In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.

[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Activities Inventory Reform 
Act of 1998''.
SEC. 2. ANNUAL LISTS OF GOVERNMENT ACTIVITIES NOT INHERENTLY 
GOVERNMENTAL IN NATURE.
    (a) Lists Required.--Not later than the end of the third quarter of 
each fiscal year, the head of each executive agency shall submit to the 
Director of the Office of Management and Budget a list of activities 
performed by Federal Government sources for the executive agency that, 
in the judgment of the head of the executive agency, are not inherently 
governmental functions. The entry for an activity on the list shall 
include the following:
        (1) The fiscal year for which the activity first appeared on a 
    list prepared under this section.
        (2) The number of full-time employees (or its equivalent) that 
    are necessary for the performance of the activity by a Federal 
    Government source.
        (3) The name of a Federal Government employee responsible for 
    the activity from whom additional information about the activity 
    may be obtained.
    (b) OMB Review and Consultation.--The Director of the Office of 
Management and Budget shall review the executive agency's list for a 
fiscal year and consult with the head of the executive agency regarding 
the content of the final list for that fiscal year.
    (c) Public Availability of Lists.--
        (1) Publication.--Upon the completion of the review and 
    consultation regarding a list of an executive agency--
            (A) the head of the executive agency shall promptly 
        transmit a copy of the list to Congress and make the list 
        available to the public; and
            (B) the Director of the Office of Management and Budget 
        shall promptly publish in the Federal Register a notice that 
        the list is available to the public.
        (2) Changes.--If the list changes after the publication of the 
    notice as a result of the resolution of a challenge under section 
    3, the head of the executive agency shall promptly--
            (A) make each such change available to the public and 
        transmit a copy of the change to Congress; and
            (B) publish in the Federal Register a notice that the 
        change is available to the public.
    (d) Competition Required.--Within a reasonable time after the date 
on which a notice of the public availability of a list is published 
under subsection (c), the head of the executive agency concerned shall 
review the activities on the list. Each time that the head of the 
executive agency considers contracting with a private sector source for 
the performance of such an activity, the head of the executive agency 
shall use a competitive process to select the source (except as may 
otherwise be provided in a law other than this Act, an Executive order, 
regulations, or any executive branch circular setting forth 
requirements or guidance that is issued by competent executive 
authority). The Director of the Office of Management and Budget shall 
issue guidance for the administration of this subsection.
    (e) Realistic and Fair Cost Comparisons.--For the purpose of 
determining whether to contract with a source in the private sector for 
the performance of an executive agency activity on the list on the 
basis of a comparison of the costs of procuring services from such a 
source with the costs of performing that activity by the executive 
agency, the head of the executive agency shall ensure that all costs 
(including the costs of quality assurance, technical monitoring of the 
performance of such function, liability insurance, employee retirement 
and disability benefits, and all other overhead costs) are considered 
and that the costs considered are realistic and fair.

SEC. 3. CHALLENGES TO THE LIST.

    (a) Challenge Authorized.--An interested party may submit to an 
executive agency a challenge of an omission of a particular activity 
from, or an inclusion of a particular activity on, a list for which a 
notice of public availability has been published under section 2.
    (b) Interested Party Defined.--For the purposes of this section, 
the term ``interested party'', with respect to an activity referred to 
in subsection (a), means the following:
        (1) A private sector source that--
            (A) is an actual or prospective offeror for any contract, 
        or other form of agreement, to perform the activity; and
            (B) has a direct economic interest in performing the 
        activity that would be adversely affected by a determination 
        not to procure the performance of the activity from a private 
        sector source.
        (2) A representative of any business or professional 
    association that includes within its membership private sector 
    sources referred to in paragraph (1).
        (3) An officer or employee of an organization within an 
    executive agency that is an actual or prospective offeror to 
    perform the activity.
        (4) The head of any labor organization referred to in section 
    7103(a)(4) of title 5, United States Code, that includes within its 
    membership officers or employees of an organization referred to in 
    paragraph (3).
    (c) Time for Submission.--A challenge to a list shall be submitted 
to the executive agency concerned within 30 days after the publication 
of the notice of the public availability of the list under section 2.
    (d) Initial Decision.--Within 28 days after an executive agency 
receives a challenge, an official designated by the head of the 
executive agency shall--
        (1) decide the challenge; and
        (2) transmit to the party submitting the challenge a written 
    notification of the decision together with a discussion of the 
    rationale for the decision and an explanation of the party's right 
    to appeal under subsection (e).
    (e) Appeal.--
        (1) Authorization of appeal.--An interested party may appeal an 
    adverse decision of the official to the head of the executive 
    agency within 10 days after receiving a notification of the 
    decision under subsection (d).
        (2) Decision on appeal.--Within 10 days after the head of an 
    executive agency receives an appeal of a decision under paragraph 
    (1), the head of the executive agency shall decide the appeal and 
    transmit to the party submitting the appeal a written notification 
    of the decision together with a discussion of the rationale for the 
    decision.

SEC. 4. APPLICABILITY.

    (a) Executive Agencies Covered.--Except as provided in subsection 
(b), this Act applies to the following executive agencies:
        (1) Executive department.--An executive department named in 
    section 101 of title 5, United States Code.
        (2) Military department.--A military department named in 
    section 102 of title 5, United States Code.
        (3) Independent establishment.--An independent establishment, 
    as defined in section 104 of title 5, United States Code.
    (b) Exceptions.--This Act does not apply to or with respect to the 
following:
        (1) General accounting office.--The General Accounting Office.
        (2) Government corporation.--A Government corporation or a 
    Government controlled corporation, as those terms are defined in 
    section 103 of title 5, United States Code.
        (3) Nonappropriated funds instrumentality.--A part of a 
    department or agency if all of the employees of that part of the 
    department or agency are employees referred to in section 2105(c) 
    of title 5, United States Code.
        (4) Certain depot-level maintenance and repair.--Depot-level 
    maintenance and repair of the Department of Defense (as defined in 
    section 2460 of title 10, United States Code).

SEC. 5. DEFINITIONS.

    In this Act:
        (1) Federal government source.--The term ``Federal Government 
    source'', with respect to performance of an activity, means any 
    organization within an executive agency that uses Federal 
    Government employees to perform the activity.
        (2) Inherently governmental function.--
            (A) Definition.--The term ``inherently governmental 
        function'' means a function that is so intimately related to 
        the public interest as to require performance by Federal 
        Government employees.
            (B) Functions included.--The term includes activities that 
        require either the exercise of discretion in applying Federal 
        Government authority or the making of value judgments in making 
        decisions for the Federal Government, including judgments 
        relating to monetary transactions and entitlements. An 
        inherently governmental function involves, among other things, 
        the interpretation and execution of the laws of the United 
        States so as--
                (i) to bind the United States to take or not to take 
            some action by contract, policy, regulation, authorization, 
            order, or otherwise;
                (ii) to determine, protect, and advance United States 
            economic, political, territorial, property, or other 
            interests by military or diplomatic action, civil or 
            criminal judicial proceedings, contract management, or 
            otherwise;
                (iii) to significantly affect the life, liberty, or 
            property of private persons;
                (iv) to commission, appoint, direct, or control 
            officers or employees of the United States; or
                (v) to exert ultimate control over the acquisition, 
            use, or disposition of the property, real or personal, 
            tangible or intangible, of the United States, including the 
            collection, control, or disbursement of appropriated and 
            other Federal funds.
            (C) Functions excluded.--The term does not normally 
        include--
                (i) gathering information for or providing advice, 
            opinions, recommendations, or ideas to Federal Government 
            officials; or
                (ii) any function that is primarily ministerial and 
            internal in nature (such as building security, mail 
            operations, operation of cafeterias, housekeeping, 
            facilities operations and maintenance, warehouse 
            operations, motor vehicle fleet management operations, or 
            other routine electrical or mechanical services).

SEC. 6. EFFECTIVE DATE.

    This Act shall take effect on October 1, 1998.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
[A]: Federal Activities Inventory Reform Act of 1998 - Directs the head of each executive agency to submit to the Director of the Office of Management and Budget, not later than the end of the third quarter of each fiscal year, a list of activities performed by Federal Government sources for the agency that, in the judgment of the head of the executive agency, are not inherently governmental functions. 
Requires:  (1) the Director to review the agency's list and consult with the agency head regarding the contents of the final list for the fiscal year; (2) the agency head to transmit a copy of the list to the Congress and make the list publicly available; (3) the Director to publish in the Federal Register a notice that the list is publicly available; and (4) the agency head to publish a notice regarding, make available to the public, and transmit to the Congress, any subsequent change to the list. 
Requires the agency head to:  (1) review the activities on the list within a reasonable time after such a notice of its availability is published; and (2) use a competitive process (with specified exceptions) and ensure that all costs are considered each time that he or she considers contracting with a private sector source for the performance of an activity on the list. 
(Sec. 3) Permits an interested party to submit to an agency a challenge of an omission of a particular activity from, or an inclusion of a particular activity on, a list for which a notice has been published.  Sets forth procedures governing filing challenges, agency decisions on challenges, appealing such decisions, and agency decisions on such appeals. 
(Sec. 4) Provides that this Act shall not apply to or with respect to:  (1) the General Accounting Office; (2) Government corporations and Government controlled corporations; (3) a part of a department or agency if all of the employees of that part are employees paid from nonappropriated funds of certain instrumentalities of the United States under the jurisdiction of the armed forces; and (4) depot-level maintenance and repair of the Department of Defense.


[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Futures Investor Protection Act''.

SEC. 2. FUTURES INVESTORS PROTECTION FUND.

    (a) Futures Investor Protection Corporation.--
            (1) Creation and membership.--
                    (A) Creation.--There is established a nonprofit 
                corporation to be known as the ``Futures Investor 
                Protection Corporation'' (in this Act referred to as 
                the ``FIPC''), which shall not be an agency or 
                establishment of the United States Government.
                    (B) Membership.--
                            (i) Members of fipc.--The FIPC shall be a 
                        membership corporation the members of which 
                        shall be all persons registered under the 
                        Commodity Exchange Act with the Commission as a 
                        futures commission merchant, other than persons 
                        whose principal business, in the determination 
                        of the FIPC, taking into account business of 
                        affiliated entities, is conducted outside the 
                        United States and its territories and 
                        possessions.
                            (ii) Commission review; additional 
                        members.--Subparagraphs (B) and (C) of section 
                        3(a)(2) of SIPA shall apply with respect to 
                        determinations of the FIPC in the same way the 
                        subparagraphs apply with respect to 
                        determinations of the SIPC and to brokers and 
                        dealers referred to in such subparagraph (D).
                            (iii) Disclosure.--Section 3(a)(2)(D) of 
                        SIPA shall apply to futures commission 
                        merchants in the same way the section applies 
                        to brokers and dealers referred to in such 
                        section.
            (2) Powers.--The FIPC shall have all the powers conferred 
        on the SIPC.
            (3) Board of directors.--
                    (A) Functions.--The FIPC shall have a Board of 
                Directors which, subject to the provisions of this Act, 
                shall determine the policies which shall govern the 
                operations of FIPC.
                    (B) Number and appointment.--The Board of Directors 
                shall consist of 7 persons as follows:
                            (i) 1 director shall be appointed by the 
                        Secretary of the Treasury from among the 
                        officers and employees of the Department of the 
                        Treasury.
                            (ii) 1 director shall be appointed by the 
                        Board of Governors of the Federal Reserve 
                        System from among the officers and employees of 
                        that Board.
                            (iii) 5 directors shall be appointed by the 
                        President, by and with the advice and consent 
                        of the Senate, as follows:
                                    (I) 3 directors shall be selected 
                                from among persons who are associated 
                                with, and representative of different 
                                aspects of, the futures industry, not 
                                all of whom shall be from the same 
                                geographical area of the United States.
                                    (II) 2 directors shall be selected 
                                from the general public from among 
                                persons who are not associated with a 
                                futures commission merchant or a 
                                contract market, or similarly 
                                associated with any self-regulatory 
                                organization or other futures industry 
                                group, and who have not had any such 
                                association during the 2 years 
                                preceding appointment.
                    (C) Chairman and vice chairman.--The President 
                shall designate a Chairman and Vice Chairman from among 
                those directors appointed under subparagraph 
                (B)(iii)(II).
                    (D) Terms.--
                            (i) In general.--Except as provided in 
                        clauses (ii) and (iii), each director shall be 
                        appointed for a term of 3 years.
                            (ii) Initially appointed members.--Of the 
                        directors first appointed under subparagraph 
                        (B)--
                                    (I) 2 shall hold office for a term 
                                expiring on December 31, 2017;
                                    (II) 2 shall hold office for a term 
                                expiring on December 31, 2018; and
                                    (III) 3 shall hold office for a 
                                term expiring on December 31, 2019,
                        as designated by the President at the time they 
                        take office. The designation shall be made in a 
                        manner which will assure that no 2 persons 
                        appointed under the authority of the same 
                        subclause of subparagraph (B)(iii) shall have 
                        terms which expire simultaneously.
                            (iii) Vacancies.--A vacancy in the Board 
                        shall be filled in the same manner as the 
                        original appointment was made. Any director 
                        appointed to fill a vacancy occurring prior to 
                        the expiration of the term for which the 
                        predecessor of the director was appointed shall 
                        be appointed only for the remainder of the 
                        term. A director may serve after the expiration 
                        of the term for which appointed until the 
                        successor of the director has taken office.
                    (E) Compensation.--All matters relating to 
                compensation of directors shall be as provided in the 
                bylaws of the FIPC.
            (4) Meetings of board; bylaws and rules.--Subsections (d) 
        and (e) of section 3 of SIPA shall apply with respect to the 
        FIPC and the Commission in the same way the subsections apply 
        with respect to the SIPC and the Securities and Exchange 
        Commission.
    (b) FIPC Fund.--
            (1) In general.--The FIPC shall establish, and make 
        deposits into and payments from, an ``FIPC fund'' (in this Act 
        referred to as the ``fund'') in the same manner in which the 
        SIPC has established, and is authorized to make deposits into 
        and payments from, the SIPC fund.
            (2) Assessments.--The FIPC shall impose on its members 
        assessments subject to the same rules that apply to the 
        imposition by the SIPC of assessments on the members of the 
        SIPC.
    (c) Other Provisions.--Sections 5 through 16 of the SIPA shall 
apply with respect to the FIPC and the members, directors, officers, 
and employees of the FIPC, the Commission, the FIPC fund, futures 
commission merchants and their affiliates, futures contracts, futures 
transactions, customers, and debtors in the same way the sections apply 
with respect to the SIPC and the members, directors, officers, and 
employees of the SIPC, the Securities and Exchange Commission, the SIPC 
fund, persons registered as brokers or dealers (as defined in section 
16(12) of the SIPA) and their affiliates, securities, securities 
transactions, customers (as defined in section 16(2) of the SIPA), and 
debtors (as defined in section 16(5) of the SIPA), respectively.
    (d) Definitions.--In this section:
            (1) Commission.--The term ``Commission'' means the 
        Commodity Futures Trading Commission.
            (2) Contract market.--The term ``contract market'' means a 
        board of trade designated as a contract market under the 
        Commodity Exchange Act.
            (3) Futures contract.--The term ``futures contract'' means 
        a contract of sale of a commodity for future delivery, within 
        the meaning of the Commodity Exchange Act.
            (4) Futures commission merchant.--The term ``futures 
        commission merchant'' has the meaning given the term in section 
        1a(28) of the Commodity Exchange Act.
            (5) SIPA.--The term ``SIPA'' means the Security Investors 
        Protection Act of 1970.
            (6) SIPC.--The term ``SIPC'' means the Security Investors 
        Protection Corporation.
            (7) SIPC fund.--The term ``SIPC fund'' means the fund 
        established under section 4(a)(1) of the SIPA.

SEC. 3. SUITABILITY RULES.

    (a) In General.--The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 
amended by inserting after section 4t the following:

``SEC. 4U. SUITABILITY RULES.

    ``(a) In General.--
            ``(1) Recommendations must be suitable for the customer.--A 
        futures commission merchant shall not recommend a transaction 
        or investment strategy involving a contract of sale of a 
        commodity for future delivery, unless the futures commission 
        merchant has a reasonable basis to believe that the transaction 
        or investment strategy is suitable for the customer, based on 
        the information obtained through the reasonable diligence of 
        the futures commission merchant to ascertain the customer's 
        investment profile. A customer's investment profile includes, 
        but is not limited to, the customer's age, other investments, 
        financial situation and needs, tax status, investment 
        objectives, investment experience, investment time horizon, 
        liquidity needs, risk tolerance, and any other information the 
        customer may disclose to the futures commission merchant in 
        connection with the recommendation.
            ``(2) Safe harbor in certain cases.--A futures commission 
        merchant is deemed to comply with paragraph (1) in the case of 
        a customer with an institutional account, if--
                    ``(A) the futures commission merchant has a 
                reasonable basis to believe that the customer is 
                capable of evaluating investment risks independently, 
                both in general and with regard to particular 
                transactions and investment strategies involving a 
                contract of sale of a commodity for future delivery; 
                and
                    ``(B) the customer affirmatively indicates that it 
                is exercising independent judgment in evaluating the 
                recommendations of the futures commission merchant.
    ``(b) Applicability With Respect to Certain Agents.--If a customer 
with an institutional account has delegated decisionmaking authority to 
an agent, subsection (a) shall be applied with respect to the agent.
    ``(c) Institutional Account Defined.--In this section, the term 
`institutional account' means the account of--
            ``(1) a bank, savings and loan association, insurance 
        company or registered investment company;
            ``(2) an investment adviser registered with the Securities 
        and Exchange Commission under section 203 of the Investment 
        Advisers Act or with a State securities commission (or any 
        agency or office performing like functions); or
            ``(3) any other person (whether a natural person, 
        corporation, partnership, trust or otherwise) with total assets 
        of at least $50,000,000.
    ``(d) Penalties.--The Commission may impose one or more of the 
following sanctions on a person found by the Commission to have 
violated this section or to have neglected or refused to comply with an 
order issued by the Commission under this section:
            ``(1) Censure.
            ``(2) A fine.
            ``(3) Expulsion of the person from, or revocation of the 
        membership of the person in, a registered entity.
            ``(4) Suspension for a definite period or a period 
        contingent on the performance of a particular act, or 
        revocation, of the registration of the person under this Act 
        with the Commission as a futures commission merchant.
            ``(5) Suspension or bar of the person from association with 
        any other futures commission merchant.
            ``(6) A temporary or permanent cease and desist order 
        against the person.
            ``(7) Any other fitting sanction.''.
    (b) Effective Date.--Within 6 months after the date of the 
enactment of this Act, the Commodity Futures Trading Commission shall 
issue regulations for the implementation of the amendment made by 
subsection (a).

SEC. 4. REVIEW OF PROOF OF CLAIMS RULES.

    (a) In General.--The Commodity Futures Trading Commission shall 
review the guidelines for establishing account classes and determining 
the basis for pro rata shares under, and the sample claim form set 
forth in, part 190 of title 17, Code of Federal Regulations, and 
consider the desirability of allowing use of a set date for valuation 
purposes rather than the date of actual liquidation of positions.
    (b) Report to the Congress.--Within 1 year after the date of the 
enactment of this Act, the Commodity Futures Trading Commission shall 
submit to the Congress a written report that contains the findings of 
the Commission with respect to the matters referred to in subsection 
(a), and includes such changes to the regulations in such part as the 
Commission deems appropriate.
[A]: Futures Investor Protection Act This bill establishes the Futures Investor Protection Corporation (FIPC) as a nonprofit membership corporation for all futures commission merchants registered with the Commodity Futures Trading Commission (CFTC). In general, the FIPC's powers and duties shall mirror those of the Security Investors Protection Corporation (the nonprofit membership corporation for registered broker-dealers). In addition, the bill amends the Commodity Exchange Act to establish suitability rules with respect to&nbsp;recommendations&nbsp;by a&nbsp;futures commission merchant to a customer. The CFTC must review certain guidelines regarding proof of claims, as specified by the bill. 


[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Retirement Security for Life Act of 
2004''.

SEC. 2. EXCLUSION FOR LIFETIME ANNUITY PAYMENTS.

    (a) Lifetime Annuity Payments Under Annuity Contracts.--Section 
72(b) of the Internal Revenue Code of 1986 (relating to exclusion 
ratio) is amended by adding at the end the following new paragraph:
            ``(5) Exclusion for lifetime annuity payments.--
                    ``(A) In general.--In the case of lifetime annuity 
                payments received under one or more annuity contracts 
                in any taxable year, gross income shall not include 50 
                percent of the portion of lifetime annuity payments 
                otherwise includible (without regard to this paragraph) 
                in gross income under this section. For purposes of the 
                preceding sentence, the amount excludible from gross 
                income in any taxable year shall not exceed $20,000.
                    ``(B) Cost-of-living adjustment.--In the case of 
                taxable years beginning after December 31, 2005, the 
                $20,000 amount in subparagraph (A) shall be increased 
                by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2004' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                If any amount as increased under the preceding sentence 
                is not a multiple of $500, such amount shall be rounded 
                to the next lower multiple of $500.
                    ``(C) Application of paragraph.--Subparagraph (A) 
                shall not apply to--
                            ``(i) any amount received under an eligible 
                        deferred compensation plan (as defined in 
                        section 457(b)) or under a qualified retirement 
                        plan (as defined in section 4974(c)),
                            ``(ii) any amount paid under an annuity 
                        contract that is received by the beneficiary 
                        under the contract--
                                    ``(I) after the death of the 
                                annuitant in the case of payments 
                                described in subsection 
                                (c)(5)(A)(ii)(III), unless the 
                                beneficiary is the surviving spouse of 
                                the annuitant, or
                                    ``(II) after the death of the 
                                annuitant and joint annuitant in the 
                                case of payments described in 
                                subsection (c)(5)(A)(ii)(IV), unless 
                                the beneficiary is the surviving spouse 
                                of the last to die of the annuitant and 
                                the joint annuitant, or
                            ``(iii) any annuity contract that is a 
                        qualified funding asset (as defined in section 
                        130(d)), but without regard to whether there is 
                        a qualified assignment.
                    ``(D) Investment in the contract.--For purposes of 
                this section, the investment in the contract shall be 
                determined without regard to this paragraph.''.
    (b) Definitions.--Subsection (c) of section 72 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(5) Lifetime annuity payment.--
                    ``(A) In general.--For purposes of subsection 
                (b)(5), the term `lifetime annuity payment' means any 
                amount received as an annuity under any portion of an 
                annuity contract, but only if--
                            ``(i) the only person (or persons in the 
                        case of payments described in subclause (II) or 
                        (IV) of clause (ii)) legally entitled (by 
                        operation of the contract, a trust, or other 
                        legally enforceable means) to receive such 
                        amount during the life of the annuitant or 
                        joint annuitant is such annuitant or joint 
                        annuitant, and
                            ``(ii) such amount is part of a series of 
                        substantially equal periodic payments made not 
                        less frequently than annually over--
                                    ``(I) the life of the annuitant,
                                    ``(II) the lives of the annuitant 
                                and a joint annuitant, but only if the 
                                annuitant is the spouse of the joint 
                                annuitant as of the annuity starting 
                                date or the difference in age between 
                                the annuitant and joint annuitant is 15 
                                years or less,
                                    ``(III) the life of the annuitant 
                                with a minimum period of payments or 
                                with a minimum amount that must be paid 
                                in any event, or
                                    ``(IV) the lives of the annuitant 
                                and a joint annuitant with a minimum 
                                period of payments or with a minimum 
                                amount that must be paid in any event, 
                                but only if the annuitant is the spouse 
                                of the joint annuitant as of the 
                                annuity starting date or the difference 
                                in age between the annuitant and joint 
                                annuitant is 15 years or less.
                            ``(iii) Exceptions.--For purposes of clause 
                        (ii), annuity payments shall not fail to be 
                        treated as part of a series of substantially 
                        equal periodic payments--
                                    ``(I) because the amount of the 
                                periodic payments may vary in 
                                accordance with investment experience, 
                                reallocations among investment options, 
                                actuarial gains or losses, cost of 
                                living indices, a constant percentage 
                                applied not less frequently than 
                                annually, or similar fluctuating 
                                criteria,
                                    ``(II) due to the existence of, or 
                                modification of the duration of, a 
                                provision in the contract permitting a 
                                lump sum withdrawal after the annuity 
                                starting date, or
                                    ``(III) because the period between 
                                each such payment is lengthened or 
                                shortened, but only if at all times 
                                such period is no longer than one 
                                calendar year.
                    ``(B) Annuity contract.--For purposes of 
                subparagraph (A) and subsections (b)(5) and (w), the 
                term `annuity contract' means a commercial annuity (as 
                defined by section 3405(e)(6)), other than an endowment 
                or life insurance contract.
                    ``(C) Minimum period of payments.--For purposes of 
                subparagraph (A), the term `minimum period of payments' 
                means a guaranteed term of payments that does not 
                exceed the greater of 10 years or--
                            ``(i) the life expectancy of the annuitant 
                        as of the annuity starting date, in the case of 
                        lifetime annuity payments described in 
                        subparagraph (A)(ii)(III), or
                            ``(ii) the life expectancy of the annuitant 
                        and joint annuitant as of the annuity starting 
                        date, in the case of lifetime annuity payments 
                        described in subparagraph (A)(ii)(IV).
                For purposes of this subparagraph, life expectancy 
                shall be computed with reference to the tables 
                prescribed by the Secretary under paragraph (3). For 
                purposes of subsection (w)(1)(C)(ii), the permissible 
                minimum period of payments shall be determined as of 
                the annuity starting date and reduced by one for each 
                subsequent year.
                    ``(D) Minimum amount that must be paid in any 
                event.--For purposes of subparagraph (A), the term 
                `minimum amount that must be paid in any event' means 
                an amount payable to the designated beneficiary under 
                an annuity contract that is in the nature of a refund 
                and does not exceed the greater of the amount applied 
                to produce the lifetime annuity payments under the 
                contract or the amount, if any, available for 
                withdrawal under the contract on the date of death.''.
    (c) Recapture Tax for Lifetime Annuity Payments.--Section 72 of the 
Internal Revenue Code of 1986 is amended by redesignating subsection 
(w) as subsection (x) and by inserting after subsection (v) the 
following new subsection:
    ``(w) Recapture Tax for Modifications to or Reductions in Lifetime 
Annuity Payments.--
            ``(1) In general.--If any amount received under an annuity 
        contract is excluded from income by reason of subsection (b)(5) 
        (relating to lifetime annuity payments), and--
                    ``(A) the series of payments under such contract is 
                subsequently modified so any future payments are not 
                lifetime annuity payments,
                    ``(B) after the date of receipt of the first 
                lifetime annuity payment under the contract an 
                annuitant receives a lump sum and thereafter is to 
                receive annuity payments in a reduced amount under the 
                contract, or
                    ``(C) after the date of receipt of the first 
                lifetime annuity payment under the contract the dollar 
                amount of any subsequent annuity payment is reduced and 
                a lump sum is not paid in connection with the 
                reduction, unless such reduction is--
                            ``(i) due to an event described in 
                        subsection (c)(5)(A)(iii), or
                            ``(ii) due to the addition of, or increase 
                        in, a minimum period of payments within the 
                        meaning of subsection (c)(5)(C) or a minimum 
                        amount that must be paid in any event (within 
                        the meaning of subsection (c)(5)(D)),
        then gross income for the first taxable year in which such 
        modification or reduction occurs shall be increased by the 
        recapture amount.
            ``(2) Recapture amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the recapture amount shall be the amount, determined 
                under rules prescribed by the Secretary, equal to the 
                amount that (but for subsection (b)(5)) would have been 
                includible in the taxpayer's gross income if the 
                modification or reduction described in paragraph (1) 
                had been in effect at all times, plus interest for the 
                deferral period at the underpayment rate established by 
                section 6621.
                    ``(B) Deferral period.--For purposes of this 
                subsection, the term `deferral period' means the period 
                beginning with the taxable year in which (without 
                regard to subsection (b)(5)) the payment would have 
                been includible in gross income and ending with the 
                taxable year in which the modification described in 
                paragraph (1) occurs.
            ``(3) Exceptions to recapture tax.--Paragraph (1) shall not 
        apply in the case of any modification or reduction that occurs 
        because an annuitant--
                    ``(A) dies or becomes disabled (within the meaning 
                of subsection (m)(7)),
                    ``(B) becomes a chronically ill individual within 
                the meaning of section 7702B(c)(2), or
                    ``(C) encounters hardship.''.
    (d) Lifetime Distributions of Life Insurance Death Benefits.--
            (1) In general.--Section 101(d) of the Internal Revenue 
        Code of 1986 (relating to payment of life insurance proceeds at 
        a date later than death) is amended by adding at the end the 
        following new paragraph:
            ``(4) Exclusion for lifetime annuity payments.--
                    ``(A) In general.--In the case of amounts to which 
                this subsection applies, gross income shall not include 
                the lesser of--
                            ``(i) 50 percent of the portion of lifetime 
                        annuity payments otherwise includible in gross 
                        income under this section (determined without 
                        regard to this paragraph), or
                            ``(ii) the amount in effect under section 
                        72(b)(5).
                    ``(B) Rules of section 72(b)(5) to apply.--For 
                purposes of this paragraph, rules similar to the rules 
                of section 72(b)(5) and section 72(w) shall apply, 
                substituting the term `beneficiary of the life 
                insurance contract' for the term `annuitant' wherever 
                it appears, and substituting the term `life insurance 
                contract' for the term `annuity contract' wherever it 
                appears.''.
            (2) Conforming amendment.--Section 101(d)(1) of such Code 
        is amended by inserting ``or paragraph (4)'' after ``to the 
        extent not excluded by the preceding sentence''.
    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to amounts received in calendar years beginning after the 
        date of the enactment of this Act.
            (2) Special rule for existing contracts.--In the case of a 
        contract in force on the date of the enactment of this Act that 
        does not satisfy the requirements of section 72(c)(5)(A) of the 
        Internal Revenue Code of 1986 (as added by this section), or 
        requirements similar to such section 72(c)(5)(A) in the case of 
        a life insurance contract), any modification to such contract 
        (including a change in ownership) or to the payments thereunder 
        that is made to satisfy the requirements of such section (or 
        similar requirements) shall not result in the recognition of 
        any gain or loss, any amount being included in gross income, or 
        any addition to tax that otherwise might result from such 
        modification, but only if the modification is completed prior 
        to the date that is 2 years after the date of the enactment of 
        this Act.
[A]:
Retirement Security for Life Act of 2004 - Amends the Internal Revenue Code to allow an exclusion from gross income for 50 percent of the amount otherwise includible in gross income as guaranteed payments from certain annuity or life insurance contracts. Limits the amount of such exclusion to $20,000 in any taxable year. Provides for an inflation adjustment of the $20,000 limitation beginning in 2006.