I

106TH CONGRESS

1ST SESSION H. R. 189

To amend the Internal Revenue Code of 1986 to provide greater equity

in savings opportunities for families with children, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1999

Mr. MCCOLLUM (for himself and Ms. DUNN) 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 provide

greater equity in savings opportunities for families with

children, and for other purposes.

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 ‘‘Women’s Investment

5 and Savings Equity Act of 1999’’.

6 SEC. 2. INDIVIDUALS MAY MAKE CONTRIBUTIONS FOR PE7 RIODS OF MATERNITY OR PATERNITY LEAVE.

8 (a) IN GENERAL.—Section 414 of the Internal Reve9 nue Code of 1986 (relating to definitions and special

10 rules) is amended by adding at the end the following:
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1 ‘‘(v) RIGHT TO MAKE CONTRIBUTIONS WITH RE2 SPECT TO PERIODS OF MATERNITY AND PATERNITY

3 LEAVE.—

4 ‘‘(1) IN GENERAL.—For purposes of this title—

5 ‘‘(A) a trust which forms part of a plan

6 shall not constitute a qualified trust under sec7 tion 401(a),

8 ‘‘(B) a plan shall not be treated as de9 scribed in section 403(b),

10 ‘‘(C) a plan shall not be treated as an eligi11 ble deferred compensation plan under section

12 457, and

13 ‘‘(D) an arrangement shall not be treated

14 as meeting the requirements of section 408 (k)

15 or (p),

16 unless such plan or arrangement permits partici17 pants who were on eligible maternity or paternity

18 leave to make additional elective deferrals under the

19 plan or arrangement with respect to periods of such

20 leave.

21 ‘‘(2) TREATMENT OF CONTRIBUTIONS.—

22 ‘‘(A) IN GENERAL.—In the case of any

23 contribution to a plan under paragraph (1)

24 (and any employer matching contribution with

25 respect thereto)—
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1 ‘‘(i) such contribution shall not, with

2 respect to the year in which the contribu3 tion is made—

4 ‘‘(I) be subject to any otherwise

5 applicable limitation contained in sec6 tion 402(g), 402(h), 403(b), 404(a),

7 404(h), 408, 415, or 457, or

8 ‘‘(II) be taken into account in ap9 plying such limitations to other con10 tributions or benefits under such plan

11 or any other such plan,

12 ‘‘(ii) such contribution shall be subject

13 to the limitations referred to in clause (i)

14 with respect to the year to which the con15 tribution relates (in accordance with rules

16 prescribed by the Secretary), and

17 ‘‘(iii) except as provided in subpara18 graph (B)(i), such plan shall not be treated

19 as failing to meet the requirements of sec20 tion 401(a)(4), 401(a)(26), 401(k)(3),

21 401(k)(11), 401(k)(12), 401(m),

22 403(b)(12), 408(k), 408(p), 410(b), or 416

23 by reason of the making of (or the right to

24 make) such contribution.
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1 ‘‘(B) MATCHING CONTRIBUTIONS.—Noth2 ing in subparagraph (A) shall require an em3 ployer to make any matching contribution with

4 respect to any additional elective deferrals

5 under paragraph (1), but if the employer elects

6 to make any such matching contribution—

7 ‘‘(i) the requirements of section

8 401(a)(4) shall be applied separately to all

9 such matching contributions made during

10 a year, and

11 ‘‘(ii) the amount of any such match12 ing contribution may not exceed the maxi13 mum amount which could have been made

14 under the plan had the elective deferral ac15 tually been made during the period of eligi16 ble maternity and paternity leave.

17 ‘‘(3) AMOUNT AND TIMING OF ELECTIVE DE18 FERRALS.—A plan shall not be treated as meeting

19 the requirements of paragraph (1) unless the plan

20 provides the following:

21 ‘‘(A) AMOUNT.—The amount of any elec22 tive deferral under paragraph (1) which any

23 employee is permitted to make with respect to

24 any period of eligible maternity and paternity

25 leave shall not exceed the maximum amount of
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1 the elective deferrals that the employee would

2 have been permitted to make during such pe3 riod in accordance with the limitation referred

4 to in paragraph (2)(A)(i) if the individual—

5 ‘‘(i) had not been on eligible maternity

6 and paternity leave during such period,

7 and

8 ‘‘(ii) had received compensation in an

9 amount determined under rules similar to

10 the rules under subsection (u)(7).

11 Proper adjustment shall be made to the amount

12 determined under the preceding sentence for

13 any elective deferrals actually made during such

14 period.

15 ‘‘(B) TIMING.—An employee may make an

16 elective deferral to which paragraph (1) applies

17 at any time during the 3-year period beginning

18 on the date on which the eligible maternity or

19 paternity leave ends. Any matching contribution

20 with respect to any such elective deferral shall

21 be made not later than the due date (including

22 extensions) for the filing of the employer’s re23 turn for the taxable year in which such elective

24 deferral is made.
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1 ‘‘(4) ELIGIBLE MATERNITY AND PATERNITY

2 LEAVE.—For purposes of this subsection—

3 ‘‘(A) IN GENERAL.—The term ‘eligible ma4 ternity or paternity leave’ means any absence of

5 an individual from work for any period—

6 ‘‘(i) by reason of the pregnancy of the

7 individual,

8 ‘‘(ii) by reason of the birth of a child

9 of the individual,

10 ‘‘(iii) by reason of the placement of a

11 child with the individual in connection with

12 the adoption of the child by the individual,

13 or

14 ‘‘(iv) for purposes of caring for such

15 child for a period beginning immediately

16 following such birth or placement.

17 ‘‘(B) LIMITATION.—Such period may not

18 exceed 12 months with respect to any child.

19 ‘‘(5) OTHER DEFINITIONS AND RULES.—For

20 purposes of this subsection—

21 ‘‘(A) ELECTIVE DEFERRAL.—The term

22 ‘elective deferral’ has the meaning given such

23 term by subsection (u)(2)(C). Such term shall

24 also include any after-tax employee contribu25 tions described in subsection (u)(2)(D).
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1 ‘‘(B) PLAN.—The term ‘plan’ includes any

2 arrangement under section 408 (k) or (p).

3 ‘‘(C) CERTAIN RETROACTIVE ADJUST4 MENTS NOT REQUIRED.—For purposes of this

5 subchapter and subchapter E, the rules of sub6 section (u)(3) shall apply.

7 ‘‘(D) LOAN REPAYMENT SUSPENSIONS

8 PERMITTED.—In the case of any plan or ar9 rangement to which paragraph (1) applies, the

10 rules of subsection (u)(4) shall apply to any

11 loan repayment suspension during any period of

12 eligible maternity and paternity leave.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to periods of eligible maternity and

15 paternity leave beginning after December 31, 1999.

16 SEC. 3. CATCHUP CONTRIBUTIONS FOR FAMILIES WITH

17 CHILDREN NOT COVERED BY A PENSION

18 PLAN.

19 (a) IN GENERAL.—Section 414 of the Internal Reve20 nue Code of 1986 (relating to definitions and special

21 rules), as amended by section 2, is amended by adding

22 at the end the following:

23 ‘‘(w) CATCHUP CONTRIBUTIONS FOR FAMILIES

24 WITH CHILDREN NOT COVERED BY A PENSION PLAN.—

25 ‘‘(1) IN GENERAL.—For purposes of this title—
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1 ‘‘(A) a trust which forms part of a plan

2 shall not constitute a qualified trust under sec3 tion 401(a),

4 ‘‘(B) a plan shall not be treated as de5 scribed in section 403(b),

6 ‘‘(C) a plan shall not be treated as an eligi7 ble deferred compensation plan under section

8 457, and

9 ‘‘(D) an arrangement shall not be treated

10 as meeting requirements of section 408 (k) or

11 (p),

12 unless such plan or arrangement permits eligible

13 participants to make additional elective deferrals

14 under the plan or arrangement in accordance with

15 paragraph (2).

16 ‘‘(2) CATCHUP CONTRIBUTIONS.—

17 ‘‘(A) IN GENERAL.—A plan shall permit an

18 eligible participant to make the additional elec19 tive deferrals under paragraph (1) in any year

20 which is certified as a catchup year by the par21 ticipant under subparagraph (E).

22 ‘‘(B) LIMITATION ON AMOUNT OF ADDI23 TIONAL DEFERRALS.—A plan shall not permit

24 additional elective deferrals under paragraph
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1 (1) for any year in an amount greater than the

2 lesser of—

3 ‘‘(i) the amount of the elective defer4 rals the participant may otherwise make

5 under the plan for such year (determined

6 without regard to this subsection, sub7 section (u), or any limitation described in

8 subparagraph (C)(i)), or

9 ‘‘(ii) the excess (if any) of—

10 ‘‘(I) 120 percent of the dollar

11 limitation in effect under section

12 402(g), 408(p), or 457(b)(2)(A),

13 whichever is applicable, for taxable

14 years beginning in the calendar year

15 in which the plan year begins, over

16 ‘‘(II) any other elective deferrals

17 of the participant for such year which

18 are made without regard to this sub19 section.

20 ‘‘(C) TREATMENT OF CONTRIBUTIONS.—In

21 the case of any contribution to a plan under

22 paragraph (1) (and any employer matching con23 tribution with respect thereto)—
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1 ‘‘(i) such contribution shall not, with

2 respect to the year in which the contribu3 tion is made—

4 ‘‘(I) be subject to any otherwise

5 applicable limitation contained in sec6 tion 402(g), 402(h), 403(b), 404(a),

7 404(h), 408, 415, or 457, or

8 ‘‘(II) be taken into account in ap9 plying such limitations to other con10 tributions or benefits under such plan

11 or any other such plan, and

12 ‘‘(ii) except as provided in subpara13 graph (D)(i), such plan shall not be treat14 ed as failing to meet the requirements of

15 section 401(a)(4), 401(a)(26), 401(k)(3),

16 401(k)(11), 401(k)(12), 401(m),

17 403(b)(12), 408(k), 408(p), 410(b), or 416

18 by reason of the making of (or the right to

19 make) such contribution.

20 ‘‘(D) MATCHING CONTRIBUTIONS.—Noth21 ing in subparagraph (A) shall require an em22 ployer to make any matching contribution with

23 respect to any additional elective deferrals

24 under paragraph (1) for any year, but if the
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1 employer elects to make any such matching

2 contribution—

3 ‘‘(i) the requirements of section

4 401(a)(4) shall be applied separately to all

5 such matching contributions made during

6 a year, and

7 ‘‘(ii) the amount of any such match8 ing contribution may not exceed the maxi9 mum amount which could have been made

10 under the terms of the plan in effect for

11 elective deferrals made for such year with12 out regard to this subsection.

13 ‘‘(E) CERTIFICATION OF CATCHUP

14 YEARS.—

15 ‘‘(i) IN GENERAL.—A participant

16 making additional elective deferrals under

17 paragraph (1) for any year shall certify to

18 the plan administrator that—

19 ‘‘(I) the participant is an eligible

20 participant, and

21 ‘‘(II) the year is a catchup year.

22 ‘‘(ii) CATCHUP YEAR.—An eligible

23 participant may certify 1 or more years as

24 catchup years, except that the total num-
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1 ber of years which may be certified shall

2 not exceed the excess (if any) of—

3 ‘‘(I) the number of years (not in

4 excess of 18) described in paragraph

5 (3) occurring before the year in ques6 tion, over

7 ‘‘(II) the number of years pre8 viously certified by the participant

9 under this subsection.

10 ‘‘(iii) PLANS NOT RESPONSIBLE FOR

11 CERTIFICATION FAILURES.—A plan shall

12 not be treated as failing to meet the re13 quirements of this subsection by reason of

14 reliance on an incorrect certification under

15 this subparagraph unless the plan adminis16 trator knew, or reasonably should have

17 known, that the certification was incorrect.

18 ‘‘(3) ELIGIBLE PARTICIPANT.—For purposes of

19 this subsection, the term ‘eligible participant’ means,

20 with respect to any year, a participant in a plan

21 who, for any calendar year before the calendar year

22 in which the year begins—

23 ‘‘(A) was not an active participant (within

24 the meaning of section 219(g)(5)) for any plan

25 year beginning in the calendar year, and
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1 ‘‘(B) had a child or stepchild who had not

2 attained age 18 with respect to whom a deduc3 tion was allowed under section 151 to the par4 ticipant (or the participant’s spouse) for a tax5 able year beginning in the calendar year.

6 ‘‘(4) OTHER DEFINITIONS AND RULES.—For

7 purposes of this subsection—

8 ‘‘(A) ELECTIVE DEFERRAL.—The term

9 ‘elective deferral’ has the meaning given such

10 term by subsection (u)(2)(C). Such term shall

11 also include after-tax employee contributions

12 described in subsection (u)(2)(D).

13 ‘‘(B) PLAN.—The term ‘plan’ includes any

14 arrangement under section 408 (k) or (p).

15 ‘‘(C) CERTAIN RETROACTIVE ADJUST16 MENTS NOT REQUIRED.—For purposes of this

17 subchapter and subchapter E, the rules of sub18 section (u)(3) shall apply.’’

19 (b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to contributions in taxable years

21 beginning after December 31, 1999.

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