‘‘(V) the date distributions for
premiums for a long-term care insur-
ance contract (as defined in section
139(c)) for coverage of such individ-
ual or the spouse of such individual
are made, and’’.
(2) Section 403(b)(11) is amended by striking
‘‘or’’ at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting
‘‘, or’’, and by inserting after subparagraph (B) the
following new subparagraph:
‘‘(C) for the payment of premiums for a
long-term care insurance contract (as defined in
section 139(c)) for coverage of the employee or
the spouse of the employee.’’
(3) Subparagraph (A) of section 457(d)(1) is
amended by striking ‘‘or’’ at the end of clause (ii),
by striking ‘‘and’’ at the end of clause (iii) and in-
serting ‘‘or’’, and by inserting after clause (iii) the
following new clause:
‘‘(iv) the date distributions for pre-
miums for a long-term care insurance con-
tract (as defined in section 139(c)) for cov-
erage of such individual or the spouse of
such individual are made, and’’.
(d) CONFORMING AMENDMENTS.—
(1) Section 72(t)(2)(B) is amended by striking
‘‘subparagraph (A), (C), or (D)’’ and inserting ‘‘sub-
paragraph (A), (C), (D), or (G)’’.
(2) Section 401(k) is amended by adding at the
end the following new paragraph:
‘‘(13) CROSS REFERENCE.—
‘‘For provision permitting tax-free withdrawals
for payment of long-term care premiums, see section
139.’’
(3) Section 408(d) is amended by adding at the
end the following new paragraph:
‘‘(8) CROSS REFERENCE.—
‘‘For provision permitting tax-free withdrawals
from individual retirement plans for payment of
long-term care premiums, see section 139.’’
(4) The table of sections for part III of sub-
chapter B of chapter 1 is amended by striking the
last item and inserting the following new items:
‘‘Sec. 139. Distributions from individual retirement plans and sec-
tion 401(k) plans for long-term care insurance.
‘‘Sec. 140. Cross references to other Acts.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments and distributions after
December 31, 1998.
SEC. 3. REFUNDABLE CREDIT FOR TAXPAYERS WITH CER-
TAIN PERSONS REQUIRING CUSTODIAL CARE
IN THEIR HOUSEHOLDS.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 (relating to refundable credits) is
amended by redesignating section 35 as section 36 and
by inserting after section 34 the following new section:
‘‘SEC. 35. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS
REQUIRING 
CUSTODIAL 
CARE 
IN 
THEIR
HOUSEHOLDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual who maintains a household which includes as a
member one or more qualified persons, there shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to $500 for each
such person.
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—
‘‘(1) IN GENERAL.—The amount of the credit
allowable under subsection (a) shall be reduced (but
not below zero) by $50 for each $1,000 (or fraction
thereof) by which the taxpayer’s modified adjusted
gross income exceeds the threshold amount. For
purposes of the preceding sentence, the term ‘modi-
fied adjusted gross income’ means adjusted gross in-
come increased by any amount excluded from gross
income under section 911, 931, or 933.
‘‘(2) THRESHOLD AMOUNT.—For purposes of
paragraph (1), the term ‘threshold amount’ means—
‘‘(A) $110,000 in the case of a joint re-
turn,
‘‘(B) $75,000 in the case of an individual
who is not married, and
‘‘(C) $55,000 in the case of a married in-
dividual filing a separate return.
For purposes of this paragraph, marital status shall
be determined under section 7703.
‘‘(c) QUALIFIED PERSON.—For purposes of this sec-
tion, the term ‘qualified person’ means any individual—
‘‘(1) who is a father or mother of the taxpayer,
his spouse, or his former spouse or who is an ances-
tor of such a father or mother,
‘‘(2) who is a chronically ill individual (as de-
fined in section 7702B(c)(2)),
‘‘(3) who has as his principal place of abode for
more than half of the taxable year the home of the
taxpayer, and
‘‘(4) whose name and TIN are included on the
taxpayer’s return for the taxable year.
For purposes of paragraph (1), a stepfather or stepmother
shall be treated as a father or mother.
‘‘(d) SPECIAL RULES.—For purposes of this section,
rules similar to the rules of paragraphs (1), (2), (3), and
(4) of section 21(e) shall apply.
‘‘(e) PHASE-IN.—In the case of a taxable year begin-
ning in a calendar year before 2003, subsection (a) shall
be applied by substituting the applicable amount deter-
mined under the following table for the $500 amount ap-
pearing in subsection (a):
‘‘If the calendar year is:
The applicable amount is:
1999 ......................................................................................
$250
2000 ......................................................................................
$350
2001 ......................................................................................
$400
2002 ......................................................................................
$450.
‘‘(f) INFLATION ADJUSTMENT.—In the case of any
taxable year beginning in a calendar year after 2003, the
$500 amount contained in subsection (a) shall be in-
creased by an amount equal to—
‘‘(1) such dollar amount, multiplied by
‘‘(2) the cost-of-living adjustment under section
1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting ‘calendar
year 2002’ for ‘calendar year 1992’ in subparagraph
(B) thereof.
If any amount as adjusted under the preceding sentence
is not a multiple of $50, such amount shall be rounded
to the nearest multiple of $50.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart C of part IV of subchapter A of chapter 1
is amended by striking the last item and inserting the fol-
lowing:
‘‘Sec. 35. Credit for taxpayers with certain persons requiring cus-
todial care in their households.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
Æ