II

105TH CONGRESS

2D SESSION S. 1856

To amend the Internal Revenue Code of 1986 to provide equitable treatment

for contributions by employees to defined contribution pension plans.

IN THE SENATE OF THE UNITED STATES

MARCH 25, 1998

Mr. GRASSLEY (for himself, Mr. BREAUX, Mr. JEFFORDS, Mr. GRAHAM, Mr.

BAUCUS, and Mr. HATCH) 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 provide

equitable treatment for contributions by employees to

defined contribution pension plans.

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 ‘‘Enhanced Savings Op5 portunities Act’’.
2

•S 1856 IS

1 SEC. 2. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF

2 EMPLOYEES TO DEFINED CONTRIBUTION

3 PLANS.

4 (a) IN GENERAL.—Subparagraph (B) of section

5 415(c)(1) of the Internal Revenue Code of 1986 (relating

6 to limitation for defined contribution plans) is amended

7 to read as follows:

8 ‘‘(B) the participant’s compensation.’’

9 (b) CONFORMING AMENDMENTS.—

10 (1)(A) Section 403(b) of the Internal Revenue

11 Code of 1986 is amended—

12 (i) by striking ‘‘the exclusion allowance for

13 such taxable year’’ in paragraph (1) and insert14 ing ‘‘the applicable limit under section 415’’,

15 and

16 (ii) by striking paragraph (2).

17 (B) Section 404(a)(10)(B) of such Code is

18 amended by striking ‘‘, the exclusion allowance

19 under section 403(b)(2),’’.

20 (C) Section 415(a)(2) of such Code is amended

21 by striking ‘‘, and the amount of the contribution for

22 such portion shall reduce the exclusion allowance as

23 provided in section 403(b)(2)’’.

24 (D) Section 415(c)(3) of such Code is amended

25 by adding at the end the following new subpara26 graph:
3

•S 1856 IS

1 ‘‘(E) ANNUITY CONTRACTS.—In the case

2 of an annuity contract described in section

3 403(b), the term ‘participant’s compensation’

4 shall mean the participant’s includible com5 pensation as determined under regulations pre6 scribed by the Secretary.’’

7 (E) Section 415(c) of such Code is amended by

8 striking paragraph (4).

9 (F) Section 415(c)(7) of such Code is amended

10 to read as follows:

11 ‘‘(7) CERTAIN CONTRIBUTIONS BY CHURCH

12 PLANS NOT TREATED AS EXCEEDING LIMIT.—

13 ‘‘(A) IN GENERAL.—Notwithstanding any

14 other provision of this subsection, at the elec15 tion of a participant who is an employee of a

16 church, a convention or association of churches,

17 including an organization described in section

18 414(e)(3)(B)(ii), contributions and other addi19 tions for an annuity contract or retirement in20 come account described in section 403(b) with

21 respect to such participant, when expressed as

22 an annual addition to such participant’s ac23 count, shall be treated as not exceeding the lim24 itation of paragraph (1) if such annual addition

25 is not in excess of $10,000.
4

•S 1856 IS

1 ‘‘(B) $40,000 AGGREGATE LIMITATION.—

2 The total amount of additions with respect to

3 any participant which may be taken into ac4 count for purposes of this subparagraph for all

5 years may not exceed $40,000.

6 ‘‘(C) ANNUAL ADDITION.—For purposes of

7 this paragraph, the term ‘annual addition’ has

8 the meaning given such term by paragraph

9 (2).’’

10 (G) Section 415(e)(5) of such Code is amend11 ed—

12 (i) by striking ‘‘(except in the case of a

13 participant who has elected under subsection

14 (c)(4)(D) to have the provisions of subsection

15 (c)(4)(C) apply)’’, and

16 (ii) by striking the last sentence.

17 (2) Section 415(n)(2)(B) of such Code is

18 amended by striking ‘‘percentage’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to years beginning after December

21 31, 1998.

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