‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the qualified
small employer retirement plan cred-
it).
‘‘(B) QUALIFIED
SMALL
EMPLOYER
RE-
TIREMENT PLAN CREDIT.—For purposes of this
subsection, the term ‘qualified small employer
retirement plan credit’ means the credit allow-
able under subsection (a) by reason of section
45E(a).’’.
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) is amended by inserting
‘‘or the qualified small employer retirement plan
credit’’ after ‘‘employment credit’’.
(d) LIMITATION ON CARRYBACK.—Subsection (d) of
section 39 is amended by adding at the end thereof the
following new paragraph:
‘‘(10) NO
CARRYBACK
OF
QUALIFIED
SMALL
EMPLOYER RETIREMENT PLAN CREDIT BEFORE EF-
FECTIVE DATE.—No portion of the unused business
credit for any taxable year which is attributable to
the credit determined under section 45E may be car-
ried back to any taxable year ending before the date
of the enactment of section 45E.’’.
(e) DEDUCTION FOR CERTAIN UNUSED BUSINESS
CREDITS.—Subsection (c) of section 196 is amended by
striking ‘‘and’’ at the end of paragraph (8), by striking
the period at the end of paragraph (9) and inserting ‘‘,
and’’, and by adding after paragraph (9) the following new
paragraph:
‘‘(10) the qualified small employer retirement
plan credit determined under section 45E.’’.
(f) DENIAL OF DOUBLE BENEFIT.—Section 280C is
amended by adding at the end thereof the following new
subsection:
‘‘(d) CREDIT FOR QUALIFIED SMALL EMPLOYER RE-
TIREMENT PLAN EXPENSES.—No deduction shall be al-
lowed for that portion of the expenses referred to in sec-
tion 45E(c)(1) otherwise allowable as a deduction for the
taxable year which is equal to the amount of the credit
determined for such taxable year under section 45E(a).’’.
(g) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter (A) of chapter
1 is amended by adding at the end the following new item:
‘‘Sec. 45E. Expenses in establishing qualified small employer retirement plans.’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 4. IMPLEMENTATION.
(a) MODEL PLAN.—Not later than 6 months after
the date of the enactment of this Act, the Secretary of
the Treasury shall issue a model small employer retire-
ment plan that meets the requirements of section 401(o)
of the Internal Revenue Code of 1986.
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
OWNERS AND THEIR SPOUSES.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall modify the requirements for filing annual
returns with respect to one-participant retirement
plans to ensure that such plans with assets of
$500,000 or less as of the close of the plan year
need not file a return for that year.
(2) ONE-PARTICIPANT RETIREMENT PLAN DE-
FINED.—For purposes of this subsection, the term
‘‘one-participant retirement plan’’ means a retire-
ment plan that—
(A) on the first day of the plan year—
(i) covered only the employer (and the
employer’s spouse) and the employer
owned the entire business (whether or not
incorporated), or
(ii) covered only one or more partners
(and their spouses) in a business partner-
ship (including partners in an S or C cor-
poration),
(B) meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any
other plan of the business that covers the em-
ployees of the business,
(C) does not provide benefits to anyone ex-
cept the employer (and the employer’s spouse)
or the partners (and their spouses),
(D) does not cover a business that is a
member of an affiliated service group, a con-
trolled group of corporations, or a group of
businesses under common control, and
(E) does not cover a business that leases
employees.
(3) OTHER DEFINITIONS.—Terms used in para-
graph (2) which are also used in section 414 of the
Internal Revenue Code of 1986 shall have the re-
spective meanings given such terms by such section.
(c) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
PLANS WITH FEWER THAN 25 EMPLOYEES.—In the case
of a retirement plan which covers less than 25 employees
on the 1st day of the plan year and meets the require-
ments described in subparagraphs (B), (D), and (E) of
subsection (b)(2), the Secretary of the Treasury shall pro-
vide for the filing of a simplified annual return that is
substantially similar to the annual return required to be
filed by a one-participant retirement plan.
Æ