I 
109TH CONGRESS 
1ST SESSION H. R. 3912 
To amend the Internal Revenue Code of 1986 to encourage guaranteed 
lifetime income payments from annuities and similar payments of life 
insurance proceeds at dates later than death by excluding from income 
a portion of such payments. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 27, 2005 
Mrs. JOHNSON of Connecticut (for herself, Mrs. JONES of Ohio, and Mr. 
ENGLISH of Pennsylvania) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to encourage 
guaranteed lifetime income payments from annuities and 
similar payments of life insurance proceeds at dates later 
than death by excluding from income a portion of such 
payments. 
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 ‘‘Flexible Retirement 
Security for Life Act of 2005’’.
SEC. 2. EXCLUSION FOR LIFETIME ANNUITY PAYMENTS. 
(a) LIFETIME ANNUITY PAYMENTS UNDER ANNUITY 
CONTRACTS.—Subsection (b) of section 72 of the Internal 
Revenue Code (relating to annuities) is amended by add-
ing at the end thereof the following new paragraph: 
‘‘(5) EXCLUSION FOR LIFETIME ANNUITY PAY-
MENTS.— 
‘‘(A) IN GENERAL.—In the case of lifetime 
annuity payments received under one or more 
annuity contracts in any taxable year, gross in-
come shall not include 50 percent of the portion 
of lifetime annuity payments otherwise includ-
ible (without regard to this paragraph) in gross 
income under this section. For purposes of the 
preceding sentence, the amount excludible from 
gross income in any taxable year shall not ex-
ceed the applicable amount. 
‘‘(B) APPLICABLE AMOUNT.—For purposes 
of subparagraph (A), the applicable amount 
shall be determined in accordance with the fol-
lowing table: 
Applicable 
‘‘Taxable Years Beginning in: 
Amount is: 
2006, 2007, 2008, 2009, 2010, or 2011 .................................
$1,000
2012 or 2013 ...........................................................................
$5,000
2014 .........................................................................................
$10,000
2015 or thereafter ....................................................................
$20,000.
‘‘(C) COST-OF-LIVING
ADJUSTMENT.—In 
the case of taxable years beginning after De-
cember 31, 2015, the $20,000 amount in sub-
paragraph (A) shall be increased by an amount 
equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2005’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If any amount as increased under the preceding 
sentence is not a multiple of $500, such amount 
shall be rounded to the next lower multiple of 
$500. 
‘‘(D) APPLICATION OF PARAGRAPH.—Sub-
paragraph (A) shall not apply to— 
‘‘(i) any amount received under an eli-
gible deferred compensation plan (as de-
fined in section 457(b)) or under a quali-
fied retirement plan (as defined in section 
4974(c)),
‘‘(ii) any amount paid under an annu-
ity contract that is received by the bene-
ficiary under the contract— 
‘‘(I) after the death of the annu-
itant in the case of payments de-
scribed in subsection (c)(5)(A)(ii)(III), 
unless the beneficiary is the surviving 
spouse of the annuitant, or 
‘‘(II) after the death of the annu-
itant and joint annuitant in the case 
of payments described in subsection 
(c)(5)(A)(ii)(IV), unless the bene-
ficiary is the surviving spouse of the 
last to die of the annuitant and the 
joint annuitant, or 
‘‘(iii) any annuity contract that is a 
qualified funding asset (as defined in sec-
tion 130(d)), but without regard to wheth-
er there is a qualified assignment. 
‘‘(E) INVESTMENT IN THE CONTRACT.— 
For purposes of this section, the investment in 
the contract shall be determined without regard 
to this paragraph.’’.
(b) DEFINITIONS.—Subsection (c) of section 72 of 
such Code is amended by adding at the end thereof the 
following new paragraph: 
‘‘(5) LIFETIME ANNUITY PAYMENT.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (b)(5), the term ‘lifetime annuity pay-
ment’ means any amount received as an annu-
ity under any portion of an annuity contract, 
but only if— 
‘‘(i) the only person (or persons in the 
case of payments described in subclause 
(II) or (IV) of clause (ii)) legally entitled 
(by operation of the contract, a trust, or 
other legally enforceable means) to receive 
such amount during the life of the annu-
itant or joint annuitant is such annuitant 
or joint annuitant, and 
‘‘(ii) such amount is part of a series 
of substantially equal periodic payments 
made not less frequently than annually 
over— 
‘‘(I) the life of the annuitant, 
‘‘(II) the lives of the annuitant 
and a joint annuitant, but only if the 
annuitant is the spouse of the joint