not exceed the sum 

10 of— 

11 ‘‘(i) the aggregate amounts paid or in12 curred by the taxpayer for such taxable 

13 year with respect to a trade or business for 

14 the purchase of equipment or facilities, 

15 marketing, training, incorporation, and ac16 counting fees, and 

17 ‘‘(ii) the aggregate capital contribu18 tions of the taxpayer with respect to a 

19 trade or business for the taxable year (but 

20 only to the extent such amounts are used 

21 in such trade or business for purposes de22 scribed in clause (i)), and 

23 ‘‘(B) which, in the case of a payment or 

24 distribution subsequent to the first payment or 


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1 distribution from such account (or any prede2 cessor to such account)— 

3 ‘‘(i) is made not later than the close 

4 of the 5th taxable year beginning after the 

5 date of such first payment or distribution, 

6 and 

7 ‘‘(ii) is made with respect to the same 

8 trade or business with respect to which 

9 such first payment or distribution was 

10 made. 

11 ‘‘(3) TREATMENT AFTER DEATH OF ACCOUNT

12 BENEFICIARY.—If, by reason of the death of the ac13 count beneficiary, any person acquires the account 

14 beneficiary’s interest in a Small Business Start-up 

15 Savings Account— 

16 ‘‘(A) such account shall cease to be a 

17 Small Business Start-up Savings Account as of 

18 the date of death, and 

19 ‘‘(B) an amount equal to the fair market 

20 value of the assets in such account on such date 

21 shall be includible— 

22 ‘‘(i) in the case of a person who is not 

23 the estate of such beneficiary, in such per24 son’s gross income for the taxable year 

25 which includes such date, or 


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1 ‘‘(ii) in the case of a person who is 

2 the estate of such beneficiary, in such 

3 beneficiary’s gross income for the last tax4 able year of such beneficiary. 

5 ‘‘(C) SPECIAL RULES.— 

6 ‘‘(i) REDUCTION OF INCLUSION FOR

7 PREDEATH EXPENSES.—The amount in8 cludible in gross income under subpara9 graph (B) shall be reduced by the amounts 

10 described in paragraph (2) which were in11 curred by the decedent before the date of 

12 the decedent’s death and paid by such per13 son within 1 year after such date. 

14 ‘‘(ii) DEDUCTION FOR ESTATE

15 TAXES.—An appropriate deduction shall be 

16 allowed under section 691(c) to any person 

17 (other than the decedent) with respect to 

18 amounts included in gross income under 

19 clause (i) by such person. 

20 ‘‘(4) MANDATORY DISTRIBUTION RULES NOT

21 TO APPLY.—Section 401(a)(9)(A) and the incidental 

22 death benefit requirements of section 401(a) shall 

23 not apply to any Small Business Start-up Savings 

24 Account.’’. 


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1 (b) EXCESS CONTRIBUTIONS.—Section 4973 of the 

2 Internal Revenue Code of 1986 is amended by adding at 

3 the end the following new subsection: 

4 ‘‘(i) EXCESS CONTRIBUTIONS TO SMALL BUSINESS

5 START-UP SAVINGS ACCOUNTS.—For purposes of this 

6 section, in the case of contributions to all Small Business 

7 Start-up Savings Accounts (within the meaning of section 

8 408B(b)) maintained for the benefit of an individual, the 

9 term ‘excess contributions’ means the sum of— 

10 ‘‘(1) the excess (if any) of— 

11 ‘‘(A) the amount contributed to such ac12 counts for the taxable year, over 

13 ‘‘(B) the amount allowable as a contribu14 tion under section 408B(c)(2)(A) for such tax15 able year, and 

16 ‘‘(2) the amount determined under this sub17 section for the preceding taxable year, reduced by 

18 the sum of— 

19 ‘‘(A) the distributions out of the accounts 

20 for the taxable year, and 

21 ‘‘(B) the excess (if any) of— 

22 ‘‘(i) the maximum amount allowable 

23 as a contribution under section 

24 408B(c)(2)(A) for such taxable year, over 


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1 ‘‘(ii) the amount contributed to such 

2 accounts for such taxable year, and 

3 ‘‘(3) the excess (if any) of— 

4 ‘‘(A) the excess (if any) of— 

5 ‘‘(i) the aggregate amounts contrib6 uted to such accounts for all taxable years, 

7 over 

8 ‘‘(ii) the aggregate amount allowable 

9 as contributions under section 

10 408B(c)(2)(B) for all taxable years, over 

11 ‘‘(B) the amount determined under this 

12 paragraph for all preceding taxable years.’’. 

13 (c) CONFORMING AMENDMENT.—The table of sec14 tions for subpart A of part I of subchapter D of chapter 

15 1 of the Internal Revenue Code of 1986 is amended by 

16 inserting after the item relating to section 408A the fol17 lowing new item: 

‘‘Sec. 408B. Small Business Start-up Savings Accounts.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2015. 

Æ 


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