I

104TH CONGRESS

1ST SESSION H. R. 844

To amend the Internal Revenue Code of 1986 to permit farmers to rollover

into an individual retirement account the proceeds from the sale of a farm.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 7, 1995

Mr. COSTELLO 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 permit

farmers to rollover into an individual retirement account

the proceeds from the sale of a farm.

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 ‘‘Farmer Retirement

5 Security Act’’.

6 SEC. 2. ROLLOVER OF PROCEEDS FROM SALE OF FARM

7 INTO INDIVIDUAL RETIREMENT ACCOUNT.

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

9 D of chapter 1 of the Internal Revenue Code of 1986 (re10 lating to pension, profit-sharing, stock bonus plans, etc.)
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1 is amended by inserting after section 408 the following

2 new section:

3 ‘‘SEC. 408A. ROLLOVER TREATMENT FOR PROCEEDS FROM

4 SALE OF FARM.

5 ‘‘(a) IN GENERAL.—In the case of an individual,

6 gross income does not include gain from the sale or ex7 change of qualified farm property to the extent of the

8 amounts which the individual, not later than the 60th day

9 after the date of the sale or exchange, pays into an individ10 ual retirement account (within the meaning of section

11 408(a)) for the benefit of the individual (or spouse of the

12 individual).

13 ‘‘(b) QUALIFIED FARM PROPERTY.—For purposes of

14 this section—

15 ‘‘(1) IN GENERAL.—The term ‘qualified farm

16 property’ means real or personal property located in

17 the United States if, during the 5-year period ending

18 on the date of the sale or exchange of the prop19 erty—

20 ‘‘(A) the property was used for farming

21 purposes, and

22 ‘‘(B) there was material participation by

23 the individual (or spouse of the individual) in

24 the operation of the farm.
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1 ‘‘(2) FARM.—The terms ‘farm’ and ‘farming

2 purposes’ have the respective meanings given such

3 terms by paragraphs (4) and (5) of section

4 2032A(e).

5 ‘‘(3) APPLICABLE RULES.—Rules similar to the

6 rules of paragraphs (3) and (6) of section 2032A(e)

7 shall apply.

8 ‘‘(c) LIMITATIONS.—

9 ‘‘(1) MAXIMUM ROLLOVER PER INDIVIDUAL.—

10 The amount which may be excluded from gross in11 come under subsection (a) in any taxable year on ac12 count of payments into an individual retirement ac13 count for the benefit of any 1 individual shall not ex14 ceed—

15 ‘‘(A) the amount determined by multiply16 ing—

17 ‘‘(i) the sum of the dollar limitations

18 applicable for such taxable year under sec19 tions 402(g)(1) and 408(a)(1), by

20 ‘‘(ii) the holding period of the individ21 ual with respect to the property, reduced

22 by

23 ‘‘(B) the aggregate amount excluded under

24 subsection (a) with respect to the individual for

25 all preceding taxable years.
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1 ‘‘(2) MAXIMUM ROLLOVER PER FAMILY.—The

2 aggregate amount which may be excluded from gross

3 income under subsection (a) in any taxable year by

4 any individual (and spouse of the individual) shall

5 not exceed—

6 ‘‘(A) $500,000, reduced by

7 ‘‘(B) the sum of—

8 ‘‘(i) the amount by which the aggre9 gate value of the assets held by the individ10 ual (and spouse) in individual retirement

11 plans exceeds $100,000, and

12 ‘‘(ii) the aggregate amount excluded

13 under subsection (a) by the individual (and

14 spouse) for all preceding taxable years.

15 ‘‘(d) TREATMENT OF INVESTMENT.—For purposes of

16 section 72, any amount excluded from gross income under

17 subsection (a) on account of a payment into an individual

18 retirement account shall be treated as an amount allowed

19 as a deduction under section 219 with respect to the indi20 vidual retirement account.’’

21 (b) DENIAL OF DEDUCTION FOR ROLLOVER

22 AMOUNT.—Paragraph (2) of section 219(d) of such Code

23 (relating to denial of deduction for recontributed amounts)

24 is amended by striking ‘‘or 408(d)(3)’’ and inserting

25 ‘‘408(d)(3), or 408A’’.
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1 (c) EXEMPTION FROM CONTRIBUTION LIMITA2 TIONS.—

3 (1) Paragraph (1) of section 408(a) of such

4 Code (relating to limitation on contributions to indi5 vidual retirement accounts) is amended by striking

6 ‘‘or 403(b)(8)’’ and inserting ‘‘403(b)(8), or 408A’’.

7 (2) Subparagraph (A) of section 4973(b)(1) of

8 such Code (relating to tax on excess contributions to

9 individual retirement accounts) is amended by strik10 ing ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or

11 408A’’.

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

13 this section shall apply to sales or exchanges after the date

14 of the enactment of this Act.

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