I 
112TH CONGRESS 
1ST SESSION H. R. 1730 
To amend the Internal Revenue Code of 1986 to establish tax-preferred 
Small Business Start-up Savings Accounts. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 4, 2011 
Ms. SEWELL (for herself and Mr. LARSEN of Washington) 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 establish 
tax-preferred Small Business Start-up Savings Accounts. 
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 Start- 
up Savings Accounts Act of 2011’’. 
SEC. 2. ESTABLISHMENT OF SMALL BUSINESS START-UP 
SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 is 
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amended by inserting after section 408A the following new 
section: 
‘‘SEC. 408B. SMALL BUSINESS START-UP SAVINGS AC-
COUNTS. 
‘‘(a) GENERAL RULE.—Except as provided in this 
section, a Small Business Start-up Savings Account shall 
be treated for purposes of this title in the same manner 
as an individual retirement plan. 
‘‘(b) SMALL BUSINESS START-UP SAVINGS AC-
COUNT.—For purposes of this title, the term ‘Small Busi-
ness Start-up Savings Account’ means an individual re-
tirement plan which is designated (in such manner as the 
Secretary may prescribe) at the time of establishment of 
the plan as a Small Business Start-up Savings Account. 
‘‘(c) TREATMENT OF CONTRIBUTIONS.— 
‘‘(1) NO DEDUCTION ALLOWED.—No deduction 
shall be allowed under section 219 for a contribution 
to a Small Business Start-up Savings Account. 
‘‘(2) CONTRIBUTION LIMIT.— 
‘‘(A) 
IN
GENERAL.—The 
aggregate 
amount of contributions for any taxable year to 
all Small Business Start-up Savings Accounts 
maintained for the benefit of an individual shall 
not exceed $10,000. 
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‘‘(B) AGGREGATE
LIMITATION.—The ag-
gregate of the amount contributions for all tax-
able years with respect to all Small Business 
Start-up Savings Accounts maintained for the 
benefit of an individual shall not exceed 
$150,000. 
‘‘(C) COST OF LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of a 
taxable year beginning after 2012, the 
$10,000 amount in subparagraph (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 tax-
able year begins, determined by sub-
stituting ‘calendar year 2011’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
‘‘(ii) ROUNDING.—If any amount as 
adjusted under clause (i) is not a multiple 
of $500, such amount shall be rounded to 
the next lowest multiple of $500. 
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‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE 
701⁄2.—Contributions to a Small Business Start-up 
Savings Account may be made even after the indi-
vidual for whom the account is maintained has at-
tained age 701⁄2. 
‘‘(4) ROLLOVERS
FROM
RETIREMENT
PLANS 
NOT ALLOWED.—A taxpayer shall not be allowed to 
make a qualified rollover contribution to a Small 
Business Start-up Savings Account from any eligible 
retirement plan (as defined in section 402(c)(8)(B)), 
except as may be provided by the Secretary in the 
case of a rollover from another Small Business 
Start-up Savings Account. 
‘‘(5) INCOME BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(A) IN GENERAL.—In the case of a tax-
able year in which the taxpayer’s adjusted gross 
income exceeds $150,000 ($300,000 in the case 
of a joint return), the dollar amount in effect 
for such taxable year under subsection (c)(2) 
shall be reduced (but not below zero) by the 
amount determined under subparagraph (B). 
‘‘(B) 
AMOUNT
OF
REDUCTION.—The 
amount determined under this subparagraph 
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shall be the amount which bears the same ratio 
to such limitation as— 
‘‘(i) the excess of— 
‘‘(I) 
the 
taxpayer’s 
adjusted 
gross income for such taxable year, 
over 
‘‘(II) $150,000 ($300,000 in the 
case of a joint return), bears to 
‘‘(ii) $25,000. 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—The term ‘modified adjusted gross in-
come’ means the adjusted gross income of the 
taxpayer for the taxable year increased by any 
amount excluded from gross income under sec-
tion 911, 931, or 933. 
‘‘(d) TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) TAX TREATMENT.— 
‘‘(A) EXCLUSION OF QUALIFIED DISTRIBU-
TIONS.—Any qualified distribution from a 
Small Business Start-up Savings Account shall 
not be includible in gross income. 
‘‘(B) INCLUSION
OF
OTHER
DISTRIBU-
TIONS.—Distributions from a Small Business 
Start-up Savings Account which is not a quali-
fied distribution shall be included in gross in-
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come and, for purposes of section 1, treated as 
a net capital gain. 
‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 
of this subsection, the term ‘qualified distribution’ 
means, with respect to any taxable year, any pay-
ment or distribution from a Small Business Start-up 
Savings Account— 
‘‘(A) to the extent the amount of such pay-
ment or distribution does not exceed the sum 
of— 
‘‘(i) the aggregate amounts paid or in-
curred by the taxpayer for such taxable 
year with respect to a trade or business for 
the purchase of equipment or facilities, 
marketing, training, incorporation, and ac-
counting fees, and 
‘‘(ii) the aggregate capital contribu-
tions of the taxpayer with respect to a 
trade or business for the taxable year (but 
only to the extent such amounts are used 
in such trade or business for purposes de-
scribed in clause (i)), and 
‘‘(B) which, in the case of a payment or 
distribution subsequent to the first payment or 
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distribution from such account (or any prede-
cessor to such account)— 
‘‘(i) is made not later than the close 
of the 5th taxable year beginning after the 
date of such first payment or distribution, 
and 
‘‘(ii) is made with respect to the same 
trade or business with respect to which 
such first payment or distribution was 
made. 
‘‘(3) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.—If, by reason of the death of the ac-
count beneficiary, any person acquires the account 
beneficiary’s interest in a Small Business Start-up 
Savings Account— 
‘‘(A) such account shall cease to be a 
Small Business Start-up Savings Account as of 
the date of death, and 
‘‘(B) an amount equal to the fair market 
value of the assets in such account on such date 
shall be includible— 
‘‘(i) in the case of a person who is not 
the estate of such beneficiary, in such per-
son’s gross income for the taxable year 
which includes such date, or 
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