I
105TH CONGRESS
2D SESSION
H. R. 3300
To amend the Internal Revenue Code of 1986 to allow small employers
a credit against income tax for costs incurred in establishing a qualified
employer plan.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 26, 1998
Ms. STABENOW 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 allow small
employers a credit against income tax for costs incurred
in establishing a qualified employer plan.
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 ‘‘Small Business Pen-
sion Start-Up Credit Act of 1998’’.
SEC. 2. CREDIT FOR PENSION PLAN START-UP COSTS OF
SMALL EMPLOYERS.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN START-UP
COSTS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of an eligible employer, the small employer pen-
sion plan start-up cost credit determined under this sec-
tion for any taxable year is an amount equal to 50 percent
of the qualified start-up costs paid or incurred by the tax-
payer during the taxable year.
‘‘(b) DOLLAR LIMITATION.—The amount of the cred-
it determined under this section for any taxable year shall
not exceed—
‘‘(1) $1,000 for the first taxable year ending
after the date the employer established the qualified
employer plan to which such costs relate,
‘‘(2) $500 for each of the second and third tax-
able years ending after such date, and
‘‘(3) zero for each taxable year thereafter.
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this
section,
‘‘(1) IN
GENERAL.—The term ‘eligible em-
ployer’ has the meaning given such term by section
408(p)(2)(C)(i).
‘‘(2) EMPLOYERS
MAINTAINING
QUALIFIED
PLANS
DURING
1997
NOT
ELIGIBLE.—Such term
shall not include an employer if such employer (or
any predecessor employer) maintained a qualified
plan (as defined in section 408(p)(2)(D)(ii)) with re-
spect to which contributions were made, or benefits
were accrued, for service in 1997. If only individuals
other than employees described in subparagraph (A)
or (B) of section 410(b)(3) are eligible to participate
in the qualified employer plan referred to in sub-
section (d)(1), then the preceding sentence shall be
applied without regard to any qualified plan in
which only employees so described are eligible to
participate.
‘‘(d) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) QUALIFIED START-UP COSTS.—
‘‘(A) IN
GENERAL.—The term ‘qualified
start-up costs’ means any ordinary and nec-
essary expenses of an eligible employer which—
‘‘(i) are paid or incurred in connection
with the establishment of a qualified em-
ployer plan in which at least 2 individuals
are eligible to participate, and
‘‘(ii) are of a nonrecurring nature.
‘‘(B) PLAN
MUST
BE
ESTABLISHED
BE-
FORE JANUARY 1, 2001.—Such term shall not
include any expense in connection with a plan
established after December 31, 2000.
‘‘(2) QUALIFIED EMPLOYER PLAN.—The term
‘qualified employer plan’ has the meaning given to
such term by section 4972(d).
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b)
of section 52, or subsection (n) or (o) of section 414,
shall be treated as one person.
‘‘(2) DISALLOWANCE OF DEDUCTION.—No de-
duction shall be allowable under this chapter for any
qualified start-up costs for which a credit is deter-
mined under subsection (a).
‘‘(3) ELECTION NOT TO CLAIM CREDIT.—This
section shall not apply to a taxpayer for any taxable
year if such taxpayer elects to have this section not
apply for such taxable year.’’.
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) of such Code (defining cur-
rent year business credit) is amended by striking ‘‘plus’’
at the end of paragraph (11), by striking the period at
the end of paragraph (12) and inserting ‘‘, plus’’, and by
adding at the end the following new paragraph:
‘‘(13) in the case of an eligible employer (as de-
fined in section 45D(c)), the small employer pension
plan start-up cost credit determined under section
45D(a).’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 39(d) of such Code is amended by
adding at the end the following new paragraph:
‘‘(8) NO
CARRYBACK
OF
SMALL
EMPLOYER
PENSION PLAN START-UP COST CREDIT BEFORE EF-
FECTIVE DATE.—No portion of the unused business
credit for any taxable year which is attributable to
the small employer pension plan start-up cost credit
determined under section 45D may be carried back
to a taxable year ending on or before the date of the
enactment of section 45D.’’.
(2) The table of sections for subpart D of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 45D. Small employer pension plan start-up costs.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to costs paid or incurred in taxable
years ending after the date of the enactment of this Act.
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