I

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104TH CONGRESS

1ST SESSION H. R. 6

To amend the Internal Revenue Code of 1986 to provide a tax credit for

families, to reform the marriage penalty, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. CRANE, Mr. NUSSLE, and Mr. SALMON (for themselves, Mr. ALLARD, Mr.

ARMEY, Mr. BAKER of California, Mr. BAKER of Louisiana, Mr.

BALLENGER, Mr. BARR, Mr. BARTLETT of Maryland, Mr. BARTON of

Texas, Mr. BILIRAKIS, Mr. BLILEY, Mr. BLUTE, Mr. BONO, Mr.

BUNNING of Kentucky, Mr. BURR, Mr. CALLAHAN, Mr. CALVERT, Mr.

CAMP, Mr. CANADY of Florida, Mr. CREMEANS, Mr. CHRISTENSEN, Mr.

CHRYSLER, Mr. COBURN, Mr. COOLEY, Mrs. CUBIN, Mr. CUNNINGHAM,

Mr. DOOLITTLE, Mr. DORNAN, Ms. DUNN of Washington, Mr. EMERSON,

Mr. ENGLISH of Pennsylvania, Mr. ENSIGN, Mr. EWING, Mr. FLANAGAN,

Mr. FOLEY, Mrs. FOWLER, Mr. FORBES, Mr. FOX of Pennsylvania, Mr.

FRISA, Mr. GANSKE, Mr. GILCHREST, Mr. GILMAN, Mr. GILLMOR, Mr.

GOODLATTE, Mr. GOODLING, Mr. GREENWOOD, Mr. GUNDERSON, Mr.

HANCOCK, Mr. HASTINGS of Washington, Mr. HAYWORTH, Mr.

HEINEMAN, Mr. HERGER, Mr. HILLEARY, Mr. HOBSON, Mr.

HOSTETTLER, Mr. HUTCHINSON, Mr. INGLIS of South Carolina, Mr.

ISTOOK, Mrs. JOHNSON of Connecticut, Mr. JONES, Mr. KINGSTON, Mr.

KNOLLENBERG, Mr. LARGENT, Mr. LATOURETTE, Mr. LATHAM, Mr.

LEWIS of Kentucky, Mr. LIGHTFOOT, Mr. LINDER, Mr. LONGLEY, Mr.

MCCOLLUM, Mr. MCHUGH, Mr. MCINTOSH, Mr. MICA, Mr. MILLER of

Florida, Ms. MOLINARI, Mrs. MYRICK, Mr. PACKARD, Mr. RADANOVICH,

Mr. RIGGS, Mr. ROTH, Mr. ROYCE, Mr. SAXTON, Mr. SENSENBRENNER,

Mr. SHADEGG, Mr. SHAW, Mr. SHAYS, Mr. SMITH of New Jersey, Mr.

SMITH of Michigan, Mr. SOLOMON, Mr. STEARNS, Mr. STOCKMAN, Mr.

STUMP, Mr. TALENT, Mr. TATE, Mr. TAYLOR of North Carolina, Mr.

THORNBERRY, Mr. THOMAS, Mr. TIAHRT, Mrs. WALDHOLTZ, Mr. WAMP,

Mr. WELDON of Florida, Mr. WELLER, Mr. WICKER, Mr. ZIMMER, Mr.

CRAPO, Mr. KOLBE, Mr. PAXON, Mr. YOUNG of Florida, Mr.

BROWNBACK, Mr. WELDON of Pennsylvania, Mr. COMBEST, Mr. COBLE,

Mr. EHRLICH, and Mrs. MEYERS of Kansas) introduced the following bill;

which was referred to the Committee on Ways and Means
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A BILL

To amend the Internal Revenue Code of 1986 to provide

a tax credit for families, to reform the marriage penalty,

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; AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘American Dream Restoration Act’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference

10 shall be considered to be made to a section or other provi11 sion of the Internal Revenue Code of 1986.

12 SEC. 2. FAMILY TAX CREDIT.

13 (a) IN GENERAL.—Subpart C of part IV of sub14 chapter A of chapter 1 (relating to refundable credits) is

15 amended by redesignating section 35 as section 36 and

16 by inserting after section 34 the following new section:

17 ‘‘SEC. 35. FAMILY TAX CREDIT.

18 ‘‘(a) ALLOWANCE OF CREDIT.—

19 ‘‘(1) IN GENERAL.—In the case of an eligible

20 individual, there shall be allowed as a credit against

21 the tax imposed by this subtitle for the taxable year
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1 an amount equal to the amount described in para2 graph (2) multiplied by the number of qualifying

3 children of the taxpayer.

4 ‘‘(2) DESCRIPTION OF AMOUNT.—

5 ‘‘(A) IN GENERAL.—The amount described

6 in this paragraph is an amount equal to $500,

7 reduced (but not below zero) by the applicable

8 reduction amount.

9 ‘‘(B) APPLICABLE REDUCTION AMOUNT.—

10 For purposes of subparagraph (A), the term

11 ‘applicable reduction amount’ means an amount

12 which bears the same ratio to the amount appli13 cable under subparagraph (A) as—

14 ‘‘(i) the excess (if any) of the tax15 payer’s adjusted gross income over

16 $200,000, bears to

17 ‘‘(ii) $50,000.

18 ‘‘(b) LIMITATION BASED ON AMOUNT OF TAX.—

19 ‘‘(1) IN GENERAL.—The credit allowed by sub20 section (a) for the taxable year shall not exceed the

21 excess (if any) of—

22 ‘‘(A) the sum of—

23 ‘‘(i) the tax imposed by this chapter

24 for the taxable year (reduced by the credits
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1 allowable against such tax other than the

2 credits allowable under this subpart), and

3 ‘‘(ii) the taxpayer’s social security

4 taxes for such taxable year, over

5 ‘‘(B) the credit allowed for the taxable year

6 under section 32.

7 ‘‘(2) SOCIAL SECURITY TAXES.—For purposes

8 of paragraph (1)—

9 ‘‘(A) IN GENERAL.—The term ‘social secu10 rity taxes’ means, with respect to any taxpayer

11 for any taxable year—

12 ‘‘(i) the amount of the taxes imposed

13 by sections 3101, 3111, 3201(a), and

14 3221(a) on amounts received by the tax15 payer during the calendar year in which

16 the taxable year begins,

17 ‘‘(ii) the taxes imposed by section

18 1401 on the self-employment income of the

19 taxpayer for the taxable year, and

20 ‘‘(iii) the taxes imposed by section

21 3211(a)(1) on amounts received by the

22 taxpayer during the calendar year in which

23 the taxable year begins.

24 ‘‘(B) COORDINATION WITH SPECIAL RE25 FUND OF SOCIAL SECURITY TAXES.—The term
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1 ‘social security taxes’ shall not include any

2 taxes to the extent the taxpayer is entitled to

3 a special refund of such taxes under section

4 6413(c).

5 ‘‘(C) SPECIAL RULE.—Any amounts paid

6 pursuant to an agreement under section 3121(l)

7 (relating to agreements entered into by Amer8 ican employers with respect to foreign affiliates)

9 which are equivalent to the taxes referred to in

10 subparagraph (A)(i) shall be treated as taxes

11 referred to in such subparagraph.

12 ‘‘(c) INFLATION ADJUSTMENTS.—

13 ‘‘(1) IN GENERAL.—In the case of a taxable

14 year beginning in a calendar year after 1996, the

15 $500 and $200,000 amounts contained in subsection

16 (a)(2) shall each be increased by an amount equal

17 to—

18 ‘‘(A) such dollar amount, multiplied by

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for the calendar

21 year in which the taxable year begins, deter22 mined by substituting ‘calendar year 1995’ for

23 ‘calendar year 1992’ in subparagraph (B)

24 thereof.
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1 ‘‘(2) ROUNDING.—If any amount as adjusted

2 under paragraph (1) is not a multiple of $50, such

3 amount shall be rounded to the nearest multiple of

4 $50.

5 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur6 poses of this section—

7 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible

8 individual’ has the meaning given to such term by

9 section 32(c)(1) (determined without regard to sub10 paragraph (B) thereof).

11 ‘‘(2) QUALIFYING CHILD.—The term ‘qualifying

12 child’ means an individual who—

13 ‘‘(A) is a qualifying child, within the mean14 ing of section 32(c)(3) (determined without re15 gard to subparagraph (E) thereof), and

16 ‘‘(B) has not attained the age of 18 as of

17 the close of the calendar year in which the tax18 able year of the taxpayer begins.

19 ‘‘(3) CERTAIN OTHER RULES APPLY.—Rules

20 similar to the rules of subsections (d) and (e) of sec21 tion 32 shall apply.’’

22 (b) CONFORMING AMENDMENTS.—

23 (1) Paragraph (2) of section 1324(b) of title

24 31, United States Code, is amended by inserting be25 fore the period ‘‘, or from section 35 of such Code’’.
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1 (2) The table of sections for subpart C of part

2 IV of subchapter A of chapter 1 is amended by

3 striking the item relating to section 35 and inserting

4 the following new items:

‘‘Sec. 35. Family tax credit.

‘‘Sec. 36. Overpayments of tax.’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 1995.

8 SEC. 3. CREDIT TO REDUCE THE MARRIAGE PENALTY.

9 (a) IN GENERAL.—Subpart A of part IV of sub10 chapter A of chapter 1 (relating to nonrefundable personal

11 credits) is amended by inserting after section 22 the fol12 lowing new section:

13 ‘‘SEC. 23. REDUCTION OF MARRIAGE PENALTY.

14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

15 qualified married couple, there shall be allowed as a credit

16 against the tax imposed by this chapter for the taxable

17 year an amount equal to the applicable dollar amount.

18 ‘‘(b) QUALIFIED MARRIED COUPLE.—For purposes

19 of this section, the term ‘qualified married couple’ means

20 a husband and wife who file a joint return for the taxable

21 year and who, but for this section, would be required to

22 pay more in income taxes under this subtitle because of

23 the fact that they were legally married during such taxable
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1 year than they would be required to pay if they had not

2 been married.

3 ‘‘(c) APPLICABLE DOLLAR AMOUNT.—For purposes

4 of this section, the term ‘applicable dollar amount’ means,

5 with respect to taxable years beginning in any calendar

6 year, the amount which the Secretary estimates will result

7 in a reduction in revenues to the Treasury for such taxable

8 years of $2,000,000,000. In no event may the applicable

9 dollar amount with respect to any taxpayer exceed the

10 marriage penalty that such taxpayer would be required to

11 pay but for this section.’’

12 (b) TABLE OF SECTIONS.—The table of sections for

13 such subpart A is amended by inserting after the item re14 lating to section 22 the following new item:

‘‘Sec. 23. Reduction of marriage penalty.’’

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

16 this section shall apply to taxable years beginning after

17 the date of the enactment of this Act.

18 SEC. 4. ESTABLISHMENT OF AMERICAN DREAM SAVINGS

19 ACCOUNTS.

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

21 D of chapter 1 (relating to pension, profit-sharing, stock

22 bonus plans, etc.) is amended by inserting after section

23 408 the following new section:
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1 ‘‘SEC. 408A. AMERICAN DREAM SAVINGS ACCOUNTS.

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

3 section, an American Dream Savings Account shall be

4 treated for purposes of this title in the same manner as

5 an individual retirement plan.

6 ‘‘(b) AMERICAN DREAM SAVINGS ACCOUNT.—For

7 purposes of this title, the term ‘American Dream Savings

8 Account’ or ‘ADS account’ means an individual retirement

9 plan which is designated at the time of the establishment

10 of the plan as an American Dream Savings Account. Such

11 designation shall be made in such manner as the Secretary

12 may prescribe.

13 ‘‘(c) CONTRIBUTION RULES.—

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

15 shall be allowed under section 219 for a contribution

16 to an ADS account.

17 ‘‘(2) CONTRIBUTION LIMIT.—

18 ‘‘(A) IN GENERAL.—The aggregate

19 amount of contributions (other than rollover

20 contributions) for any taxable year to all ADS

21 accounts maintained for the benefit of an indi22 vidual shall not exceed the lesser of—

23 ‘‘(i) $2,000, or

24 ‘‘(ii) an amount equal to the com25 pensation includible in the individual’s

26 gross income for such taxable year.
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1 ‘‘(B) $4,000 LIMITATION FOR CERTAIN AD2 DITIONAL MARRIED INDIVIDUALS.—

3 ‘‘(i) IN GENERAL.—In the case of an

4 individual to whom this subparagraph ap5 plies for the taxable year, the limitation of

6 subparagraph (A)(ii) shall be equal to the

7 sum of—

8 ‘‘(I) the compensation includible

9 in such individual’s gross income for

10 the taxable year, plus

11 ‘‘(II) the compensation includible

12 in the gross income of such individ13 ual’s spouse for the taxable year re14 duced by the amount of the limitation

15 under subparagraph (A) applicable to

16 such spouse for such taxable year.

17 ‘‘(ii) INDIVIDUALS TO WHOM CLAUSE

18 (i) APPLIES.—Clause (i) shall apply to any

19 individual if—

20 ‘‘(I) such individual files a joint

21 return for the taxable year, and

22 ‘‘(II) the amount of compensa23 tion (if any) includible in such individ24 ual’s gross income for the taxable year

25 is less than the compensation includ-
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1 ible in the gross income of such indi2 vidual’s spouse for the taxable year.

3 ‘‘(C) ADJUSTMENT FOR INFLATION.—

4 ‘‘(i) IN GENERAL.—In the case of a

5 taxable year beginning in a calendar year

6 after 1996, the $2,000 amount contained

7 in subparagraph (A) shall be increased by

8 an amount equal to—

9 ‘‘(I) such dollar amount, multi10 plied by

11 ‘‘(II) the cost-of-living adjust12 ment under section 1(f)(3) for the cal13 endar year in which the taxable year

14 begins, determined by substituting

15 ‘calendar year 1995’ for ‘calendar

16 year 1992’ in subparagraph (B) there17 of.

18 ‘‘(ii) ROUNDING.—If any amount as

19 adjusted under clause (i) is not a multiple

20 of $50, such amount shall be rounded to

21 the nearest multiple of $50.

22 ‘‘(D) TAX ON EXCESS CONTRIBUTIONS.—

23 Section 4973 shall be applied separately with

24 respect to individual retirement plans which are

25 ADS accounts and individual retirement plans
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1 which are not ADS accounts; except that, for

2 purposes of applying such section with respect

3 to individual retirement plans which are ADS

4 accounts, excess contributions shall be consid5 ered to be any amounts in excess of the limita6 tion under subsection (c)(2)(A).

7 ‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE

701 8 ⁄2.—Contributions to an ADS account may be

9 made even after the individual for whom the account

is maintained has attained age 701 10 ⁄2.

11 ‘‘(4) MANDATORY DISTRIBUTION RULES NOT

12 TO APPLY, ETC.—Subsections (a)(6) and (b)(3) of

13 section 408 (relating to required distributions) and

14 section 4974 (relating to excise tax on certain accu15 mulations in qualified retirement plans) shall not

16 apply to any ADS account.

17 ‘‘(5) LIMITATIONS ON ROLLOVER CONTRIBU18 TIONS.—No rollover contribution may be made to an

19 ADS account unless—

20 ‘‘(A) such contribution is from another

21 ADS account, or

22 ‘‘(B) such contribution is from an individ23 ual retirement plan (other than an ADS ac24 count) and is made before January 1, 1998.
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1 ‘‘(d) DISTRIBUTION RULES.—For purposes of this

2 title—

3 ‘‘(1) IN GENERAL.—In the case of a qualified

4 distribution from an ADS account—

5 ‘‘(A) no portion of such distribution shall

6 be includible in gross income, and

7 ‘‘(B) section 72(t) shall not apply.

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

9 of this subsection—

10 ‘‘(A) IN GENERAL.—The term ‘qualified

11 distribution’ means any payment or distribu12 tion—

13 ‘‘(i) made on or after the date on

which the individual attains age 591 14 ⁄2,

15 ‘‘(ii) made to a beneficiary (or to the

16 estate of the individual) on or after the

17 death of the individual,

18 ‘‘(iii) attributable to the individual’s

19 being disabled (within the meaning of sec20 tion 72(m)(7)), or

21 ‘‘(iv) which is a qualified special pur22 pose distribution (within the meaning of

23 subsection (e)).
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1 ‘‘(B) DISTRIBUTIONS WITHIN 5 YEARS.—

2 No payment or distribution shall be treated as

3 a qualified distribution if—

4 ‘‘(i) it is made within the 5-taxable

5 year period beginning with the 1st taxable

6 year in which the individual made a con7 tribution to an ADS account (or such indi8 vidual’s spouse made a contribution to an

9 ADS account) established for such individ10 ual, or

11 ‘‘(ii) in the case of a payment or dis12 tribution properly allocable to a rollover

13 contribution (or income allocable thereto),

14 it is made within 5 years after the date on

15 which such rollover contribution was made,

16 as determined under regulations prescribed

17 by the Secretary.

18 Clause (ii) shall not apply to a rollover con19 tribution from an ADS account.

20 ‘‘(3) INCOME INCLUSION FOR ROLLOVERS FROM

21 NON-ADS ACCOUNTS.—In the case of any amount

22 paid or distributed out of an individual retirement

23 plan (other than an ADS account) which is paid into

24 an ADS account (established for the benefit of the

25 payee or distributee, as the case may be) before the
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1 close of the 60th day after the day on which the

2 payment or distribution is received—

3 ‘‘(A) sections 72(t) and 408(d)(3) shall not

4 apply, and

5 ‘‘(B) any amount required to be included

6 in gross income by reason of this paragraph

7 shall be so included ratably over the 4-taxable

8 year period beginning with the taxable year in

9 which the payment or distribution is made.

10 ‘‘(e) QUALIFIED SPECIAL PURPOSE DISTRIBU11 TION.—

12 ‘‘(1) IN GENERAL.—For purposes of this sec13 tion, the term ‘qualified special purpose distribution’

14 means any payments or distributions to an individ15 ual from an ADS account—

16 ‘‘(A) if such payments or distributions are

17 qualified first-time homebuyer distributions, or

18 ‘‘(B) to the extent such payments or dis19 tributions do not exceed—

20 ‘‘(i) the qualified higher education ex21 penses of the taxpayer for the taxable year

22 in which received, and

23 ‘‘(ii) the qualified medical expenses of

24 the taxpayer for the taxable year in which

25 received.
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1 The term ‘qualified special purpose distribution’

2 shall not include any payment or distribution to the

3 extent such payment or distribution reduces the bal4 ance of the amounts in ADS accounts of the tax5 payer below $1,000.

6 ‘‘(2) QUALIFIED FIRST-TIME HOMEBUYER DIS7 TRIBUTIONS.—

8 ‘‘(A) IN GENERAL.—For purposes of this

9 subsection, the term ‘qualified first-time home10 buyer distribution’ means any payment or dis11 tribution received by an individual to the extent

12 such payment or distribution is used by the in13 dividual before the close of the 60th day after

14 the day on which such payment or distribution

15 is received to pay qualified acquisition costs

16 with respect to a principal residence for such

17 individual as a first-time homebuyer.

18 ‘‘(B) QUALIFIED ACQUISITION COSTS.—

19 For purposes of this paragraph, the term

20 ‘qualified acquisition costs’ means the costs of

21 acquiring, constructing, or reconstructing a res22 idence. Such term includes any usual or reason23 able settlement, financing, or other closing

24 costs.
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1 ‘‘(C) FIRST-TIME HOMEBUYER; OTHER

2 DEFINITIONS.—For purposes of this para3 graph—

4 ‘‘(i) FIRST-TIME HOMEBUYER.—The

5 term ‘first-time homebuyer’ means any in6 dividual if such individual (and, if married,

7 such individual’s spouse) had no present

8 ownership interest in a principal residence

9 during the 3-year period ending on the

10 date of acquisition of the principal resi11 dence to which this paragraph applies.

12 ‘‘(ii) PRINCIPAL RESIDENCE.—The

13 term ‘principal residence’ has the same

14 meaning as when used in section 1034.

15 ‘‘(iii) DATE OF ACQUISITION.—The

16 term ‘date of acquisition’ means the date—

17 ‘‘(I) on which a binding contract

18 to acquire the principal residence to

19 which subparagraph (A) applies is en20 tered into, or

21 ‘‘(II) on which construction or re22 construction of such a principal resi23 dence is commenced.

24 ‘‘(D) SPECIAL RULE WHERE DELAY IN AC25 QUISITION.—If any payment or distribution out
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1 of an ADS account fails to meet the require2 ments of subparagraph (A) solely by reason of

3 a delay or cancellation of the purchase or con4 struction of the residence, the amount of the

5 payment or distribution may be contributed to

6 an ADS account as provided in subsection

7 (d)(3)(A)(i) of section 408 (determined by sub8 stituting ‘120 days’ for ‘60 days’ in such sec9 tion), except that—

10 ‘‘(i) subsection (d)(3)(B) of such sec11 tion shall not be applied to such contribu12 tion, and

13 ‘‘(ii) such amount shall not be taken

14 into account in determining whether sub15 section (d)(3)(A)(i) of such section applies

16 to any other amount.

17 ‘‘(5) QUALIFIED HIGHER EDUCATION EX18 PENSES.—For purposes of this subsection—

19 ‘‘(A) IN GENERAL.—The term ‘qualified

20 higher education expenses’ means tuition, fees,

21 books, supplies, and equipment required for the

22 enrollment or attendance of—

23 ‘‘(i) the taxpayer,

24 ‘‘(ii) the taxpayer’s spouse, or
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1 ‘‘(iii) the taxpayer’s child (as defined

2 in section 151(c)(3)) or grandchild,

3 at an eligible educational institution (as defined

4 in section 135(c)(3)).

5 ‘‘(B) COORDINATION WITH SAVINGS BOND

6 PROVISIONS.—The amount of qualified higher

7 education expenses for any taxable year shall be

8 reduced by any amount excludable from gross

9 income under section 135.

10 ‘‘(6) QUALIFIED MEDICAL EXPENSES.—

11 ‘‘(A) IN GENERAL.—For purposes of this

12 subsection, the term ‘qualified medical ex13 penses’ means any amounts paid during the

14 taxable year, not compensated for by insurance

15 or otherwise, for medical care (as defined in

16 section 213(d)) of the taxpayer, his spouse, or

17 a dependent (as defined in section 152).

18 ‘‘(B) LONG-TERM CARE INSURANCE.—

19 Such term includes premiums paid during the

20 taxable year for any long-term care insurance

21 contract for the benefit of the individual or

22 such individual’s spouse.

23 ‘‘(C) LONG-TERM CARE INSURANCE CON24 TRACT.—For purposes of subparagraph (B),
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1 the term ‘long-term care insurance contract’

2 means any insurance contract issued if—

3 ‘‘(i) the only insurance protection pro4 vided under such contract is coverage of

5 qualified long-term care services and bene6 fits incidental to such coverage (as defined

7 under regulations prescribed by the Sec8 retary),

9 ‘‘(ii) the maximum benefit under the

10 policy for expenses incurred for any day

11 does not exceed $200,

12 ‘‘(iii) such contract does not cover ex13 penses incurred for services or items to the

14 extent that such expenses are reimbursable

15 under title XVIII of the Social Security

16 Act or would be so reimbursable but for

17 the application of a deductible or coinsur18 ance amount,

19 ‘‘(iv) such contract is guaranteed re20 newable,

21 ‘‘(v) such contract does not have any

22 cash surrender value, and

23 ‘‘(vi) all refunds of premiums, and all

24 policyholder dividends or similar amounts,

25 under such contract are to be applied as a
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1 reduction in future premiums or to in2 crease future benefits.

3 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec4 tion—

5 ‘‘(1) ROLLOVER CONTRIBUTIONS.—The term

6 ‘rollover contributions’ means contributions de7 scribed in sections 402(c), 403(a)(4), 403(b)(8), and

8 408(d)(3).

9 ‘‘(2) COMPENSATION.—The term ‘compensa10 tion’ has the meaning given such term by section

11 219(f).’’

12 (b) CONFORMING AMENDMENT.—The table of sec13 tions for subpart A of part I of subchapter D of chapter

14 1 is amended by inserting after the item relating to section

15 408 the following new item:

‘‘Sec. 408A. American dream savings accounts.’’

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

17 this section shall apply to taxable years beginning after

18 December 31, 1995.

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