I
107TH CONGRESS
2D SESSION
H. R. 5190
To amend the Internal Revenue Code of 1986 to expand retirement savings
for moderate and lower income workers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 23, 2002
Mr. POMEROY 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
retirement savings for moderate and lower income work-
ers, 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; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Retirement Security for All Americans Act’’.
(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.
SEC. 2. EXPANSION OF RETIREMENT SAVINGS CREDIT.
(a) CREDIT TO BE REFUNDABLE; EXPANSION OF
ELIGIBILITY; CREDIT MADE PERMANENT.—Subpart C of
part IV of subchapter A of chapter 1 (relating to refund-
able credits) is amended by redesignating section 35 as
section 36 and by inserting after section 34 the following
new section:
‘‘SEC. 35. ELECTIVE DEFERRALS AND INDIVIDUAL RETIRE-
MENT PLAN ACCOUNT CONTRIBUTIONS BY
CERTAIN INDIVIDUALS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible individual, there shall be allowed as a credit against
the tax imposed by this subtitle for the taxable year an
amount equal to the applicable percentage of so much of
the qualified retirement savings contributions of the eligi-
ble individual for the taxable year as do not exceed $2,000.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
this section—
‘‘(1) IN GENERAL.—-The applicable percentage
is 50 percent, reduced (but not below zero) by the
percentage determined under paragraph (2).
‘‘(2) AMOUNT OF REDUCTION.— The percent-
age determined under this paragraph shall be equal
to the ratio that—
‘‘(A) the excess of—
‘‘(i) the taxpayer’s adjusted gross in-
come for such taxable year, over
‘‘(ii) the applicable dollar amount,
bears to
‘‘(B) the phaseout range.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—The ap-
plicable dollar amount equals $30,000 in the case of
a taxpayer filing a joint return, $22,500 in the case
of a taxpayer filing as a head of a household (as de-
fined in section 2(b)), and $15,000 in the case of all
other taxpayers.
‘‘(4) PHASEOUT RANGE.—The phaseout range
equals $25,000 in the case of a taxpayer filing a
joint return, $18,750 in the case of a taxpayer filing
as a head of a household (as so defined), and
$12,500 in the case of all other taxpayers.
‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The term ‘eligible indi-
vidual’ means any individual if such individual has
attained the age of 18 as of the close of the taxable
year.
‘‘(2) DEPENDENTS AND FULL-TIME STUDENTS
NOT ELIGIBLE.—The term ‘eligible individual’ shall
not include—
‘‘(A) any individual with respect to whom
a deduction under section 151 is allowed to an-
other taxpayer for a taxable year beginning in
the calendar year in which such individual’s
taxable year begins, and
‘‘(B) any individual who is a student (as
defined in section 151(c)(4)).
‘‘(d) QUALIFIED RETIREMENT SAVINGS CONTRIBU-
TIONS.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified retire-
ment savings contributions’ means, with respect to
any taxable year, the sum of—
‘‘(A) the amount of the qualified retire-
ment contributions (as defined in section
219(e)) made by the eligible individual,
‘‘(B) the amount of—
‘‘(i) any elective deferrals (as defined
in section 402(g)(3)) of such individual,
and
‘‘(ii) any elective deferral of com-
pensation by such individual under an eli-
gible deferred compensation plan (as de-
fined in section 457(b)) of an eligible em-
ployer described in section 457(e)(1)(A),
and
‘‘(C) the amount of voluntary employee
contributions by such individual to any qualified
retirement plan (as defined in section 4974(c)).
‘‘(2) REDUCTION
FOR
CERTAIN
DISTRIBU-
TIONS.—
‘‘(A) IN GENERAL.—The qualified retire-
ment savings contributions determined under
paragraph (1) shall be reduced (but not below
zero) by the aggregate distributions received by
the individual during the testing period from
any entity of a type to which contributions
under paragraph (1) may be made. The pre-
ceding sentence shall not apply to the portion of
any distribution which is not includible in gross
income by reason of a trustee-to-trustee trans-
fer or a rollover distribution.
‘‘(B) TESTING PERIOD.—For purposes of
subparagraph (A), the testing period, with re-
spect to a taxable year, is the period which
includes—
‘‘(i) such taxable year,
‘‘(ii) the 2 preceding taxable years,
and
‘‘(iii) the period after such taxable
year and before the due date (including ex-
tensions) for filing the return of tax for
such taxable year.
‘‘(C) EXCEPTED
DISTRIBUTIONS.—There
shall not be taken into account under subpara-
graph (A)—
‘‘(i) any distribution referred to in
section 
72(p), 
401(k)(8), 
401(m)(6),
402(g)(2), 404(k), or 408(d)(4), and
‘‘(ii) any distribution to which section
408A(d)(3) applies.
‘‘(D) TREATMENT OF DISTRIBUTIONS RE-
CEIVED BY SPOUSE OF INDIVIDUAL.—For pur-
poses of determining distributions received by
an individual under subparagraph (A) for any
taxable year, any distribution received by the
spouse of such individual shall be treated as re-
ceived by such individual if such individual and
spouse file a joint return for such taxable year
and for the taxable year during which the
spouse receives the distribution.
‘‘(e) ADJUSTED GROSS INCOME.—For purposes of
this section, adjusted gross income shall be determined
without regard to sections 911, 931, and 933.
‘‘(f) INVESTMENT
IN
THE CONTRACT.—Notwith-
standing any other provision of law, a qualified retirement
savings contribution shall not fail to be included in deter-
mining the investment in the contract for purposes of sec-
tion 72 by reason of the credit under this section.’’.
(b) CREDIT TREATED AS OVERPAYMENT OF TAX.—
Section 6401(b) (relating to excessive credits) is
amended—
(1) by striking ‘‘If’’ in paragraph (1) and in-
serting ‘‘Except as provided in paragraph (3)’’, and
(2) by adding at the end the following new
paragraph:
‘‘(3) SPECIAL RULE FOR CREDIT UNDER SEC-
TION 35.—If the amount allowable as a credit under
section 35 (relating to retirement savings credit) for
any taxable year exceeds the tax imposed for such
taxable year by subtitle A (reduced by the credits al-
lowable under subparts A, B, D, and G of part IV
of subchapter A of chapter 1), the amount of such
‘‘(f)(1) The Secretary shall issue Secure Retirement
savings bonds as required under section 6402(l) of the In-
ternal Revenue Code of 1986.
‘‘(2) For purposes of paragraph (1), a Secure Retire-
ment savings bond is an inflation-indexed savings bond
otherwise authorized to be issued under this section, ex-
cept that, notwithstanding any other provision of this sec-
tion, such bond shall not mature before the earlier of the
date on which the bondholder—
‘‘(A) dies;
‘‘(B) becomes disabled (within the meaning of
section 72(m)(7) of the Internal Revenue Code of
1986); or
‘‘(C) attains social security retirement age
under section 216(l)(2) of the Social Security Act
(without regard to any early retirement age per-
mitted under such section).
‘‘(3) The Secretary may, in lieu of actually issuing
Secure Retirement savings bonds, provide an annual ac-
count statement to the bondholder reflecting the current
value of the bonds, including accrued interest, nominally
issued on behalf of such bondholder.’’.
(e) REPEAL OF NONREFUNDABLE CREDIT.—
(1) Section 25B is hereby repealed.
(2) Subparagraph (B) of section 25(b)(3) is
amended by striking ‘‘and 25B’’.
(3) Subparagraph (C) of section 25(e)(1) is
amended by striking ‘‘25B,’’.
(4) Sections 26(a)(1), 901(h), and 1400C are
each amended by striking ‘‘24, and 25B’’ and insert-
ing ‘‘and 24’’.
(5) The table of sections for subpart A of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 25B.
(f) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 35 of such Code’’.
(2) The table of sections for subpart C of part
IV of subchapter A of chapter 1 is amended by
striking the last item and inserting the following
new items:
‘‘Sec. 35. Elective deferrals and individual retirement plan ac-
count contributions by certain individuals.
‘‘Sec. 36. Overpayments of tax.’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2002.
SEC. 3. UNIVERSAL ACCESS TO DIRECT DEPOSIT RETIRE-
MENT SAVINGS.
(a) IN GENERAL.—Chapter 43 (relating to qualified
pension, etc., plans) is amended by adding at the end the
following new section:
‘‘SEC. 4980G. REQUIREMENTS FOR EMPLOYERS TO PRO-
VIDE EMPLOYEES ACCESS TO SALARY RE-
DUCTION CONTRIBUTIONS TO INDIVIDUAL
RETIREMENT PLANS.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on any failure by an employer to meet the require-
ments of subsection (d) for a calendar year.
‘‘(b) AMOUNT.—The amount of the tax imposed by
subsection (a) on any failure for any calendar year shall
be $100 with respect to each employee to whom such fail-
ure relates.
‘‘(c) PROCEDURES
FOR NOTICE
AND GRACE PE-
RIOD.—Not later than 6 months after the date of the en-
actment of this section, the Secretary shall prescribe and
initiate implementation of procedures for obtaining from
employers confirmation that such employers are in compli-
ance with the requirements of subsection (d). The Sec-
retary, in the Secretary’s discretion, may prescribe that
the confirmation shall be obtained on an annual or less
frequent basis, and may use for this purpose the annual
report or quarterly report for employment taxes, or such
other means as the Secretary may deem advisable. The
tax imposed by subsection (a) shall not be imposed with
respect to any failure that ends before the expiration of
90 days after the employer has responded or has had a
reasonable opportunity to respond to a request for con-
firmation of compliance.
‘‘(d) EMPLOYEE ACCESS
TO SALARY REDUCTION
CONTRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS.—
‘‘(1) IN GENERAL.—Every employer which does
not maintain a qualified plan or arrangement for a
calendar year shall provide a salary reduction ar-
rangement for the calendar year which meets the re-
quirements of paragraphs (3), (4) and (5).
‘‘(2) QUALIFIED PLAN OR ARRANGEMENT.—For
purposes of this section, an employer is treated as
maintaining a qualified plan or arrangement for a
calendar year if the employer maintains for such
year a plan, contract, pension, or trust described in
subparagraph (A) or (B) of section 219(g)(5) or an
eligible deferred compensation plan (within the
meaning of section 457(b)) with respect to which
contributions are made, or benefits are accrued, for
service in such year.
‘‘(3) SALARY REDUCTION ARRANGEMENT.—For
purposes of this section, the term ‘salary reduction
arrangement’ means a written arrangement of an
employer under which—
‘‘(A) an employee eligible to participate in
the arrangement may elect to—
‘‘(i) contribute to an individual retire-
ment plan established by or on behalf of
the employee by having the employer make
direct deposit payments to the plan by pay-
roll deduction, or
‘‘(ii) receive the amounts directly as
cash compensation, and
‘‘(B) no other contributions may be made
under the arrangement.
‘‘(4) PARTICIPATION REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met with respect to a salary
reduction arrangement for a year only if, under
the arrangement, all employees of the employer
are eligible to make the election under para-
graph (3)(A).
‘‘(B) EXCLUDABLE EMPLOYEES.—An em-
ployer may exclude from the requirement under
paragraph (3) employees described in section
410(b)(3) and any employee who has not com-
pleted hours of service for the employer on a