I
106TH CONGRESS
1ST SESSION
H. R. 2553
To amend the Internal Revenue Code of 1986 to allow certain individuals
a credit against income tax for elective deferrals and IRA contributions.
IN THE HOUSE OF REPRESENTATIVES
JULY 19, 1999
Mr. POMEROY (for himself, Mr. FROST, Mr. PAUL, Ms. LEE, and Mrs.
CHRISTENSEN) 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 allow cer-
tain individuals a credit against income tax for elective
deferrals and IRA contributions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Family Investment Re-
tirement Savings Tax (FIRST) Credit Act of 1999’’.
SEC. 2. CREDIT TO CERTAIN INDIVIDUALS FOR ELECTIVE
DEFERRALS AND IRA CONTRIBUTIONS.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBU-
TIONS BY CERTAIN INDIVIDUALS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to 50 percent of—
‘‘(1) the amount allowed as a deduction under
section 219 for such taxable year, and
‘‘(2) the amount of the elective deferrals (as de-
fined in section 402(g)(3)) for such taxable year.
‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed $1,000
with respect to each individual.
‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—
‘‘(1) IN GENERAL.—The amount of the credit
which would (but for this subsection) be allowed
under subsection (a) for the taxable year shall be re-
duced (but not below zero) by an amount which
bears the same ratio to such amount of credit as—
‘‘(A) the excess of—
‘‘(i) the taxpayer’s adjusted gross in-
come for such taxable year, over
‘‘(ii) the applicable dollar amount,
bears to
‘‘(B) $10,000.
‘‘(2) 
ROUNDING.—Any 
amount 
determined
under this subsection which is not a multiple of $10
shall be rounded to the next lowest $10.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of this subsection, the term ‘applicable dollar
amount’ means—
‘‘(A) in the case of a taxpayer filing a joint
return, $51,000,
‘‘(B) in the case of any other taxpayer
(other than a married individual filing a sepa-
rate return), $31,000, and
‘‘(C) in the case of a married individual fil-
ing a separate return, zero.
A husband and wife who file separate returns for
any taxable year and live apart at all times during
such taxable year shall not be treated as married in-
dividuals for purposes of this paragraph.
‘‘(d) SPECIAL RULES.—
‘‘(1) COORDINATION WITH DEDUCTION AND EX-
CLUSION.—Nothing in this section shall be con-
strued to deny any deduction or exclusion otherwise
allowable for any amount taken into account under
subsection (a).
‘‘(2) ANTI-CHURNING RULE.—
‘‘(A) IN GENERAL.—If any amount—
‘‘(i) is paid into an individual retire-
ment plan or defined contribution plan of
the taxpayer or the taxpayer’s spouse, and
‘‘(ii) is taken into account in deter-
mining the amount of credit allowed under
this section,
then, with respect to distributions from any
such plan during the increased penalty period,
paragraph (1) of section 72(t) shall be applied
by substituting ‘60 percent’ for ‘10 percent’ and
subparagraphs (B), (D), (E), and (F) of section
72(t)(2) shall not apply.
‘‘(B) EXCEPTIONS.—
‘‘(i) IN GENERAL.—Subparagraph (A)
shall not apply to any distribution during
the increased penalty period to the extent
that such distribution, when increased by
prior distributions from the plans referred
to in subparagraph (A) during such period,
exceed the aggregate amount paid into
such plans which was taken into account in
determining the amount of credit allowed
under this section.
‘‘(ii) 
HARDSHIP
DISTRIBUTIONS.—
Subparagraph (A) shall not apply to dis-
tribution upon the hardship of the bene-
ficiary.
‘‘(C) AGGREGATE
OF
PLANS.—For pur-
poses of this paragraph, all individual retire-
ment plans and defined contribution plans of an
individual and the spouse of such individual
shall be treated as 1 plan.
‘‘(D) INCREASED PENALTY PERIOD.—For
purposes of subparagraph (A), the increased
penalty period is the 5-taxable year period be-
ginning with the first taxable year for which
any amount is described in clauses (i) and (ii)
of subparagraph (A).
‘‘(e) ELECTION NOT TO CLAIM CREDIT.—This sec-
tion (other than subsection (d)(2)) shall not apply to any
taxable year if the individual elects not to have this section
apply.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart A is amended by inserting after the item
relating to section 25A the following new item:
‘‘Sec. 25B. Elective deferrals and IRA contributions by certain in-
dividuals.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
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