I
107TH CONGRESS
1ST SESSION
H. R. 1018
To amend the Internal Revenue Code of 1986 to provide for economic growth
by providing tax relief.
IN THE HOUSE OF REPRESENTATIVES
MARCH 14, 2001
Mr. TOOMEY (for himself, Mr. RYAN of Wisconsin, Mr. ARMEY, Mr. FLAKE,
Mr. SHADEGG, Mr. SAM JOHNSON of Texas, Mr. DEMINT, Mr. PENCE,
Mr. BONILLA, Mr. SESSIONS, Mr. DOOLITTLE, Mr. RYUN of Kansas, Mr.
SOUDER, Mr. LARGENT, Mr. Otter, Mr. TANCREDO, Mr. CHABOT, Mr.
COX, Mrs. MYRICK, Mr. HAYWORTH, Mr. CANTOR, Mr. AKIN, Ms. HART,
Mr. SCHAFFER, Mr. GARY MILLER of California, Mr. ISTOOK, Mr.
HOSTETTLER, Mr. PITTS, Mr. BARTLETT of Maryland, Mr. HERGER, Mr.
ISSA, Mr. HEFLEY, Mr. KIRK, Mr. KELLER, Mr. JONES of North Caro-
lina, Mrs. JO ANN DAVIS of Virginia, and Mr. BARR of Georgia) intro-
duced the following bill; which was referred to the Committee on Ways
and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
for economic growth by providing tax relief.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Recovery and Growth Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act 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.
(c) SECTION 15 NOT TO APPLY.—No amendment
made by this Act shall be treated as a change in a rate
of tax for purposes of section 15 of the Internal Revenue
Code of 1986.
(d) TABLE OF CONTENTS.—
Sec. 1. Short title.
TITLE I—INDIVIDUAL INCOME TAX RELIEF
Sec. 101. Reduction in marginal income tax rates for individuals.
Sec. 102. Repeal of alternative minimum tax on individuals.
TITLE II—INDIVIDUAL SAVINGS AND INVESTMENT TAX RELIEF
Subtitle A—Individual Savings and Investment Tax Relief
Sec. 201. Reduction in capital gains rates.
Sec. 202. Phaseout of estate and gift taxes.
Subtitle B—Pension Reform
CHAPTER 1—INDIVIDUAL RETIREMENT ACCOUNTS
Sec. 211. Modification of IRA contribution limits.
Sec. 212. Catchup contributions to IRAs by individuals age 50 or over.
Sec. 213. Modification of income limits on contributions and rollovers to Roth
IRAs.
Sec. 214. Deemed IRAs under employer plans.
CHAPTER 2—EXPANDING COVERAGE
Sec. 221. Increase in benefit and contribution limits.
Sec. 222. Plan loans for subchapter S owners, partners, and sole proprietors.
Sec. 223. Modification of top-heavy rules.
Sec. 224. Elective deferrals not taken into account for purposes of deduction
limits.
Sec. 225. Repeal of coordination requirements for deferred compensation plans
of State and local governments and tax-exempt organizations.
Sec. 226. Elimination of user fee for requests to IRS regarding pension plans.
Sec. 227. Deduction limits.
Sec. 228. Option to treat elective deferrals as after-tax contributions.
CHAPTER 3—ENHANCING FAIRNESS FOR WOMEN
Sec. 231. Catch-up contributions for individuals age 50 or over.
Sec. 232. Equitable treatment for contributions of employees to defined con-
tribution plans.
Sec. 233. Faster vesting of certain employer matching contributions.
Sec. 234. Simplify and update the minimum distribution rules.
Sec. 235. Clarification of tax treatment of division of section 457 plan benefits
upon divorce.
Sec. 236. Modification of safe harbor relief for hardship withdrawals from cash
or deferred arrangements.
CHAPTER 4—INCREASING PORTABILITY FOR PARTICIPANTS
Sec. 241. Rollovers allowed among various types of plans.
Sec. 242. Rollovers of IRAs into workplace retirement plans.
Sec. 243. Rollovers of after-tax contributions.
Sec. 244. Hardship exception to 60-day rule.
Sec. 245. Treatment of forms of distribution.
Sec. 246. Rationalization of restrictions on distributions.
Sec. 247. Purchase of service credit in governmental defined benefit plans.
Sec. 248. Employers may disregard rollovers for purposes of cash-out amounts.
Sec. 249. Minimum distribution and inclusion requirements for section 457
plans.
CHAPTER 5—STRENGTHENING PENSION SECURITY AND ENFORCEMENT
Sec. 251. Repeal of 150 percent of current liability funding limit.
Sec. 252. Maximum contribution deduction rules modified and applied to all de-
fined benefit plans.
Sec. 253. Excise tax relief for sound pension funding.
Sec. 254. Excise tax on failure to provide notice by defined benefit plans sig-
nificantly reducing future benefit accruals.
Sec. 255. Treatment of multiemployer plans under section 415.
Sec. 256. Prohibited allocations of stock in S corporation ESOP.
CHAPTER 6—REDUCING REGULATORY BURDENS
Sec. 261. Modification of timing of plan valuations.
Sec. 262. ESOP dividends may be reinvested without loss of dividend deduc-
tion.
Sec. 263. Repeal of transition rule relating to certain highly compensated em-
ployees.
Sec. 264. Employees of tax-exempt entities.
Sec. 265. Clarification of treatment of employer-provided retirement advice.
Sec. 266. Reporting simplification.
Sec. 267. Improvement of employee plans compliance resolution system.
Sec. 268. Repeal of the multiple use test.
Sec. 269. Flexibility in nondiscrimination, coverage, and line of business rules.
Sec. 270. Extension to all governmental plans of moratorium on application of
certain nondiscrimination rules applicable to State and local
plans.
Sec. 271. Notice and consent period regarding distributions.
CHAPTER 7—PLAN AMENDMENTS
Sec. 281. Provisions relating to plan amendments.
TITLE III—FAMILY TAX RELIEF
Sec. 301. Elimination of marriage penalty in standard deduction.
Sec. 302. Phaseout of marriage penalty in income tax rate brackets.
Sec. 303. Modifications of child tax credit.
Sec. 304. Expansion of Education IRAs.
Sec. 305. Eligible educational institutions permitted to maintain qualified tui-
tion programs.
Sec. 306. Exclusion from gross income of education distributions from qualified
tuition programs.
Sec. 307. Qualified tuition programs included in securities exemption.
Sec. 308. Expansion of credit for adoption expenses.
TITLE IV—CHARITABLE GIVING TAX RELIEF
Sec. 401. Deduction for portion of charitable contributions to be allowed to in-
dividuals who do not itemize deductions.
Sec. 402. Tax-free distributions from individual retirement accounts for chari-
table purposes.
Sec. 403. Higher limitation on corporate charitable contributions.
TITLE V—MISCELLANEOUS TAX RELIEF
Sec. 501. Repeal of 1993 income tax increase on social security benefits.
Sec. 502. Repeal of Federal communications excise tax.
Sec. 503. Deduction for 100 percent of health insurance costs of self-employed
individuals.
Sec. 504. Increased deduction for meal expenses.
Sec. 505. Increase in expense treatment for small businesses.
Sec. 506. Income averaging for farmers and fishermen not to increase alter-
native minimum tax liability.
Sec. 507. Repeal of occupational taxes relating to distilled spirits, wine, and
beer.
Sec. 508. Permanent extension of research credit.
Sec. 509. Farm, fishing, and ranch risk management accounts.
TITLE I—INDIVIDUAL INCOME
TAX RELIEF
SEC. 101. REDUCTION IN MARGINAL INCOME TAX RATES
FOR INDIVIDUALS.
(a) IN GENERAL.—Section 1 is amended by adding
at the end the following new subsection:
‘‘(i) RATE REDUCTIONS AFTER 2000.—
‘‘(1) NEW LOWEST RATE BRACKET.—
‘‘(A) IN GENERAL.—In the case of taxable
years beginning after December 31, 2000—
‘‘(i) the rate of tax under subsections
(a), (b), (c), and (d) on taxable income not
over the initial bracket amount shall be 12
percent (as modified by paragraph (2)),
and
‘‘(ii) the 15 percent rate of tax shall
apply only to taxable income over the ini-
tial bracket amount.
‘‘(B) INITIAL
BRACKET
AMOUNT.—For
purposes of this subsection, the initial bracket
amount is—
‘‘(i) $12,000 in the case of subsection
(a),
‘‘(ii) $10,000 in the case of subsection
(b), and
‘‘(iii) 1⁄2 the amount applicable under
clause (i) in the case of subsections (c) and
(d).
‘‘(C) INFLATION
ADJUSTMENT.—In pre-
scribing the tables under subsection (f) which
apply with respect to taxable years beginning in
calendar years after 2001—
‘‘(i) the Secretary shall make no ad-
justment to the initial bracket amount for
any taxable year beginning before January
1, 2007,
‘‘(ii) the cost-of-living adjustment
used in making adjustments to the initial
bracket amount for any taxable year begin-
ning after December 31, 2006, shall be de-
termined under subsection (f)(3) by sub-
stituting ‘2005’ for ‘1992’ in subparagraph
(B) thereof, and
‘‘(iii) such adjustment shall not apply
to the amount referred to in subparagraph
(B)(iii).
If any amount after adjustment under the pre-
ceding sentence is not a multiple of $50, such
amount shall be rounded to the next lowest
multiple of $50.
‘‘(2) ADDITIONAL REDUCTIONS.—In the case of
taxable years beginning in a calendar year after
2000, the corresponding percentage specified for
such calendar year in the following table shall be
substituted for the otherwise applicable tax rate in
the tables under subsections (a), (b), (c), (d), and,
to the extent applicable, (e).
(6) Section 3402(p)(1)(B) is amended by strik-
ing ‘‘7, 15, 28, or 31 percent’’ and inserting ‘‘7 per-
cent, any percentage applicable to any of the 3 low-
est income brackets in the table under section
1(c),’’.
(7) Section 3402(p)(2) is amended by striking
‘‘equal to 15 percent of such payment’’ and inserting
‘‘equal to the product of the lowest rate of tax under
section 1(c) and such payment’’.
(8) Section 3402(q)(1) is amended by striking
‘‘equal to 28 percent of such payment’’ and inserting
‘‘equal to the product of the third to the lowest rate
of tax under section 1(c) and such payment’’.
(9) Section 3402(r)(3) is amended by striking
‘‘31 percent’’ and inserting ‘‘the third to the lowest
rate of tax under section 1(c)’’.
(10) Section 3406(a)(1) is amended by striking
‘‘equal to 31 percent of such payment’’ and inserting
‘‘equal to the product of the third to the lowest rate
of tax under section 1(c) and such payment’’.
(11) Section 13273 of the Revenue Reconcili-
ation Act of 1993 is amended by striking ‘‘28 per-
cent’’ and inserting ‘‘the third to the lowest rate of
tax under section 1(c) of the Internal Revenue Code
of 1986’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to taxable years beginning after Decem-
ber 31, 2000.
(2) AMENDMENTS
TO
WITHHOLDING
PROVI-
SIONS.—The amendments made by paragraphs (6),
(7), (8), (9), (10), and (11) of subsection (c) shall
apply to amounts paid after the 60th day after the
date of the enactment of this Act.
SEC. 102. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDI-
VIDUALS.
(a) IN GENERAL.—Subsection (a) of section 55 is
amended by adding at the end the following new flush sen-
tence:
‘‘For purposes of this title, the tentative minimum tax on
any taxpayer other than a corporation for any taxable year
beginning after December 31, 2009, shall be zero.’’.
(b) REDUCTION OF TAX ON INDIVIDUALS PRIOR TO
REPEAL.—Section 55 is amended by adding at the end
the following new subsection:
‘‘(f ) PHASEOUT OF TAX ON INDIVIDUALS.—
‘‘(1) IN GENERAL.—The tax imposed by this
section on a taxpayer other than a corporation for
any taxable year beginning after December 31,
2000, and before January 1, 2010, shall be the ap-
plicable percentage of the tax which would be im-
posed but for this subsection.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage shall be
determined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2001, 2002, or 2003 ............................................................ 80
2004, 2005, or 2006 ............................................................ 70
2007 or 2008 ....................................................................... 60
2009 ..................................................................................... 50.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
TITLE II—INDIVIDUAL SAVINGS
AND INVESTMENT TAX RE-
LIEF; PENSION REFORM
Subtitle A—Individual Savings and
Investment Tax Relief
SEC. 201. REDUCTION IN CAPITAL GAINS RATES.
(a) IN GENERAL.—Subsection (h) of section 1 is
amended—
(1) by striking ‘‘10 percent’’ in subparagraph
(B) and inserting ‘‘7.5 percent’’,
(2) by striking ‘‘20 percent’’ in subparagraph
(C) and inserting ‘‘15 percent’’,
(3) by striking ‘‘25 percent’’ in subparagraph
(D) and inserting ‘‘20 percent’’, and
(4) by striking paragraph (2).
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 202. PHASEOUT OF ESTATE AND GIFT TAXES.
(a) REPEAL OF ESTATE AND GIFT TAXES.—Subtitle
B (relating to estate and gift taxes) is repealed effective
with respect to estates of decedents dying, and gifts made,
after December 31, 2008.
(b) PHASEOUT OF TAX.—Subsection (c) of section
2001 (relating to imposition and rate of tax) is amended
by adding at the end the following new paragraph:
‘‘(3) PHASEOUT OF TAX.—In the case of es-
tates of decedents dying, and gifts made, during any
calendar year after 2001 and before 2009—
‘‘(A) IN
GENERAL.—The tentative tax
under this subsection shall be determined by
using a table prescribed by the Secretary (in
lieu of using the table contained in paragraph
(1)) which is the same as such table; except
that—
‘‘(i) each of the rates of tax shall be
reduced (but not below zero) by the num-
ber of percentage points determined under
subparagraph (B), and
‘‘(ii) the amounts setting forth the tax
shall be adjusted to the extent necessary to
reflect the adjustments under clause (i).
‘‘(B) PERCENTAGE
POINTS
OF
REDUC-
TION.—
The number of
‘‘For calendar year:
percentage points is:
2002, 2003, 2004, or 2005 ......................................................
2006 .........................................................................................
2007 .........................................................................................
2008 .........................................................................................
40.
‘‘(C) COORDINATION
WITH
PARAGRAPH
(2).—Paragraph (2) shall be applied by reduc-
ing the 55 percent percentage contained therein
by the number of percentage points determined
for such calendar year under subparagraph
(B).’’.
(c) EFFECTIVE DATE.—The amendments made by
subsection (b) shall apply to estates of decedents dying,
and gifts made, after December 31, 2001.
Subtitle B—Pension Reform
CHAPTER 1—INDIVIDUAL RETIREMENT
ACCOUNTS
SEC. 211. MODIFICATION OF IRA CONTRIBUTION LIMITS.
(a) INCREASE IN CONTRIBUTION LIMIT.—
(1) IN GENERAL.—Paragraph (1)(A) of section
219(b) (relating to maximum amount of deduction)
is amended by striking ‘‘$2,000’’ and inserting ‘‘the
deductible amount’’.
(2) DEDUCTIBLE AMOUNT.—Section 219(b) is
amended by adding at the end the following new
paragraph:
‘‘(5) DEDUCTIBLE AMOUNT.—For purposes of
paragraph (1)(A)—
‘‘(A) 
IN
GENERAL.—The 
deductible
amount shall be determined in accordance with
the following table:
‘‘For taxable years
The deductible
beginning in:
amount is:
2002 .........................................................................................
$3,000
2003 .........................................................................................
$4,000
2004 and thereafter .................................................................
$5,000.
‘‘(B) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of any
taxable year beginning in a calendar year
after 2004, the $5,000 amount under sub-
paragraph (A) shall be increased by an
amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjust-
ment 
determined 
under 
section
1(f )(3) for the calendar year in which
the taxable year begins, determined by
substituting ‘calendar year 2003’ for
‘calendar year 1992’ in subparagraph
(B) thereof.
‘‘(ii) 
ROUNDING
RULES.—If 
any
amount after adjustment under clause (i)
is not a multiple of $100, such amount
shall be rounded to the next lower multiple
of $100.’’.
(b) 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)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 212. CATCHUP CONTRIBUTIONS TO IRAS BY INDIVID-
UALS AGE 50 OR OVER.
(a) IN GENERAL.—Section 219(b) is amended fur-
ther by adding at the end the following new paragraph:
‘‘(6) CATCHUP CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who has attained the age of 50 before
the close of the taxable year, the dollar amount
in effect under paragraph (1)(A) for such tax-
able year shall be equal to the applicable per-
centage of such amount determined without re-
gard to this paragraph.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of this paragraph, the applicable per-
centage shall be determined in accordance with
the following table:
‘‘For taxable years
The applicable
beginning in:
percentage is:
2002 .........................................................................................110 percent
2003 .........................................................................................120 percent
2004 .........................................................................................130 percent
2005 .........................................................................................140 percent
2006 and thereafter .................................................................150 percent.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to contributions in taxable years
beginning after December 31, 2001.
SEC. 213. MODIFICATION OF INCOME LIMITS ON CON-
TRIBUTIONS AND ROLLOVERS TO ROTH IRAS.
(a) REPEAL OF AGI LIMIT ON CONTRIBUTIONS.—
Section 408A(c)(3) (relating to limits based on modified
adjusted gross income) is amended—
(1) by striking clause (ii) of subparagraph (A)
and inserting:
‘‘(ii) $10,000.’’, and
(2) by striking clause (ii) of subparagraph (C)
and inserting:
‘‘(ii) the applicable dollar amount is—
‘‘(I) $200,000 in the case of a
taxpayer filing a joint return, and
‘‘(II) $100,000 in the case of any
other taxpayer.’’.
(b) INCREASE IN AGI LIMIT FOR ROLLOVER CON-
TRIBUTIONS.—Section 408A(c)(3)(B) (relating to rollover
from IRA) is amended to read as follows:
‘‘(B) ROLLOVER FROM IRA.—A taxpayer
shall not be allowed to make a qualified rollover
contribution from an individual retirement plan
other than a Roth IRA during any taxable year
if, for the taxable year of the distribution to
which the contribution relates, the taxpayer’s
adjusted 
gross 
income 
exceeds 
$100,000
($200,000 in the case of a taxpayer filing a
joint return).’’.
(c) EFFECTIVE DATES.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 214. 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, 2001.
CHAPTER 2—EXPANDING COVERAGE
SEC. 221. 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 appears in the head-
ings and the text and inserting ‘‘$160,000’’.
(C) Paragraph (7) of section 415(b) (relat-
ing to benefits under certain collectively bar-
gained plans) is amended by striking ‘‘the
greater of $68,212 or one-half the amount oth-
erwise 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.—Sub-
section (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 head-
ing and inserting ‘‘$160,000’’; and
(ii) by striking ‘‘October 1, 1986’’ and
inserting ‘‘July 1, 2001’’.
(5) 
CONFORMING
AMENDMENT.—Section
415(b)(2) is amended by striking subparagraph (F).
(b) DEFINED CONTRIBUTION PLANS.—
(1) DOLLAR LIMIT.—Subparagraph (A) of sec-
tion 415(c)(1) (relating to limitation for defined con-
tribution plans) is amended by striking ‘‘$30,000’’
and inserting ‘‘$40,000’’.
(2) 
COST-OF-LIVING
ADJUSTMENTS.—Sub-
section (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 head-
ing and inserting ‘‘$40,000’’; and
(ii) by striking ‘‘October 1, 1993’’ and
inserting ‘‘July 1, 2001’’.
(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 ap-
pears and inserting ‘‘$200,000’’.
(2) BASE PERIOD AND ROUNDING OF COST-OF-
LIVING ADJUSTMENT.—Subparagraph (B) of section
401(a)(17) is amended—
(A) by striking ‘‘October 1, 1993’’ and in-
serting ‘‘July 1, 2001’’; 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 elec-
tive deferrals) is amended to read as follows:
‘‘(1) IN GENERAL.—
‘‘(A) LIMITATION.—Notwithstanding sub-
sections (e)(3) and (h)(1)(B), the elective defer-
rals 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:
2002 ............................................................................. $11,000
2003 ............................................................................. $12,000
2004 ............................................................................. $13,000
2005 ............................................................................. $14,000
2006 or thereafter ........................................................ $15,000.’’.
(2) COST-OF-LIVING ADJUSTMENT.—Paragraph
(5) of section 402(g) is amended to read as follows: