H. R. 2488—123 
redesignating section 223 as section 224 and by inserting after 
section 222 the following new section: 
‘‘SEC. 223. HISTORIC HOMEOWNERSHIP REHABILITATION DEDUCTION. 
‘‘(a) GENERAL RULE.—In the case of an individual, there shall 
be allowed as a deduction an amount equal to 50 percent of the 
qualified rehabilitation expenditures made by the taxpayer with 
respect to a qualified historic home. 
‘‘(b) DOLLAR LIMITATION.—The deduction allowed by subsection 
(a) with respect to any residence of a taxpayer shall not exceed 
$50,000 ($25,000 in the case of a married individual filing a separate 
return). 
‘‘(c) QUALIFIED REHABILITATION EXPENDITURE.—For purposes 
of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified rehabilitation 
expenditure’ means any amount properly chargeable to capital 
account— 
‘‘(A) in connection with the certified rehabilitation of 
a qualified historic home, and 
‘‘(B) for property for which depreciation would be allow-
able under section 168 if the qualified historic home were 
used in a trade or business. 
‘‘(2) CERTAIN EXPENDITURES NOT INCLUDED.— 
‘‘(A) EXTERIOR.—Such term shall not include any 
expenditure in connection with the rehabilitation of a 
building unless at least 5 percent of the total expenditures 
made in the rehabilitation process are allocable to the 
rehabilitation of the exterior of such building. 
‘‘(B) OTHER
RULES
TO
APPLY.—Rules similar to the 
rules of clauses (ii) and (iii) of section 47(c)(2)(B) shall 
apply. 
‘‘(3) MIXED USE OR MULTIFAMILY BUILDING.—If only a por-
tion of a building is used as the principal residence of the 
taxpayer, only qualified rehabilitation expenditures which are 
properly allocable to such portion shall be taken into account 
under this section. 
‘‘(d) CERTIFIED REHABILITATION.—For purposes of this section: 
‘‘(1) IN GENERAL.—Except as otherwise provided in this 
subsection, the term ‘certified rehabilitation’ has the meaning 
given such term by section 47(c)(2)(C). 
‘‘(2) FACTORS TO BE CONSIDERED IN THE CASE OF TARGETED 
AREA RESIDENCES, ETC.— 
‘‘(A) IN GENERAL.—For purposes of applying section 
47(c)(2)(C) under this section with respect to the rehabilita-
tion of a building to which this paragraph applies, consider-
ation shall be given to— 
‘‘(i) the feasibility of preserving existing architec-
tural and design elements of the interior of such 
building, 
‘‘(ii) the risk of further deterioration or demolition 
of such building in the event that certification is denied 
because of the failure to preserve such interior ele-
ments, and 
‘‘(iii) the effects of such deterioration or demolition 
on neighboring historic properties. 
‘‘(B) BUILDINGS TO WHICH THIS PARAGRAPH APPLIES.— 
This paragraph shall apply with respect to any building— 
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H. R. 2488—124 
‘‘(i) any part of which is a targeted area residence 
within the meaning of section 143( j)(1), or 
‘‘(ii) which is located within an enterprise commu-
nity or empowerment zone as designated under section 
1391, 
but shall not apply with respect to any building which 
is listed in the National Register. 
‘‘(3) APPROVED
STATE
PROGRAM.—The term ‘certified 
rehabilitation’ includes a certification made by— 
‘‘(A) a State Historic Preservation Officer who admin-
isters a State Historic Preservation Program approved by 
the Secretary of the Interior pursuant to section 101(b)(1) 
of the National Historic Preservation Act, as in effect on 
July 21, 1999, or 
‘‘(B) a local government, certified pursuant to section 
101(c)(1) of the National Historic Preservation Act, as in 
effect on July 21, 1999, and authorized by a State Historic 
Preservation Officer, or the Secretary of the Interior where 
there is no approved State program), 
subject to such terms and conditions as may be specified by 
the Secretary of the Interior for the rehabilitation of buildings 
within the jurisdiction of such officer (or local government) 
for purposes of this section. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
‘‘(1) QUALIFIED HISTORIC HOME.—The term ‘qualified his-
toric home’ means a certified historic structure— 
‘‘(A) which has been substantially rehabilitated, and 
‘‘(B) which (or any portion of which)— 
‘‘(i) is owned by the taxpayer, and 
‘‘(ii) is used (or will, within a reasonable period, 
be used) by such taxpayer as his principal residence. 
‘‘(2) SUBSTANTIALLY REHABILITATED.—The term ‘substan-
tially rehabilitated’ has the meaning given such term by section 
47(c)(1)(C); except that, in the case of any building described 
in subsection (d)(2), clause (i)(I) of section 47(c)(1)(C) shall 
not apply. 
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘principal residence’ 
has the same meaning as when used in section 121. 
‘‘(4) CERTIFIED HISTORIC STRUCTURE.— 
‘‘(A) IN GENERAL.—The term ‘certified historic struc-
ture’ means any building (and its structural components) 
which— 
‘‘(i) is listed in the National Register, or 
‘‘(ii) is located in a registered historic district (as 
defined in section 47(c)(3)(B)) within which only quali-
fied census tracts (or portions thereof) are located, 
and is certified by the Secretary of the Interior to 
the Secretary as being of historic significance to the 
district. 
‘‘(B) CERTAIN
STRUCTURES
INCLUDED.—Such term 
includes any building (and its structural components) which 
is designated as being of historic significance under a 
statute of a State or local government, if such statute 
is certified by the Secretary of the Interior to the Secretary 
as containing criteria which will substantially achieve the 
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H. R. 2488—125 
purpose of preserving and rehabilitating buildings of his-
toric significance. 
‘‘(C) QUALIFIED
CENSUS
TRACTS.—For purposes of 
subparagraph (A)(ii)— 
‘‘(i) IN GENERAL.—The term ‘qualified census tract’ 
means a census tract in which the median family 
income is less than twice the statewide median family 
income. 
‘‘(ii) DATA USED.—The determination under clause 
(i) shall be made on the basis of the most recent 
decennial census for which data are available. 
‘‘(5) REHABILITATION
NOT
COMPLETE
BEFORE
CERTIFI-
CATION.—A rehabilitation shall not be treated as complete 
before the date of the certification referred to in subsection 
(d). 
‘‘(6) LESSEES.—A taxpayer who leases his principal resi-
dence shall, for purposes of this section, be treated as the 
owner thereof if the remaining term of the lease (as of the 
date determined under regulations prescribed by the Secretary) 
is not less than such minimum period as the regulations 
require. 
‘‘(7) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING COR-
PORATION.—If the taxpayer holds stock as a tenant-stockholder 
(as defined in section 216) in a cooperative housing corporation 
(as defined in such section), such stockholder shall be treated 
as owning the house or apartment which the taxpayer is enti-
tled to occupy as such stockholder. 
‘‘(8) ALLOCATION OF EXPENDITURES RELATING TO EXTERIOR 
OF
BUILDING
CONTAINING
COOPERATIVE
OR
CONDOMINIUM 
UNITS.—The percentage of the total expenditures made in the 
rehabilitation of a building containing cooperative or condo-
minium residential units allocated to the rehabilitation of the 
exterior of the building shall be attributed proportionately to 
each cooperative or condominium residential unit in such 
building for which a deduction under this section is claimed. 
‘‘(f ) WHEN EXPENDITURES TAKEN INTO ACCOUNT.—Qualified 
rehabilitation expenditures shall be treated for purposes of this 
section as made on the date the rehabilitation is completed. 
‘‘(g) RECAPTURE.— 
‘‘(1) IN GENERAL.—If, before the end of the 5-year period 
beginning on the date on which the rehabilitation of the 
building is completed— 
‘‘(A) the taxpayer disposes of such taxpayer’s interest 
in such building, or 
‘‘(B) such building ceases to be used as the principal 
residence of the taxpayer, 
the taxpayer’s gross income for the taxable year in which 
such disposition or cessation occurs shall be increased by the 
recapture percentage of the deduction allowed under this sec-
tion for all prior taxable years with respect to such rehabilita-
tion. 
‘‘(2) RECAPTURE PERCENTAGE.—For purposes of paragraph 
(1), the recapture percentage shall be determined in accordance 
with the following table: 
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H. R. 2488—126 
‘‘If the disposition or cessation 
occurs within— 
The recapture percentage is— 
(i) One full year after the taxpayer becomes entitled to the de-
duction.
100
(ii) One full year after the close of the period described in clause 
(i).
(iii) One full year after the close of the period described in 
clause (ii).
(iv) One full year after the close of the period described in 
clause (iii).
(v) One full year after the close of the period described in clause 
(iv).
20.’’. 
‘‘(h) BASIS ADJUSTMENTS.—For purposes of this subtitle, if a 
deduction is allowed under this section for any expenditure with 
respect to any property, the increase in the basis of such property 
which would (but for this subsection) result from such expenditure 
shall be reduced by the amount of the deduction so allowed. 
‘‘(i) DENIAL
OF
DOUBLE
BENEFIT.—No deduction shall be 
allowed under this section for any amount for which credit is 
allowed under section 47. 
‘‘( j) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be appropriate to carry out the purposes of this 
section, including regulations where less than all of a building 
is used as a principal residence and where more than one taxpayer 
use the same dwelling unit as their principal residence.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (i) of section 56(b)(1)(A) is amended by inserting 
before the comma ‘‘other than the deduction under section 
223 (relating to historic homeownership rehabilitation deduc-
tion)’’. 
(2) Subsection (a) of section 1016 is amended by striking 
‘‘and’’ at the end of paragraph (27), by striking the period 
at the end of paragraph (28) and inserting ‘‘, and’’, and by 
adding at the end the following new item: 
‘‘(29) to the extent provided in section 223(h).’’. 
(c) CLERICAL AMENDMENT.—The table of sections for part VII 
of subchapter B of chapter 1 is amended by striking the item 
relating to section 223 and inserting the following new items: 
‘‘Sec. 223. Historic homeownership rehabilitation deduction. 
‘‘Sec. 224. Cross reference.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to expenses paid or incurred in taxable years beginning 
after December 31, 1999. 
TITLE XII—PROVISIONS RELATING TO 
PENSIONS 
Subtitle A—Expanding Coverage 
SEC. 1201. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS. 
(a) DEFINED BENEFIT PLANS.— 
(1) DOLLAR LIMIT.— 
(A) Subparagraph (A) of section 415(b)(1) (relating to 
limitation for defined benefit plans) is amended by striking 
‘‘$90,000’’ and inserting ‘‘$160,000’’. 
(B) Subparagraphs (C) and (D) of section 415(b)(2) 
are each amended by striking ‘‘$90,000’’ each place it 
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H. R. 2488—127 
appears in the headings and the text and inserting 
‘‘$160,000’’. 
(C) Paragraph (7) of section 415(b) (relating to benefits 
under certain collectively bargained plans) is amended by 
striking ‘‘the greater of $68,212 or one-half the amount 
otherwise applicable for such year under paragraph (1)(A) 
for ‘$90,000’ ’’ and inserting ‘‘one-half the amount otherwise 
applicable for such year under paragraph (1)(A) for 
‘$160,000’ ’’. 
(2) LIMIT REDUCED WHEN BENEFIT BEGINS BEFORE AGE 62.— 
Subparagraph (C) of section 415(b)(2) is amended by striking 
‘‘the social security retirement age’’ each place it appears in 
the heading and text and inserting ‘‘age 62’’. 
(3) LIMIT INCREASED WHEN BENEFIT BEGINS AFTER AGE 65.— 
Subparagraph (D) of section 415(b)(2) is amended by striking 
‘‘the social security retirement age’’ each place it appears in 
the heading and text and inserting ‘‘age 65’’. 
(4) COST-OF-LIVING ADJUSTMENTS.—Subsection (d) of section 
415 (related to cost-of-living adjustments) is amended— 
(A) by striking ‘‘$90,000’’ in paragraph (1)(A) and 
inserting ‘‘$160,000’’, and 
(B) in paragraph (3)(A)— 
(i) by striking ‘‘$90,000’’ in the heading and 
inserting ‘‘$160,000’’, and 
(ii) by striking ‘‘October 1, 1986’’ and inserting 
‘‘July 1, 2000’’. 
(5) 
CONFORMING
AMENDMENT.—Section 
415(b)(2) 
is 
amended by striking subparagraph (F). 
(b) DEFINED CONTRIBUTION PLANS.— 
(1) DOLLAR LIMIT.—Subparagraph (A) of section 415(c)(1) 
(relating to limitation for defined contribution plans) is 
amended by striking ‘‘$30,000’’ and inserting ‘‘$40,000’’. 
(2) COST-OF-LIVING ADJUSTMENTS.—Subsection (d) of section 
415 (related to cost-of-living adjustments) is amended— 
(A) by striking ‘‘$30,000’’ in paragraph (1)(C) and 
inserting ‘‘$40,000’’, and 
(B) in paragraph (3)(D)— 
(i) by striking ‘‘$30,000’’ in the heading and 
inserting ‘‘$40,000’’, and 
(ii) by striking ‘‘October 1, 1993’’ and inserting 
‘‘July 1, 2000’’. 
(c) QUALIFIED TRUSTS.— 
(1) COMPENSATION
LIMIT.—Sections 401(a)(17), 404(l), 
408(k), and 505(b)(7) are each amended by striking ‘‘$150,000’’ 
each place it appears and inserting ‘‘$200,000’’. 
(2) BASE PERIOD AND ROUNDING OF COST-OF-LIVING ADJUST-
MENT.—Subparagraph (B) of section 401(a)(17) is amended— 
(A) by striking ‘‘October 1, 1993’’ and inserting ‘‘July 
1, 2000’’, and 
(B) by striking ‘‘$10,000’’ both places it appears and 
inserting ‘‘$5,000’’. 
(d) ELECTIVE DEFERRALS.— 
(1) IN GENERAL.—Paragraph (1) of section 402(g) (relating 
to limitation on exclusion for elective deferrals) is amended 
to read as follows: 
‘‘(1) IN GENERAL.— 
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H. R. 2488—128 
‘‘(A) LIMITATION.—Notwithstanding subsections (e)(3) 
and (h)(1)(B), the elective deferrals of any individual for 
any taxable year shall be included in such individual’s 
gross income to the extent the amount of such deferrals 
for the taxable year exceeds the applicable dollar amount. 
‘‘(B) APPLICABLE
DOLLAR
AMOUNT.—For purposes of 
subparagraph (A), the applicable dollar amount shall be 
the amount determined in accordance with the following 
table: 
‘‘For taxable years 
The applicable 
beginning in 
dollar amount: 
calendar year: 
2001 .............................................................................................
$11,000
2002 .............................................................................................
$12,000
2003 .............................................................................................
$13,000
2004 .............................................................................................
$14,000
2005 or thereafter ...................................................................... $15,000.’’. 
(2) COST-OF-LIVING ADJUSTMENT.—Paragraph (5) of section 
402(g) is amended to read as follows: 
‘‘(5) COST-OF-LIVING ADJUSTMENT.—In the case of taxable 
years beginning after December 31, 2005, the Secretary shall 
adjust the $15,000 amount under paragraph (1)(B) at the same 
time and in the same manner as under section 415(d), except 
that the base period shall be the calendar quarter beginning 
July 1, 2004, and any increase under this paragraph which 
is not a multiple of $500 shall be rounded to the next lowest 
multiple of $500.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 402(g) (relating to limitation on exclusion 
for elective deferrals), as amended by paragraphs (1) and 
(2), is further amended by striking paragraph (4) and 
redesignating paragraphs (5), (6), (7), (8), and (9) as para-
graphs (4), (5), (6), (7), and (8), respectively. 
(B) Paragraph (2) of section 457(c) is amended by 
striking ‘‘402(g)(8)(A)(iii)’’ and inserting ‘‘402(g)(7)(A)(iii)’’. 
(C) Clause (iii) of section 501(c)(18)(D) is amended 
by striking ‘‘(other than paragraph (4) thereof)’’. 
(e) DEFERRED COMPENSATION PLANS
OF STATE
AND LOCAL 
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.— 
(1) IN GENERAL.—Section 457 (relating to deferred com-
pensation plans of State and local governments and tax-exempt 
organizations) is amended— 
(A) in subsections (b)(2)(A) and (c)(1) by striking 
‘‘$7,500’’ each place it appears and inserting ‘‘the applicable 
dollar amount’’, and 
(B) in subsection (b)(3)(A) by striking ‘‘$15,000’’ and 
inserting ‘‘twice the dollar amount in effect under sub-
section (b)(2)(A)’’. 
(2) APPLICABLE DOLLAR AMOUNT; COST-OF-LIVING ADJUST-
MENT.—Paragraph (15) of section 457(e) is amended to read 
as follows: 
‘‘(15) APPLICABLE DOLLAR AMOUNT.— 
‘‘(A) IN GENERAL.—The applicable dollar amount shall 
be the amount determined in accordance with the following 
table: 
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H. R. 2488—129 
‘‘For taxable years 
The applicable 
beginning in 
dollar amount: 
calendar year: 
2001 .............................................................................................
$11,000
2002 .............................................................................................
$12,000
2003 .............................................................................................
$13,000
2004 .............................................................................................
$14,000
2005 or thereafter ......................................................................
$15,000. 
‘‘(B) COST-OF-LIVING ADJUSTMENTS.—In the case of tax-
able years beginning after December 31, 2005, the Sec-
retary shall adjust the $15,000 amount specified in the 
table in subparagraph (A) at the same time and in the 
same manner as under section 415(d), except that the 
base period shall be the calendar quarter beginning July 
1, 2004, and any increase under this paragraph which 
is not a multiple of $500 shall be rounded to the next 
lowest multiple of $500.’’. 
(f ) SIMPLE RETIREMENT ACCOUNTS.— 
(1) LIMITATION.—Clause (ii) of section 408(p)(2)(A) (relating 
to general rule for qualified salary reduction arrangement) 
is amended by striking ‘‘$6,000’’ and inserting ‘‘the applicable 
dollar amount’’. 
(2) APPLICABLE
DOLLAR
AMOUNT.—Subparagraph (E) of 
408(p)(2) is amended to read as follows: 
‘‘(E) APPLICABLE
DOLLAR
AMOUNT; 
COST-OF-LIVING 
ADJUSTMENT.— 
‘‘(i) IN GENERAL.—For purposes of subparagraph 
(A)(ii), the applicable dollar amount shall be the 
amount determined in accordance with the following 
table: 
‘‘For taxable years 
The applicable 
beginning in 
dollar amount: 
calendar year: 
2001 ..................................................................................
$7,000
2002 ..................................................................................
$8,000
2003 ..................................................................................
$9,000
2004 or thereafter ...........................................................
$10,000. 
‘‘(ii) COST-OF-LIVING ADJUSTMENT.—In the case of 
a year beginning after December 31, 2004, the Sec-
retary shall adjust the $10,000 amount under clause 
(i) at the same time and in the same manner as under 
section 415(d), except that the base period taken into 
account shall be the calendar quarter beginning July 
1, 2003, and any increase under this subparagraph 
which is not a multiple of $500 shall be rounded to 
the next lower multiple of $500.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Clause (I) of section 401(k)(11)(B)(i) is amended 
by striking ‘‘$6,000’’ and inserting ‘‘the amount in effect 
under section 408(p)(2)(A)(ii)’’. 
(B) Section 401(k)(11) is amended by striking subpara-
graph (E). 
(g) ROUNDING RULE RELATING
TO DEFINED BENEFIT PLANS 
AND DEFINED CONTRIBUTION PLANS.—Paragraph (4) of section 
415(d) is amended to read as follows: 
‘‘(4) ROUNDING.— 
‘‘(A) $160,000 AMOUNT.—Any increase under subpara-
graph (A) of paragraph (1) which is not a multiple of 
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H. R. 2488—130 
$5,000 shall be rounded to the next lowest multiple of 
$5,000. 
‘‘(B) $40,000 AMOUNT.—Any increase under subpara-
graph (C) of paragraph (1) which is not a multiple of 
$1,000 shall be rounded to the next lowest multiple of 
$1,000.’’. 
(h) EFFECTIVE DATE.—The amendments made by this section 
shall apply to years beginning after December 31, 2000. 
SEC. 1202. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
SOLE PROPRIETORS. 
(a) AMENDMENT TO 1986 CODE.—Subparagraph (B) of section 
4975(f )(6) (relating to exemptions not to apply to certain trans-
actions) is amended by adding at the end the following new clause: 
‘‘(iii) LOAN EXCEPTION.—For purposes of subpara-
graph (A)(i), the term ‘owner-employee’ shall only 
include a person described in subclause (II) or (III) 
of clause (i).’’. 
(b) AMENDMENT TO ERISA.—Section 408(d)(2) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
is amended by adding at the end the following new subparagraph: 
‘‘(C) For purposes of paragraph (1)(A), the term ‘owner- 
employee’ shall only include a person described in clause (ii) or 
(iii) of subparagraph (A).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to loans made after December 31, 2000. 
SEC. 1203. MODIFICATION OF TOP-HEAVY RULES. 
(a) SIMPLIFICATION OF DEFINITION OF KEY EMPLOYEE.— 
(1) 
IN
GENERAL.—Section 
416(i)(1)(A) 
(defining 
key 
employee) is amended— 
(A) by striking ‘‘or any of the 4 preceding plan years’’ 
in the matter preceding clause (i), 
(B) by striking clause (i) and inserting the following: 
‘‘(i) an officer of the employer having an annual 
compensation greater than $150,000,’’, 
(C) by striking clause (ii) and redesignating clauses 
(iii) and (iv) as clauses (ii) and (iii), respectively, and 
(D) by striking the second sentence in the matter fol-
lowing clause (iii), as redesignated by subparagraph (C). 
(2) CONFORMING AMENDMENT.—Section 416(i)(1)(B)(iii) is 
amended by striking ‘‘and subparagraph (A)(ii)’’. 
(b) MATCHING CONTRIBUTIONS TAKEN INTO ACCOUNT FOR MIN-
IMUM CONTRIBUTION REQUIREMENTS.—Section 416(c)(2)(A) (relating 
to defined contribution plans) is amended by adding at the end 
the following: ‘‘Employer matching contributions (as defined in sec-
tion 401(m)(4)(A)) shall be taken into account for purposes of this 
subparagraph.’’. 
(c) DISTRIBUTIONS DURING LAST YEAR BEFORE DETERMINATION 
DATE TAKEN INTO ACCOUNT.— 
(1) IN
GENERAL.—Paragraph (3) of section 416(g) is 
amended to read as follows: 
‘‘(3) DISTRIBUTIONS DURING LAST YEAR BEFORE DETERMINA-
TION DATE TAKEN INTO ACCOUNT.— 
‘‘(A) IN GENERAL.—For purposes of determining— 
‘‘(i) the present value of the cumulative accrued 
benefit for any employee, or 
‘‘(ii) the amount of the account of any employee, 
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H. R. 2488—131 
such present value or amount shall be increased by the 
aggregate distributions made with respect to such employee 
under the plan during the 1-year period ending on the 
determination date. The preceding sentence shall also apply 
to distributions under a terminated plan which if it had 
not been terminated would have been required to be 
included in an aggregation group. 
‘‘(B) 5-YEAR PERIOD IN CASE OF IN-SERVICE DISTRIBU-
TION.—In the case of any distribution made for a reason 
other than separation from service, death, or disability, 
subparagraph (A) shall be applied by substituting ‘5-year 
period’ for ‘1-year period’.’’. 
(2) BENEFITS NOT TAKEN INTO ACCOUNT.—Subparagraph 
(E) of section 416(g)(4) is amended— 
(A) by striking ‘‘LAST 5 YEARS’’ in the heading and 
inserting ‘‘LAST YEAR BEFORE DETERMINATION DATE’’, and 
(B) by striking ‘‘5-year period’’ and inserting ‘‘1-year 
period’’. 
(d) DEFINITION OF TOP-HEAVY PLANS.—Paragraph (4) of section 
416(g) (relating to other special rules for top-heavy plans) is 
amended by adding at the end the following new subparagraph: 
‘‘(H) CASH OR DEFERRED ARRANGEMENTS USING ALTER-
NATIVE METHODS OF MEETING NONDISCRIMINATION REQUIRE-
MENTS.—The term ‘top-heavy plan’ shall not include a plan 
which consists solely of— 
‘‘(i) a cash or deferred arrangement which meets 
the requirements of section 401(k)(12), and 
‘‘(ii) matching contributions with respect to which 
the requirements of section 401(m)(11) are met. 
If, but for this subparagraph, a plan would be treated 
as a top-heavy plan because it is a member of an aggrega-
tion group which is a top-heavy group, contributions under 
the plan may be taken into account in determining whether 
any other plan in the group meets the requirements of 
subsection (c)(2).’’. 
(e) FROZEN PLAN EXEMPT FROM MINIMUM BENEFIT REQUIRE-
MENT.—Subparagraph (C) of section 416(c)(1) (relating to defined 
benefit plans) is amended— 
(A) by striking ‘‘clause (ii)’’ in clause (i) and inserting 
‘‘clause (ii) or (iii)’’, and 
(B) by adding at the end the following: 
‘‘(iii) EXCEPTION FOR FROZEN PLAN.—For purposes 
of determining an employee’s years of service with 
the employer, any service with the employer shall be 
disregarded to the extent that such service occurs 
during a plan year when the plan benefits (within 
the meaning of section 410(b)) no employee or former 
employee.’’. 
(f ) ELIMINATION OF FAMILY ATTRIBUTION.—Section 416(i)(1)(B) 
(defining 5-percent owner) is amended by adding at the end the 
following new clause: 
‘‘(iv) FAMILY
ATTRIBUTION
DISREGARDED.—Solely 
for purposes of applying this paragraph (and not for 
purposes of any provision of this title which incor-
porates by reference the definition of a key employee 
or 5-percent owner under this paragraph), section 318 
shall be applied without regard to subsection (a)(1) 
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H. R. 2488—132 
thereof in determining whether any person is a 5- 
percent owner.’’. 
(g) EFFECTIVE DATE.—The amendments made by this section 
shall apply to years beginning after December 31, 2000. 
SEC. 1204. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
PURPOSES OF DEDUCTION LIMITS. 
(a) IN GENERAL.—Section 404 (relating to deduction for con-
tributions of an employer to an employees’ 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 ACCOUNT FOR PUR-
POSES OF DEDUCTION LIMITS.—Elective deferrals (as defined in sec-
tion 402(g)(3)) shall not be subject to any limitation contained 
in paragraph (3), (7), or (9) of subsection (a), and such elective 
deferrals shall not be taken into account in applying any such 
limitation to any other contributions.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to years beginning after December 31, 2000. 
SEC. 
1205. 
REPEAL 
OF 
COORDINATION 
REQUIREMENTS 
FOR 
DEFERRED COMPENSATION PLANS OF STATE AND LOCAL 
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS. 
(a) IN GENERAL.—Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and 
tax-exempt organizations), as amended by section 1201, is amended 
to read as follows: 
‘‘(c) LIMITATION.—The maximum amount of the compensation 
of any one individual which may be deferred under subsection 
(a) during any taxable year shall not exceed the amount in effect 
under subsection (b)(2)(A) (as modified by any adjustment provided 
under subsection (b)(3)).’’. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to years beginning after December 31, 2000. 
SEC. 1206. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
REGARDING PENSION PLANS. 
(a) ELIMINATION OF CERTAIN USER FEES.—The Secretary of 
the Treasury or the Secretary’s delegate shall not require payment 
of user fees under the program established under section 7527 
of the Internal Revenue Code of 1986 for requests to the Internal 
Revenue Service for determination letters with respect to the quali-
fied status of a pension benefit plan maintained solely by one 
or more eligible employers or any trust which is part of the plan. 
The preceding sentence shall not apply to any request— 
(1) made after the 5th plan year the pension benefit plan 
is in existence, or 
(2) made by the sponsor of any prototype or similar plan 
which the sponsor intends to market to participating employers. 
(b) PENSION BENEFIT PLAN.—For purposes of this section, the 
term ‘‘pension benefit plan’’ means a pension, profit-sharing, stock 
bonus, annuity, or employee stock ownership plan. 
(c) ELIGIBLE EMPLOYER.—For purposes of this section, the term 
‘‘eligible employer’’ has the same meaning given such term in section 
408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The deter-
mination of whether an employer is an eligible employer under 
this section shall be made as of the date of the request described 
in subsection (a). 
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H. R. 2488—133 
(d) EFFECTIVE DATE.—The provisions of this section shall apply 
with respect to requests made after December 31, 2000. 
SEC. 1207. DEDUCTION LIMITS. 
(a) IN GENERAL.—Section 404(a) (relating to general rule) is 
amended by adding at the end the following: 
‘‘(12) DEFINITION OF COMPENSATION.—For purposes of para-
graphs (3), (7), (8), and (9), the term ‘compensation’ shall include 
amounts treated as participant’s compensation under subpara-
graph (C) or (D) of section 415(c)(3).’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (B) of section 
404(a)(3) is amended by striking the last sentence thereof. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to years beginning after December 31, 2000. 
SEC. 1208. 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 DEFERRALS 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 treated as an elective deferral 
for purposes of this chapter, except that such contribution shall 
not be excludable 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 require-
ment of this chapter solely by reason 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 contributions in lieu of all or 
a portion of elective deferrals 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 contribution program unless 
the applicable retirement plan— 
‘‘(A) establishes separate accounts (‘designated plus 
accounts’) for the designated plus contributions of each 
employee and any earnings properly allocable to the con-
tributions, and 
‘‘(B) maintains separate recordkeeping with respect to 
each account. 
‘‘(c) DEFINITIONS AND RULES RELATING TO DESIGNATED PLUS 
CONTRIBUTIONS.—For purposes of this section— 
‘‘(1) DESIGNATED
PLUS
CONTRIBUTION.—The term ‘des-
ignated plus contribution’ means any elective 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 prescribe) as not being 
so excludable. 
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H. R. 2488—134 
‘‘(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 deferrals exclud-
able from gross income of the employee for the taxable 
year (without regard to this section), over 
‘‘(B) the aggregate amount of elective deferrals of the 
employee for the taxable year which the employee does 
not designate under paragraph (1). 
‘‘(3) ROLLOVER CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—A rollover contribution of any pay-
ment or distribution from a designated plus account which 
is otherwise allowable under this chapter may be made 
only if the contribution is to— 
‘‘(i) another designated plus account of the indi-
vidual from whose account the payment or distribution 
was made, or 
‘‘(ii) a Roth IRA of such individual. 
‘‘(B) COORDINATION WITH LIMIT.—Any rollover contribu-
tion to a designated plus account 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 des-
ignated plus account shall not be includible in gross income. 
‘‘(2) QUALIFIED DISTRIBUTION.—For purposes of this sub-
section— 
‘‘(A) IN GENERAL.—The term ‘qualified distribution’ has 
the meaning given such term by section 408A(d)(2)(A) 
(without regard to clause (iv) thereof). 
‘‘(B) DISTRIBUTIONS WITHIN NONEXCLUSION 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 first taxable year for which the individual 
made a designated plus contribution to any designated 
plus account established for such individual under the 
same applicable retirement plan, or 
‘‘(ii) if a rollover contribution was made to such 
designated plus account from a designated plus account 
previously established for such individual under 
another applicable retirement plan, the first taxable 
year for which the individual made a designated plus 
contribution to such previously established account. 
‘‘(C) 
DISTRIBUTIONS
OF
EXCESS
DEFERRALS
AND 
EARNINGS.—The term ‘qualified distribution’ shall not 
include any distribution of any excess deferral under sec-
tion 402(g)(2) and any income on the excess deferral. 
‘‘(3) AGGREGATION RULES.—Section 72 shall be applied sepa-
rately with respect to distributions and payments from a des-
ignated 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— 
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H. R. 2488—135 
‘‘(A) an employees’ trust described in section 401(a) 
which is exempt from tax under section 501(a), and 
‘‘(B) a plan under which amounts are contributed by 
an individual’s employer for an annuity 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.—Subparagraph (B) of section 402(c)(8) is 
amended by adding at the end the following: 
‘‘If any portion of an eligible rollover distribution is attrib-
utable 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.’’. 
(d) REPORTING REQUIREMENTS.— 
(1) W–2 INFORMATION.—Section 6051(a)(8) is amended by 
inserting ‘‘, including the amount of designated plus contribu-
tions (as defined in section 402A)’’ before the comma at the 
end. 
(2) INFORMATION.—Section 6047 is amended by redesig-
nating subsection (f ) as subsection (g) and by inserting after 
subsection (e) the following new subsection: 
‘‘(f ) DESIGNATED PLUS CONTRIBUTIONS.—The Secretary shall 
require the plan administrator of each applicable retirement plan 
(as defined in section 402A) to make such returns and reports 
regarding designated plus contributions (as so defined) to the Sec-
retary, 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).’’. 
(2) The table of sections for subpart A of part I of sub-
chapter D of chapter 1 is amended by inserting after the item 
relating to section 402 the following new item: 
‘‘Sec. 402A. Optional treatment of elective deferrals as plus contributions.’’. 
(f ) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000. 
SEC. 1209. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL 
EMPLOYERS. 
(a) IN GENERAL.—Subparagraph (A) of section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(A)) is amended— 
(1) in clause (i), by inserting ‘‘other than a new single- 
employer plan (as defined in subparagraph (F)) maintained 
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H. R. 2488—136 
by a small employer (as so defined),’’ after ‘‘single-employer 
plan,’’, 
(2) in clause (iii), by striking the period at the end and 
inserting ‘‘, and’’, and 
(3) by adding at the end the following new clause: 
‘‘(iv) in the case of a new single-employer plan (as defined 
in subparagraph (F)) maintained by a small employer (as so 
defined) for the plan year, $5 for each individual who is a 
participant in such plan during the plan year.’’. 
(b) DEFINITION
OF
NEW
SINGLE-EMPLOYER
PLAN.—Section 
4006(a)(3) of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1306(a)(3)) is amended by adding at the end the following 
new subparagraph: 
‘‘(F)(i) For purposes of this paragraph, a single-employer plan 
maintained by a contributing sponsor shall be treated as a new 
single-employer plan for each of its first 5 plan years if, during 
the 36-month period ending on the date of the adoption of such 
plan, the sponsor or any member of such sponsor’s controlled group 
(or any predecessor of either) had not established or maintained 
a plan to which this title applies with respect to which benefits 
were accrued for substantially the same employees as are in the 
new single-employer plan. 
‘‘(ii)(I) For purposes of this paragraph, the term ‘small employer’ 
means an employer which on the first day of any plan year has, 
in aggregation with all members of the controlled group of such 
employer, 100 or fewer employees. 
‘‘(II) In the case of a plan maintained by two or more contrib-
uting sponsors that are not part of the same controlled group, 
the employees of all contributing sponsors and controlled groups 
of such sponsors shall be aggregated for purposes of determining 
whether any contributing sponsor is a small employer.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plans established after December 31, 2000. 
SEC. 1210. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND 
SMALL PLANS. 
(a) NEW PLANS.—Subparagraph (E) of section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended by adding at the end the following new 
clause: 
‘‘(v) In the case of a new defined benefit plan, the amount 
determined under clause (ii) for any plan year shall be an amount 
equal to the product of the amount determined under clause (ii) 
and the applicable percentage. For purposes of this clause, the 
term ‘applicable percentage’ means— 
‘‘(I) 0 percent, for the first plan year. 
‘‘(II) 20 percent, for the second plan year. 
‘‘(III) 40 percent, for the third plan year. 
‘‘(IV) 60 percent, for the fourth plan year. 
‘‘(V) 80 percent, for the fifth plan year. 
For purposes of this clause, a defined benefit plan (as defined 
in section 3(35)) maintained by a contributing sponsor shall be 
treated as a new defined benefit plan for its first 5 plan years 
if, during the 36-month period ending on the date of the adoption 
of the plan, the sponsor and each member of any controlled group 
including the sponsor (or any predecessor of either) did not establish 
or maintain a plan to which this title applies with respect to 
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