I 

111TH CONGRESS 

1ST SESSION H. R. 95 

To amend the Internal Revenue Code of 1986 to assist in the recovery 

and development of the Virgin Islands by providing for a reduction 

in the tax imposed on distributions from certain retirement plans’ assets 

which are invested for at least 30 years, subject to defined withdrawals, 

under a Virgin Islands investment program. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 6, 2009 

Mrs. CHRISTENSEN 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 assist 

in the recovery and development of the Virgin Islands 

by providing for a reduction in the tax imposed on distributions from certain retirement plans’ assets which 

are invested for at least 30 years, subject to defined 

withdrawals, under a Virgin Islands investment program. 

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 ‘‘Virgin Islands Im5 provement Act of 2009’’. 


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1 SEC. 2. TAX-FREE DISTRIBUTIONS FROM CERTAIN RETIRE2 MENT PLAN ASSETS INVESTED UNDER A VIR3 GIN ISLANDS INVESTMENT PROGRAM. 

4 (a) IN GENERAL.—Part I of subchapter D of chapter 

5 1 of the Internal Revenue Code of 1986 (relating to pen6 sion, profit-sharing, stock bonus plans, etc.) is amended 

7 by adding at the end the following new section: 

8 ‘‘SEC. 409B. TREATMENT OF DISTRIBUTIONS FROM CER9 TAIN RETIREMENT PLAN ASSETS INVESTED 

10 UNDER A VIRGIN ISLANDS INVESTMENT PRO11 GRAM. 

12 ‘‘(a) IN GENERAL.—If an individual makes a one13 time designation of an amount of qualified retirement sav14 ings as being under investment by the Virgin Islands In15 vestment Program for at least 30 years, then, as of the 

16 close of the 10th year, such amount (and any earnings 

17 properly allocable to such amount) shall be treated for 

18 purposes of this title— 

19 ‘‘(1) as a designated Roth account in the case 

20 of qualified retirement savings described in sub21 section (b)(1), or 

22 ‘‘(2) as a Roth IRA in the case of qualified re23 tirement savings described in subsection (b)(2). No 

24 amount shall be includible in gross income by reason 

25 of the change in treatment under the preceding sen26 tence. 


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1 ‘‘(b) QUALIFIED RETIREMENT SAVINGS.—For pur2 poses of this section, the term ‘qualified retirement sav3 ings’ means— 

4 ‘‘(1) amounts attributable to elective deferrals 

5 under an applicable retirement plan, and 

6 ‘‘(2) amounts held in an individual retirement 

7 plan which is not a Roth IRA. 

8 ‘‘(c) VIRGIN ISLANDS INVESTMENT PROGRAM.—For 

9 purposes of this section— 

10 ‘‘(1) IN GENERAL.—The term ‘Virgin Islands 

11 Investment Program’ means a program of the Virgin 

12 Islands which meets the requirements of paragraphs 

13 (2), (3), (4), and (5). 

14 ‘‘(2) MAXIMUM AMOUNT ACCEPTED FOR MAN15 AGEMENT.—A program meets the requirements of 

16 this paragraph if the amount accepted for manage17 ment under the program does not exceed 

18 $50,000,000,000. 

19 ‘‘(3) FEES AND TAXES.—A program meets the 

20 requirements of this paragraph if— 

21 ‘‘(A) the fees charged by investment man22 agers under the program do not exceed the fees 

23 customarily imposed by investment managers 

24 for managing like qualified retirement savings 

25 outside the Virgin Islands Investment Program, 


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1 ‘‘(B) the program imposes an annual tax 

2 (in addition to the fees permitted under sub3 paragraph (A)) equal to 1 percent of the 

4 amount designated for management under the 

5 program for the life of the account without re6 gard to account balance, and 

7 ‘‘(C) the 1 percent tax is imposed notwith8 standing the Roth designation. 

9 ‘‘(4) INVESTMENT MANAGER.—A program 

10 meets the requirements of this paragraph if the in11 vestment managers under the program are chosen 

12 by the Governor of the Virgin Islands. 

13 ‘‘(5) SEPARATE ACCOUNTING.—A program 

14 meets the requirements of this paragraph if the pro15 gram— 

16 ‘‘(A) establishes separate accounts for each 

17 type of qualified retirement savings held for the 

18 benefit of each individual and any earnings 

19 properly allocable to such assets, and 

20 ‘‘(B) maintains separate recordkeeping 

21 with respect to each account. 

22 ‘‘(d) USE OF 1 PERCENT ANNUAL TAX.— 

23 ‘‘(1) REVENUES TO THE VIRGIN ISLANDS DUR24 ING FIRST 20 YEARS.— 


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1 ‘‘(A) IN GENERAL.—Revenues from the tax 

2 referred to in subsection (c)(3)(B) shall be col3 lected, held, and distributed for the benefit of 

4 the Virgin Islands in a manner similar to sec5 tion 7652(b) of the Internal Revenue Code of 

6 1986 (Rum Excise Tax). 

7 ‘‘(B) DISTRIBUTIONS TO VIRGIN IS8 LANDS.—Funds and accrued interest described 

9 in subsection (d)(1)(A) may be paid from es10 crow to the Virgin Islands for expenditure only 

11 if— 

12 ‘‘(i) the expenditure is pursuant to a 

13 qualified infrastructure development plan, 

14 and 

15 ‘‘(ii) the expenditure is approved by 

16 the Secretary of the Interior as being pur17 suant to such plan. 

18 ‘‘(C) QUALIFIED INFRASTRUCTURE DEVEL19 OPMENT PLAN.—For purposes of this para20 graph, the term ‘qualified infrastructure devel21 opment plan’ means a plan for improving and 

22 enhancing the infrastructure of the Virgin Is23 lands which is— 


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1 ‘‘(i) developed and approved by the 

2 committee described in subparagraph (D), 

3 and 

4 ‘‘(ii) approved by the Governor of the 

5 Virgin Islands. 

6 ‘‘(D) COMMITTEE.—The committee de7 scribed in this subparagraph is a committee— 

8 ‘‘(i) comprised of 5 members, each 

9 serving a term of either three or five 

10 years— 

11 ‘‘(I) 2 of whom are appointed by 

12 the Governor of the Virgin Islands, 

13 one for a 3-year and one for a 5-year 

14 term, 

15 ‘‘(II) 2 of whom are appointed by 

16 the Virgin Islands legislature, one for 

17 a 3-year and one for a 5-year term, 

18 and 

19 ‘‘(III) 1 of whom is appointed by 

20 the Secretary of the Interior for a 5- 

21 year term, and 

22 ‘‘(ii) with respect to which a vacancy 

23 is filled in the manner in which the origi24 nal appointment was made. 


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1 ‘‘(2) REVENUES TO THE UNITED STATES AND

2 THE VIRGIN ISLANDS.— 

3 ‘‘(A) DURING FIRST 20 YEARS.—Revenues 

4 from the fee referred to in subsection (c)(3)(B) 

5 imposed on designated assets after the first 20 

6 years under management by the Virgin Islands 

7 Investment Program shall be collected by the 

8 United States Treasury in a manner similar to 

9 section 7652 of the Internal Revenue Code, 

10 upon which half of the proceeds shall be distrib11 uted to the Virgin Islands for the first 20 years 

12 of management. 

13 ‘‘(B) AFTER THE FIRST 20 YEARS.—Begin14 ning in the 21st year, the entire 1 percent tax 

15 collected shall be retained by the United States 

16 Treasury. 

17 ‘‘(C) MINIMUM HOLDING PERIOD.—No 

18 withdrawals may be made by an investor from 

19 the account during the minimum holding period 

20 of ten years. Should the investor choose to with21 draw money from the account during the min22 imum holding period, the investor would forfeit 

23 the tax advantages of the Fund; any funds 

24 withdrawn would be included in gross income 


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1 and subject to Federal income tax, minus pay2 ments of the 1 percent tax. 

3 ‘‘(3) EARLY WITHDRAWAL.—Should an investor 

4 withdraw the entire balance of the funds after the 

5 10-year minimum holding period but before the end 

6 of the 30 years, his account will be liable for the en7 tire 1 percent tax for each of the remaining years. 

8 ‘‘(e) OTHER DEFINITIONS.—For purposes of this 

9 section— 

10 ‘‘(1) ELECTIVE DEFERRALS; APPLICABLE RE11 TIREMENT PLAN.—The terms ‘elective deferrals’ and 

12 ‘applicable retirement plan’ have the respective 

13 meanings given such terms by section 402A. 

14 ‘‘(2) VIRGIN ISLANDS.—The term ‘Virgin Is15 lands’ means the United States Virgin Islands. 

16 ‘‘(3) SECRETARY OF THE INTERIOR.—The term 

17 ‘Secretary of the Interior’ means the Secretary of 

18 the Interior or his designee.’’. 

19 (b) CLERICAL AMENDMENT.—The table of sections 

20 for such part I is amended by adding at the end the fol21 lowing new item: 

‘‘Sec. 409B. Treatment of distributions from certain retirement plan assets invested under a Virgin Islands investment program.’’. 


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

2 this section shall take effect on the date of the enactment 

3 of this Act. 

Æ 


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