I 

109TH CONGRESS 

2D SESSION H. R. 4836 

To amend the Internal Revenue Code of 1986 to create Catastrophe Savings 

Accounts. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 1, 2006 

Mr. FEENEY (for himself, Ms. HARRIS, Mr. MARIO DIAZ-BALART of Florida, 

Mr. LINCOLN DIAZ-BALART of Florida, Ms. GINNY BROWN-WAITE of 

Florida, Mr. KELLER, Mr. MACK, Mr. MILLER of Florida, Mr. FOLEY, 

Ms. WASSERMAN SCHULTZ, Mr. WEXLER, Mr. BILIRAKIS, Mr. HASTINGS

of Florida, Mr. DAVIS of Florida, and Ms. ROS-LEHTINEN) 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 create 

Catastrophe 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 ‘‘Catastrophe Savings 

5 Accounts Act of 2006’’. 

6 SEC. 2. CATASTROPHE SAVINGS ACCOUNTS. 

7 (a) IN GENERAL.—Subchapter F of Chapter 1 of the 

8 Internal Revenue Code of 1986 (relating to exempt organi-
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1 zations) is amended by adding at the end the following 

2 new part: 

3 ‘‘PART IX—CATASTROPHE SAVINGS ACCOUNTS 

4 ‘‘SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS. 

5 ‘‘(a) GENERAL RULE.—A Catastrophe Savings Ac6 count shall be exempt from taxation under this subtitle. 

7 Notwithstanding the preceding sentence, such account 

8 shall be subject to the taxes imposed by section 511 (relat9 ing to imposition of tax on unrelated business income of 

10 charitable organizations). 

11 ‘‘(b) CATASTROPHE SAVINGS ACCOUNT.—For pur12 poses of this section, the term ‘Catastrophe Savings Ac13 count’ means a trust created or organized in the United 

14 States for the exclusive benefit of an individual or his 

15 beneficiaries and which is designated (in such manner as 

16 the Secretary shall prescribe) at the time of the establish17 ment of the trust as a Catastrophe Savings Account, but 

18 only if the written governing instrument creating the trust 

19 meets the following requirements: 

20 ‘‘(1) Except in the case of a qualified rollover 

21 contribution— 

22 ‘‘(A) no contribution will be accepted un23 less it is in cash, and 
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1 ‘‘(B) contributions will not be accepted in 

2 excess of the account balance limit specified in 

3 subsection (c). 

4 ‘‘(2) The trustee is a bank (as defined in sec5 tion 408(n)) or another person who demonstrates to 

6 the satisfaction of the Secretary that the manner in 

7 which that person will administer the trust will be 

8 consistent with the requirements of this section. 

9 ‘‘(3) The interest of an individual in the bal10 ance of his account is nonforfeitable. 

11 ‘‘(4) The assets of the trust shall not be com12 mingled with other property except in a common 

13 trust fund or common investment fund. 

14 ‘‘(c) ACCOUNT BALANCE LIMIT.—The aggregate ac15 count balance for all Catastrophe Savings Accounts main16 tained for the benefit of an individual (including qualified 

17 rollover contributions) shall not exceed— 

18 ‘‘(1) in the case of an individual whose qualified 

19 deductible is not more than $1,000, $2,000, and 

20 ‘‘(2) in the case of an individual whose qualified 

21 deductible is more than $1,000, the amount equal to 

22 the lesser of— 

23 ‘‘(A) $15,000, or 

24 ‘‘(B) twice the amount of the individual’s 

25 qualified deductible. 
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1 ‘‘(d) DEFINITIONS.—For purposes of this section— 

2 ‘‘(1) QUALIFIED CATASTROPHE EXPENSES.— 

3 The term ‘qualified catastrophe expenses’ means ex4 penses paid or incurred by reason of a major dis5 aster that has been declared by the President under 

6 section 401 of the Robert T. Stafford Disaster Relief 

7 and Emergency Assistance Act. 

8 ‘‘(2) QUALIFIED DEDUCTIBLE.—With respect 

9 to an individual, the term ‘qualified deductible’ 

10 means the annual deductible for the individual’s 

11 homeowners’ insurance policy. 

12 ‘‘(3) QUALIFIED ROLLOVER CONTRIBUTION.— 

13 The term ‘qualified rollover contribution’ means a 

14 contribution to a Catastrophe Savings Account— 

15 ‘‘(A) from another such account of the 

16 same beneficiary, but only if such amount is 

17 contributed not later than the 60th day after 

18 the distribution from such other account, and 

19 ‘‘(B) from a Catastrophe Savings Account 

20 of a spouse of the beneficiary of the account to 

21 which the contribution is made, but only if such 

22 amount is contributed not later than the 60th 

23 day after the distribution from such other ac24 count. 

25 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
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1 ‘‘(1) IN GENERAL.—Any distribution from a 

2 Catastrophe Savings Account shall be includible in 

3 the gross income of the distributee in the manner as 

4 provided in section 72. 

5 ‘‘(2) DISTRIBUTIONS FOR QUALIFIED CATAS6 TROPHE EXPENSES.— 

7 ‘‘(A) IN GENERAL.—No amount shall be 

8 includible in gross income under paragraph (1) 

9 if the qualified catastrophe expenses of the dis10 tributee during the taxable year are not less 

11 than the aggregate distributions during the tax12 able year. 

13 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX14 PENSES.—If such aggregate distributions ex15 ceed such expenses during the taxable year, the 

16 amount otherwise includible in gross income 

17 under paragraph (1) shall be reduced by the 

18 amount which bears the same ratio to the 

19 amount which would be includible in gross in20 come under paragraph (1) (without regard to 

21 this subparagraph) as the qualified catastrophe 

22 expenses bear to such aggregate distributions. 

23 ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT

24 USED FOR QUALIFIED CATASTROPHE EXPENSES.— 

25 The tax imposed by this chapter for any taxable 
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1 year on any taxpayer who receives a payment or dis2 tribution from a Catastrophe Savings Account which 

3 is includible in gross income shall be increased by 10 

4 percent of the amount which is so includible. 

5 ‘‘(4) RETIREMENT DISTRIBUTIONS.—No 

6 amount shall be includible in gross income under 

7 paragraph (1) (or subject to an additional tax under 

8 paragraph (3)) if the payment or distribution is 

9 made on or after the date on which the distributee 

10 attains age 62. 

11 ‘‘(f) TAX TREATMENT OF ACCOUNTS.—Rules similar 

12 to the rules of paragraphs (2) and (4) of section 408(e) 

13 shall apply to any Catastrophe Savings Account.’’. 

14 (b) TAX ON EXCESS CONTRIBUTIONS.— 

15 (1) IN GENERAL.—Subsection (a) of section 

16 4973 of the Internal Revenue Code of 1986 (relating 

17 to tax on excess contributions to certain tax-favored 

18 accounts and annuities) is amended by striking ‘‘or’’ 

19 at the end of paragraph (4), by inserting ‘‘or’’ at the 

20 end of paragraph (5), and by inserting after para21 graph (5) the following new paragraph: 

22 ‘‘(6) a Catastrophe Savings Account (as defined 

23 in section 530A),’’. 
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1 (2) EXCESS CONTRIBUTION.—Section 4973 of 

2 such Code is amended by adding at the end the fol3 lowing new subsection: 

4 ‘‘(h) EXCESS CONTRIBUTIONS TO CATASTROPHE

5 SAVINGS ACCOUNTS.—For purposes of this section, in the 

6 case of Catastrophe Savings Accounts (within the meaning 

7 of section 530A), the term ‘excess contributions’ means 

8 the amount by which the aggregate account balance for 

9 all Catastrophe Savings Accounts maintained for the ben10 efit of an individual exceeds the account balance limit de11 fined in section 530A(c)(1).’’. 

12 (c) CONFORMING AMENDMENT.—The table of parts 

13 for subchapter F of chapter 1 of the Internal Revenue 

14 Code of 1986 is amended by adding at the end the fol15 lowing new item: 

‘‘PART IX. CATASTROPHE SAVINGS ACCOUNTS’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2006. 

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