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108th CONGRESS
2d Session
H. R. 4714
To amend the Internal Revenue Code of 1986 to provide for retirement
savings accounts, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 25, 2004
Mr. Sam Johnson of Texas introduced the following bill; which was
referred to the Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to provide for retirement
savings accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives 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 Savings
Account Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment 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
provision of the Internal Revenue Code of 1986.
SEC. 2. RETIREMENT SAVINGS ACCOUNTS.
(a) In General.--Section 408A (relating to Roth IRAs) is amended to
read as follows:
``SEC. 408A. RETIREMENT SAVINGS ACCOUNTS.
``(a) In General.--Except as provided in this section, a retirement
savings account shall be treated for purposes of this title in the same
manner as an individual retirement plan.
``(b) Retirement Savings Account.--For purposes of this title, the
term `retirement savings account' means an individual retirement plan
(as defined in section 7701(a)(37)) which--
``(1) is designated (in such manner as the Secretary may
prescribe) at the time of establishment of the plan as a
retirement savings account, and
``(2) does not accept any contribution (other than a
qualified rollover contribution) which is not in cash.
``(c) Treatment of Contributions.--
``(1) Contribution limit.--Notwithstanding subsections
(a)(1) and (b)(2)(A) of section 408, the aggregate amount of
contributions for any taxable year to all retirement savings
accounts maintained for the benefit of an individual shall not
exceed the lesser of--
``(A) $5,000, or
``(B) the amount of compensation includible in the
individual's gross income for such taxable year.
``(2) Special rule for certain married individuals.--In the
case of any individual who files a joint return for the taxable
year, the amount taken into account under paragraph (1)(B)
shall be increased by the excess (if any) of--
``(A) the compensation includible in the gross
income of such individual's spouse for the taxable
year, over
``(B) the aggregate amount of contributions for the
taxable year to all retirement savings accounts
maintained for the benefit of such spouse.
``(3) Contributions permitted after age 70\1/2\.--
Contributions to a retirement savings account may be made even
after the individual for whom the account is maintained has
attained age 70\1/2\.
``(4) Mandatory distribution rules not to apply before
death.--Notwithstanding subsections (a)(6) and (b)(3) of
section 408 (relating to required distributions), the following
provisions shall not apply to any retirement savings account:
``(A) Section 401(a)(9)(A).
``(B) The incidental death benefit requirements of
section 401(a).
``(5) Rollover contributions.--
``(A) In general.--No rollover contribution may be
made to a retirement savings account unless it is a
qualified rollover contribution.
``(B) Coordination with limit.--A qualified
rollover contribution shall not be taken into account
for purposes of paragraph (1).
``(6) Rollovers from plans with taxable distributions.--
``(A) In general.--Notwithstanding sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16), in the
case of any contribution to which this paragraph
applies--
``(i) there shall be included in gross
income any amount which would be includible
were it not part of a qualified rollover
contribution,
``(ii) section 72(t) shall not apply, and
``(iii) unless the taxpayer elects not to
have this clause apply for any taxable year,
any amount required to be included in gross
income for such taxable year by reason of this
paragraph for any contribution before January
1, 2006, shall be so included ratably over the
4-taxable year period beginning with such
taxable year.
Any election under clause (iii) for any contributions
during a taxable year may not be changed after the due
date (including extensions of time) for filing the
taxpayer's return for such taxable year.
``(B) Contributions to which paragraph applies.--
This paragraph shall apply to any qualified rollover
contribution to a retirement savings account (other
than a rollover contribution from another such
account).
``(C) Conversions of iras.--The conversion of an
individual retirement plan (other than a retirement
savings account) to a retirement savings account shall
be treated for purposes of this paragraph as a
contribution to which this paragraph applies.
``(D) Additional reporting requirements.--Trustees
and plan administrators of eligible retirement plans
(as defined in section 402(c)(8)(B)) and retirement
savings accounts shall report such information as the
Secretary may require to ensure that amounts required
to be included in gross income under subparagraph (A)
are so included. Such reports shall be made at such
time and in such form and manner as the Secretary may
require. The Secretary may provide that such
information be included as additional information in
reports required under section 408(i) or 6047.
``(E) Special rules for contributions to which a 4-
year averaging applies.--In the case of a qualified
rollover contribution to which subparagraph (A)(iii)
applied, the following rules shall apply:
``(i) Acceleration of inclusion.--
``(I) In general.--The amount
required to be included in gross income
for each of the first 3 taxable years
in the 4-year period under subparagraph
(A)(iii) shall be increased by the
aggregate distributions from retirement
savings accounts for such taxable year
which are allocable under subsection
(d)(3) to the portion of such qualified
rollover contribution required to be
included in gross income under
subparagraph (A)(i).
``(II) Limitation on aggregate
amount included.--The amount required
to be included in gross income for any
taxable year under subparagraph
(A)(iii) shall not exceed the aggregate
amount required to be included in gross
income under subparagraph (A)(iii) for
all taxable years in the 4-year period
(without regard to subclause (I))
reduced by amounts included for all
preceding taxable years.
``(ii) Death of distributee.--
``(I) In general.--If the
individual required to include amounts
in gross income under such subparagraph
dies before all of such amounts are
included, all remaining amounts shall
be included in gross income for the
taxable year which includes the date of
death.
``(II) Special rule for surviving
spouse.--If the spouse of the
individual described in subclause (I)
acquires the individual's entire
interest in any retirement savings
account to which such qualified
rollover contribution is properly
allocable, the spouse may elect to
treat the remaining amounts described
in subclause (I) as includible in the
spouse's gross income in the taxable
years of the spouse ending with or
within the taxable years of such
individual in which such amounts would
otherwise have been includible. Any
such election may not be made or
changed after the due date (including
extensions of time) for filing the
spouse's return for the taxable year
which includes the date of death.
``(F) 5-year holding period rules.--If--
``(i) any portion of a distribution from a
retirement savings account is properly
allocable to a qualified rollover contribution
with respect to which an amount is includible
in gross income under subparagraph (A)(i),
``(ii) such distribution is made during the
5-taxable year period beginning with the
taxable year for which such contribution was
made, and
``(iii) such distribution is not described
in clause (i), (ii), or (iii) of subsection
(d)(2)(A),
then section 72(t) shall be applied as if such portion
were includible in gross income.
``(7) Time when contributions made.--For purposes of this
section, a taxpayer shall be deemed to have made a contribution
to a retirement savings account on the last day of the
preceding taxable year if the contribution is made on account
of such taxable year and is made not later than the time
prescribed by law for filing the return for such taxable year
(not including extensions thereof).
``(8) Cost-of-living adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2005, the $5,000
amount under paragraph (1)(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.
``(B) Rounding rules.--If any amount after
adjustment under subparagraph (A) is not a multiple of
$500, such amount shall be rounded to the next lower
multiple of $500.
``(d) Distribution Rules.--For purposes of this title--
``(1) Exclusion.--Any qualified distribution from a
retirement savings account shall not be includible in gross
income.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified
distribution' means any payment or distribution--
``(i) made on or after the date on which
the individual attains age 58,
``(ii) made to a beneficiary (or to the
estate of the individual) on or after the death
of the individual,
``(iii) attributable to the individual's
being disabled (within the meaning of section
72(m)(7)), or
``(iv) to which section 72(t)(2)(F) applies
(if such payment or distribution is made before
January, 1, 2008).
``(B) Distributions of excess contributions and
earnings.--The term `qualified distribution' shall not
include any distribution of any contribution described
in section 408(d)(4) and any net income allocable to
the contribution.
``(3) Ordering rules.--For purposes of applying this
section and section 72 to any distribution from a retirement
savings account, such distribution shall be treated as made--
``(A) from contributions to the extent that the
amount of such distribution, when added to all previous
distributions from the retirement savings account, does
not exceed the aggregate contributions to the
retirement savings account; and
``(B) from such contributions in the following
order:
``(i) Contributions other than qualified
rollover contributions with respect to which an
amount is includible in gross income under
subsection (c)(6)(A)(i).
``(ii) Qualified rollover contributions
with respect to which an amount is includible
in gross income under subsection (c)(6)(A)(i)
on a first-in, first-out basis.
Any distribution allocated to a qualified rollover contribution
under subparagraph (B)(ii) shall be allocated first to the
portion of such contribution required to be included in gross
income.
``(4) Aggregation rules.--Section 408(d)(2) shall be
applied separately with respect to retirement savings accounts
and other individual retirement plans.
``(e) Qualified Rollover Contribution.--
``(1) In general.--For purposes of this section, the term
`qualified rollover contribution' means--
``(A) a rollover contribution to a retirement
savings account of an individual from another such
account of such individual or such individual's spouse,
or from an individual retirement plan of such
individual, but only if such rollover contribution
meets the requirements of section 408(d)(3), and
``(B) a rollover contribution described in section
402(c), 402A(c)(3)(A), 403(a)(4), 403(b)(8), or
457(e)(16).
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