II 

112TH CONGRESS 

1ST SESSION S. 364 

To amend the Internal Revenue Code of 1986 to establish a new Small 

Business Savings Account. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 16, 2011 

Mr. PRYOR (for himself, Mr. BROWN of Massachusetts, and Mr. KOHL) 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 

a new Small Business Savings 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. ESTABLISHMENT OF SMALL BUSINESS SAVINGS 

4 ACCOUNTS. 

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

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

7 amended by inserting after section 408A the following new 

8 section: 


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1 ‘‘SEC. 408B. SMALL BUSINESS SAVINGS ACCOUNTS. 

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

3 section, a Small Business Savings Account shall be treated 

4 for purposes of this title in the same manner as an indi5 vidual retirement plan. 

6 ‘‘(b) SMALL BUSINESS SAVINGS ACCOUNT.—For 

7 purposes of this title, the term ‘Small Business Savings 

8 Account’ means a tax preferred savings plan which is des9 ignated at the time of establishment of the plan as a Small 

10 Business Savings Account. Such designation shall be made 

11 in such manner as the Secretary may prescribe. 

12 ‘‘(c) TREATMENT OF CONTRIBUTIONS.— 

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

14 shall be allowed under section 219 for a contribution 

15 to a Small Business Savings Account. 

16 ‘‘(2) CONTRIBUTION LIMIT.— 

17 ‘‘(A) IN GENERAL.—The aggregate 

18 amount of contributions for any taxable year to 

19 all Small Business Savings Accounts main20 tained for the benefit of an individual shall not 

21 exceed $10,000. 

22 ‘‘(B) AGGREGATE LIMITATION.—The ag23 gregate of the amounts which may be taken 

24 into account under subparagraph (A) for all 

25 taxable years with respect to all Small Business 


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1 Savings Accounts maintained for the benefit of 

2 an individual shall not exceed $150,000. 

3 ‘‘(C) COST OF LIVING ADJUSTMENT.—The 

4 Secretary shall adjust annually the $10,000 

5 amount in subparagraph (A) for increases in 

6 the cost-of-living at the same time and in the 

7 same manner as adjustments under section 

8 415(d); except that the base period shall be the 

9 calendar quarter beginning July 1, 2011, and 

10 any increase which is not a multiple of $500 

11 shall be rounded to the next lowest multiple of 

12 $500. 

13 ‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE

701 14 ⁄2.—Contributions to a Small Business Savings 

15 Account may be made even after the individual for 

16 whom the account is maintained has attained age 

701 17 ⁄2. 

18 ‘‘(4) ROLLOVERS FROM RETIREMENT PLANS

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

20 make a qualified rollover contribution to a Small 

21 Business Savings Account from any qualified retire22 ment plan (as defined in section 4974(c)). 

23 ‘‘(d) DISTRIBUTION RULES.—For purposes of this 

24 title— 

25 ‘‘(1) GENERAL RULES.— 


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1 ‘‘(A) LIMITATIONS ON DISTRIBUTIONS.— 

2 All qualified distributions from a Small Busi3 ness Savings Account— 

4 ‘‘(i) shall be limited to a single busi5 ness, and 

6 ‘‘(ii) must be disbursed not later than 

7 the last day of the 5th taxable year begin8 ning after the initial disbursement. 

9 ‘‘(B) EXCLUSIONS FROM GROSS INCOME.— 

10 Any qualified distribution from a Small Busi11 ness Savings Account shall not be includible in 

12 gross income. 

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

14 of this subsection, the term ‘qualified distribution’ 

15 means any payment or distribution made for oper16 ating capital, the purchase of equipment or facilities, 

17 marketing, training, incorporation, and accounting 

18 fees. 

19 ‘‘(3) NONQUALIFIED DISTRIBUTIONS.— 

20 ‘‘(A) IN GENERAL.—In applying section 72 

21 to any distribution from a Small Business Sav22 ings Account which is not a qualified distribu23 tion, such distribution shall be treated as made 

24 from contributions to the Small Business Sav25 ings Account to the extent that such distribuVerDate Mar 15 2010 01:54 Feb 17, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S364.IS S364

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1 tion, when added to all previous distributions 

2 from the Small Business Savings Account, does 

3 not exceed the aggregate amount of contribu4 tions to the Small Business Savings Account. 

5 ‘‘(B) TREATMENT OF AMOUNTS REMAIN6 ING IN ACCOUNT.—Any remaining amount in a 

7 Small Business Savings Account following the 

8 date described in paragraph (1)(A)(ii) shall be 

9 treated as distributed during the taxable year 

10 following such date and such distribution shall 

11 not be treated as a qualified distribution. 

12 ‘‘(4) ROLLOVERS TO A ROTH IRA.—Subject to 

13 the application of the treatment of contributions in 

14 section 408A(c), distributions from a Small Business 

15 Savings Account may be rolled over into a Roth 

16 IRA.’’. 

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

18 Internal Revenue Code of 1986 is amended by adding at 

19 the end the following new subsection: 

20 ‘‘(h) EXCESS CONTRIBUTIONS TO SMALL BUSINESS

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

22 case of contributions to all Small Business Savings Ac23 counts (within the meaning of section 408B(b)) main24 tained for the benefit of an individual, the term ‘excess 

25 contributions’ means the sum of— 


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1 ‘‘(1) the excess (if any) of— 

2 ‘‘(A) the amount contributed to such ac3 counts for the taxable year, over 

4 ‘‘(B) the amount allowable as a contribu5 tion under section 408B(c)(2) for such taxable 

6 year, and 

7 ‘‘(2) the amount determined under this sub8 section for the preceding taxable year, reduced by 

9 the sum of— 

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

11 for the taxable year, and 

12 ‘‘(B) the excess (if any) of— 

13 ‘‘(i) the maximum amount allowable 

14 as a contribution under section 408B(c)(2) 

15 for such taxable year, over 

16 ‘‘(ii) the amount contributed to such 

17 accounts for such taxable year.’’. 

18 (c) CONFORMING AMENDMENT.—The table of sec19 tions for subpart A of part I of subchapter D of chapter 

20 1 of the Internal Revenue Code of 1986 is amended by 

21 inserting after the item relating to section 408A the fol22 lowing new item: 

‘‘Sec. 408B. Small Business Savings Accounts.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2010. 

Æ 


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