I 
113TH CONGRESS 
2D SESSION 
H. R. 3821 
To amend the Internal Revenue Code of 1986 to assist in the recovery 
and development of the Virgin Islands by providing for a reduction 
in the tax imposed on distributions from certain retirement plans’ assets 
which are invested for at least 30 years, subject to defined withdrawals, 
under a Virgin Islands investment program. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 8, 2014 
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 assist 
in the recovery and development of the Virgin Islands 
by providing for a reduction in the tax imposed on dis-
tributions from certain retirement plans’ assets which 
are invested for at least 30 years, subject to defined 
withdrawals, under a Virgin Islands investment program. 
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 ‘‘Derek M. Hodge Vir-
gin Islands Improvement Act of 2013’’. 
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SEC. 2. TAX-FREE DISTRIBUTIONS FROM CERTAIN RETIRE-
MENT PLAN ASSETS INVESTED UNDER A VIR-
GIN ISLANDS INVESTMENT PROGRAM. 
(a) IN GENERAL.—Part I of subchapter D of chapter 
1 of the Internal Revenue Code of 1986 (relating to pen-
sion, profit-sharing, stock bonus plans, etc.) is amended 
by adding at the end the following new section: 
‘‘SEC. 409B. TREATMENT OF DISTRIBUTIONS FROM CER-
TAIN RETIREMENT PLAN ASSETS INVESTED 
UNDER A VIRGIN ISLANDS INVESTMENT PRO-
GRAM. 
‘‘(a) IN GENERAL.—If an individual under the age 
of 61 makes a one-time designation of an amount of quali-
fied retirement savings as being under investment by the 
Virgin Islands Investment Program for at least 30 years, 
then, as of the close of the 10th year, such amount (and 
any earnings properly allocable to such amount) shall be 
treated for purposes of this title— 
‘‘(1) as a designated Roth account in the case 
of qualified retirement savings described in sub-
section (b)(1), or 
‘‘(2) as a Roth IRA in the case of qualified re-
tirement savings described in subsection (b)(2). 
No amount shall be includible in gross income by reason 
of the change in treatment under the preceding sentence. 
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‘‘(b) QUALIFIED RETIREMENT SAVINGS.—For pur-
poses of this section, the term ‘qualified retirement sav-
ings’ means— 
‘‘(1) amounts attributable to elective deferrals 
under an applicable retirement plan, and 
‘‘(2) amounts held in an individual retirement 
plan which is not a Roth IRA. 
‘‘(c) VIRGIN ISLANDS INVESTMENT PROGRAM.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘Virgin Islands 
Investment Program’ means a program of the Virgin 
Islands which meets the requirements of paragraphs 
(2), (3), (4), and (5). 
‘‘(2) MAXIMUM AMOUNT ACCEPTED FOR MAN-
AGEMENT.—A program meets the requirements of 
this paragraph if the amount accepted for manage-
ment 
under 
the 
program 
does 
not 
exceed 
$50,000,000,000. 
‘‘(3) FEES AND TAXES.—A program meets the 
requirements of this paragraph if— 
‘‘(A) the fees charged by investment man-
agers under the program do not exceed the fees 
customarily imposed by investment managers 
for managing like qualified retirement savings 
outside the Virgin Islands Investment Program, 
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‘‘(B) the program imposes an annual tax 
(in addition to the fees permitted under sub-
paragraph (A)) equal to— 
‘‘(i) 1.5 percent of the amount des-
ignated for management under the pro-
gram for the first 10 years of the account, 
and 
‘‘(ii) 1 percent of the amount des-
ignated for management under the pro-
gram for the remainder of the life of the 
account without regard to account balance, 
and 
‘‘(C) the 1 percent tax is imposed notwith-
standing the Roth designation. 
‘‘(4) 
INVESTMENT
MANAGER.—A 
program 
meets the requirements of this paragraph if the in-
vestment managers under the program are chosen 
by the Governor of the Virgin Islands. 
‘‘(5) 
SEPARATE
ACCOUNTING.—A 
program 
meets the requirements of this paragraph if the pro-
gram— 
‘‘(A) establishes separate accounts for each 
type of qualified retirement savings held for the 
benefit of each individual and any earnings 
properly allocable to such assets, and 
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‘‘(B) maintains separate recordkeeping 
with respect to each account. 
‘‘(d) USE OF 1 PERCENT ANNUAL TAX.— 
‘‘(1) REVENUES TO THE VIRGIN ISLANDS DUR-
ING FIRST 20 YEARS.— 
‘‘(A) IN GENERAL.—Revenues from the tax 
referred to in subsection (c)(3)(B) shall be col-
lected, held, and distributed for the benefit of 
the Virgin Islands in a manner similar to sec-
tion 7652(b) (relating to rum excise tax). 
‘‘(B) 
DISTRIBUTIONS
TO
VIRGIN
IS-
LANDS.—Funds and accrued interest described 
in subsection (d)(1)(A) may be paid from es-
crow to the Virgin Islands for expenditure only 
if— 
‘‘(i) the expenditure is pursuant to a 
qualified infrastructure development plan, 
and 
‘‘(ii) the expenditure is approved by 
the Secretary of the Interior as being pur-
suant to such plan. 
‘‘(C) QUALIFIED INFRASTRUCTURE DEVEL-
OPMENT
PLAN.—For purposes of this para-
graph, the term ‘qualified infrastructure devel-
opment plan’ means a plan for improving and 
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enhancing the infrastructure of the Virgin Is-
lands which is— 
‘‘(i) developed and approved by the 
committee described in subparagraph (D), 
and 
‘‘(ii) approved by the Governor of the 
Virgin Islands. 
‘‘(D) COMMITTEE.—The committee de-
scribed in this subparagraph is a committee— 
‘‘(i) comprised of 5 members, each 
serving a term of either three or five 
years— 
‘‘(I) 2 of whom are appointed by 
the Governor of the Virgin Islands, 
one for a 3-year and one for a 5-year 
term, 
‘‘(II) 2 of whom are appointed by 
the Virgin Islands legislature, one for 
a 3-year and one for a 5-year term, 
and 
‘‘(III) 1 of whom is appointed by 
the Secretary of the Interior for a 5- 
year term, and 
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‘‘(ii) with respect to which a vacancy 
is filled in the manner in which the origi-
nal appointment was made. 
‘‘(2) REVENUES TO THE UNITED STATES AND 
THE VIRGIN ISLANDS.— 
‘‘(A) DURING FIRST 20 YEARS.—Revenues 
from the fee referred to in subsection (c)(3)(B) 
imposed on designated assets after the first 10 
years under management by the Virgin Islands 
Investment Program shall be collected by the 
United States Treasury in a manner similar to 
section 7652, upon which— 
‘‘(i) 26.67 percent of the proceeds 
shall be distributed to the Virgin Islands 
for the first 10 years of management, and 
‘‘(ii) half of the proceeds shall be dis-
tributed to the Virgin Islands for the next 
10 years of management. 
‘‘(B) AFTER THE FIRST 20 YEARS.—Begin-
ning in the 21st year, the entire 1 percent tax 
collected shall be retained by the United States 
Treasury. 
‘‘(C) MINIMUM
HOLDING
PERIOD.—No 
withdrawals may be made by an investor from 
the account during the minimum holding period 
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of ten years. Should the investor choose to with-
draw money from the account during the min-
imum holding period, the investor would forfeit 
the tax advantages of the Fund. Any funds so 
withdrawn would be included in gross income 
and subject to Federal income tax, minus pay-
ments of the 1 percent tax. 
‘‘(3) EARLY WITHDRAWAL.—Should an investor 
withdraw the entire balance of the funds after the 
10-year minimum holding period but before the end 
of the 30 years, his account will be liable for the en-
tire 1 percent tax for each of the remaining years. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) ELECTIVE DEFERRALS; APPLICABLE RE-
TIREMENT PLAN.—The terms ‘elective deferrals’ and 
‘applicable retirement plan’ have the respective 
meanings given such terms by section 402A. 
‘‘(2) VIRGIN ISLANDS.—The term ‘Virgin Is-
lands’ means the United States Virgin Islands. 
‘‘(3) SECRETARY OF THE INTERIOR.—The term 
‘Secretary of the Interior’ means the Secretary of 
the Interior or his designee.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
for such part I is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 409B. Treatment of distributions from certain retirement plan assets in-
vested under a Virgin Islands investment program.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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