I
103D CONGRESS
1ST SESSION
H. R. 972
To amend the Internal Revenue Code of 1986 to exclude from gross income
that portion of a governmental pension which does not exceed the maxi-
mum benefits payable under title II of the Social Security Act which
could have been excluded from income for the taxable year.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 18, 1993
Mr. FRANK of Massachusetts 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 exclude
from gross income that portion of a governmental pen-
sion which does not exceed the maximum benefits pay-
able under title II of the Social Security Act which
could have been excluded from income for the taxable
year.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. EXCLUSION FOR CERTAIN PENSIONS AND AN-
NUITIES UNDER PUBLIC RETIREMENT SYS-
TEMS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from income) is amended by re-
designating section 137 as section 138 and by inserting
after section 136 the following new section:
‘‘SEC. 137. CERTAIN PENSIONS AND ANNUITIES UNDER
PUBLIC RETIREMENT SYSTEMS.
‘‘(a) GENERAL RULE.—In the case of an individual,
gross income does not include any amount (otherwise in-
cludable in gross income) received as a qualified govern-
mental pension.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR
LIMITATION.—The aggregate
amount excluded under subsection (a) for the tax-
able year shall not exceed—
‘‘(A) the maximum excludable social secu-
rity benefits of the taxpayer for such year,
reduced by
‘‘(B) the social security benefits (within
the meaning of section 86(d)) received by the
taxpayer during such year which were excluded
from gross income.
‘‘(2) INDIVIDUAL MUST PERFORM THE SERV-
ICES GIVING RISE TO PENSION.—Subsection (a) shall
not apply to any qualified governmental pension re-
ceived by the taxpayer during the taxable year un-
less the taxpayer (or the spouse or former spouse of
the taxpayer) performed the services giving rise to
such pension.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
GOVERNMENTAL
PENSION.—
The term ‘qualified governmental pension’ means
any pension or annuity under a public retirement
system to the extent such pension or annuity is not
attributable to service—
‘‘(A) which constitutes employment for
purposes of chapter 21 (relating to the Federal
Insurance Contributions Act), or
‘‘(B) which is covered by an agreement
made pursuant to section 218 of the Social
Security Act.
‘‘(2) MAXIMUM EXCLUDABLE SOCIAL SECURITY
BENEFITS.—The term ‘maximum excludable social
security benefits’ means an amount equal to so
much of the applicable maximum benefit amount for
the taxpayer for the taxable year which would be ex-
cluded from gross income if such benefit amount
were treated as social security benefits (within the
meaning of section 86(d)) received during the tax-
able year.
‘‘(3) 
APPLICABLE
MAXIMUM
BENEFIT
AMOUNT.—The term ‘applicable maximum benefit
amount’ means—
‘‘(A) in the case of an unmarried individ-
ual, the maximum individual social security
benefit,
‘‘(B) in the case of a joint return, 150 per-
cent of the maximum individual social security
benefit, or
‘‘(C) in the case of a married individual fil-
ing a separate return, 75 percent of the maxi-
mum individual social security benefit.
For purposes of the preceding sentence, marital sta-
tus shall be determined under section 7703.
‘‘(4) MAXIMUM INDIVIDUAL SOCIAL SECURITY
BENEFIT.—
‘‘(A) IN GENERAL.—The term ‘maximum
individual social security benefit’ means, with
respect to any taxable year, the maximum total
amount (as certified by the Secretary of Health
and Human Services to the Secretary) which
could be paid for all months in the calendar
year in which such taxable year begins as old-
age insurance benefits under section 202(a) of
the Social Security Act (without regard to any
reduction, deduction, or offset under section
202(k) or section 203 of such Act) to any indi-
vidual who attained age 65, and filed applica-
tion for such benefits, on the first day of such
calendar year.
‘‘(B) PART YEARS.—In the case of an indi-
vidual who receives a qualified governmental
pension with respect to a period of less than a
full taxable year, the maximum individual social
security benefit for such individual for such
year shall be reduced as provided in regulations
prescribed by the Secretary to properly cor-
respond to such period.
‘‘(5) PUBLIC RETIREMENT SYSTEM.—The term
‘public retirement system’ means any pension, annu-
ity, retirement, or similar fund or system established
by the United States, a State, a possession of the
United States, any political subdivision of any of the
foregoing, or the District of Columbia.’’
(b) TECHNICAL AMENDMENT.—Subparagraph (A) of
section 86(b)(2) of such Code (defining modified adjusted
gross income) is amended by inserting ‘‘137,’’ before
‘‘911’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by redesignating the item relating to section
137 as section 138 and by inserting after the item relating
to section 136 the following new item:
‘‘Sec. 137. Certain pensions and annuities under public retirement
systems.’’
(d) EFFECTIVE DATE.—The amendments made by
this Act shall apply to taxable years beginning after the
date of the enactment of this Act.
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