(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. ACCELERATION OF INCREASES IN IRA CONTRIBU-
TION LIMIT. 
(a) DEDUCTIBLE AMOUNT.—Subparagraph (A) of 
section 219(b)(1) is amended to read as follows: 
‘‘(A) $5,000, or’’. 
(b) CATCH-UP AMOUNT.—Paragraph (5) of section 
219(b) is amended to read as follows: 
‘‘(5) CATCH-UP CONTRIBUTIONS FOR INDIVID-
UALS 50 OR OLDER.—In the case of an individual 
who has attained the age of 50 before the close of 
the taxable year, the dollar amount in effect under 
paragraph (1)(A) for such taxable year (determined 
without regard to this paragraph) shall be increased 
by $1,000.’’. 
(c) COST-OF-LIVING ADJUSTMENT.—Subsection (b) 
of section 219 is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) COST-OF-LIVING ADJUSTMENT.—
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2002, the $5,000 amount under paragraph 
(1)(A) shall be increased by an amount equal 
to—
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
‘‘(B) ROUNDING RULES.—If any amount 
after adjustment under subparagraph (A) is not 
a multiple of $500, such amount shall be 
rounded to the next lower multiple of $500.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2001. 
SEC. 3. ACCELERATION OF SCHEDULED INCREASES IN ELI-
GIBILITY FOR DEDUCTIBLE IRAS AND ELIMI-
NATION 
OF 
MARRIAGE 
PENALTY; 
SIM-
PLIFICATION OF RULES. 
(a) DEDUCTIBLE IRAS.—
(1) INCREASE IN PHASEOUT AMOUNTS.—
(A) IN GENERAL.—Subclause (II) of sec-
tion 219(g)(2)(A)(i) is amended to read as fol-
lows: 
‘‘(II) $50,000 ($100,000 in the 
case of a joint return and zero in the 
case of a married individual filing a 
separate return), bears to’’. 
(B) 
CONFORMING
AMENDMENT.—Para-
graph (3) of section 219(g) is amended to read 
as follows: 
‘‘(3) ADJUSTED GROSS INCOME.—For purposes 
of this subsection, adjusted gross income of any tax-
payer shall be determined—
‘‘(A) after application of sections 86 and 
469, and 
‘‘(B) without regard to sections 135, 137, 
221, 222, and 911 or the deduction allowable 
under this section.’’. 
(2) INCREASE
IN
PHASEOUT
RANGE.—Clause 
(ii) of section 219(g)(2)(A) is amended by striking 
‘‘for a taxable year beginning after December 31, 
2006’’. 
(b) 
ROTH
IRAS.—Subclause 
(I) 
of 
section 
408A(c)(3)(C)(ii) is amended by striking ‘‘$150,000’’ and 
inserting ‘‘$190,000’’.
(c) ELIMINATION OF MARRIAGE PENALTY ON IRA 
DEDUCTION
FOR
ACTIVE
PENSION
PLAN
PARTICI-
PANTS.—Section 219(g) is amended—
(1) by striking ‘‘or the individual’s spouse’’ in 
paragraph (1), and 
(2) by striking paragraph (7). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 4. ACCELERATION OF SCHEDULED INCREASES IN 
PENSION PLAN CONTRIBUTION LIMITS. 
(a) ELECTIVE DEFERRALS.—
(1) IN GENERAL.—Section 402(g)(1) is amend-
ed—
(A) in subparagraph (A) by striking ‘‘the 
applicable 
dollar 
amount’’ 
and 
inserting 
‘‘$15,000’’, 
(B) by striking subparagraph (B) and re-
designating subparagraph (C) as subparagraph 
(B). 
(2) CONFORMING AMENDMENTS.—
(A) Section 402(g)(1)(B) (as redesignated 
by paragraph (1)) is amended by striking ‘‘ap-
plicable dollar amount under subparagraph
(B)’’ and inserting ‘‘amount in effect under 
subparagraph (A)’’. 
(B) Section 402(g)(4) is amended—
(i) by striking ‘‘2006’’ and inserting 
‘‘2003’’, 
(ii) by striking ‘‘paragraph (1)(B)’’ 
and inserting ‘‘paragraph (1)(A)’’, and 
(iii) by striking ‘‘2005’’ and inserting 
‘‘2002’’. 
(b) DEFERRED COMPENSATION PLANS OF STATE 
AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANI-
ZATIONS.—
(1) IN GENERAL.—Subsection (b)(2)(A) of sec-
tion 457 is amended by striking ‘‘the applicable dol-
lar amount’’ and inserting ‘‘$15,000’’. 
(2) 
CONFORMING
AMENDMENT.—Paragraph 
(15) of section 457(e) is amended to read as follows: 
‘‘(15) COST-OF-LIVING ADJUSTMENTS.—In the 
case of taxable years beginning after December 31, 
2003, the Secretary shall adjust the $15,000 
amount in subsection (b)(2)(A) at the same time 
and in the same manner as under section 415(d), 
except that the base period shall be the calendar 
quarter beginning July 1, 2002, and any increase 
under this paragraph which is not a multiple of
$500 shall be rounded to the next lowest multiple of 
$500.’’. 
(c) SIMPLE RETIREMENT ACCOUNTS.—
(1) IN
GENERAL.—Clause (ii) of section 
408(p)(2)(A) (relating to general rule for qualified 
salary reduction arrangement) is amended by strik-
ing ‘‘the applicable dollar amount’’ and inserting 
‘‘$10,000’’. 
(2) CONFORMING AMENDMENT.—Subparagraph 
(E) of section 408(p)(2) is amended to read as fol-
lows: 
‘‘(E) COST-OF-LIVING
ADJUSTMENT.—In 
the case of a year beginning after December 31, 
2003, the Secretary shall adjust the $10,000 
amount in subparagraph (A)(ii) at the same 
time and in the same manner as under section 
415(d), except that the base period taken into 
account shall be the calendar quarter beginning 
July 1, 2002, and any increase under this sub-
paragraph which is not a multiple of $500 shall 
be rounded to the next lower multiple of 
$500.’’. 
(d) CATCH-UP CONTRIBUTIONS.—
(1) IN GENERAL.—Subparagraph (B) of section 
414(v)(2) is amended—
(A) in clause (i) by striking ‘‘shall be’’ and 
all that follows and inserting ‘‘is $5,000.’’, and 
(B) in clause (ii) by striking ‘‘shall be’’ 
and all that follows and inserting ‘‘is $2,500.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
414(v)(2)(C) is amended—
(A) by striking ‘‘2006’’ and inserting 
‘‘2003’’, and 
(B) by striking ‘‘2005’’ and inserting 
‘‘2002’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2002. 
SEC. 5. CATCH-UP CONTRIBUTIONS FOR FEDERAL EMPLOY-
EES. 
(a) CIVIL SERVICE RETIREMENT SYSTEM.—Para-
graph (2) of section 8351(b) of title 5, United States 
Code, is amended by adding at the end the following: 
‘‘(C) Notwithstanding any limitation under this para-
graph, an eligible participant (as defined by section 414(v) 
of the Internal Revenue Code of 1986) may make such 
additional contributions to the Thrift Savings Fund as are 
permitted by such section 414(v) and regulations of the 
Executive Director consistent therewith.’’. 
(b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.—
(1) PROVISION
APPLICABLE
TO
EMPLOYEES 
GENERALLY.—Subsection (a) of section 8432 of title 
5, United States Code, is amended by adding at the 
end the following: 
‘‘(3) Notwithstanding any limitation under this sub-
section, an eligible participant (as defined by section 
414(v) of the Internal Revenue Code of 1986) may make 
such additional contributions to the Thrift Savings Fund 
as are permitted by such section 414(v) and regulations 
of the Executive Director consistent therewith.’’. 
(2) PROVISION APPLICABLE TO CERTAIN OTHER 
INDIVIDUALS.—Section 8440f of title 5, United 
States Code, is amended—
(A) by striking ‘‘The maximum’’ and in-
serting ‘‘(a) The maximum’’; and 
(B) by adding at the end the following: 
‘‘(b) Notwithstanding any limitation under this sec-
tion, an eligible participant (as defined by section 414(v) 
of the Internal Revenue Code of 1986) may make such 
additional contributions to the Thrift Savings Fund as are 
permitted by such section 414(v) and regulations of the 
Executive Director consistent therewith.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as of the earliest practicable 
date, as determined by the Executive Director (appointed
under section 8474(a) of title 5, United States Code) in 
regulations. 
SEC. 6. EXTENSION AND EXPANSION OF CREDIT FOR CER-
TAIN INDIVIDUALS FOR ELECTIVE DEFER-
RALS AND IRA CONTRIBUTIONS. 
(a) EXTENSION.—Section 25B (relating to elective 
deferrals and IRA contributions by certain individuals) is 
amended by striking subsection (h). 
(b) EXPANSION.—The table contained in subsection 
(b) of section 25B (relating to applicable percentage) is 
amended to read as follows:
‘‘Adjusted Gross Income 
Applicable per-
centage 
Joint return 
Head of a household 
All other cases 
Over 
Not over 
Over 
Not over 
Over 
Not over 
$30,000
$22,500
$15,000
30,000
40,000
22,500
30,000
15,000
20,000
40,000
50,000
30,000
37,500
20,000
25,000
50,000
65,000
37,500
48,750
25,000
32,500
65,000
48,750
32,500
0’’. 
(c) EGTRRA SUNSET NOT TO APPLY.—Title IX of 
the Economic Growth and Tax Relief Reconciliation Act 
of 2001 shall not apply with respect to section 25B of 
the Internal Revenue Code of 1986. 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 7. SIMPLIFICATION AND UPDATING OF THE MINIMUM 
DISTRIBUTION RULES. 
(a) REQUIRED DISTRIBUTIONS.—
(1) INCREASE IN AGE FOR REQUIRED BEGIN-
NING DATE.—Subparagraphs (C)(i)(I) and (C)(ii)(I) 
of section 401(a)(9) are each amended by striking 
‘‘701⁄2’’ and inserting ‘‘75’’. 
(2) ACTUARIAL
ADJUSTMENT
OF
BENEFIT 
UNDER
DEFINED
BENEFIT
PLAN.—Clause (iii) of 
section 401(a)(9)(C) is amended to read as follows: 
‘‘(iii) ACTUARIAL ADJUSTMENT.—
‘‘(I) IN GENERAL.—In the case 
of a defined benefit plan, an employ-
ee’s accrued benefit shall be actuari-
ally increased to take into account the 
period after the applicable date during 
which the employee was not eligible to 
receive any benefits under the plan. 
‘‘(II) APPLICABLE
DATE.—For 
purposes of clause (I), the term ‘appli-
cable date’ means the April 1st fol-
lowing the calendar year in which the 
employee attains age 701⁄2.’’. 
(b) AMOUNT NOT SUBJECT TO MINIMUM DISTRIBU-
TION REQUIREMENTS.—Paragraph (9) of section 401(a) 
is amended—
(1) in subparagraph (A), by inserting ‘‘(minus 
the exclusion amount)’’ after ‘‘the entire interest’’, 
and 
(2) by adding at the end the following: 
‘‘(H) EXCLUSION AMOUNT.—
‘‘(i) IN
GENERAL.—For purposes of 
this 
paragraph, 
the 
term 
‘exclusion 
amount’ means—
‘‘(I) $300,000 in the case of a 
defined contribution plan, 
‘‘(II) $300,000 in the case of an 
individual retirement plan, and 
‘‘(III) $0 in the case of a defined 
benefit plan. 
‘‘(ii) AGGREGATION OF PLANS.—For 
purposes of determining the exclusion 
amount under clause (i)—
‘‘(I) 
all 
defined 
contribution 
plans maintained by the same em-
ployer shall be treated as a single 
plan, and 
‘‘(II) all individual retirement 
plans (other than Roth IRAs) of the 
individual shall be treated as a single 
plan.
‘‘(iii) 
COST-OF-LIVING
ADJUST-
MENT.—The Secretary shall adjust the 
$300,000 exclusion amount specified in 
clause (i) at the same time and in the 
same manner as under section 415(d), ex-
cept that the base period shall be the cal-
endar quarter beginning July 1, 2002.’’
(c) REDUCTION IN EXCISE TAX.—Subsection (a) of 
section 4974 is amended by striking ‘‘50 percent’’ and in-
serting ‘‘25 percent’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2002. 
SEC. 8. ALLOW ROLLOVERS TO SPOUSE’S RETIREMENT 
PLANS. 
(a) EXEMPT TRUSTS.—Paragraph (9) of section 
402(c) (relating to rollover where spouse receives distribu-
tion after death of employee) is amended—
(1) by inserting ‘‘or transferred by the employee 
to the spouse’’ after ‘‘after the employee’s death’’ in 
the text, and 
(2) by amending the heading to read as follows: 
‘‘ROLLOVER
WHERE
SPOUSE
OF
EMPLOYEE
RE-
CEIVES DISTRIBUTION.—’’.
(b) IRAS.—Paragraph (3) of section 408(d) (relating 
to rollover contributions) is amended by adding at the end 
the following: 
‘‘(J) 
ROLLOVERS
TO
SPOUSE’S
AC-
COUNT.—For purposes of this paragraph, rules 
similar to the rules of section 402(c)(9) shall 
apply, except that the term ‘individual’ shall be 
applied in lieu of ‘employee’.’’. 
(c) EMPLOYEE ANNUITIES.—Subparagraph (B) of 
section 403(a)(4) (relating to rollover amounts) is amend-
ed by inserting ‘‘and (9)’’ after ‘‘through (7)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after the date 
of the enactment of this Act.
SEC. 9. ROLLOVERS BY NONSPOUSE BENEFICIARIES. 
(a) IN GENERAL.—
(1) QUALIFIED PLANS.—Section 402(c) (relat-
ing to rollovers from exempt trusts) is amended by 
adding at the end the following new paragraph: 
‘‘(11) ROLLOVER
WHERE
NONSPOUSE
BENE-
FICIARY RECEIVES DISTRIBUTION AFTER DEATH OF 
EMPLOYEE.—If any distribution attributable to an 
employee is paid to a designated beneficiary (as de-
fined by section 401(a)(9)(E)) other than the sur-
viving spouse of the employee after the employee’s
death, the preceding provisions of this subsection 
shall apply to such distribution in the same manner 
as if the designated beneficiary were the employee, 
except that only a plan described in clause (i) or 
(ii) of paragraph (8)(B) that is established in the 
name of the employee for the benefit of the des-
ignated beneficiary shall be treated as an eligible re-
tirement plan with respect to such distribution.’’. 
(2) SECTION 403(a) PLANS.—Subparagraph (B) 
of section 403(a)(4) (as amended by section 8) is 
further amended by striking ‘‘and (9)’’ and inserting 
‘‘, (9), and (11)’’. 
(3) SECTION 403(b) PLANS.—Subparagraph (B) 
of section 403(b)(8) is amended by striking ‘‘and 
(9)’’ and inserting ‘‘, (9), and (10)’’. 
(4) SECTION 457 PLANS.—Subparagraph (B) of 
section 457(e)(16) is amended by striking ‘‘and (9)’’ 
and inserting ‘‘, (9), and (10)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions after December 31, 
2002. 
SEC. 10. FAIR TREATMENT UNDER SUBSTANTIALLY EQUAL 
PERIODIC PAYMENTS RULE. 
Not later than 30 days after the date of enactment 
of this Act, the Secretary of Treasury shall issue rules
under sections 72(t)(2)(A)(iv) and 72(t)(4)(A) of the In-
ternal Revenue Code of 1986 which provide that if—
(1) a taxpayer changes from one permissible 
method of determining substantially equal periodic 
payments to another permissible method for pur-
poses of such determination, and 
(2) such change results in an initial reduction 
in the amount of payments made, 
such change shall not be treated as a modification under 
section 72(t)(4)(A)(ii) of such Code. 
SEC. 11. ADDITIONAL NONELECTIVE EMPLOYER CON-
TRIBUTIONS TO SIMPLE PLANS. 
(a) IN GENERAL.—
(1) MODIFICATION TO DEFINITION.—Subpara-
graph (A) of section 408(p)(2) is amended by strik-
ing ‘‘and’’ at the end of clause (iii), by redesignating 
clause (iv) as clause (v), and by inserting after 
clause (iii) the following new clause: 
‘‘(iv) the employer may make nonelec-
tive contributions of a uniform percentage 
(up to 10 percent) of compensation for 
each employee who is eligible to participate 
in the arrangement and who has at least 
$5,000 of compensation from the employer 
for the year, and’’.
(2) LIMITATION.—Subparagraph (A) of section 
408(p)(2) is amended by adding at the end the fol-
lowing: ‘‘The compensation taken into account under 
clause (iv) for any year shall not exceed the limita-
tion 
in 
effect 
for 
such 
year 
under 
section 
401(a)(17).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 408(p)(2)(A)(v), as redesignated by 
subsection (a), is amended by striking ‘‘or (iii)’’ and 
inserting ‘‘, (iii), or (iv)’’. 
(2) Paragraph (8) of section 408(p) is amended 
by inserting after ‘‘paragraph (2)(A)(ii) of this sub-
section’’ the following: ‘‘, the employer contribution 
actually made under paragraph (2)(A)(iv) of this 
subsection,’’. 
(3) Section 401(k)(11)(B)(i) is amended by 
striking ‘‘and’’ at the end of subclause (II), by re-
designating subclause (III) as subclause (IV), and 
by inserting after subclause (II) the following new 
subclause: 
‘‘(III) the employer may make 
nonelective contributions of a uniform 
percentage (up to 10 percent) of com-
pensation for each employee who is el-
igible to participate in the arrange-
ment and who has at least $5,000 of 
compensation from the employer for 
the year, and’’
(4) Section 401(k)(11)(B)(i)(IV), as redesig-
nated by paragraph (2), is amended by striking ‘‘or 
(II)’’ and inserting ‘‘, (II), or (III)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2002.
SEC 12. GOLDEN PARACHUTE EXCISE TAX TO APPLY TO EX-
CESSIVE EMPLOYEE REMUNERATION PAID 
BY CORPORATION AFTER DECLARTION OF 
BANKRUPTCY. 
(a) IN GENERAL.—Section 4999 of the Internal Rev-
enue Code of 1986 (relating to golden parachute pay-
ments) is amended by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) TAX ON EXCESSIVE EMPLOYEE REMUNERATION 
IN THE CASE OF BANKRUPTCY.—
‘‘(1) IN GENERAL.—There is hereby imposed a 
tax on any person who is a covered employee equal 
to 50 percent of any payment of excessive employee 
remuneration from a corporation which becomes a 
debtor in a title 11 or similar case (as defined in
section 368(a)(3)(A) of this title, but not including
a case under chapter 12 of title 11, United States 
Code). The tax imposed under subsection (a) shall 
not apply to the extent that a tax is imposed under 
this subsection. 
‘‘(2) SPECIAL RULES RELATING TO EXCESSIVE 
EMPLOYEE REMUNERATION.—For purposes of this 
subsection—
‘‘(A) EXCESS EMPLOYEE REMUNERATION 
DEFINED.—The term ‘excess employee remu-
neration’ means remuneration paid directly or 
indirectly to a covered employee during the 
bankruptcy period— 
‘‘(i) for which a deduction is not al-
lowed under chapter 1 by reason of the ap-
plication of section 162(m) or would not be 
allowed if section 162(m) applied to the 
covered employee at the time of payment, 
or 
‘‘(ii) in the case of remuneration to a 
covered employee of a corporation that is 
not a publicly held corporation described in 
section 
162(m)(2), 
that 
exceeds 
$1,000,000, other than remuneration that 
meets requirements similar to the stand-
ards for performance-based compensation 
under section 162(m)(4)(C). 
‘‘(B) Such term shall not include—
‘‘(i) remuneration that, on the date 
immediately prior to the beginning of the 
bankruptcy period, was payable to the cov-
ered employee under a binding obligation 
and not subject to a substantial risk of for-
feiture, 
‘‘(ii) remuneration attributable to con-
tributions to or benefits from an excess re-
tirement plan to the extent that such plan 
is maintained solely for the purpose of pro-
viding benefits to employees in excess of 
the limitations imposed by 1 or more of 
sections 401(a)(17), 401(k), 401(m), and 
415, 
‘‘(iii) contributions to or benefits from 
a qualified employer plan (as defined in 
section 132(m)), or 
‘‘(iv) any payment that is avoided or 
approved by a bankruptcy trustee. 
‘‘(C) BANKRUPTCY
PERIOD.—The term 
‘bankruptcy period’ means any time during the 
period beginning 2 years before the date on