nancing loan is pursuant to a program of the refi-
nancing organization which is designed as described
in subparagraph (D)(ii).’’
(2) Section 108(f)(3) of the 1986 Code is
amended by striking ‘‘(or by an organization de-
scribed in paragraph (2)(E) from funds provided by
an organization described in paragraph (2)(D))’’.
(f) AMENDMENTS RELATED TO SECTION 226 OF
1997 ACT.—
(1) Section 226(a) of the 1997 Act is amended
by striking ‘‘section 1397E’’ and inserting ‘‘section
1397D’’.
(2) Section 1397E(d)(4)(B) of the 1986 Code
is amended by striking ‘‘local education agency as
defined’’ and inserting ‘‘local educational agency as
defined’’.
SEC. 5. AMENDMENTS RELATED TO TITLE III OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 301 OF
1997 ACT.—Section 219(g) of the 1986 Code is amend-
ed—
(1) by inserting ‘‘or the individual’s spouse’’
after ‘‘individual’’ in paragraph (1), and
(2) by striking paragraph (7) and inserting:
‘‘(7) SPECIAL RULE FOR SPOUSES WHO ARE
NOT ACTIVE PARTICIPANTS.—If this subsection ap-
plies to an individual for any taxable year solely be-
cause their spouse is an active participant, then, in
applying this subsection to the individual (but not
their spouse)—
‘‘(A) the applicable dollar amount under
paragraph (3)(B)(i) shall be $150,000, and
‘‘(B) the amount applicable under para-
graph (2)(A)(ii) shall be $10,000.’’
(b) AMENDMENTS RELATED TO SECTION 302 OF
1997 ACT.—
(1) Section 408A(c)(3)(A) of the 1986 Code is
amended by striking ‘‘shall be reduced’’ and insert-
ing ‘‘shall not exceed an amount equal to the
amount determined under paragraph (2)(A) for such
taxable year, reduced’’.
(2) Section 408A(c)(3) of the 1986 Code (relat-
ing to limits based on modified adjusted gross in-
come) is amended—
(A) by inserting ‘‘or a married individual
filing a separate return’’ after ‘‘joint return’’ in
subparagraph (A)(ii), and
(B) by striking ‘‘and the deduction under
section 219 shall be taken into account’’ in sub-
paragraph (C)(i).
(3) Section 408A(d)(2) of the 1986 Code (de-
fining qualified distribution) is amended by striking
subparagraph (B) and inserting the following:
‘‘(B) DISTRIBUTIONS WITHIN NONEXCLU-
SION PERIOD.—A payment or distribution from
a Roth IRA shall not be treated as a qualified
distribution under subparagraph (A) if such
payment or distribution is made before the ex-
clusion date for the Roth IRA.
‘‘(C) EXCLUSION DATE.—For purposes of
this section, the exclusion date for any Roth
IRA is the first day of the taxable year imme-
diately following the 5-taxable year period be-
ginning with—
‘‘(i) the first taxable year for which a
contribution to any Roth IRA maintained
for the benefit of the individual was made,
or
‘‘(ii) in the case of a Roth IRA to
which 1 or more qualified rollover con-
tributions were made—
‘‘(I) from an individual retire-
ment plan other than a Roth IRA, or
‘‘(II) from another Roth IRA to
the extent such contributions are
properly allocable to contributions de-
scribed in subclause (I),
the most recent taxable year for which any
such qualified rollover contribution was
made.’’
(4) Section 408A(d)(3) of the 1986 Code (relat-
ing to rollovers from IRAs other than Roth IRAs)
is amended by adding at the end the following:
‘‘(F) SPECIAL RULE FOR APPLYING SEC-
TION 72.—
‘‘(i) IN GENERAL.—If—
‘‘(I) any distribution from a Roth
IRA is made before the exclusion
date, and
‘‘(II) any portion of such dis-
tribution is properly allocable to a
qualified 
rollover 
contribution 
de-
scribed in paragraph (2)(C)(ii),
then section 72(t) shall be applied as if
such portion were includible in gross in-
come.
‘‘(ii) LIMITATION.—Clause (i) shall
apply only to the extent of the amount in-
cludible in gross income under subpara-
graph (A)(i) by reason of the qualified roll-
over contribution.
‘‘(G) SPECIAL RULES FOR CONTRIBUTIONS
TO WHICH 4-YEAR AVERAGING APPLIES.—In the
case of a qualified rollover contribution to a
Roth IRA of a distribution to which subpara-
graph (A)(iii) applied, the following rules shall
apply:
‘‘(i) DEATH OF DISTRIBUTEE.—
‘‘(I) IN GENERAL.—If the indi-
vidual required to include amounts in
gross income under such subpara-
graph dies before all of such amounts
are included, all remaining amounts
shall be included in gross income for
the taxable year which includes the
date of death.
‘‘(II) SPECIAL RULE FOR SURVIV-
ING SPOUSE.—If the spouse of the in-
dividual described in subclause (I) ac-
quires the Roth IRA to which such
qualified rollover contribution is prop-
erly allocable, the spouse may elect to
include the remaining amounts de-
scribed in subclause (I) in the
spouse’s gross income in the taxable
years of the spouse ending with or
within the taxable years of such indi-
vidual in which such amounts would
otherwise have been includible.
‘‘(ii) ADDITIONAL
TAX
FOR
EARLY
DISTRIBUTION.—
‘‘(I) IN
GENERAL.—If any dis-
tribution from a Roth IRA is made
before the exclusion date, and any
portion of such distribution is prop-
erly allocable to such qualified rollover
contribution, the distributee’s tax
under this chapter for the taxable
year in which the amount is received
shall be increased by 10 percent of the
amount of such portion not in excess
of the amount includible in gross in-
come under subparagraph (A)(i) by
reason of such qualified rollover con-
tribution.
‘‘(II) TREATMENT OF TAX.—For
purposes of this title, any tax imposed
by subclause (I) shall be treated as a
tax imposed by section 72(t) and shall
be in addition to any other tax im-
posed by such section.’’
(5)(A) Section 408A(d)(4) of the 1986 Code is
amended to read as follows:
‘‘(4) AGGREGATION AND ORDERING RULES.—
‘‘(A) 
AGGREGATION
RULES.—Section
408(d)(2) shall be applied separately with re-
spect to—
‘‘(i) Roth IRAs and other individual
retirement plans,
‘‘(ii) Roth IRAs described in para-
graph (2)(C)(ii) and Roth IRAs not so de-
scribed, and
‘‘(iii) Roth IRAs described in para-
graph (2)(C)(ii) with different exclusion
dates.
‘‘(B) ORDERING RULES.—For purposes of
applying section 72 to any distribution from a
Roth IRA which is not a qualified distribution,
such distribution shall be treated as made—
‘‘(i) from contributions to the extent
that the amount of such distribution, when
added to all previous distributions from the
Roth IRA, does not exceed the aggregate
contributions to the Roth IRA, and
‘‘(ii) from such contributions in the
following order:
‘‘(I) Qualified rollover contribu-
tions to the extent includible in gross
income in the manner described in
paragraph (3)(A)(iii).
‘‘(II) Qualified rollover contribu-
tions not described in subclause (I) to
the extent includible in gross income
under paragraph (3)(A).
‘‘(III) 
Contributions 
not 
de-
scribed in subclause (I) or (II).
Such rules shall also apply in determining the
character of qualified rollover contributions
from one Roth IRA to another Roth IRA.’’
(B) Section 408A(d)(1) of the 1986 Code is
amended to read as follows:
‘‘(1) EXCLUSION.—Any qualified distribution
from a Roth IRA shall not be includible in gross in-
come.’’
(6)(A) Section 408A(d) of the 1986 Code (re-
lating to distribution rules) is amended by adding at
the end the following:
‘‘(6) TAXPAYER MAY MAKE ADJUSTMENTS BE-
FORE DUE DATE.—