I
104TH CONGRESS
1ST SESSION
H. R. 1389
To amend the Internal Revenue Code of 1986 to expand the availability
of, and amount of, deductible individual retirement account contributions,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 4, 1995
Mr. HINCHEY (for himself, Mr. SANDERS, Mr. BROWN of California, Mr.
FROST, Mr. FATTAH, Mr. OWENS, Ms. VELA´ZQUEZ, Mr. UNDERWOOD,
and Mr. MARTINEZ) 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 expand
the availability of, and amount of, deductible individual
retirement account contributions, and for other purposes.
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 ‘‘Middle Class Flexible
Savings Act of 1995’’.
SEC. 2. HIGHER MAXIMUM IRA DEDUCTION AND INCOME
PHASEOUT LIMITS; INFLATION ADJUSTMENT
OF MAXIMUM IRA DEDUCTION AND PHASE-
OUT LIMITS.
(a) HIGHER MAXIMUM IRA DEDUCTION.—
(1) IN GENERAL.—The following provisions of
the Internal Revenue Code of 1986 are each amend-
ed by striking ‘‘$2,000’’ and inserting ‘‘$3,000’’:
(A) Subsections (b)(1)(A) and (c)(2) of
section 219.
(B) Subsections (a)(1), (b), and (j) of sec-
tion 408.
(2) 
CONFORMING
AMENDMENT.—Sections
219(c)(2) and 408(d)(5) of such Code are each
amended by striking ‘‘$2,250’’ and inserting
‘‘$3,500’’.
(b) HIGHER INCOME PHASEOUT LIMITS.—
(1) Subparagraph (B) of section 219(g)(3) of
such Code is amended—
(A) by striking ‘‘$40,000’’ and inserting
‘‘$60,000’’, and
(B) by striking ‘‘$25,000’’ and inserting
‘‘$40,000’’.
(2) Clause (ii) of section 219(g)(2)(A) of such
Code is amended to read as follows:
‘‘(ii) $15,000.’’
(c) INFLATION ADJUSTMENT OF MAXIMUM IRA DE-
DUCTION AND INCOME PHASEOUT LIMITS.—Section 219
of such Code is amended by inserting after subsection (f)
the following new subsection:
‘‘(g) INFLATION ADJUSTMENT OF MAXIMUM DEDUC-
TION AND INCOME PHASEOUT LIMITS.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1995, each
applicable dollar amount shall be increased by an
amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment under
section 1(f)(3) for the calendar year in which
the taxable year begins, determined by sub-
stituting ‘calendar year 1994’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(2) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of paragraph (1), the term ‘applicable dollar
amount’ means—
‘‘(A) the $3,000 amount in subsections
(b)(1)(A), (c)(2), and (c)(3) of this section and
in subsections (a)(1), (b), and (j) of section
408,
‘‘(B) the $3,500 amount in subsection
(c)(2) of this section and in section 408(d)(5),
‘‘(C) the $60,000 and $40,000 amounts in
subsection (g)(3)(B), and
‘‘(D) the $15,000 amount in subsection
(g)(2)(A)(ii).
‘‘(3) ROUNDING.—If any amount as adjusted
under paragraph (1) is not a multiple of $50, such
amount shall be rounded to the nearest multiple of
$50.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
SEC. 3. IRA FOR NONWORKING SPOUSE WITH YOUNG CHIL-
DREN COMPUTED ON BASIS OF COMPENSA-
TION OF BOTH SPOUSES.
(a) IN GENERAL.—Subsection (c) of section 219 of
the Internal Revenue Code of 1986 (relating to special
rules for certain married individuals) is amended by add-
ing at the end thereof the following new paragraph:
‘‘(3) HIGHER LIMIT FOR SPOUSE WITH YOUNG
CHILDREN.—
‘‘(A) IN GENERAL.—In the case of a quali-
fying spouse, the amount allowable as a deduc-
tion under paragraph (1) shall not exceed the
lesser of—
‘‘(i) $3,000, or
‘‘(ii) the sum of—
‘‘(I) the compensation includible
in such individual’s gross income for
the taxable year, plus
‘‘(II) the compensation includible
in the gross income of such individ-
ual’s spouse for the taxable year re-
duced by the amount allowable as a
deduction under subsection (a) to
such spouse for such taxable year.
‘‘(B) QUALIFYING SPOUSE.—For purposes
of subparagraph (A), the term ‘qualifying
spouse’ means any spouse of an individual if—
‘‘(i) such individual and spouse file a
joint return for the taxable year,
‘‘(ii) such spouse has less than $1,000
of compensation (determined without re-
gard to section 911) for the taxable year,
and
‘‘(iii) such spouse has a child (as de-
fined in section 151(c)(3)) who has not at-
tained age 6 as of the close of such taxable
year and who is a dependent (as defined in
section 152) of the taxpayer for such
year.’’