SEC. 2. EXEMPTION OF CERTAIN INTEREST INCOME FROM 
TAX. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
amounts specifically excluded from gross income) is 
amended by inserting after section 115 the following new 
section: 
‘‘SEC. 116. PARTIAL EXCLUSION OF INTEREST RECEIVED BY 
INDIVIDUALS. 
‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in-
come does not include interest otherwise includible in 
gross income which is received during the taxable year by 
an individual. 
‘‘(b) LIMITATIONS.— 
‘‘(1) 
MAXIMUM
AMOUNT.—The 
aggregate 
amount excluded under subsection (a) for any tax-
able year shall not exceed— 
‘‘(A) in the case of any taxable year begin-
ning in 2009, $500 ($1,000 in the case of a 
joint return), and 
‘‘(B) in the case of taxable years beginning 
after 2009— 
‘‘(i) in the case of a joint return, 200 
percent of the dollar amount in effect 
under clause (ii) for the taxable year, and 
‘‘(ii) in any other case, $550. 
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‘‘(2) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after 2010, the $550 
amount contained in paragraph (1)(B)(ii) shall be 
increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2009’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any increase under the preceding sentence is not 
a multiple of $10, such increase shall be rounded to 
the nearest multiple of $10. 
‘‘(c) INTEREST.—For purposes of this section, the 
term ‘interest’ means— 
‘‘(1) interest on deposits with a bank (as de-
fined in section 581), 
‘‘(2) amounts (whether or not designated as in-
terest) paid in respect of deposits, investment certifi-
cates, or withdrawable or repurchasable shares, by— 
‘‘(A) a mutual savings bank, cooperative 
bank, domestic building and loan association, 
industrial loan association or bank, or credit 
union, or 
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‘‘(B) any other savings or thrift institution 
which is chartered and supervised under Fed-
eral or State law, 
the deposits or accounts in which are insured under 
Federal or State law or which are protected and 
guaranteed under State law. 
‘‘(d) CERTAIN NONRESIDENT ALIENS INELIGIBLE 
FOR EXCLUSION.—For purposes of this section, in the 
case of a nonresident alien individual, subsection (a) shall 
apply only in determining the taxes imposed for the tax-
able year pursuant to sections 871(b)(1) and 877(b).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 32(i)(2) of 
such Code is amended by inserting ‘‘(determined 
without regard to section 116)’’ before the comma. 
(2) Subparagraph (B) of section 86(b)(2) of 
such Code is amended to read as follows: 
‘‘(B) increased by the sum of— 
‘‘(i) the amount of interest received or 
accrued by the taxpayer during the taxable 
year which is exempt from tax, and 
‘‘(ii) the amount of interest received 
during the taxable year which is excluded 
from gross income under section 116.’’. 
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(3) Subsection (d) of section 135 of such Code 
is amended by redesignating paragraph (4) as para-
graph (5) and by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) COORDINATION WITH SECTION 116.—This 
section shall be applied before section 116.’’. 
(4) Paragraph (2) of section 265(a) of such 
Code is amended by inserting before the period ‘‘, or 
to purchase or carry obligations or shares, or to 
make deposits, to the extent the interest thereon is 
excludable from gross income under section 116’’. 
(5) Subsection (c) of section 584 of such Code 
is amended by adding at the end the following new 
flush sentence: 
‘‘The proportionate share of each participant in the 
amount of interest received by the common trust fund and 
to which section 116 applies shall be considered for pur-
poses of such section as having been received by such par-
ticipant.’’. 
(6) Subsection (a) of section 643 of such Code 
is amended by redesignating paragraph (7) as para-
graph (8) and by inserting after paragraph (6) the 
following new paragraph: 
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‘‘(7) INTEREST.—There shall be included the 
amount of any interest excluded from gross income 
pursuant to section 116.’’. 
(7) The table of sections for part III of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 115 the 
following new item: 
‘‘Sec. 116. Partial exclusion of dividends and interest received by individuals.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 3. INCREASE IN DOLLAR LIMITATIONS ON CONTRIBU-
TIONS TO RETIREMENT PLANS. 
(a) PERMANENT INCREASE IN DOLLAR LIMITATION 
ON DEDUCTION FOR CONTRIBUTIONS TO INDIVIDUAL RE-
TIREMENT PLANS.— 
(1) IN
GENERAL.—Paragraph (5) of section 
219(b) of the Internal Revenue Code of 1986 is 
amended— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) 
IN
GENERAL.—The 
deductible 
amount for any taxable year is the applicable 
dollar amount in effect under section 402(g)(1) 
for such taxable year.’’, and 
(B) by striking subparagraph (D). 
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(2) SIMPLE
RETIREMENT
ACCOUNTS.—Sub-
paragraph (E) of section 408(p)(2) of such Code is 
amended to read as follows: 
‘‘(E) APPLICABLE DOLLAR AMOUNT.—For 
purposes of subparagraph (A)(ii), the applicable 
dollar amount for any taxable year is the appli-
cable dollar amount in effect under section 
402(g)(1) for such taxable year.’’. 
(b) TEMPORARY INCREASE IN CONTRIBUTIONS TO 
DEFINED CONTRIBUTION PLANS.— 
(1) INCREASE IN LIMITATION ON ELECTIVE DE-
FERRALS.—Paragraph (1) of section 402(g) of such 
Code is amended by adding at the end the following 
new subparagraph: 
‘‘(D) TEMPORARY INCREASE IN APPLICA-
BLE DOLLAR AMOUNT.—In the case of taxable 
years beginning in calendar year 2009, 2010, or 
2011, the applicable dollar amount determined 
under subparagraph (B) shall not be less than 
$33,000.’’. 
(2) INCREASE
IN
COMBINED
EMPLOYEE
AND 
EMPLOYER LIMITATION ON CONTRIBUTIONS TO DE-
FINED CONTRIBUTION PLANS.—Paragraph 1 of sec-
tion 415(c) of such Code is amended by adding at 
the end the following new flush sentence: 
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‘‘(iii) 
SPECIAL
RULE
FOR
2009 
THROUGH
2011.—In the case of taxable 
years beginning in calendar years 2009, 
2010, or 2011, the dollar amount in effect 
under clause (i) shall not be less than 
$10,000.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 5. SUSPENSION OF MINIMUM DISTRIBUTION RE-
QUIREMENTS. 
(a) IN GENERAL.—In the case of an eligible defined 
contribution plan of an individual, sections 401(a)(9), 
404(a)(2), 
403(b)(10), 
408(a)(6), 
408(b)(3), 
and 
457(d)(2) of the Internal Revenue Code of 1986 shall not 
apply with respect to such individual for any year during 
the suspension period. 
(b) SUSPENSION PERIOD.—For purposes of this sec-
tion, the term ‘‘suspension period’’ means the period be-
ginning on January 1, 2008, and ending on December 31, 
2012. 
(c) ELIGIBLE DEFINED CONTRIBUTION PLAN.—For 
purposes of this section, the term ‘‘eligible defined con-
tribution plan’’ means— 
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(1) a defined contribution plan (within the 
meaning of section 414(i) of such Code) which is— 
(A) an employee’s trust described in sec-
tion 401(a) of such Code which is exempt from 
tax under section 501(a) of such Code, 
(B) an annuity plan described in section 
403(a) of such Code, 
(C) an annuity contract described in sec-
tion 403(b) of such Code, and 
(D) an eligible deferred compensation plan 
described in section 457(b) of such Code which 
is maintained by an eligible employer described 
in section 457(e)(1)(A) of such Code, and 
(2) an individual retirement plan (as defined in 
section 7701(a)(37) of such Code). 
(d) SPECIAL RULES.— 
(1) REQUIRED BEGINNING DATE DURING SUS-
PENSION
PERIOD.—The required beginning date 
with respect to any individual under section 
401(a)(9) of such Code shall be determined without 
regard to this section for purposes of applying sec-
tions 401(a)(9), 404(a)(2), 403(b)(10), 408(a)(6), 
408(b)(3), and 457(d) of such Code for calendar 
years after 2009. 
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(2) EXCEPTION FOR 5-YEAR RULE.—In the case 
of 
a 
distribution 
required 
under 
section 
401(a)(9)(B)(ii) of such Code, subsection (a) shall 
not apply. 
(3) EXEMPTION
OF
DISTRIBUTIONS
DURING 
SUSPENSION PERIOD FROM TRUSTEE TRANSFER AND 
WITHHOLDING
RULES.—For purposes of sections 
401(a)(31), 402(f), and 3405 of such Code, any dis-
tribution during the suspension period which, but for 
subsection (a), would have been a required distribu-
tion under section 401(a)(9) of such Code shall not 
be treated as an eligible rollover distribution. 
(e) PROVISIONS
RELATING
TO
PLAN
AMEND-
MENTS.— 
(1) IN GENERAL.—If this subsection applies to 
any plan or annuity contract, such plan or contract 
shall be treated as being operated in accordance with 
the terms of the plan during the period described in 
paragraph (2)(B)(i). 
(2) AMENDMENTS TO WHICH SUBSECTION AP-
PLIES.— 
(A) IN
GENERAL.—This subsection shall 
apply to any amendment to any plan or annuity 
contract which is made— 
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(i) pursuant to this section or pursu-
ant to any regulation issued by the Sec-
retary of the Treasury to carry out this 
section, and 
(ii) on or before the last day of the 
first plan year beginning on or after Janu-
ary 1, 2009. 
(B) CONDITIONS.—This subsection shall 
not apply to any amendment unless during the 
period beginning on the date such amendment 
takes effect and ending on December 31, 2009 
(or, if earlier, the date the plan or contract 
amendment is adopted), the plan or contract is 
operated as if such plan or contract amendment 
were in effect. 
(f) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. 
Æ 
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