[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 822 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 822
To amend the Internal Revenue Code of 1986 to increase the availability
of individual retirement accounts, to increase amount deductible for
contributions to such accounts, and to permit penalty-free withdrawals
from such accounts to pay educational, medical, and business start-up
expenses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 4, 1993
Mr. Brown of California 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 increase the availability
of individual retirement accounts, to increase amount deductible for
contributions to such accounts, and to permit penalty-free withdrawals
from such accounts to pay educational, medical, and business start-up
expenses.
Be it enacted by the Senate and House of Representatives 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
1993''.
SEC. 2. HIGHER MAXIMUM IRA DEDUCTION AND INCOME PHASEOUT LIMITS;
INFLATION ADJUSTMENT OF MAXIMUM IRA DEDUCTION AND
PHASEOUT LIMITS.
(a) Higher Maximum IRA Deduction.--
(1) In general.--The following provisions of the Internal
Revenue Code of 1986 are each amended 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 section
408.
(2) Conforming amendment.--Sections 219(c)(2) and 408(d)(5)
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
``$50,000'', and
(B) by striking ``$25,000'' and inserting
``$30,000''.
(2) Clause (ii) of section 219(g)(2)(A) of such Code is
amended to read as follows:
``(ii) $12,000.''
(c) Inflation Adjustment of Maximum IRA Deduction 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 Deduction and Income Phaseout
Limits.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 1993, 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 substituting `calendar year 1992'
for `calendar year 1989' in subparagraph (B) thereof.
``(2) Applicable dollar amount.--For purposes 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 $50,000 and $30,000 amounts in subsection
(g)(3)(B), and
``(D) the $12,000 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 (or, if such amount is a multiple
of $25 and not of $50, such amount shall be rounded to the next
highest multiple of $50).''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1992.
SEC. 3. IRA FOR NONWORKING SPOUSE WITH YOUNG CHILDREN COMPUTED ON BASIS
OF COMPENSATION 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 adding at the end thereof the following new
paragraph:
``(3) Higher limit for spouse with young children.--
``(A) In general.--In the case of a qualifying
spouse, the amount allowable as a deduction 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
individual's spouse for the taxable
year reduced 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 regard to
section 911) for the taxable year, and
``(iii) such spouse has a child (as defined
in section 151(c)(3)) who has not attained 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.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1992.
SEC. 4. PENALTY-FREE WITHDRAWALS FROM CERTAIN PLANS TO PAY EDUCATIONAL
EXPENSES, MEDICAL EXPENSES, AND BUSINESS START-UP
EXPENSES.
(a) Educational Expenses and Business Start-up Expenses.--
(1) In general.--Paragraph (2) of section 72(t) of the
Internal Revenue Code of 1986 (relating to exceptions to 10-
percent additional tax on early distributions from qualified
retirement plans) is amended by adding at the end thereof the
following new subparagraph:
``(D) Distributions from certain plans for
educational expenses and business start-up expenses.--
``(i) In general.--Distributions to an
individual from an individual retirement plan,
or from amounts attributable to employer
contributions made pursuant to elective
deferrals described in subparagraph (A) or (C)
of section 402(g)(3) or section
501(c)(18)(D)(iii) to the extent such
distributions do not exceed the sum of--
``(I) the qualified higher
education expenses (as defined in
paragraph (6)) of the taxpayer for the
taxable year, and
``(II) the start-up expenditures
(as defined in section 195(c)) of the
taxpayer for the taxable year.
``(ii) Adjusted gross income limit.--Clause
(i) shall apply to distributions from an
individual retirement plan only if the adjusted
gross income of the distributee for the taxable
year in which the distribution occurs does not
exceed--
``(I) $60,000 in the case of an
unmarried individual,
``(II) $70,000 in the case of a
joint return, and
``(III) $35,000 in the case of a
married individual filing a separate
return.''
(2) Qualified higher education expenses defined.--Section
72(t) of such Code is amended by adding at the end thereof the
following new paragraph:
``(6) Qualified higher education expenses.--For purposes of
paragraph (2)(D)--
``(A) In general.--The term `qualified higher
education expenses' means tuition, fees, books,
supplies, and equipment required for the enrollment or
attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) a child (as defined in section
151(c)(3)) of the taxpayer,
at an eligible educational institution (as defined in
section 135(c)(3)).
``(B) Coordination with savings bond provisions.--
The amount of qualified higher education expenses for
any taxable year shall be reduced by any amount
excludable from gross income under section 135.''
(b) Catastrophic Illness Expenses.--Subparagraph (A) of section
72(t)(3) of such Code is amended to read as follows:
``(A) Certain exceptions not to apply to individual
retirement plans.--
``(i) In general.--Except as provided in
clause (ii), subparagraphs (A)(v), (B), and (C)
of paragraph (2) shall not apply to
distributions from an individual retirement
plan.
``(ii) Distributions for medical expenses
from certain individual retirement plans.--
Subparagraph (B) of paragraph (2) shall apply
to distributions from an individual retirement
plan if the adjusted gross income of the
distributee for the taxable year in which the
distribution occurs does not exceed the
applicable limitation under paragraph (2)(D).''
(c) Conforming Amendments.--
(1) Section 401(k)(2)(B)(i) of such Code is amended by
striking ``or'' at the end of subclause (III), by striking
``and'' at the end of subclause (IV) and inserting ``or'', and
by inserting after subclause (IV) the following new subclause:
``(V) the date on which
distributions for qualified higher
education expenses (as defined in
section 72(t)(6)) or start-up expenses
(as defined in section 195(c)) are
made, and''.
(2) Section 403(b)(11) of such Code is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) for the payment of qualified higher education
expenses (as defined in section 72(t)(6)) or start-up
expenses (as defined in section 195(c)).''
(d) Effective Date.--The amendments made by this section shall
apply to payments and distributions after the date of the enactment of
this Act.
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