I

107TH CONGRESS

1ST SESSION H. R. 1026

To amend the Internal Revenue Code of 1986 to increase the annual limitation on deductible contributions to individual retirement accounts to

$5,000, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 14, 2001

Mr. MOORE (for himself, Mr. ABERCROMBIE, Mr. BAIRD, Mr. BALDACCI, Mrs.

BONO, Mr. BOSWELL, Mr. CALVERT, Mr. CAPUANO, Mr. CLEMENT, Mr.

CONDIT, Mr. CRAMER, Ms. DELAURO, Mr. DOOLEY of California, Mr.

FROST, Mr. GREEN of Texas, Mr. HILL, Mr. HINCHEY, Mr. HOLT, Mr.

HONDA, Ms. HOOLEY of Oregon, Mr. HYDE, Mr. ISRAEL, Ms. JACKSONLEE of Texas, Mr. KILDEE, Mr. LARSEN of Washington, Mr. LARSON

of Connecticut, Mr. LEWIS of Georgia, Mrs. LOWEY, Mr. LUCAS of Kentucky, Mrs. MCCARTHY of New York, Ms. MCKINNEY, Mr. MORAN of

Virginia, Mrs. NAPOLITANO, Mr. PASCRELL, Mr. PETERSON of Minnesota, Mr. ROHRABACHER, Mr. RUSH, Mr. SANDLIN, Mr. SISISKY, Mr.

SKELTON, Mr. TANCREDO, Mrs. TAUSCHER, Mr. THOMPSON of California, Mrs. JONES of Ohio, Mr. TURNER, Mr. WU, Mr. WYNN, and Mr.

UDALL of New Mexico) 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 increase

the annual limitation on deductible contributions to individual retirement accounts to $5,000, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Increased Individual

3 Retirement Accounts for All Act of 2001’’.

4 SEC. 2. INCREASE IN AMOUNT OF MAXIMUM CONTRIBU5 TIONS ALLOWABLE TO DEDUCTIBLE, TRADI6 TIONAL, AND ROTH IRAS.

7 (a) IN GENERAL.—Subparagraph (A) of section

8 219(b)(1) of the Internal Revenue Code of 1986 (relating

9 to maximum amount of deduction) is amended by striking

10 ‘‘$2,000’’ and inserting ‘‘$5,000’’.

11 (b) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS 50

12 OR OLDER.—Subsection (b) of section 219 of such Code

13 is amended by adding at the end the following new para14 graph:

15 ‘‘(5) CATCH-UP CONTRIBUTIONS FOR INDIVID16 UALS 50 OR OLDER.—In the case of an individual

17 who has attained the age of 50 before the close of

18 the taxable year, paragraph (1)(A) shall be applied

19 by substituting ‘$7,500’ for the dollar amount in ef20 fect under such paragraph. This paragraph shall not

21 apply for any taxable year in which the dollar

22 amount in effect under paragraph (1)(A) is equal to

23 or greater than $7,500.’’.

24 (c) COST-OF-LIVING ADJUSTMENT.—Subsection (b)

25 of section 219 of such Code is amended by adding at the

26 end the following new paragraph:
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1 ‘‘(6) COST-OF-LIVING ADJUSTMENT.—

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

3 taxable year beginning in a calendar year after

4 2001, the $5,000 amount under paragraph (1)

5 shall be increased by an amount equal to—

6 ‘‘(i) such dollar amount, multiplied by

7 ‘‘(ii) the cost-of-living adjustment de8 termined under section 1(f)(3) for the cal9 endar year in which the taxable year be10 gins, determined by substituting ‘calendar

11 year 2000’ for ‘calendar year 1992’ in sub12 paragraph (B) thereof.

13 ‘‘(ii) ROUNDING RULES.—If any

14 amount after adjustment under clause (i)

15 is not a multiple of $500, such amount

16 shall be rounded to the next higher mul17 tiple of $500.’’.

18 (d) CONFORMING AMENDMENTS.—

19 (1) Section 408(a)(1) of such Code is amended

20 by striking ‘‘in excess of $2,000 on behalf of any in21 dividual’’ and inserting ‘‘on behalf of any individual

22 in excess of the amount in effect for such taxable

23 year under section 219(b)(1)(A)’’.
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1 (2) Section 408(b)(2)(B) of such Code is

2 amended by striking ‘‘$2,000’’ and inserting ‘‘the

3 dollar amount in effect under section 219(b)(1)(A)’’.

4 (3) Section 408(b) of such Code is amended by

5 striking ‘‘$2,000’’ in the matter following paragraph

6 (4) and inserting ‘‘the dollar amount in effect under

7 section 219(b)(1)(A)’’.

8 (4) Section 408(j) of such Code is amended by

9 striking ‘‘$2,000’’.

10 (5) Section 408(p)(8) of such Code is amended

11 by striking ‘‘$2,000’’ and inserting ‘‘the dollar

12 amount in effect under section 219(b)(1)(A)’’.

13 (e) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to taxable years beginning after

15 December 31, 2000.

16 SEC. 3. NONREFUNDABLE CREDIT TO CERTAIN INDIVID17 UALS FOR ELECTIVE DEFERRALS AND IRA

18 CONTRIBUTIONS.

19 (a) IN GENERAL.—Subpart A of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of

21 1986 (relating to nonrefundable credits) is amended by

22 inserting after section 25A the following new section:

23 ‘‘SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBU24 TIONS BY CERTAIN INDIVIDUALS.

25 ‘‘(a) ALLOWANCE OF CREDIT.—
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1 ‘‘(1) IN GENERAL.—In the case of an eligible

2 individual, there shall be allowed as a credit against

3 the tax imposed by this subtitle for the taxable year

4 an amount equal to the applicable percentage of so

5 much of the qualified retirement savings contribu6 tions of the eligible individual for the taxable year as

7 do not exceed the dollar amount in effect for such

8 taxable year under section 219(b)(1)(A).

9 ‘‘(2) REDUCTION FOR RECEIPT OF CERTAIN RE10 TIREMENT DISTRIBUTIONS.—

11 ‘‘(A) IN GENERAL.—The amount allowed

12 as a credit under paragraph (1) shall be re13 duced (but not below zero) by the amount the

14 eligible individual received, with respect to the

15 taxable year, during the testing period in—

16 ‘‘(i) any distribution from a qualified

17 retirement plan (as defined in section

18 4974(c)), or from an eligible deferred com19 pensation plan (as defined in section

20 457(b)), which is includible in gross in21 come, or

22 ‘‘(ii) any distribution from a Roth

23 IRA which is not a qualified rollover con24 tribution (as defined in section 408A(e)) to

25 a Roth IRA.
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1 ‘‘(B) TESTING PERIOD.—For purposes of

2 subparagraph (A), the testing period, with re3 spect to a taxable year, is the period which

4 includes—

5 ‘‘(i) such taxable year,

6 ‘‘(ii) the 2 preceding taxable years,

7 and

8 ‘‘(iii) the period after such taxable

9 year and before the due date (without ex10 tensions) for filing the return of tax for

11 such taxable year.

12 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

13 this section, the applicable percentage is the percentage

14 determined in accordance with the following table:

Adjusted Gross Income

Applicable percentage

Joint return Head of a household All other cases

Over Not over Over Not over Over Not over

$0 $20,000 $0 $15,000 $0 $10,000 50

20,000 25,000 15,000 18,750 10,000 12,500 30

25,000 30,000 18,750 22,500 12,500 15,000 25

30,000 35,000 22,500 26,250 15,000 17,500 20

35,000 40,000 26,250 30,000 17,500 20,000 15

40,000 45,000 30,000 33,750 20,000 22,500 10

45,000 50,000 33,750 37,500 22,500 25,000 5

50,000 37,500 25,000 0

15 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this

16 section—

17 ‘‘(1) IN GENERAL.—The term ‘eligible indi18 vidual’ means any individual if—
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1 ‘‘(A) such individual has attained the age

2 of 18 as of the close of the taxable year, and

3 ‘‘(B) the compensation (as defined in sec4 tion 219(f)(1)) includible in the gross income of

5 the individual (or, in the case of a joint return,

6 of the taxpayer) for such taxable year is at least

7 $5,000.

8 ‘‘(2) DEPENDENTS AND FULL-TIME STUDENTS

9 NOT ELIGIBLE.—The term ‘eligible individual’ shall

10 not include—

11 ‘‘(A) any individual with respect to whom

12 a deduction under section 151 is allowable to

13 another taxpayer for a taxable year beginning

14 in the calendar year in which such individual’s

15 taxable year begins, and

16 ‘‘(B) any individual who is a student (as

17 defined in section 151(c)(4)).

18 ‘‘(d) QUALIFIED RETIREMENT SAVINGS CONTRIBU19 TIONS.—For purposes of this section, the term ‘qualified

20 retirement savings contributions’ means the sum of—

21 ‘‘(1) the amount of the qualified retirement

22 contributions (as defined in section 219(e)) for the

23 benefit of the eligible individual,
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1 ‘‘(2) the amount of the elective deferrals (as de2 fined in section 414(u)(2)(C)) of such individual,

3 and

4 ‘‘(3) the amount of voluntary employee con5 tributions by such individual to any qualified retire6 ment plan (as defined in section 4974(c)).

7 ‘‘(e) SPECIAL RULES.—

8 ‘‘(1) TREATMENT OF DISTRIBUTIONS RECEIVED

9 BY SPOUSE OF INDIVIDUAL.—For purposes of deter10 mining whether an individual is an eligible individual

11 for any taxable year and for the reduction under

12 subsection (a)(2), any distribution received by the

13 spouse of such individual shall be treated as received

14 by such individual if such individual and spouse file

15 a joint return for such taxable year and for the tax16 able year during which the spouse receives the dis17 tribution.

18 ‘‘(2) ADJUSTED GROSS INCOME.—For purposes

19 of this section, adjusted gross income shall be deter20 mined without regard to sections 911, 931, and 933.

21 ‘‘(3) INVESTMENT IN THE CONTRACT.—Not22 withstanding any other provision of law, a qualified

23 retirement savings contribution shall not fail to be

24 included in determining the investment in the con-
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1 tract for purposes of section 72 by reason of the

2 credit under this section.

3 ‘‘(f) TERMINATION.—This section shall not apply to

4 taxable years beginning after December 31, 2005.’’.

5 (b) CONFORMING AMENDMENT.—The table of sec6 tions for subpart A of part IV of subchapter A of chapter

7 1 of the Internal Revenue Code of 1986 is amended by

8 inserting after the item relating to section 25A the fol9 lowing new item:

‘‘Sec. 25B. Elective deferrals and IRA contributions by certain individuals.’’.

10 (c) REPORTING REQUIREMENTS.—

11 (1) ANNUAL REPORT REQUIRED.—The Sec12 retary of the Treasury shall submit an annual report

13 to the Committee on Ways and Means of the House

14 of Representatives and the Committee on Finance of

15 the Senate regarding the number of individuals who

16 claim the credit under section 25B of the Internal

17 Revenue Code of 1986 (as added by this section).

18 (2) EFFECT OF CREDIT ON PENSION COV19 ERAGE.—Not later than 4 years after the date of the

20 enactment of this Act, the Secretary of the Treasury

21 shall submit a report to the committees specified in

22 paragraph (1) on the effect of the credit under sec23 tion 25B of the Internal Revenue Code of 1986 (as

24 added by this section) on pension coverage of indi-
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1 viduals in the workforce, including expansion of cov2 erage for low- and moderate-income workers, levels

3 of pension benefits, quality of coverage, workers’ ac4 cess to and participation in plans, and retirement se5 curity.

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

7 this section shall apply to taxable years beginning after

8 December 31, 2000.

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