I
106TH CONGRESS
1ST SESSION
H. R. 1546
To amend the Internal Revenue Code of 1986 to provide increased retirement
savings opportunities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 22, 1999
Mr. THOMAS introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to provide
increased retirement savings opportunities, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; AMEND-
MENT TO 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Retirement Savings Opportunity Act of 1999’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents; amendment to 1986 Code.
TITLE I—INDIVIDUAL RETIREMENT PLANS
Sec. 101. Modification of deduction limits for IRA contributions.
Sec. 102. Modification of income limits on contributions and rollovers to Roth
IRAs.
Sec. 103. Deemed IRAs under employer plans.
Sec. 104. Electronic signatures permitted.
TITLE II—PENSION PLANS
Sec. 201. Option to treat elective deferrals as after-tax contributions.
Sec. 202. Increase in limit on exclusion amount for elective deferrals.
Sec. 203. Increased limit on deferred amount for plans of State and local gov-
ernments.
Sec. 204. Equitable treatment for contributions of employees to defined con-
tribution plans.
Sec. 205. Repeal of 150 percent of current liability funding limit.
Sec. 206. Repeal of transitional rule.
TITLE III—SMALL BUSINESS INCENTIVES
Sec. 301. Credit for small employer pension plan contributions and start-up
costs.
Sec. 302. SAFE annuities and trusts.
Sec. 303. Increased limit on contribution amount for SIMPLE retirement ac-
counts.
TITLE IV—CATCHUP CONTRIBUTIONS
Sec. 401. Catchup contributions for individuals age 50 or over.
TITLE V—PLAN AMENDMENTS
Sec. 501. Provisions relating to plan amendments.
(c) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this title 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.
TITLE I—INDIVIDUAL
RETIREMENT PLANS
SEC. 101. MODIFICATION OF DEDUCTION LIMITS FOR IRA
CONTRIBUTIONS.
(a) INCREASE IN CONTRIBUTION LIMIT.—Paragraph
(1)(A) of section 219(b) (relating to maximum amount of
deduction) is amended by striking ‘‘$2,000’’ and inserting
‘‘$5,000’’.
(b) INFLATION ADJUSTMENT.—Section 219 (relating
to deduction for retirement savings) is amended by redes-
ignating subsection (h) as subsection (i) and by inserting
after subsection (g) the following new subsection:
‘‘(h) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) DEDUCTIBLE AMOUNTS.—In the case of
any taxable year beginning in a calendar year after
2000, the $5,000 amount under subsection (b)(1)(A)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 1999’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) ROUNDING RULES.—If any amount after
adjustment under paragraph (1) is not a multiple of
$100, such amount shall be rounded to the next
lower multiple of $100.’’
(c) REPEAL OF RESTRICTIONS ON ACTIVE PARTICI-
PANTS.—
(1) IN GENERAL.—Section 219, as amended by
subsection (b), is amended by striking subsection (g)
and by redesignating subsections (h) and (i) as sub-
sections (g) and (h).
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—
(A) Section 219(f) is amended by striking
paragraph (7).
(B) Section 408(d)(5) is amended by strik-
ing the last sentence.
(C) Section 408(o) is amended by adding
at the end the following new paragraph:
‘‘(5) TERMINATION.—This subsection shall not
apply to any contribution for any taxable year begin-
ning after December 31, 1999.’’
(D) Section 408A(c)(2)(A) is amended by
striking ‘‘or (g)’’.
(E) Section 408A(c)(3)(A) is amended by
striking the last sentence.
(F) Section 408A(c)(3)(C) is amended—
(i) by striking all before clause (ii)
and inserting the following:
‘‘(C) SPECIAL
RULES.—For purposes of
this paragraph—
‘‘(i) adjusted gross income shall be
determined—
‘‘(I) after application of sections
86 and 469, and
‘‘(II) without regard to sections
135, 137, 221, and 911, the deduction
allowable under section 219, or any
amount included in gross income
under subsection (d)(3),’’,
(ii) by striking the period at the end
of clause (ii) and inserting a comma, and
(iii) by adding at the end the fol-
lowing new clauses:
‘‘(iii) no dollar limitation shall be re-
duced below $200 under subparagraph (A)
unless (without regard to this clause) such
limitation is reduced to zero, and
‘‘(iv) any amount determined under
subparagraph (A) which is not a multiple
of $10 shall be rounded to the next lowest
$10.’’
(G) Section 408A(c)(3)(D) is amended to
read as follows:
‘‘(D) SPECIAL RULE FOR MARRIED INDI-
VIDUALS
FILING
SEPARATELY
AND
LIVING
APART.—A husband and wife who—
‘‘(i) file separate returns for any tax-
able year, and
‘‘(ii) live apart at all times during
such taxable year,
shall not be treated as married individuals for
purposes of this paragraph.’’
(H) Section 4973(b) is amended by strik-
ing the last sentence.
(d) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 408(a)(1) is amended by striking
‘‘in excess of $2,000 on behalf of any individual’’
and inserting ‘‘on behalf of any individual in excess
of the amount in effect for such taxable year under
section 219(b)(1)(A)’’.
(2) Section 408(b)(2)(B) is amended by strik-
ing ‘‘$2,000’’ and inserting ‘‘the dollar amount in
effect under section 219(b)(1)(A)’’.
(3) Section 408(b) is amended by striking
‘‘$2,000’’ in the matter following paragraph (4) and
inserting ‘‘the dollar amount in effect under section
219(b)(1)(A)’’.
(4) Section 408(j) is amended by striking
‘‘$2,000’’.
(5) Section 408(p)(8) is amended by striking
‘‘$2,000’’ and inserting ‘‘the dollar amount in effect
under section 219(b)(1)(A)’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 102. MODIFICATION OF INCOME LIMITS ON CON-
TRIBUTIONS AND ROLLOVERS TO ROTH IRAS.
(a) REPEAL OF AGI LIMIT ON CONTRIBUTIONS.—
Subsection 408A(c)(3) (relating to limits based on modi-
fied adjusted gross income), as amended by section
101(c)(2), is amended by striking subparagraph (A) and
by redesignating subparagraphs (B), (C), and (D) as sub-
paragraphs (A), (B), and (C), respectively.
(b) INCREASE IN AGI LIMIT FOR ROLLOVER CON-
TRIBUTIONS.—Clause (i) of section 408A(c)(3)(A) (relat-
ing to rollover from IRA), as redesignated by subsection
(a), is amended by striking ‘‘$100,000’’ and inserting
‘‘$1,000,000’’.
(c) CONFORMING AMENDMENTS.—
(1)(A) Subparagraph (B) of section 408A(c)(3),
as redesignated by subsection (a) and as amended
by section 101(c)(2)(F), is amended to read as fol-
lows:
‘‘(B) DEFINITION OF ADJUSTED GROSS IN-
COME.—For purposes of subparagraph (A), ad-
justed gross income shall be determined—
‘‘(i) after application of sections 86
and 469, and
‘‘(ii) without regard to sections 135,
137, 221, and 911, the deduction allowable
under section 219, or any amount included
in gross income under subsection (d)(3).’’
(B) EFFECTIVE DATE.—The amendment made
by this paragraph shall apply to taxable years begin-
ning after December 31, 1999.
(2)(A) Subparagraph (B) of section 408A(c)(3),
as amended by paragraph (1), is amended to read
as follows:
‘‘(B) DEFINITION OF ADJUSTED GROSS IN-
COME.—For purposes of subparagraph (A), ad-
justed gross income shall be determined—
‘‘(i) after application of sections 86
and 469, and
‘‘(ii) without regard to sections 135,
137, 221, and 911, the deduction allowable
under section 219, or any amount included
in gross income under subsection (d)(3) or
by reason of a required distribution under
a provision described in paragraph (5).’’
(B) EFFECTIVE DATE.—The amendment made
by this paragraph shall apply to taxable years begin-
ning after December 31, 2004.
(d) EFFECTIVE DATE.—Except as otherwise pro-
vided in this section, the amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 103. DEEMED IRAS UNDER EMPLOYER PLANS.
(a) IN GENERAL.—Section 408 (relating to individual
retirement accounts) is amended by redesignating sub-
section (q) as subsection (r) and by inserting after sub-
section (p) the following new subsection:
‘‘(q) DEEMED IRAS UNDER QUALIFIED EMPLOYER
PLANS.—
‘‘(1) GENERAL RULE.—If—
‘‘(A) a qualified employer plan elects to
allow employees to make voluntary employee
contributions to a separate account or annuity
established under the plan, and
‘‘(B) under the terms of the qualified em-
ployer plan, such account or annuity meets the
applicable requirements of this section or sec-
tion 408A for an individual retirement account
or annuity,
then such account or annuity shall be treated for
purposes of this title in the same manner as an indi-
vidual retirement plan (and contributions to such ac-
count or annuity as contributions to an individual
retirement plan). For purposes of subparagraph (B),
the requirements of subsection (a)(5) shall not
apply.
‘‘(2) SPECIAL
RULES
FOR
QUALIFIED
EM-
PLOYER PLANS.—For purposes of this title—
‘‘(A) a qualified employer plan shall not
fail to meet any requirement of this title solely
by reason of establishing and maintaining a
program described in paragraph (1), and
‘‘(B) any account or annuity described in
paragraph (1), and any contribution to the ac-
count or annuity, shall not be subject to any re-
quirement of this title applicable to a qualified
employer plan or taken into account in applying
any such requirement to any other contribu-
tions under the plan.
‘‘(3) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) QUALIFIED
EMPLOYER
PLAN.—The
term ‘qualified employer plan’ has the meaning
given such term by section 72(p)(4).
‘‘(B) VOLUNTARY
EMPLOYEE
CONTRIBU-
TION.—The term ‘voluntary employee contribu-
tion’ means any contribution (other than a
mandatory contribution within the meaning of
section 411(c)(2)(C))—
‘‘(i) which is made by an individual as
an employee under a qualified employer
plan which allows employees to elect to
make contributions described in paragraph
(1), and
‘‘(ii) with respect to which the indi-
vidual has designated the contribution as a
contribution to which this subsection ap-
plies.’’
(b) AMENDMENT OF ERISA.—
(1) IN GENERAL.—Section 4 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1003) is amended by adding at the end the following
new subsection:
‘‘(c) If a pension plan allows an employee to elect to
make voluntary employee contributions to accounts and
annuities as provided in section 408(q) of the Internal
Revenue Code of 1986, such accounts and annuities (and
contributions thereto) shall not be treated as part of such
plan (or as a separate pension plan) for purposes of any
provision of this title other than section 403(c), 404, or
405 (relating to exclusive benefit, and fiduciary and co-
fiduciary responsibilities).’’
(2) CONFORMING
AMENDMENT.—Section 4(a)
of such Act (29 U.S.C. 1003(a)) is amended by in-
serting ‘‘or (c)’’ after ‘‘subsection (b)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after De-
cember 31, 1999.
SEC. 104. ELECTRONIC SIGNATURES PERMITTED.
Subsection (a) of section 408 (relating to individual
retirement accounts) is amended by adding at the end the
following new flush sentence:
‘‘Notwithstanding any other provision of law, electronic
signatures (which are verified in such manner as the Sec-
retary may prescribe) shall be sufficient to establish any
individual retirement plan and shall satisfy any require-
ment otherwise imposed by Federal law for an actual sig-
nature to establish such a plan.’’
TITLE II—PENSION PLANS
SEC. 201. OPTION TO TREAT ELECTIVE DEFERRALS AS
AFTER-TAX CONTRIBUTIONS.
(a) IN GENERAL.—Subpart A of part I of subchapter
D of chapter 1 (relating to deferred compensation, etc.)
is amended by inserting after section 402 the following
new section:
‘‘SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFER-
RALS AS PLUS CONTRIBUTIONS.
‘‘(a) GENERAL RULE.—If an applicable retirement
plan includes a qualified plus contribution program—
‘‘(1) any designated plus contribution made by
an employee pursuant to the program shall be treat-
ed as an elective deferral for purposes of this chap-
ter, except that such contribution shall not be ex-
cludable from gross income, and
‘‘(2) such plan (and any arrangement which is
part of such plan) shall not be treated as failing to
meet any requirement of this chapter solely by rea-
son of including such program.
‘‘(b) QUALIFIED PLUS CONTRIBUTION PROGRAM.—
For purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified plus
contribution program’ means a program under which
an employee may elect to make designated plus con-
tributions in lieu of all or a portion of elective defer-
rals the employee is otherwise eligible to make under
the applicable retirement plan.
‘‘(2) SEPARATE
ACCOUNTING
REQUIRED.—A
program shall not be treated as a qualified plus con-
tribution program unless the applicable retirement
plan—
‘‘(A) establishes separate accounts (‘des-
ignated plus accounts’) for the designated plus
contributions of each employee and any earn-
ings properly allocable to the contributions, and
‘‘(B) maintains separate recordkeeping
with respect to each account.
‘‘(c) DEFINITIONS AND RULES RELATING TO DES-
IGNATED PLUS CONTRIBUTIONS.—For purposes of this
section—
‘‘(1) DESIGNATED PLUS CONTRIBUTION.—The
term ‘designated plus contribution’ means any elec-
tive deferral which—
‘‘(A) is excludable from gross income of an
employee without regard to this section, and
‘‘(B) the employee designates (at such time
and in such manner as the Secretary may pre-
scribe) as not being so excludable.
‘‘(2) DESIGNATION
LIMITS.—The amount of
elective deferrals which an employee may designate
under paragraph (1) shall not exceed the excess (if
any) of—
‘‘(A) the maximum amount of elective de-
ferrals excludable from gross income of the em-
ployee for the taxable year (without regard to
this section), over
‘‘(B) the aggregate amount of elective de-
ferrals of the employee for the taxable year
which the employee does not designate under
paragraph (1).
‘‘(3) ROLLOVER CONTRIBUTIONS.—
‘‘(A) IN
GENERAL.—A rollover contribu-
tion of any payment or distribution from a des-
ignated plus account which is otherwise allow-
able under this chapter may be made only if the
contribution is to—
‘‘(i) another designated plus account
of the individual from whose account the
payment or distribution was made, or
‘‘(ii) a Roth IRA of such individual.
‘‘(B) COORDINATION
WITH
LIMIT.—Any
rollover contribution to a designated plus ac-
count under subparagraph (A) shall not be
taken into account for purposes of paragraph
(1).
‘‘(d) DISTRIBUTION RULES.—For purposes of this
title—
‘‘(1) EXCLUSION.—Any qualified distribution
from a designated plus account shall not be includ-
ible in gross income.
‘‘(2) QUALIFIED DISTRIBUTION.—For purposes
of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
distribution’ has the meaning given such term
by section 408A(d)(2)(A).
‘‘(B) DISTRIBUTIONS WITHIN NONEXCLU-
SION PERIOD.—A payment or distribution from
a designated plus account shall not be treated
as a qualified distribution if such payment or
distribution is made within the 5-taxable-year
period beginning with the earlier of—
‘‘(i) the earlier of—
‘‘(I) the 1st taxable year for
which the individual made a des-
ignated plus contribution to any des-
ignated plus account established for
such individual under the same appli-
cable retirement plan, or
‘‘(II) if a rollover contribution
was made to such designated plus ac-
count from a designated plus account
previously established for such indi-
vidual under another applicable retire-
ment plan, the 1st taxable year for
which the individual made a des-
ignated plus contribution to such pre-
viously established account), or
‘‘(ii) the 1st taxable year for which
the individual (or the individual’s spouse)
made a contribution to a Roth IRA estab-
lished for such individual.
‘‘(C) DISTRIBUTIONS OF EXCESS DEFER-
RALS AND EARNINGS.—The term ‘qualified dis-
tribution’ shall not include any distribution of
any excess deferral under section 402(g)(2) and
any income on the excess deferral.
‘‘(3) AGGREGATION RULES.—Section 72 shall
be applied separately with respect to distributions
and payments from a designated plus account and
other distributions and payments from the plan.
‘‘(e) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) APPLICABLE
RETIREMENT
PLAN.—The
term ‘applicable retirement plan’ means—
‘‘(A) an employees’ trust described in sec-
tion 401(a) which is exempt from tax under
section 501(a), and
‘‘(B) a plan under which amounts are con-
tributed by an individual’s employer for an an-
nuity contract described in section 403(b).
‘‘(2) ELECTIVE DEFERRAL.—The term ‘elective
deferral’ means any elective deferral described in
subparagraph (A) or (C) of section 402(g)(3).’’
(b) EXCESS DEFERRALS.—Section 402(g) (relating
to limitation on exclusion for elective deferrals) is
amended—
(1) by adding at the end of paragraph (1) the
following new sentence: ‘‘The preceding sentence
shall not apply to so much of such excess as does
not exceed the designated plus contributions of the
individual for the taxable year.’’, and
(2) by inserting ‘‘(or would be included but for
the last sentence thereof)’’ after ‘‘paragraph (1)’’ in
paragraph (2)(A).
(c) ROLLOVERS.—
(1) QUALIFIED TRUSTS.—Section 402(d)(8)(B)
is amended by adding at the end the following new
flush sentence:
‘‘Without regard to the foregoing provisions of
this paragraph, if any portion of an eligible roll-
over distribution is attributable to payments or
distributions from a designated plus account (as
defined in section 402A), an eligible retirement
plan with respect to such portion shall include
only another designated plus account and a
Roth IRA.’’
(2) 
ANNUITIES.—Section 
403(b)(8)(A) 
is
amended by adding at the end the following new
sentence: ‘‘If any portion of an eligible rollover dis-
tribution is attributable to payments or distributions
from a designated plus account (as defined in sec-
tion 402A), the transfer of such portion under
clause (ii) may be made only to another such ac-
count or to a Roth IRA.’’
(3) INDIVIDUAL RETIREMENT PLANS.—Section
408(d)(3) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(H) DESIGNATED PLUS ACCOUNTS.—The
requirements of clauses (ii) and (iii) of subpara-
graph (A) shall not be treated as met if the
rollover contribution includes any amount at-
tributable to a designated plus account (as de-
fined in section 402A).’’
(d) REPORTING REQUIREMENTS.—
(1) W–2 INFORMATION.—Section 6051(a)(8) is
amended by inserting ‘‘, including the amount of
designated plus contributions (as defined in section
402A)’’ before the comma at the end.
(2) INFORMATION.—Section 6047 is amended
by redesignating subsection (f) as subsection (g) and
by inserting after subsection (e) the following new
subsection:
‘‘(f) DESIGNATED PLUS CONTRIBUTIONS.—The Sec-
retary shall require the plan administrator of each applica-
ble retirement plan (as defined in section 402A) to make
such returns and reports regarding designated plus con-
tributions (as so defined) to the Secretary, participants
and beneficiaries of the plan, and such other persons as
the Secretary may prescribe.’’
(e) CONFORMING AMENDMENTS.—
(1) Section 408A(e) is amended by adding after
the first sentence the following new sentence: ‘‘Such
term includes a rollover contribution described in
section 402A(c)(3)(A).’’
(1) IN GENERAL.—Subparagraph (B) of section
415(c)(1) (relating to limitation for defined con-
tribution plans) is amended to read as follows:
‘‘(B) the participant’s compensation.’’
(2) APPLICATION TO SECTION 403(b).—Section
403(b) is amended—
(A) by striking ‘‘the exclusion allowance
for such taxable year’’ in paragraph (1) and in-
serting ‘‘the applicable limit under section
415’’,
(B) by striking paragraph (2), and
(C) by inserting ‘‘or any amount received
by a former employee after the 5th taxable year
following the taxable year in which such em-
ployee was terminated’’ before the period at the
end of the second sentence of paragraph (3).
(3) CONFORMING AMENDMENTS.—
(A) Subsection (f) of section 72 is amend-
ed by striking ‘‘section 403(b)(2)(D)(iii))’’ and
inserting ‘‘section 403(b)(2)(D)(iii), as in effect
on December 31, 1998)’’.
(B) Section 404(a)(10)(B) is amended by
striking ‘‘, the exclusion allowance under sec-
tion 403(b)(2),’’.
(C) Section 415(a)(2) is amended by strik-
ing ‘‘, and the amount of the contribution for
such portion shall reduce the exclusion allow-
ance as provided in section 403(b)(2)’’.
(D) Section 415(c)(3) is amended by add-
ing at the end the following new subparagraph:
‘‘(E) ANNUITY CONTRACTS.—In the case
of an annuity contract described in section
403(b), the term ‘participant’s compensation’
means the participant’s includible compensation
determined under section 403(b)(3).’’
(E) Section 415(c) is amended by striking
paragraph (4) and redesignating paragraph (6)
as paragraph (4).
(F) Section 415(c)(7) is amended to read
as follows:
‘‘(5) CERTAIN
CONTRIBUTIONS
BY
CHURCH
PLANS NOT TREATED AS EXCEEDING LIMIT.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of this subsection, at the elec-
tion of a participant who is an employee of a
church, a convention or association of churches,
including an organization described in section
414(e)(3)(B)(ii), contributions and other addi-
tions for an annuity contract or retirement in-
come account described in section 403(b) with
respect to such participant, when expressed as
an annual addition to such participant’s ac-
count, shall be treated as not exceeding the lim-
itation of paragraph (1) if such annual addition
is not in excess of $10,000.
‘‘(B) $40,000 AGGREGATE LIMITATION.—
The total amount of additions with respect to
any participant which may be taken into ac-
count for purposes of this subparagraph for all
years may not exceed $40,000.
‘‘(C) ANNUAL ADDITION.—For purposes of
this paragraph, the term ‘annual addition’ has
the meaning given such term by paragraph
(2).’’
(G) Section 415(e)(3)(B) is amended—
(i) by striking ‘‘subsection (c)(6)’’ in
clause 
(i) 
and 
inserting 
‘‘subsection
(c)(4)’’, and
(ii) by striking ‘‘subsection (c)(7)’’ in
clause (ii)(II) and inserting ‘‘subsection
(c)(5)’’.
(H) Section 415(e)(5) is amended—
(i) by striking ‘‘(except in the case of
a participant who has elected under sub-
section (c)(4)(D) to have the provisions of
subsection (c)(4)(C) apply)’’, and
(ii) by striking the last sentence.
(I) Section 415(n)(2)(B) is amended by
striking ‘‘percentage’’.
(J) 
Subparagraph 
(B) 
of 
section
402(g)(7), 
as 
redesignated 
by 
section
202(b)(1)(A), is amended by inserting before
the period at the end the following: ‘‘(as in ef-
fect on the date of the enactment of the Retire-
ment Savings Opportunity Act of 1999)’’.
(b) DEFERRED COMPENSATION PLANS OF STATE
AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANI-
ZATIONS.—Subparagraph (B) of section 457(b)(2) (relat-
ing to salary limitation on eligible deferred compensation
plans’’ is amended by striking ‘‘331⁄3 percent’’ and insert-
ing ‘‘100 percent’’.
(c) ELECTIVE DEFERRALS NOT TAKEN INTO AC-
COUNT FOR PURPOSES OF LIMITS.—Section 404 (relating
to deduction for contributions of an employer to an em-
ployees’ trust or annuity plan and compensation under a
deferred-payment plan) is amended by adding at the end
the following new subsection:
‘‘(n) ELECTIVE DEFERRALS NOT TAKEN INTO AC-
COUNT FOR PURPOSES OF LIMITS.—Elective deferrals (as
defined in section 402(g)(3)) shall not be subject to any
limitation described in this section (other than subsection
(a)), and such elective deferrals shall not be taken into
account in applying such limitations to any other contribu-
tions.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 205. REPEAL OF 150 PERCENT OF CURRENT LIABILITY
FUNDING LIMIT.
(a) IN GENERAL.—
(1) CODE AMENDMENT.—Section 412(c)(7) (re-
lating to full-funding limitation) is amended—
(A) by striking ‘‘the applicable percentage’’
in subparagraph (A)(i)(I) and inserting ‘‘in the
case of plan years beginning before January 1,
2003, the applicable percentage’’, and
(B) by amending subparagraph (F) to read
as follows:
‘‘(F) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A)(i)(I), the applica-
ble percentage shall be determined in accord-
ance with the following table:
‘‘In the case of any plan year
beginning in—
The applicable percentage is—
1999 .........................................................................................
155
2000 .........................................................................................
160