[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3081 Reported in House (RH)]
Union Calendar No. 275
106th CONGRESS
2d Session
H. R. 3081
[Report No. 106-467, Part I]
_______________________________________________________________________
A BILL
To increase the Federal minimum wage and to amend the Internal Revenue
Code of 1986 to provide tax benefits for small businesses, and for
other purposes.
_______________________________________________________________________
January 28, 2000
The Committee on Education and the Workforce discharged; referred to
the Committee of the Whole House on the State of the Union and ordered
to be printed
Union Calendar No. 275
106th CONGRESS
2d Session
H. R. 3081
[Report No. 106-467, Part I]
To increase the Federal minimum wage and to amend the Internal Revenue
Code of 1986 to provide tax benefits for small businesses, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 14, 1999
Mr. Lazio (for himself, Mr. Condit, Mr. Shimkus, Mr. Cramer, Mr.
Sherwood, Mr. Bishop, Mr. Weller, Ms. Hooley of Oregon, Mr. Pickering,
and Mr. Peterson of Minnesota) introduced the following bill; which was
referred to the Committee on Ways and Means, and in addition to the
Committee on Education and the Workforce, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
November 11, 1999
Reported from the Committee on Ways and Means with amendments
[Omit the part struck through and insert the part printed in italic]
November 11, 1999
Referral to the Committee on Education and the Workforce extended for a
period ending not later than November 17, 1999
November 17, 1999
Referral to the Committee on Education and the Workforce extended for a
period ending not later than November 18, 1999
November 18, 1999
Referral to the Committee on Education and the Workforce extended for a
period ending not later than November 19, 1999
November 19, 1999
Referral to the Committee on Education and the Workforce extended for a
period ending not later than November 22, 1999
November 22, 1999
Referral to the Committee on Education and the Workforce extended for a
period ending not later than January 28, 2000
January 28, 2000
The Committee on Education and the Workforce discharged; referred to
the Committee of the Whole House on the State of the Union and ordered
to be printed
[For text of introduced bill, see copy of bill as introduced on October
14, 1999]
_______________________________________________________________________
A BILL
To increase the Federal minimum wage and to amend the Internal Revenue
Code of 1986 to provide tax benefits for small businesses, 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; REFERENCES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Wage and
Employment Growth Act of 1999''.
(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.
(c) Table of Contents.--
Sec. 1. Short title; references; table of contents.
TITLE I--AMENDMENTS TO FAIR LABOR STANDARDS ACT OF 1938
Sec. 101. Minimum wage.
Sec. 102. Exemption for computer professionals.
Sec. 103. Exemption for certain sales employees.
Sec. 104. Exemption for funeral directors.
<DELETED>TITLE II--SMALL BUSINESS PROVISIONS
<DELETED>Sec. 201. Deduction for 100 percent of health insurance costs
of self-employed individuals.
<DELETED>Sec. 202. Increase in expense treatment for small businesses.
<DELETED>Sec. 203. Small businesses allowed increased deduction for
meal expenses.
<DELETED>Sec. 204. Increased deductibility of business meal expenses
for individuals subject to Federal
limitations on hours of service.
<DELETED>Sec. 205. Repeal of occupational taxes relating to distilled
spirits, wine, and beer.
<DELETED>TITLE III--PENSION PROVISIONS
<DELETED>Subtitle A--Expanding Coverage
<DELETED>Sec. 301. Increase in benefit and contribution limits.
<DELETED>Sec. 302. Plan loans for subchapter S owners, partners, and
sole proprietors.
<DELETED>Sec. 303. Modification of top-heavy rules.
<DELETED>Sec. 304. Elective deferrals not taken into account for
purposes of deduction limits.
<DELETED>Sec. 305. Repeal of coordination requirements for deferred
compensation plans of State and local
governments and tax-exempt organizations.
<DELETED>Sec. 306. Elimination of user fee for requests to IRS
regarding pension plans.
<DELETED>Sec. 307. Deduction limits.
<DELETED>Sec. 308. Option to treat elective deferrals as after-tax
contributions.
<DELETED>Sec. 309. Reduced PBGC premium for new plans of small
employers.
<DELETED>Sec. 310. Reduction of additional PBGC premium for new and
small plans.
<DELETED>Subtitle B--Enhancing Fairness for Women
<DELETED>Sec. 321. Catchup contributions for individuals age 50 or
over.
<DELETED>Sec. 322. Equitable treatment for contributions of employees
to defined contribution plans.
<DELETED>Sec. 323. Faster vesting of certain employer matching
contributions.
<DELETED>Sec. 324. Simplify and update the minimum distribution rules.
<DELETED>Sec. 325. Clarification of tax treatment of division of
section 457 plan benefits upon divorce.
<DELETED>Sec. 326. Modification of safe harbor relief for hardship
withdrawals from cash or deferred
arrangements.
<DELETED>Subtitle C--Increasing Portability for Participants
<DELETED>Sec. 331. Rollovers allowed among various types of plans.
<DELETED>Sec. 332. Rollovers of IRAs into workplace retirement plans.
<DELETED>Sec. 333. Rollovers of after-tax contributions.
<DELETED>Sec. 334. Hardship exception to 60-day rule.
<DELETED>Sec. 335. Treatment of forms of distribution.
<DELETED>Sec. 336. Rationalization of restrictions on distributions.
<DELETED>Sec. 337. Purchase of service credit in governmental defined
benefit plans.
<DELETED>Sec. 338. Employers may disregard rollovers for purposes of
cash-out amounts.
<DELETED>Sec. 339. Minimum distribution and inclusion requirements for
section 457 plans.
<DELETED>Subtitle D--Strengthening Pension Security and Enforcement
<DELETED>Sec. 341. Repeal of 150 percent of current liability funding
limit.
<DELETED>Sec. 342. Maximum contribution deduction rules modified and
applied to all defined benefit plans.
<DELETED>Sec. 343. Missing participants.
<DELETED>Sec. 344. Periodic pension benefits statements.
<DELETED>Sec. 345. Civil penalties for breach of fiduciary
responsibility.
<DELETED>Sec. 346. Excise tax relief for sound pension funding.
<DELETED>Sec. 347. Excise tax on failure to provide notice by defined
benefit plans significantly reducing future
benefit accruals.
<DELETED>Sec. 348. Protection of investment of employee contributions
to 401(k) plans.
<DELETED>Sec. 349. Treatment of multiemployer plans under section 415.
<DELETED>Sec. 350. Technical corrections to Saver Act.
<DELETED>Sec. 351. Model spousal consent language and qualified
domestic relations order.
<DELETED>Sec. 352. Elimination of ERISA double jeopardy.
<DELETED>Subtitle E--Reducing Regulatory Burdens
<DELETED>Sec. 361. Modification of timing of plan valuations.
<DELETED>Sec. 362. ESOP dividends may be reinvested without loss of
dividend deduction.
<DELETED>Sec. 363. Repeal of transition rule relating to certain highly
compensated employees.
<DELETED>Sec. 364. Employees of tax-exempt entities.
<DELETED>Sec. 365. Clarification of treatment of employer-provided
retirement advice.
<DELETED>Sec. 366. Reporting simplification.
<DELETED>Sec. 367. Improvement of employee plans compliance resolution
system.
<DELETED>Sec. 368. Substantial owner benefits in terminated plans.
<DELETED>Sec. 369. Modification of exclusion for employer provided
transit passes.
<DELETED>Sec. 370. Repeal of the multiple use test.
<DELETED>Sec. 371. Flexibility in nondiscrimination, coverage, and line
of business rules.
<DELETED>Sec. 372. Extension to international organizations of
moratorium on application of certain
nondiscrimination rules applicable to State
and local plans.
<DELETED>Sec. 373. Notice and consent period regarding distributions.
<DELETED>Sec. 374. Annual report dissemination.
<DELETED>Sec. 375. Excess benefit plans.
<DELETED>Sec. 376. Benefit suspension notice.
<DELETED>Sec. 377. Clarification of church welfare plan status under
State insurance law.
<DELETED>Subtitle F--Plan Amendments
<DELETED>Sec. 381. Provisions relating to plan amendments.
<DELETED>TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-
WORK CREDIT
<DELETED>Sec. 401. Work opportunity credit and welfare-to-work credit.
<DELETED>TITLE V--ESTATE TAX RELIEF
<DELETED>Subtitle A--Reductions of Estate and Gift Tax Rates
<DELETED>Sec. 501. Reductions of estate and gift tax rates.
<DELETED>Subtitle B--Unified Credit Replaced With Unified Exemption
Amount
<DELETED>Sec. 511. Unified credit against estate and gift taxes
replaced with unified exemption amount.
<DELETED>Subtitle C--Modifications of Generation-skipping Transfer Tax
<DELETED>Sec. 521. Deemed allocation of GST exemption to lifetime
transfers to trusts; retroactive
allocations.
<DELETED>Sec. 522. Severing of trusts.
<DELETED>Sec. 523. Modification of certain valuation rules.
<DELETED>Sec. 524. Relief provisions.
<DELETED>Subtitle D--Conservation Easements
<DELETED>Sec. 531. Expansion of estate tax rule for conservation
easements.
<DELETED>TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND INDUSTRIES
<DELETED>Subtitle A--American Community Renewal Act of 1999
<DELETED>Sec. 601. Short title.
<DELETED>Sec. 602. Designation of and tax incentives for renewal
communities.
<DELETED>Sec. 603. Extension of expensing of environmental remediation
costs to renewal communities.
<DELETED>Sec. 604. Extension of work opportunity tax credit for renewal
communities.
<DELETED>Sec. 605. Conforming and clerical amendments.
<DELETED>Subtitle B--Timber Incentives
<DELETED>Sec. 611. Temporary suspension of maximum amount of
amortizable reforestation expenditures.
<DELETED>TITLE VII--REAL ESTATE PROVISIONS
<DELETED>Subtitle A--Improvements in Low-Income Housing Credit
<DELETED>Sec. 701. Modification of State ceiling on low-income housing
credit.
<DELETED>Sec. 702. Modification of criteria for allocating housing
credits among projects.
<DELETED>Sec. 703. Additional responsibilities of housing credit
agencies.
<DELETED>Sec. 704. Modifications to rules relating to basis of building
which is eligible for credit.
<DELETED>Sec. 705. Other modifications.
<DELETED>Sec. 706. Carryforward rules.
<DELETED>Sec. 707. Effective date.
<DELETED>Subtitle B--Provisions Relating to Real Estate Investment
Trusts
<DELETED>Part I--Treatment of Income and Services Provided by Taxable
REIT Subsidiaries
<DELETED>Sec. 711. Modifications to asset diversification test.
<DELETED>Sec. 712. Treatment of income and services provided by taxable
REIT subsidiaries.
<DELETED>Sec. 713. Taxable REIT subsidiary.
<DELETED>Sec. 714. Limitation on earnings stripping.
<DELETED>Sec. 715. 100 percent tax on improperly allocated amounts.
<DELETED>Sec. 716. Effective date.
<DELETED>Part II--Health Care REITs
<DELETED>Sec. 721. Health care REITs.
<DELETED>Part III--Conformity With Regulated Investment Company Rules
<DELETED>Sec. 731. Conformity with regulated investment company rules.
<DELETED>Part IV--Clarification of Exception From Impermissible Tenant
Service Income
<DELETED>Sec. 741. Clarification of exception for independent
operators.
<DELETED>Part V--Modification of Earnings and Profits Rules
<DELETED>Sec. 751. Modification of earnings and profits rules.
<DELETED>Subtitle C--Private Activity Bond Volume Cap
<DELETED>Sec. 761. Acceleration of phase-in of increase in volume cap
on private activity bonds.
<DELETED>Subtitle D--Exclusion From Gross Income for Certain Forgiven
Mortgage Obligations.
<DELETED>Sec. 771. Exclusion from gross income for certain forgiven
mortgage obligations.
<DELETED>TITLE VIII--MISCELLANEOUS PROVISIONS
<DELETED>Sec. 801. Credit for modifications to inter-city buses
required under the Americans with
Disabilities Act of 1990.
<DELETED>Sec. 802. Certain educational benefits provided by an employer
to children of employees excludable from
gross income as a scholarship.
<DELETED>Sec. 803. Tax incentives for qualified United States
independent film and television production.
</DELETED>TITLE II--SMALL BUSINESS PROVISIONS
Sec. 201. Deduction for 100 percent of health insurance costs of self-
employed individuals.
Sec. 202. Increase in expense treatment for small businesses.
Sec. 203. Increased deduction for meal expenses.
Sec. 204. Increased deductibility of business meal expenses for
individuals subject to Federal limitations
on hours of service.
Sec. 205. Production flexibility contract payments.
Sec. 206. Income averaging for farmers and fishermen not to increase
alternative minimum tax liability.
Sec. 207. Repeal of occupational taxes relating to distilled spirits,
wine, and beer.
TITLE III--PENSION PROVISIONS
Subtitle A--Expanding Coverage
Sec. 301. Increase in benefit and contribution limits.
Sec. 302. Plan loans for subchapter S owners, partners, and sole
proprietors.
Sec. 303. Modification of top-heavy rules.
Sec. 304. Elective deferrals not taken into account for purposes of
deduction limits.
Sec. 305. Repeal of coordination requirements for deferred compensation
plans of State and local governments and
tax-exempt organizations.
Sec. 306. Elimination of user fee for requests to IRS regarding pension
plans.
Sec. 307. Deduction limits.
Sec. 308. Option to treat elective deferrals as after-tax
contributions.
Sec. 309. Reduced PBGC premium for new plans of small employers.
Sec. 310. Reduction of additional PBGC premium for new and small plans.
Subtitle B--Enhancing Fairness for Women
Sec. 321. Catchup contributions for individuals age 50 or over.
Sec. 322. Equitable treatment for contributions of employees to defined
contribution plans.
Sec. 323. Faster vesting of certain employer matching contributions.
Sec. 324. Simplify and update the minimum distribution rules.
Sec. 325. Clarification of tax treatment of division of section 457
plan benefits upon divorce.
Sec. 326. Modification of safe harbor relief for hardship withdrawals
from cash or deferred arrangements.
Subtitle C--Increasing Portability for Participants
Sec. 331. Rollovers allowed among various types of plans.
Sec. 332. Rollovers of IRAs into workplace retirement plans.
Sec. 333. Rollovers of after-tax contributions.
Sec. 334. Hardship exception to 60-day rule.
Sec. 335. Treatment of forms of distribution.
Sec. 336. Rationalization of restrictions on distributions.
Sec. 337. Purchase of service credit in governmental defined benefit
plans.
Sec. 338. Employers may disregard rollovers for purposes of cash-out
amounts.
Sec. 339. Minimum distribution and inclusion requirements for section
457 plans.
Subtitle D--Strengthening Pension Security and Enforcement
Sec. 341. Repeal of 150 percent of current liability funding limit.
Sec. 342. Maximum contribution deduction rules modified and applied to
all defined benefit plans.
Sec. 343. Missing participants.
Sec. 344. Periodic pension benefits statements.
Sec. 345. Civil penalties for breach of fiduciary responsibility.
Sec. 346. Excise tax relief for sound pension funding.
Sec. 347. Excise tax on failure to provide notice by defined benefit
plans significantly reducing future benefit
accruals.
Sec. 348. Protection of investment of employee contributions to 401(k)
plans.
Sec. 349. Treatment of multiemployer plans under section 415.
Sec. 350. Technical corrections to Saver Act.
Sec. 351. Model spousal consent language and qualified domestic
relations order.
Sec. 352. Elimination of ERISA double jeopardy.
Subtitle E--Reducing Regulatory Burdens
Sec. 361. Modification of timing of plan valuations.
Sec. 362. ESOP dividends may be reinvested without loss of dividend
deduction.
Sec. 363. Repeal of transition rule relating to certain highly
compensated employees.
Sec. 364. Employees of tax-exempt entities.
Sec. 365. Clarification of treatment of employer-provided retirement
advice.
Sec. 366. Reporting simplification.
Sec. 367. Improvement of employee plans compliance resolution system.
Sec. 368. Substantial owner benefits in terminated plans.
Sec. 369. Modification of exclusion for employer provided transit
passes.
Sec. 370. Repeal of the multiple use test.
Sec. 371. Flexibility in nondiscrimination, coverage, and line of
business rules.
Sec. 372. Extension to international organizations of moratorium on
application of certain nondiscrimination
rules applicable to State and local plans.
Sec. 373. Notice and consent period regarding distributions.
Sec. 374. Annual report dissemination.
Sec. 375. Excess benefit plans.
Sec. 376. Benefit suspension notice.
Sec. 377. Clarification of church welfare plan status under State
insurance law.
Subtitle F--Plan Amendments
Sec. 381. Provisions relating to plan amendments.
TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK
CREDIT
Sec. 401. Work opportunity credit and welfare-to-work credit.
TITLE V--ESTATE TAX RELIEF
Subtitle A--Reductions of Estate and Gift Tax Rates
Sec. 501. Reductions of estate and gift tax rates.
Sec. 502. Sense of the Congress concerning repeal of the death tax.
Subtitle B--Unified Credit Replaced With Unified Exemption Amount
Sec. 511. Unified credit against estate and gift taxes replaced with
unified exemption amount.
Subtitle C--Modifications of Generation-skipping Transfer Tax
Sec. 521. Deemed allocation of GST exemption to lifetime transfers to
trusts; retroactive allocations.
Sec. 522. Severing of trusts.
Sec. 523. Modification of certain valuation rules.
Sec. 524. Relief provisions.
Subtitle D--Conservation Easements
Sec. 531. Expansion of estate tax rule for conservation easements.
TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND INDUSTRIES
Subtitle A--American Community Renewal Act of 1999
Sec. 601. Short title.
Sec. 602. Designation of and tax incentives for renewal communities.
Sec. 603. Extension of expensing of environmental remediation costs to
renewal communities.
Sec. 604. Extension of work opportunity tax credit for renewal
communities.
Sec. 605. Conforming and clerical amendments.
Subtitle B--Timber Incentives
Sec. 611. Temporary suspension of maximum amount of amortizable
reforestation expenditures.
TITLE VII--REAL ESTATE PROVISIONS
Subtitle A--Improvements in Low-Income Housing Credit
Sec. 701. Modification of State ceiling on low-income housing credit.
Sec. 702. Modification of criteria for allocating housing credits among
projects.
Sec. 703. Additional responsibilities of housing credit agencies.
Sec. 704. Modifications to rules relating to basis of building which is
eligible for credit.
Sec. 705. Other modifications.
Sec. 706. Carryforward rules.
Sec. 707. Effective date.
Subtitle B--Provisions Relating to Real Estate Investment Trusts
Part I--Treatment of Income and Services Provided by Taxable REIT
Subsidiaries
Sec. 711. Modifications to asset diversification test.
Sec. 712. Treatment of income and services provided by taxable REIT
subsidiaries.
Sec. 713. Taxable REIT subsidiary.
Sec. 714. Limitation on earnings stripping.
Sec. 715. 100 percent tax on improperly allocated amounts.
Sec. 716. Effective date.
Part II--Health Care REITs
Sec. 721. Health care REITs.
Part III--Conformity With Regulated Investment Company Rules
Sec. 731. Conformity with regulated investment company rules.
Part IV--Clarification of Exception From Impermissible Tenant Service
Income
Sec. 741. Clarification of exception for independent operators.
Part V--Modification of Earnings and Profits Rules
Sec. 751. Modification of earnings and profits rules.
Subtitle C--Private Activity Bond Volume Cap
Sec. 761. Acceleration of phase-in of increase in volume cap on private
activity bonds.
Subtitle D--Exclusion From Gross Income for Certain Forgiven Mortgage
Obligations
Sec. 771. Exclusion from gross income for certain forgiven mortgage
obligations.
TITLE I--AMENDMENTS TO FAIR LABOR STANDARDS ACT OF 1938
SEC. 101. MINIMUM WAGE.
(a) Increase.--Section 6(a)(1) of the Fair Labor Standards Act of
1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:
``(1) except as otherwise provided in this section, not
less than--
``(A) $5.15 an hour beginning September 1, 1997,
``(B) $5.48 an hour during the year beginning April
1, 2000,
``(C) $5.81 an hour during the year beginning April
1, 2001, and
``(D) $6.15 an hour during the year beginning April
1, 2002.''.
(b) Overtime.--Section 7(e) of such Act (29 U.S.C. 207(e)) is
amended by striking paragraph (1).
SEC. 102. EXEMPTION FOR COMPUTER PROFESSIONALS.
Section 13(a) of the Fair Labor Standards Act of 1938 (29 U.S.C.
213(a)) is amended by amending paragraph (17) to read as follows:
``(17) any employee who is a computer systems, network, or
database analyst, designer, developer, programmer, software
engineer, or other similarly skilled worker--
``(A) whose primary duty is--
``(i) the application of systems or network
or database analysis techniques and procedures,
including consulting with users, to determine
hardware, software, systems, network, or
database specifications (including functional
specifications);
``(ii) the design, configuration,
development, integration, documentation,
analysis, creation, testing, securing, or
modification of, or problem resolution for,
computer systems, networks, databases, or
programs, including prototypes, based on and
related to user, system, network, or database
specifications, including design specifications
and machine operating systems;
``(iii) the management or training of
employees performing duties described in clause
(i) or (ii); or
``(iv) a combination of duties described in
clauses (i), (ii), or (iii) the performance of
which requires the same level of skills; and
``(B) who, in the case of an employee who is
compensated on an hourly basis, is compensated at a
rate of not less than $27.63 an hour.
For purposes of paragraph (17), the term `network' includes the
Internet and intranet networks and the world wide web. An
employee who meets the exemption provided by paragraph (17)
shall be considered an employee in a professional capacity
pursuant to paragraph (1).''.
SEC. 103. EXEMPTION FOR CERTAIN SALES EMPLOYEES.
(a) Amendment.--Section 13(a) of the Fair Labor Standards Act of
1938 (29 U.S.C. 213(a)) is amended by striking the period at the end of
paragraph (17) and inserting a semicolon and by adding at the end the
following:
``(18) any employee employed in a sales position if--
``(A) the employee has specialized or technical
knowledge related to products or services being sold;
``(B) the employee's--
``(i) sales are predominantly to persons or
entities to whom the employee's position has
made previous sales; or
``(ii) position does not involve initiating
sales contacts;
``(C) the employee has a detailed understanding of
the needs of those to whom the employee is selling;
``(D) the employee exercises discretion in offering
a variety of products and services;
``(E) the employee receives--
``(i) base compensation, determined without
regard to the number of hours worked by the
employee, of not less than an amount equal to
one and one-half times the minimum wage in
effect under section 6(a)(1) multiplied by
2,080; and
``(ii) in addition to the employee's base
compensation, compensation based upon each sale
attributable to the employee;
``(F) the employee's aggregate compensation based
upon sales attributable to the employee is not less
than 40 percent of one and one-half times the minimum
wage multiplied by 2,080;
``(G) the employee receives a rate of compensation
based upon each sale attributable to the employee which
is beyond sales required to reach the compensation
required by subparagraph (F) which rate is not less
than the rate on which the compensation required by
subparagraph (F) is determined; and
``(H) the rate of annual compensation or base
compensation for any employee who did not work for an
employer for an entire calendar year is prorated to
reflect annual compensation which would have been
earned if the employee had been compensated at the same
rate for the entire calendar year.''.
(b) Construction.--The amendment made by subsection (a) may not be
construed to apply to individuals who are employed as route sales
drivers.
SEC. 104. EXEMPTION FOR FUNERAL DIRECTORS.
Section 13(a) of the Fair Labor Standards Act of 1938 (29 U.S.C.
213(a)) is amended by striking the period at the end of paragraph (18)
and inserting ``; or'' and by adding after paragraph (18) the
following:
``(19) any employee employed as a licensed funeral director
or a licensed embalmer.''.
<DELETED>TITLE II--SMALL BUSINESS PROVISIONS</DELETED>
<DELETED>SEC. 201. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS
OF SELF-EMPLOYED INDIVIDUALS.</DELETED>
<DELETED> (a) In General.--Paragraph (1) of section 162(l) is
amended to read as follows:</DELETED>
<DELETED> ``(1) Allowance of deduction.--In the case of an
individual who is an employee within the meaning of section
401(c)(1), there shall be allowed as a deduction under this
section an amount equal to 100 percent of the amount paid
during the taxable year for insurance which constitutes medical
care for the taxpayer and the taxpayer's spouse and
dependents.''.</DELETED>
<DELETED> (b) Clarification of Limitations on Other Coverage.--The
first sentence of section 162(l)(2)(B) is amended to read as follows:
``Paragraph (1) shall not apply to any taxpayer for any calendar month
for which the taxpayer participates in any subsidized health plan
maintained by any employer (other than an employer described in section
401(c)(4)) of the taxpayer or the spouse of the taxpayer.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED> SEC. 202. INCREASE IN EXPENSE TREATMENT FOR SMALL
BUSINESSES.</DELETED>
<DELETED> (a) In General.--Paragraph (1) of section 179(b) (relating
to dollar limitation) is amended to read as follows:</DELETED>
<DELETED> ``(1) Dollar limitation.--The aggregate cost which
may be taken into account under subsection (a) for any taxable
year shall not exceed $30,000.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 203. SMALL BUSINESSES ALLOWED INCREASED DEDUCTION FOR
MEAL EXPENSES.</DELETED>
<DELETED> (a) In General.--Subsection (n) of section 274 (relating
to only 50 percent of meal and entertainment expenses allowed as
deduction) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(4) Special rule for small businesses.--
</DELETED>
<DELETED> ``(A) In general.--In the case of any
taxpayer which is a small business, paragraph (1) shall
be applied by substituting for `50 percent' with
respect to expenses for food or beverages--</DELETED>
<DELETED> ``(i) `55 percent' in the case of
taxable years beginning in 2001, and</DELETED>
<DELETED> ``(ii) `60 percent' in the case of
taxable years beginning after 2001.</DELETED>
<DELETED> ``(B) Small business.--For purposes of
this paragraph, the term `small business' means, with
respect to expenses paid or incurred during any taxable
year--</DELETED>
<DELETED> ``(i) any C corporation which
meets the requirements of section 55(e)(1) for
such year, and</DELETED>
<DELETED> ``(ii) any S corporation,
partnership, or sole proprietorship which would
meet such requirements if it were a C
corporation.''</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 204. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES
FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS
OF SERVICE.</DELETED>
<DELETED> (a) In General.--Paragraph (3) of section 274(n) (relating
to only 50 percent of meal and entertainment expenses allowed as
deduction) is amended to read as follows:</DELETED>
<DELETED> ``(3) Special rule for individuals subject to
federal hours of service.--In the case of any expenses for food
or beverages consumed while away from home (within the meaning
of section 162(a)(2)) by an individual during, or incident to,
the period of duty subject to the hours of service limitations
of the Department of Transportation, paragraph (1) shall be
applied by substituting `80 percent' for `50
percent'.''</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 205. REPEAL OF OCCUPATIONAL TAXES RELATING TO DISTILLED
SPIRITS, WINE, AND BEER.</DELETED>
<DELETED> (a) Repeal of Occupational Taxes.--</DELETED>
<DELETED> (1) In general.--The following provisions of part
II of subchapter A of chapter 51 of the Internal Revenue Code
of 1986 (relating to occupational taxes) are hereby
repealed:</DELETED>
<DELETED> (A) Subpart A (relating to
rectifier).</DELETED>
<DELETED> (B) Subpart B (relating to
brewer).</DELETED>
<DELETED> (C) Subpart D (relating to wholesale
dealers) (other than sections 5114 and 5116).</DELETED>
<DELETED> (D) Subpart E (relating to retail dealers)
(other than section 5124).</DELETED>
<DELETED> (E) Subpart G (relating to general
provisions) (other than sections 5142, 5143, 5145, and
5146).</DELETED>
<DELETED> (2) Nonbeverage domestic drawback.--Section 5131
is amended by striking ``, on payment of a special tax per
annum,''.</DELETED>
<DELETED> (3) Industrial use of distilled spirits.--Section
5276 is hereby repealed.</DELETED>
<DELETED> (b) Conforming Amendments.--</DELETED>
<DELETED> (1)(A) The heading for part II of subchapter A of
chapter 51 and the table of subparts for such part are amended
to read as follows:</DELETED>
<DELETED>``PART II--MISCELLANEOUS PROVISIONS</DELETED>
<DELETED>``Subpart A. Manufacturers of
stills.
<DELETED>``Subpart B. Nonbeverage
domestic drawback claimants.
<DELETED>``Subpart C. Recordkeeping by
dealers.
<DELETED>``Subpart D. Other provisions.''
<DELETED> (B) The table of parts for such subchapter A is
amended by striking the item relating to part II and inserting
the following new item:</DELETED>
<DELETED>``Part II. Miscellaneous
provisions.''
<DELETED> (2) Subpart C of part II of such subchapter
(relating to manufacturers of stills) is redesignated as
subpart A.</DELETED>
<DELETED> (3)(A) Subpart F of such part II (relating to
nonbeverage domestic drawback claimants) is redesignated as
subpart B and sections 5131 through 5134 are redesignated as
sections 5111 through 5114, respectively.</DELETED>
<DELETED> (B) The table of sections for such subpart B, as
so redesignated, is amended--</DELETED>
<DELETED> (i) by redesignating the items relating to
sections 5131 through 5134 as relating to sections 5111
through 5114, respectively, and</DELETED>
<DELETED> (ii) by striking ``and rate of tax'' in
the item relating to section 5111, as so
redesignated.</DELETED>
<DELETED> (C) Section 5111, as redesignated by subparagraph
(A), is amended--</DELETED>
<DELETED> (i) by striking ``and rate of tax'' in the
section heading,</DELETED>
<DELETED> (ii) by striking the subsection heading
for subsection (a), and</DELETED>
<DELETED> (iii) by striking subsection
(b).</DELETED>
<DELETED> (4) Part II of subchapter A of chapter 51 is
amended by adding after subpart B, as redesignated by paragraph
(3), the following new subpart:</DELETED>
<DELETED>``Subpart C. Recordkeeping by Dealers</DELETED>
<DELETED>``Sec. 5121. Recordkeeping by
wholesale dealers.
<DELETED>``Sec. 5122. Recordkeeping by
retail dealers.
<DELETED>``Sec. 5123. Preservation and
inspection of records, and
entry of premises for
inspection.''
<DELETED> (5)(A) Section 5114 (relating to records) is moved
to subpart C of such part II and inserted after the table of
sections for such subpart.</DELETED>
<DELETED> (B) Section 5114 is amended--</DELETED>
<DELETED> (i) by striking the section heading and
inserting the following new heading:</DELETED>
<DELETED>``SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.'',</DELETED>
<DELETED>and</DELETED>
<DELETED> (ii) by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b)
the following new subsection:</DELETED>
<DELETED> ``(c) Wholesale Dealers.--For purposes of this part--
</DELETED>
<DELETED> ``(1) Wholesale dealer in liquors.--The term
`wholesale dealer in liquors' means any dealer (other than a
wholesale dealer in beer) who sells, or offers for sale,
distilled spirits, wines, or beer, to another dealer.</DELETED>
<DELETED> ``(2) Wholesale dealer in beer.--The term
`wholesale dealer in beer' means any dealer who sells, or
offers for sale, beer, but not distilled spirits or wines, to
another dealer.</DELETED>
<DELETED> ``(3) Dealer.--The term `dealer' means any person
who sells, or offers for sale, any distilled spirits, wines, or
beer.</DELETED>
<DELETED> ``(4) Presumption in case of sale of 20 wine
gallons or more.--The sale, or offer for sale, of distilled
spirits, wines, or beer, in quantities of 20 wine gallons or
more to the same person at the same time, shall be presumptive
evidence that the person making such sale, or offer for sale,
is engaged in or carrying on the business of a wholesale dealer
in liquors or a wholesale dealer in beer, as the case may be.
Such presumption may be overcome by evidence satisfactorily
showing that such sale, or offer for sale, was made to a person
other than a dealer.''</DELETED>
<DELETED> (C) Paragraph (3) of section 5121(d), as so
redesignated, is amended by striking ``section 5146'' and
inserting ``section 5123''.</DELETED>
<DELETED> (6)(A) Section 5124 (relating to records) is moved
to subpart C of part II of subchapter A of chapter 51 and
inserted after section 5121.</DELETED>
<DELETED> (B) Section 5124 is amended--</DELETED>
<DELETED> (i) by striking the section heading and
inserting the following new heading:</DELETED>
<DELETED>``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',</DELETED>
<DELETED> (ii) by striking ``section 5146'' in
subsection (c) and inserting ``section 5123'',
and</DELETED>
<DELETED> (iii) by redesignating subsection (c) as
subsection (d) and inserting after subsection (b) the
following new subsection:</DELETED>
<DELETED> ``(c) Retail Dealers.--For purposes of this section--
</DELETED>
<DELETED> ``(1) Retail dealer in liquors.--The term `retail
dealer in liquors' means any dealer (other than a retail dealer
in beer) who sells, or offers for sale, distilled spirits,
wines, or beer, to any person other than a dealer.</DELETED>
<DELETED> ``(2) Retail dealer in beer.--The term `retail
dealer in beer' means any dealer who sells, or offers for sale,
beer, but not distilled spirits or wines, to any person other
than a dealer.</DELETED>
<DELETED> ``(3) Dealer.--The term `dealer' has the meaning
given such term by section 5121(c)(3).''</DELETED>
<DELETED> (7) Section 5146 is moved to subpart C of part II
of subchapter A of chapter 51, inserted after section 5122, and
redesignated as section 5123.</DELETED>
<DELETED> (8) Part II of subchapter A of chapter 51 is
amended by inserting after subpart C the following new
subpart:</DELETED>
<DELETED>``Subpart D. Other Provisions</DELETED>
<DELETED>``Sec. 5131. Packaging distilled
spirits for industrial uses.
<DELETED>``Sec. 5132. Prohibited
purchases by dealers.''
<DELETED> (9) Section 5116 is moved to subpart D of part II
of subchapter A of chapter 51, inserted after the table of
sections, redesignated as section 5131, and amended by
inserting ``(as defined section 5121(c))'' after ``dealer'' in
subsection (a).</DELETED>
<DELETED> (10) Subpart D of part II of subchapter A of
chapter 51 is amended by adding at the end thereof the
following new section:</DELETED>
<DELETED>``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.</DELETED>
<DELETED> ``(a) In General.--Except as provided in regulations
prescribed by the Secretary, it shall be unlawful for a dealer to
purchase distilled spirits from any person other than a wholesale
dealer in liquors who is required to keep the records prescribed by
section 5121.</DELETED>
<DELETED> ``(b) Penalty and Forfeiture.--</DELETED>
<DELETED> ``For penalty and forfeiture
provisions applicable to violations of subsection (a), see sections
5687 and 7302.''
<DELETED> (11) Subsection (b) of section 5002 is amended--
</DELETED>
<DELETED> (A) by striking ``section 5112(a)'' and
inserting ``section 5121(c)(3)'',</DELETED>
<DELETED> (B) by striking ``section 5112'' and
inserting ``section 5121(c)'',</DELETED>
<DELETED> (C) by striking ``section 5122'' and
inserting ``section 5122(c)''.</DELETED>
<DELETED> (12) Subparagraph (A) of section 5010(c)(2) is
amended by striking ``section 5134'' and inserting ``section
5114''.</DELETED>
<DELETED> (13) Subsection (d) of section 5052 is amended to
read as follows:</DELETED>
<DELETED> ``(d) Brewer.--For purposes of this chapter, the term
`brewer' means any person who brews beer or produces beer for sale.
Such term shall not include any person who produces only beer exempt
from tax under section 5053(e).''</DELETED>
<DELETED> (14) The text of section 5182 is amended to read
as follows:</DELETED>
<DELETED> ``For provisions requiring recordkeeping by
wholesale liquor dealers, see section 5112, and by retail
liquor dealers, see section 5122.''</DELETED>
<DELETED> (15) Subsection (b) of section 5402 is amended by
striking ``section 5092'' and inserting ``section
5052(d)''.</DELETED>
<DELETED> (16) Section 5671 is amended by striking ``or
5091''.</DELETED>
<DELETED> (17)(A) Part V of subchapter J of chapter 51 is
hereby repealed.</DELETED>
<DELETED> (B) The table of parts for such subchapter J is
amended by striking the item relating to part V.</DELETED>
<DELETED> (18)(A) Sections 5142, 5143, and 5145 are moved to
subchapter D of chapter 52, inserted after section 5731,
redesignated as sections 5732, 5733, and 5734, respectively,
and amended by striking ``this part'' each place it appears and
inserting ``this subchapter''.</DELETED>
<DELETED> (B) Section 5732, as redesignated by subparagaph
(A), is amended by striking ``(except the tax imposed by
section 5131)'' each place it appears.</DELETED>
<DELETED> (C) Subsection (c) of section 5733, as
redesignated by subparagraph (A), is amended by striking
paragraph (2) and by redesignating paragraph (3) as paragraph
(2).</DELETED>
<DELETED> (D) The table of sections for subchapter D of
chapter 52 is amended by adding at the end thereof the
following:</DELETED>
<DELETED>``Sec. 5732. Payment of tax.
<DELETED>``Sec. 5733. Provisions relating
to liability for occupational
taxes.
<DELETED>``Sec. 5734. Application of
State laws.''
<DELETED> (E) Section 5731 is amended by striking subsection
(c) and by redesignating subsection (d) as subsection
(c).</DELETED>
<DELETED> (19) Subsection (c) of section 6071 is amended by
striking ``section 5142'' and inserting ``section
5732''.</DELETED>
<DELETED> (20) Paragraph (1) of section 7652(g) is amended--
</DELETED>
<DELETED> (A) by striking ``subpart F'' and
inserting ``subpart B'', and</DELETED>
<DELETED> (B) by striking ``section 5131(a)'' and
inserting ``section 5111(a)''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act, but shall
not apply to taxes imposed for periods before such date.</DELETED>
<DELETED>TITLE III--PENSION PROVISIONS</DELETED>
<DELETED>Subtitle A--Expanding Coverage</DELETED>
<DELETED>SEC. 301. INCREASE IN BENEFIT AND CONTRIBUTION
LIMITS.</DELETED>
<DELETED> (a) Defined Benefit Plans.--</DELETED>
<DELETED> (1) Dollar limit.--</DELETED>
<DELETED> (A) Subparagraph (A) of section 415(b)(1)
(relating to limitation for defined benefit plans) is
amended by striking ``$90,000'' and inserting
``$160,000''.</DELETED>
<DELETED> (B) Subparagraphs (C) and (D) of section
415(b)(2) are each amended by striking ``$90,000'' each
place it appears in the headings and the text and
inserting ``$160,000''.</DELETED>
<DELETED> (C) Paragraph (7) of section 415(b)
(relating to benefits under certain collectively
bargained plans) is amended by striking ``the greater
of $68,212 or one-half the amount otherwise applicable
for such year under paragraph (1)(A) for `$90,000'''
and inserting ``one-half the amount otherwise
applicable for such year under paragraph (1)(A) for
`$160,000'''.</DELETED>
<DELETED> (2) Limit reduced when benefit begins before age
62.--Subparagraph (C) of section 415(b)(2) is amended by
striking ``the social security retirement age'' each place it
appears in the heading and text and inserting ``age
62''.</DELETED>
<DELETED> (3) Limit increased when benefit begins after age
65.--Subparagraph (D) of section 415(b)(2) is amended by
striking ``the social security retirement age'' each place it
appears in the heading and text and inserting ``age
65''.</DELETED>
<DELETED> (4) Cost-of-living adjustments.--Subsection (d) of
section 415 (related to cost-of-living adjustments) is
amended--</DELETED>
<DELETED> (A) by striking ``$90,000'' in paragraph
(1)(A) and inserting ``$160,000'', and</DELETED>
<DELETED> (B) in paragraph (3)(A)--</DELETED>
<DELETED> (i) by striking ``$90,000'' in the
heading and inserting ``$160,000'',
and</DELETED>
<DELETED> (ii) by striking ``October 1,
1986'' and inserting ``July 1,
2000''.</DELETED>
<DELETED> (5) Conforming amendment.--Section 415(b)(2) is
amended by striking subparagraph (F).</DELETED>
<DELETED> (b) Defined Contribution Plans.--</DELETED>
<DELETED> (1) Dollar limit.--Subparagraph (A) of section
415(c)(1) (relating to limitation for defined contribution
plans) is amended by striking ``$30,000'' and inserting
``$40,000''.</DELETED>
<DELETED> (2) Cost-of-living adjustments.--Subsection (d) of
section 415 (related to cost-of-living adjustments) is
amended--</DELETED>
<DELETED> (A) by striking ``$30,000'' in paragraph
(1)(C) and inserting ``$40,000'', and</DELETED>
<DELETED> (B) in paragraph (3)(D)--</DELETED>
<DELETED> (i) by striking ``$30,000'' in the
heading and inserting ``$40,000'',
and</DELETED>
<DELETED> (ii) by striking ``October 1,
1993'' and inserting ``July 1,
2000''.</DELETED>
<DELETED> (c) Qualified Trusts.--</DELETED>
<DELETED> (1) Compensation limit.--Sections 401(a)(17),
404(l), 408(k), and 505(b)(7) are each amended by striking
``$150,000'' each place it appears and inserting
``$200,000''.</DELETED>
<DELETED> (2) Base period and rounding of cost-of-living
adjustment.--Subparagraph (B) of section 401(a)(17) is
amended--</DELETED>
<DELETED> (A) by striking ``October 1, 1993'' and
inserting ``July 1, 2000'', and</DELETED>
<DELETED> (B) by striking ``$10,000'' both places it
appears and inserting ``$5,000''.</DELETED>
<DELETED> (d) Elective Deferrals.--</DELETED>
<DELETED> (1) In general.--Paragraph (1) of section 402(g)
(relating to limitation on exclusion for elective deferrals) is
amended to read as follows:</DELETED>
<DELETED> ``(1) In general.--</DELETED>
<DELETED> ``(A) Limitation.--Notwithstanding
subsections (e)(3) and (h)(1)(B), the elective
deferrals of any individual for any taxable year shall
be included in such individual's gross income to the
extent the amount of such deferrals for the taxable
year exceeds the applicable dollar amount.</DELETED>
<DELETED> ``(B) Applicable dollar amount.--For
purposes of subparagraph (A), the applicable dollar
amount shall be the amount determined in accordance
with the following table:</DELETED>
<DELETED>``For taxable years</DELETED>
The applicable
<DELETED> beginning in</DELETED>
dollar amount:
<DELETED> calendar year:</DELETED>
<DELETED> 2001.......................... $11,000
<DELETED> 2002.......................... $12,000
<DELETED> 2003.......................... $13,000
<DELETED> 2004.......................... $14,000
<DELETED> 2005 or thereafter............ $15,000.''.
<DELETED> (2) Cost-of-living adjustment.--Paragraph (5) of
section 402(g) is amended to read as follows:</DELETED>
<DELETED> ``(5) Cost-of-living adjustment.--In the case of
taxable years beginning after December 31, 2005, the Secretary
shall adjust the $15,000 amount under paragraph (1)(B) at the
same time and in the same manner as under section 415(d),
except that the base period shall be the calendar quarter
beginning July 1, 2004, and any increase under this paragraph
which is not a multiple of $500 shall be rounded to the next
lowest multiple of $500.''.</DELETED>
<DELETED> (3) Conforming amendments.--</DELETED>
<DELETED> (A) Section 402(g) (relating to limitation
on exclusion for elective deferrals), as amended by
paragraphs (1) and (2), is further amended by striking
paragraph (4) and redesignating paragraphs (5), (6),
(7), (8), and (9) as paragraphs (4), (5), (6), (7), and
(8), respectively.</DELETED>
<DELETED> (B) Paragraph (2) of section 457(c) is
amended by striking ``402(g)(8)(A)(iii)'' and inserting
``402(g)(7)(A)(iii)''.</DELETED>
<DELETED> (C) Clause (iii) of section 501(c)(18)(D)
is amended by striking ``(other than paragraph (4)
thereof)''.</DELETED>
<DELETED> (e) Deferred Compensation Plans of State and Local
Governments and Tax-Exempt Organizations.--</DELETED>
<DELETED> (1) In general.--Section 457 (relating to deferred
compensation plans of State and local governments and tax-
exempt organizations) is amended--</DELETED>
<DELETED> (A) in subsections (b)(2)(A) and (c)(1) by
striking ``$7,500'' each place it appears and inserting
``the applicable dollar amount'', and</DELETED>
<DELETED> (B) in subsection (b)(3)(A) by striking
``$15,000'' and inserting ``twice the dollar amount in
effect under subsection (b)(2)(A)''.</DELETED>
<DELETED> (2) Applicable dollar amount; cost-of-living
adjustment.--Paragraph (15) of section 457(e) is amended to
read as follows:</DELETED>
<DELETED> ``(15) Applicable dollar amount.--</DELETED>
<DELETED> ``(A) In general.--The applicable dollar
amount shall be the amount determined in accordance
with the following table:</DELETED>
<DELETED>``For taxable years</DELETED>
The applicable
<DELETED> beginning in</DELETED>
dollar amount:
<DELETED> calendar year:</DELETED>
<DELETED> 2001.......................... $11,000
<DELETED> 2002.......................... $12,000
<DELETED> 2003.......................... $13,000
<DELETED> 2004.......................... $14,000
<DELETED>2005 or thereafter........ $15,000.
<DELETED> ``(B) Cost-of-living adjustments.--In the
case of taxable years beginning after December 31,
2005, the Secretary shall adjust the $15,000 amount
specified in the table in subparagraph (A) at the same
time and in the same manner as under section 415(d),
except that the base period shall be the calendar
quarter beginning July 1, 2004, and any increase under
this paragraph which is not a multiple of $500 shall be
rounded to the next lowest multiple of
$500.''.</DELETED>
<DELETED> (f) Simple Retirement Accounts.--</DELETED>
<DELETED> (1) Limitation.--Clause (ii) of section
408(p)(2)(A) (relating to general rule for qualified salary
reduction arrangement) is amended by striking ``$6,000'' and
inserting ``the applicable dollar amount''.</DELETED>
<DELETED> (2) Applicable dollar amount.--Subparagraph (E) of
408(p)(2) is amended to read as follows:</DELETED>
<DELETED> ``(E) Applicable dollar amount; cost-of-
living adjustment.--</DELETED>
<DELETED> ``(i) In general.--For purposes of
subparagraph (A)(ii), the applicable dollar
amount shall be the amount determined in
accordance with the following table:</DELETED>
<DELETED>``For taxable years</DELETED>
The applicable
<DELETED> beginning in</DELETED>
dollar amount:
<DELETED> calendar year:</DELETED>
<DELETED> 2001................ $7,000
<DELETED> 2002................ $8,000
<DELETED> 2003................ $9,000
<DELETED> 2004 or thereafter.. $10,000.
<DELETED> ``(ii) Cost-of-living
adjustment.--In the case of a year beginning
after December 31, 2004, the Secretary shall
adjust the $10,000 amount under clause (i) at
the same time and in the same manner as under
section 415(d), except that the base period
taken into account shall be the calendar
quarter beginning July 1, 2003, and any
increase under this subparagraph which is not a
multiple of $500 shall be rounded to the next
lower multiple of $500.''.</DELETED>
<DELETED> (3) Conforming amendments.--</DELETED>
<DELETED> (A) Clause (I) of section 401(k)(11)(B)(i)
is amended by striking ``$6,000'' and inserting ``the
amount in effect under section
408(p)(2)(A)(ii)''.</DELETED>
<DELETED> (B) Section 401(k)(11) is amended by
striking subparagraph (E).</DELETED>
<DELETED> (g) Rounding Rule Relating to Defined Benefit Plans and
Defined Contribution Plans.--Paragraph (4) of section 415(d) is amended
to read as follows:</DELETED>
<DELETED> ``(4) Rounding.--</DELETED>
<DELETED> ``(A) $160,000 amount.--Any increase under
subparagraph (A) of paragraph (1) which is not a
multiple of $5,000 shall be rounded to the next lowest
multiple of $5,000.</DELETED>
<DELETED> ``(B) $40,000 amount.--Any increase under
subparagraph (C) of paragraph (1) which is not a
multiple of $1,000 shall be rounded to the next lowest
multiple of $1,000.''.</DELETED>
<DELETED> (h) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 302. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND
SOLE PROPRIETORS.</DELETED>
<DELETED> (a) Amendment to 1986 Code.--Subparagraph (B) of section
4975(f)(6) (relating to exemptions not to apply to certain
transactions) is amended by adding at the end the following new
clause:</DELETED>
<DELETED> ``(iii) Loan exception.--For
purposes of subparagraph (A)(i), the term
`owner-employee' shall only include a person
described in subclause (II) or (III) of clause
(i).''.</DELETED>
<DELETED> (b) Amendment to ERISA.--Section 408(d)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is
amended by adding at the end the following new subparagraph:</DELETED>
<DELETED> ``(C) For purposes of paragraph (1)(A), the term `owner-
employee' shall only include a person described in clause (ii) or (iii)
of subparagraph (A).''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to loans made after December 31, 2000.</DELETED>
<DELETED>SEC. 303. MODIFICATION OF TOP-HEAVY RULES.</DELETED>
<DELETED> (a) Simplification of Definition of Key Employee.--
</DELETED>
<DELETED> (1) In general.--Section 416(i)(1)(A) (defining
key employee) is amended--</DELETED>
<DELETED> (A) by striking ``or any of the 4
preceding plan years'' in the matter preceding clause
(i),</DELETED>
<DELETED> (B) by striking clause (i) and inserting
the following:</DELETED>
<DELETED> ``(i) an officer of the employer
having an annual compensation greater than
$150,000,'',</DELETED>
<DELETED> (C) by striking clause (ii) and
redesignating clauses (iii) and (iv) as clauses (ii)
and (iii), respectively, and</DELETED>
<DELETED> (D) by striking the second sentence in the
matter following clause (iii), as redesignated by
subparagraph (C).</DELETED>
<DELETED> (2) Conforming amendment.--Section
416(i)(1)(B)(iii) is amended by striking ``and subparagraph
(A)(ii)''.</DELETED>
<DELETED> (b) Matching Contributions Taken Into Account for Minimum
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined
contribution plans) is amended by adding at the end the following:
``Employer matching contributions (as defined in section 401(m)(4)(A))
shall be taken into account for purposes of this
subparagraph.''.</DELETED>
<DELETED> (c) Distributions During Last Year Before Determination
Date Taken Into Account.--</DELETED>
<DELETED> (1) In general.--Paragraph (3) of section 416(g)
is amended to read as follows:</DELETED>
<DELETED> ``(3) Distributions during last year before
determination date taken into account.--</DELETED>
<DELETED> ``(A) In general.--For purposes of
determining--</DELETED>
<DELETED> ``(i) the present value of the
cumulative accrued benefit for any employee,
or</DELETED>
<DELETED> ``(ii) the amount of the account
of any employee,</DELETED>
<DELETED>such present value or amount shall be
increased by the aggregate distributions made with
respect to such employee under the plan during the 1-
year period ending on the determination date. The
preceding sentence shall also apply to distributions
under a terminated plan which if it had not been
terminated would have been required to be included in
an aggregation group.</DELETED>
<DELETED> ``(B) 5-year period in case of in-service
distribution.--In the case of any distribution made for
a reason other than separation from service, death, or
disability, subparagraph (A) shall be applied by
substituting `5-year period' for `1-year
period'.''.</DELETED>
<DELETED> (2) Benefits not taken into account.--Subparagraph
(E) of section 416(g)(4) is amended--</DELETED>
<DELETED> (A) by striking ``last 5 years'' in the
heading and inserting ``last year before determination
date'', and</DELETED>
<DELETED> (B) by striking ``5-year period'' and
inserting ``1-year period''.</DELETED>
<DELETED> (d) Definition of Top-Heavy Plans.--Paragraph (4) of
section 416(g) (relating to other special rules for top-heavy plans) is
amended by adding at the end the following new subparagraph:</DELETED>
<DELETED> ``(H) Cash or deferred arrangements using
alternative methods of meeting nondiscrimination
requirements.--The term `top-heavy plan' shall not
include a plan which consists solely of--</DELETED>
<DELETED> ``(i) a cash or deferred
arrangement which meets the requirements of
section 401(k)(12), and</DELETED>
<DELETED> ``(ii) matching contributions with
respect to which the requirements of section
401(m)(11) are met.</DELETED>
<DELETED>If, but for this subparagraph, a plan would be
treated as a top-heavy plan because it is a member of
an aggregation group which is a top-heavy group,
contributions under the plan may be taken into account
in determining whether any other plan in the group
meets the requirements of subsection
(c)(2).''.</DELETED>
<DELETED> (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit
plans) is amended--</DELETED>
<DELETED> (A) by striking ``clause (ii)'' in clause
(i) and inserting ``clause (ii) or (iii)'',
and</DELETED>
<DELETED> (B) by adding at the end the
following:</DELETED>
<DELETED> ``(iii) Exception for frozen
plan.--For purposes of determining an
employee's years of service with the employer,
any service with the employer shall be
disregarded to the extent that such service
occurs during a plan year when the plan
benefits (within the meaning of section 410(b))
no employee or former employee.''.</DELETED>
<DELETED> (f) Elimination of Family Attribution.--Section
416(i)(1)(B) (defining 5-percent owner) is amended by adding at the end
the following new clause:</DELETED>
<DELETED> ``(iv) Family attribution
disregarded.--Solely for purposes of
applying this paragraph (and not for purposes of any provision of this
title which incorporates by reference the definition of a key employee
or 5-percent owner under this paragraph), section 318 shall be applied
without regard to subsection (a)(1) thereof in determining whether any
person is a 5-percent owner.''.</DELETED>
<DELETED> (g) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 304. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR
PURPOSES OF DEDUCTION LIMITS.</DELETED>
<DELETED> (a) In General.--Section 404 (relating to deduction for
contributions of an employer to an employees' trust or annuity plan and
compensation under a deferred payment plan) is amended by adding at the
end the following new subsection:</DELETED>
<DELETED> ``(n) Elective Deferrals Not Taken Into Account for
Purposes of Deduction Limits.--Elective deferrals (as defined in
section 402(g)(3)) shall not be subject to any limitation contained in
paragraph (3), (7), or (9) of subsection (a), and such elective
deferrals shall not be taken into account in applying any such
limitation to any other contributions.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 305. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED
COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND
TAX-EXEMPT ORGANIZATIONS.</DELETED>
<DELETED> (a) In General.--Subsection (c) of section 457 (relating
to deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 211, is amended to read as
follows:</DELETED>
<DELETED> ``(c) Limitation.--The maximum amount of the compensation
of any one individual which may be deferred under subsection (a) during
any taxable year shall not exceed the amount in effect under subsection
(b)(2)(A) (as modified by any adjustment provided under subsection
(b)(3)).''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 306. ELIMINATION OF USER FEE FOR REQUESTS TO IRS
REGARDING PENSION PLANS.</DELETED>
<DELETED> (a) Elimination of Certain User Fees.--The Secretary of
the Treasury or the Secretary's delegate shall not require payment of
user fees under the program established under section 7527 of the
Internal Revenue Code of 1986 for requests to the Internal Revenue
Service for determination letters with respect to the qualified status
of a pension benefit plan maintained solely by one or more eligible
employers or any trust which is part of the plan. The preceding
sentence shall not apply to any request--</DELETED>
<DELETED> (1) made after the 5th plan year the pension
benefit plan is in existence, or</DELETED>
<DELETED> (2) made by the sponsor of any prototype or
similar plan which the sponsor intends to market to
participating employers.</DELETED>
<DELETED> (b) Pension Benefit Plan.--For purposes of this section,
the term ``pension benefit plan'' means a pension, profit-sharing,
stock bonus, annuity, or employee stock ownership plan.</DELETED>
<DELETED> (c) Eligible Employer.--For purposes of this section, the
term ``eligible employer'' has the same meaning given such term in
section 408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The
determination of whether an employer is an eligible employer under this
section shall be made as of the date of the request described in
subsection (a).</DELETED>
<DELETED> (d) Effective Date.--The provisions of this section shall
apply with respect to requests made after December 31, 2000.</DELETED>
<DELETED>SEC. 307. DEDUCTION LIMITS.</DELETED>
<DELETED> (a) In General.--Section 404(a) (relating to general rule)
is amended by adding at the end the following:</DELETED>
<DELETED> ``(12) Definition of compensation.--For purposes
of paragraphs (3), (7), (8), and (9), the term `compensation'
shall include amounts treated as participant's compensation
under subparagraph (C) or (D) of section
415(c)(3).''.</DELETED>
<DELETED> (b) Conforming Amendment.--Subparagraph (B) of section
404(a)(3) is amended by striking the last sentence thereof.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 308. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX
CONTRIBUTIONS.</DELETED>
<DELETED> (a) In General.--Subpart A of part I of subchapter D of
chapter 1 (relating to deferred compensation, etc.) is amended by
inserting after section 402 the following new section:</DELETED>
<DELETED>``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS
CONTRIBUTIONS.</DELETED>
<DELETED> ``(a) General Rule.--If an applicable retirement plan
includes a qualified plus contribution program--</DELETED>
<DELETED> ``(1) any designated plus contribution made by an
employee pursuant to the program shall be treated as an
elective deferral for purposes of this chapter, except that
such contribution shall not be excludable from gross income,
and</DELETED>
<DELETED> ``(2) such plan (and any arrangement which is part
of such plan) shall not be treated as failing to meet any
requirement of this chapter solely by reason of including such
program.</DELETED>
<DELETED> ``(b) Qualified Plus Contribution Program.--For purposes
of this section--</DELETED>
<DELETED> ``(1) In general.--The term `qualified plus
contribution program' means a program under which an employee
may elect to make designated plus contributions in lieu of all
or a portion of elective deferrals the employee is otherwise
eligible to make under the applicable retirement
plan.</DELETED>
<DELETED> ``(2) Separate accounting required.--A program
shall not be treated as a qualified plus contribution program
unless the applicable retirement plan--</DELETED>
<DELETED> ``(A) establishes separate accounts
(`designated plus accounts') for the designated plus
contributions of each employee and any earnings
properly allocable to the contributions, and</DELETED>
<DELETED> ``(B) maintains separate recordkeeping
with respect to each account.</DELETED>
<DELETED> ``(c) Definitions and Rules Relating to Designated Plus
Contributions.--For purposes of this section--</DELETED>
<DELETED> ``(1) Designated plus contribution.--The term
`designated plus contribution' means any elective deferral
which--</DELETED>
<DELETED> ``(A) is excludable from gross income of
an employee without regard to this section,
and</DELETED>
<DELETED> ``(B) the employee designates (at such
time and in such manner as the Secretary may prescribe)
as not being so excludable.</DELETED>
<DELETED> ``(2) Designation limits.--The amount of elective
deferrals which an employee may designate under paragraph (1)
shall not exceed the excess (if any) of--</DELETED>
<DELETED> ``(A) the maximum amount of elective
deferrals excludable from gross income of the employee
for the taxable year (without regard to this section),
over</DELETED>
<DELETED> ``(B) the aggregate amount of elective
deferrals of the employee for the taxable year which
the employee does not designate under paragraph
(1).</DELETED>
<DELETED> ``(3) Rollover contributions.--</DELETED>
<DELETED> ``(A) In general.--A rollover contribution
of any payment or distribution from a designated plus
account which is otherwise allowable under this chapter
may be made only if the contribution is to--</DELETED>
<DELETED> ``(i) another designated plus
account of the individual from whose account
the payment or distribution was made,
or</DELETED>
<DELETED> ``(ii) a Roth IRA of such
individual.</DELETED>
<DELETED> ``(B) Coordination with limit.--Any
rollover contribution to a designated plus account
under subparagraph (A) shall not be taken into account
for purposes of paragraph (1).</DELETED>
<DELETED> ``(d) Distribution Rules.--For purposes of this title--
</DELETED>
<DELETED> ``(1) Exclusion.--Any qualified distribution from
a designated plus account shall not be includible in gross
income.</DELETED>
<DELETED> ``(2) Qualified distribution.--For purposes of
this subsection--</DELETED>
<DELETED> ``(A) In general.--The term `qualified
distribution' has the meaning given such term by
section 408A(d)(2)(A) (without regard to clause (iv)
thereof).</DELETED>
<DELETED> ``(B) Distributions within nonexclusion
period.--A payment or distribution from a designated
plus account shall not be treated as a qualified
distribution if such payment or distribution is made
within the 5-taxable-year period beginning with the
earlier of--</DELETED>
<DELETED> ``(i) the first taxable year for
which the individual made a designated plus
contribution to any designated plus account
established for such individual under the same
applicable retirement plan, or</DELETED>
<DELETED> ``(ii) if a rollover contribution
was made to such designated plus account from a
designated plus account previously established
for such individual under another applicable
retirement plan, the first taxable year for
which the individual made a designated plus
contribution to such previously established
account.</DELETED>
<DELETED> ``(C) Distributions of excess deferrals
and earnings.--The term `qualified distribution' shall
not include any distribution of any excess deferral
under section 402(g)(2) and any income on the excess
deferral.</DELETED>
<DELETED> ``(3) Aggregation rules.--Section 72 shall be
applied separately with respect to distributions and payments
from a designated plus account and other distributions and
payments from the plan.</DELETED>
<DELETED> ``(e) Other Definitions.--For purposes of this section--
</DELETED>
<DELETED> ``(1) Applicable retirement plan.--The term
`applicable retirement plan' means--</DELETED>
<DELETED> ``(A) an employees' trust described in
section 401(a) which is exempt from tax under section
501(a), and</DELETED>
<DELETED> ``(B) a plan under which amounts are
contributed by an individual's employer for an annuity
contract described in section 403(b).</DELETED>
<DELETED> ``(2) Elective deferral.--The term `elective
deferral' means any elective deferral described in subparagraph
(A) or (C) of section 402(g)(3).''.</DELETED>
<DELETED> (b) Excess Deferrals.--Section 402(g) (relating to
limitation on exclusion for elective deferrals) is amended--</DELETED>
<DELETED> (1) by adding at the end of paragraph (1) the
following new sentence: ``The preceding sentence shall not
apply to so much of such excess as does not exceed the
designated plus contributions of the individual for the taxable
year.'', and</DELETED>
<DELETED> (2) by inserting ``(or would be included but for
the last sentence thereof)'' after ``paragraph (1)'' in
paragraph (2)(A).</DELETED>
<DELETED> (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is
amended by adding at the end the following:</DELETED>
<DELETED>``If any portion of an eligible rollover
distribution is attributable to payments or
distributions from a designated plus account (as
defined in section 402A), an eligible retirement plan
with respect to such portion shall include only another
designated plus account and a Roth IRA.''.</DELETED>
<DELETED> (d) Reporting Requirements.--</DELETED>
<DELETED> (1) W-2 information.--Section 6051(a)(8) is
amended by inserting ``, including the amount of designated
plus contributions (as defined in section 402A)'' before the
comma at the end.</DELETED>
<DELETED> (2) Information.--Section 6047 is amended by
redesignating subsection (f) as subsection (g) and by inserting
after subsection (e) the following new subsection:</DELETED>
<DELETED> ``(f) Designated Plus Contributions.--The Secretary shall
require the plan administrator of each applicable retirement plan (as
defined in section 402A) to make such returns and reports regarding
designated plus contributions (as so defined) to the Secretary,
participants and beneficiaries of the plan, and such other persons as
the Secretary may prescribe.''.</DELETED>
<DELETED> (e) Conforming Amendments.--</DELETED>
<DELETED> (1) Section 408A(e) is amended by adding after the
first sentence the following new sentence: ``Such term includes
a rollover contribution described in section
402A(c)(3)(A).''.</DELETED>
<DELETED> (2) The table of sections for subpart A of part I
of subchapter D of chapter 1 is amended by inserting after the
item relating to section 402 the following new item:</DELETED>
<DELETED>``Sec. 402A. Optional treatment
of elective deferrals as plus
contributions.''.
<DELETED> (f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 309. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL
EMPLOYERS.</DELETED>
<DELETED> (a) In General.--Subparagraph (A) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(A)) is amended--</DELETED>
<DELETED> (1) in clause (i), by inserting ``other than a new
single-employer plan (as defined in subparagraph (F))
maintained by a small employer (as so defined),'' after
``single-employer plan,'',</DELETED>
<DELETED> (2) in clause (iii), by striking the period at the
end and inserting ``, and'', and</DELETED>
<DELETED> (3) by adding at the end the following new
clause:</DELETED>
<DELETED> ``(iv) in the case of a new single-employer plan
(as defined in subparagraph (F)) maintained by a small employer
(as so defined) for the plan year, $5 for each individual who
is a participant in such plan during the plan
year.''.</DELETED>
<DELETED> (b) Definition of New Single-Employer Plan.--Section
4006(a)(3) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1306(a)(3)) is amended by adding at the end the following new
subparagraph:</DELETED>
<DELETED> ``(F)(i) For purposes of this paragraph, a single-employer
plan maintained by a contributing sponsor shall be treated as a new
single-employer plan for each of its first 5 plan years if, during the
36-month period ending on the date of the adoption of such plan, the
sponsor or any member of such sponsor's controlled group (or any
predecessor of either) had not established or maintained a plan to
which this title applies with respect to which benefits were accrued
for substantially the same employees as are in the new single-employer
plan.</DELETED>
<DELETED> ``(ii)(I) For purposes of this paragraph, the term `small
employer' means an employer which on the first day of any plan year
has, in aggregation with all members of the controlled group of such
employer, 100 or fewer employees.</DELETED>
<DELETED> ``(II) In the case of a plan maintained by two or more
contributing sponsors that are not part of the same controlled group,
the employees of all contributing sponsors and controlled groups of
such sponsors shall be aggregated for purposes of determining whether
any contributing sponsor is a small employer.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to plans established after December 31, 2000.</DELETED>
<DELETED>SEC. 310. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND
SMALL PLANS.</DELETED>
<DELETED> (a) New Plans.--Subparagraph (E) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by adding at the end the following new
clause:</DELETED>
<DELETED> ``(v) In the case of a new defined benefit plan, the
amount determined under clause (ii) for any plan year shall be an
amount equal to the product of the amount determined under clause (ii)
and the applicable percentage. For purposes of this clause, the term
`applicable percentage' means--</DELETED>
<DELETED> ``(I) 0 percent, for the first plan
year.</DELETED>
<DELETED> ``(II) 20 percent, for the second plan
year.</DELETED>
<DELETED> ``(III) 40 percent, for the third plan
year.</DELETED>
<DELETED> ``(IV) 60 percent, for the fourth plan
year.</DELETED>
<DELETED> ``(V) 80 percent, for the fifth plan
year.</DELETED>
<DELETED>For purposes of this clause, a defined benefit plan (as
defined in section 3(35)) maintained by a contributing sponsor shall be
treated as a new defined benefit plan for its first 5 plan years if,
during the 36-month period ending on the date of the adoption of the
plan, the sponsor and each member of any controlled group including the
sponsor (or any predecessor of either) did not establish or maintain a
plan to which this title applies with respect to which benefits were
accrued for substantially the same employees as are in the new
plan.''.</DELETED>
<DELETED> (b) Small Plans.--Paragraph (3) of section 4006(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is
amended--</DELETED>
<DELETED> (1) by striking ``The'' in subparagraph (E)(i) and
inserting ``Except as provided in subparagraph (G), the'',
and</DELETED>
<DELETED> (2) by inserting after subparagraph (F) the
following new subparagraph:</DELETED>
<DELETED> ``(G)(i) In the case of an employer who has 25 or fewer
employees on the first day of the plan year, the additional premium
determined under subparagraph (E) for each participant shall not exceed
$5 multiplied by the number of participants in the plan as of the close
of the preceding plan year.</DELETED>
<DELETED> ``(ii) For purposes of clause (i), whether an employer has
25 or fewer employees on the first day of the plan year is determined
taking into consideration all of the employees of all members of the
contributing sponsor's controlled group. In the case of a plan
maintained by two or more contributing sponsors, the employees of all
contributing sponsors and their controlled groups shall be aggregated
for purposes of determining whether 25-or-fewer-employees limitation
has been satisfied.''.</DELETED>
<DELETED> (c) Effective Dates.--</DELETED>
<DELETED> (1) Subsection (a).--The amendments made by
subsection (a) shall apply to plans established after December
31, 2000.</DELETED>
<DELETED> (2) Subsection (b).--The amendments made by
subsection (b) shall apply to plan years beginning after
December 31, 2000.</DELETED>
<DELETED>Subtitle B--Enhancing Fairness for Women</DELETED>
<DELETED>SEC. 321. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR
OVER.</DELETED>
<DELETED> (a) In General.--Section 414 (relating to definitions and
special rules) is amended by adding at the end the following new
subsection:</DELETED>
<DELETED> ``(v) Catchup Contributions for Individuals Age 50 or
Over.--</DELETED>
<DELETED> ``(1) In general.--An applicable employer plan
shall not be treated as failing to meet any requirement of this
title solely because the plan permits an eligible participant
to make additional elective deferrals in any plan
year.</DELETED>
<DELETED> ``(2) Limitation on amount of additional
deferrals.--</DELETED>
<DELETED> ``(A) In general.--A plan shall not permit
additional elective deferrals under paragraph (1) for
any year in an amount greater than the lesser of--</DELETED>
<DELETED> ``(i) the applicable percentage of
the applicable dollar amount for such elective
deferrals for such year, or</DELETED>
<DELETED> ``(ii) the excess (if any) of--
</DELETED>
<DELETED> ``(I) the participant's
compensation for the year,
over</DELETED>
<DELETED> ``(II) any other elective
deferrals of the participant for such
year which are made without regard to
this subsection.</DELETED>
<DELETED> ``(B) Applicable percentage.--For purposes
of this paragraph, the applicable percentage shall be
determined in accordance with the following
table:</DELETED>
<DELETED>``For taxable years The applicable
<DELETED>beginning in: percentage is:
<DELETED>2001................................. 10 percent
<DELETED>2002................................. 20 percent
<DELETED>2003................................. 30 percent
<DELETED>2004................................. 40 percent
<DELETED>2005 and thereafter.................. 50 percent.
<DELETED> ``(3) Treatment of contributions.--In the case of
any contribution to a plan under paragraph (1)--</DELETED>
<DELETED> ``(A) such contribution shall not, with
respect to the year in which the contribution is made--
</DELETED>
<DELETED> ``(i) be subject to any otherwise
applicable limitation contained in section
402(g), 402(h), 403(b), 404(a), 404(h), 408,
415, or 457, or</DELETED>
<DELETED> ``(ii) be taken into account in
applying such limitations to other
contributions or benefits under such plan or
any other such plan, and</DELETED>
<DELETED> ``(B) such plan shall not be treated as
failing to meet the requirements of section 401(a)(4),
401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 401(m),
403(b)(12), 408(k), 408(p), 408B, 410(b), or 416 by
reason of the making of (or the right to make) such
contribution.</DELETED>
<DELETED> ``(4) Eligible participant.--For purposes of this
subsection, the term `eligible participant' means, with respect
to any plan year, a participant in a plan--</DELETED>
<DELETED> ``(A) who has attained the age of 50
before the close of the plan year, and</DELETED>
<DELETED> ``(B) with respect to whom no other
elective deferrals may (without regard to this
subsection) be made to the plan for the plan year by
reason of the application of any limitation or other
restriction described in paragraph (3) or contained in
the terms of the plan.</DELETED>
<DELETED> ``(5) Other definitions and rules.--For purposes
of this subsection--</DELETED>
<DELETED> ``(A) Applicable dollar amount.--The term
`applicable dollar amount' means, with respect to any
year, the amount in effect under section 402(g)(1)(B),
408(p)(2)(E)(i), or 457(e)(15)(A), whichever is
applicable to an applicable employer plan, for such
year.</DELETED>
<DELETED> ``(B) Applicable employer plan.--The term
`applicable employer plan' means--</DELETED>
<DELETED> ``(i) an employees' trust
described in section 401(a) which is exempt
from tax under section 501(a),</DELETED>
<DELETED> ``(ii) a plan under which amounts
are contributed by an individual's employer for
an annuity contract described in section
403(b),</DELETED>
<DELETED> ``(iii) an eligible deferred
compensation plan under section 457 of an
eligible employer as defined in section
457(e)(1)(A), and</DELETED>
<DELETED> ``(iv) an arrangement meeting the
requirements of section 408 (k) or
(p).</DELETED>
<DELETED> ``(C) Elective deferral.--The term
`elective deferral' has the meaning given such term by
subsection (u)(2)(C).</DELETED>
<DELETED> ``(D) Exception for section 457 plans.--
This subsection shall not apply to an applicable
employer plan described in subparagraph (B)(iii) for
any year to which section 457(b)(3)
applies.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to contributions in taxable years beginning after December
31, 2000.</DELETED>
<DELETED>SEC. 322. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES
TO DEFINED CONTRIBUTION PLANS.</DELETED>
<DELETED> (a) Equitable Treatment.--</DELETED>
<DELETED> (1) In general.--Subparagraph (B) of section
415(c)(1) (relating to limitation for defined contribution
plans) is amended by striking ``25 percent'' and inserting
``100 percent''.</DELETED>
<DELETED> (2) Application to section 403(b).--Section 403(b)
is amended--</DELETED>
<DELETED> (A) by striking ``the exclusion allowance
for such taxable year'' in paragraph (1) and inserting
``the applicable limit under section 415'',</DELETED>
<DELETED> (B) by striking paragraph (2),
and</DELETED>
<DELETED> (C) by inserting ``or any amount received
by a former employee after the 5th taxable year
following the taxable year in which such employee was
terminated'' before the period at the end of the second
sentence of paragraph (3).</DELETED>
<DELETED> (3) Conforming amendments.--</DELETED>
<DELETED> (A) Subsection (f) of section 72 is
amended by striking ``section 403(b)(2)(D)(iii))'' and
inserting ``section 403(b)(2)(D)(iii), as in effect
before the enactment of the Wage and Employment Growth
Act of 1999)''.</DELETED>
<DELETED> (B) Section 404(a)(10)(B) is amended by
striking ``, the exclusion allowance under section
403(b)(2),''.</DELETED>
<DELETED> (C) Section 415(a)(2) is amended by
striking ``, and the amount of the contribution for
such portion shall reduce the exclusion allowance as
provided in section 403(b)(2)''.</DELETED>
<DELETED> (D) Section 415(c)(3) is amended by adding
at the end the following new subparagraph:</DELETED>
<DELETED> ``(E) Annuity contracts.--In the case of
an annuity contract described in section 403(b), the
term `participant's compensation' means the
participant's includible compensation determined under
section 403(b)(3).''.</DELETED>
<DELETED> (E) Section 415(c) is amended by striking
paragraph (4).</DELETED>
<DELETED> (F) Section 415(c)(7) is amended to read
as follows:</DELETED>
<DELETED> ``(7) Certain contributions by church plans not
treated as exceeding limit.--</DELETED>
<DELETED> ``(A) In general.--Notwithstanding any
other provision of this subsection, at the election of
a participant who is an employee of a church or a
convention or association of churches, including an
organization described in section 414(e)(3)(B)(ii),
contributions and other additions for an annuity
contract or retirement income account described in
section 403(b) with respect to such participant, when
expressed as an annual addition to such participant's
account, shall be treated as not exceeding the
limitation of paragraph (1) if such annual addition is
not in excess of $10,000.</DELETED>
<DELETED> ``(B) $40,000 aggregate limitation.--The
total amount of additions with respect to any
participant which may be taken into account for
purposes of this subparagraph for all years may not
exceed $40,000.</DELETED>
<DELETED> ``(C) Annual addition.--For purposes of
this paragraph, the term `annual addition' has the
meaning given such term by paragraph (2).''.</DELETED>
<DELETED> (G) Subparagraph (B) of section 402(g)(7)
(as redesignated by section 211) is amended by
inserting before the period at the end the following:
``(as in effect before the enactment of the Wage and
Employment Growth Act of 1999)''.</DELETED>
<DELETED> (3) Effective date.--The amendments made by this
subsection shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED> (b) Special Rules for Sections 403(b) and 408.--</DELETED>
<DELETED> (1) In general.--Subsection (k) of section 415 is
amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(4) Special rules for sections 403(b) and 408.--
For purposes of this section, any annuity contract described in
section 403(b) for the benefit of a participant shall be
treated as a defined contribution plan maintained by each
employer with respect to which the participant has the control
required under subsection (b) or (c) of section 414 (as
modified by subsection (h)). For purposes of this section, any
contribution by an employer to a simplified employee pension
plan for an individual for a taxable year shall be treated as
an employer contribution to a defined contribution plan for
such individual for such year.''.</DELETED>
<DELETED> (2) Effective date.--</DELETED>
<DELETED> (A) In general.--The amendment made by
paragraph (1) shall apply to limitation years beginning
after December 31, 1999.</DELETED>
<DELETED> (B) Exclusion allowance.--Effective for
limitation years beginning in 2000, in the case of any
annuity contract described in section 403(b) of the
Internal Revenue Code of 1986, the amount of the
contribution disqualified by reason of section 415(g)
of such Code shall reduce the exclusion allowance as
provided in section 403(b)(2) of such Code.</DELETED>
<DELETED> (3) Modification of 403(b) exclusion allowance to
conform to 415 modification.--The Secretary of the Treasury
shall modify the regulations regarding the exclusion allowance
under section 403(b)(2) of the Internal Revenue Code of 1986
to render void the requirement that contributions to a defined benefit
pension plan be treated as previously excluded amounts for purposes of
the exclusion allowance. For taxable years beginning after December 31,
1999, such regulations shall be applied as if such requirement were
void.</DELETED>
<DELETED> (c) Deferred Compensation Plans of State and Local
Governments and Tax-Exempt Organizations.--</DELETED>
<DELETED> (1) In general.--Subparagraph (B) of section
457(b)(2) (relating to salary limitation on eligible deferred
compensation plans) is amended by striking
``33</DELETED>\<DELETED>1/3</DELETED>\ <DELETED>percent'' and
inserting ``100 percent''.</DELETED>
<DELETED> (2) Effective date.--The amendment made by this
subsection shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 323. FASTER VESTING OF CERTAIN EMPLOYER MATCHING
CONTRIBUTIONS.</DELETED>
<DELETED> (a) Amendments to 1986 Code.--Section 411(a) (relating to
minimum vesting standards) is amended--</DELETED>
<DELETED> (1) in paragraph (2), by striking ``A plan'' and
inserting ``Except as provided in paragraph (12), a plan'',
and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(12) Faster vesting for matching
contributions.--In the case of matching contributions (as
defined in section 401(m)(4)(A)), paragraph (2) shall be
applied--</DELETED>
<DELETED> ``(A) by substituting `3 years' for `5
years' in subparagraph (A), and</DELETED>
<DELETED> ``(B) by substituting the following table
for the table contained in subparagraph (B):</DELETED>
The nonforfeitable
<DELETED>``Years of service: percentage is:
<DELETED>2.................................... 20
<DELETED>3.................................... 40
<DELETED>4.................................... 60
<DELETED>5.................................... 80
<DELETED>6.................................... 100.''.
<DELETED> (b) Amendments to ERISA.--Section 203(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
</DELETED>
<DELETED> (1) in paragraph (2), by striking ``A plan'' and
inserting ``Except as provided in paragraph (4), a plan'',
and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(4) Faster vesting for matching contributions.--
In the case of matching contributions (as defined in section
401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph
(2) shall be applied--</DELETED>
<DELETED> ``(A) by substituting `3 years' for `5
years' in subparagraph (A), and</DELETED>
<DELETED> ``(B) by substituting the following table
for the table contained in subparagraph (B):</DELETED>
The nonforfeitable
<DELETED>``Years of service: percentage is:
<DELETED>2.................................... 20
<DELETED>3.................................... 40
<DELETED>4.................................... 60
<DELETED>5.................................... 80
<DELETED>6.................................... 100.''.
<DELETED> (c) Effective Dates.--</DELETED>
<DELETED> (1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall apply to
contributions for plan years beginning after December 31,
2000.</DELETED>
<DELETED> (2) Collective bargaining agreements.--In the case
of a plan maintained pursuant to one or more collective
bargaining agreements between employee representatives and one
or more employers ratified by the date of the enactment of this
Act, the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
</DELETED>
<DELETED> (A) the later of--</DELETED>
<DELETED> (i) the date on which the last of
such collective bargaining agreements
terminates (determined without regard to any
extension thereof on or after such date of the
enactment), or</DELETED>
<DELETED> (ii) January 1, 2001, or</DELETED>
<DELETED> (B) January 1, 2005.</DELETED>
<DELETED> (3) Service required.--With respect to any plan,
the amendments made by this section shall not apply to any
employee before the date that such employee has 1 hour of
service under such plan in any plan year to which the
amendments made by this section apply.</DELETED>
<DELETED>SEC. 324. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION
RULES.</DELETED>
<DELETED> (a) Simplification and Finalization of Minimum
Distribution Requirements.--</DELETED>
<DELETED> (1) In general.--The Secretary of the Treasury
shall--</DELETED>
<DELETED> (A) simplify and finalize the regulations
relating to minimum distribution requirements under
sections 401(a)(9), 408(a)(6) and (b)(3), 403(b)(10),
and 457(d)(2) of the Internal Revenue Code of 1986,
and</DELETED>
<DELETED> (B) modify such regulations to--</DELETED>
<DELETED> (i) reflect current life
expectancy, and</DELETED>
<DELETED> (ii) revise the required
distribution methods so that, under reasonable
assumptions, the amount of the required
minimum distribution does not decrease over a participant's life
expectancy.</DELETED>
<DELETED> (2) Fresh start.--Notwithstanding subparagraph (D)
of section 401(a)(9) of such Code, during the first year that
regulations are in effect under this subsection, required
distributions for future years may be redetermined to reflect
changes under such regulations. Such redetermination shall
include the opportunity to choose a new designated beneficiary
and to elect a new method of calculating life
expectancy.</DELETED>
<DELETED> (3) Effective date for regulations.--Regulations
referred to in paragraph (1) shall be effective for years
beginning after December 31, 2000, and shall apply in such
years without regard to whether an individual had previously
begun receiving minimum distributions.</DELETED>
<DELETED> (b) Repeal of Rule Where Distributions Had Begun Before
Death Occurs.--</DELETED>
<DELETED> (1) In general.--Subparagraph (B) of section
401(a)(9) is amended by striking clause (i) and redesignating
clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii),
respectively.</DELETED>
<DELETED> (2) Conforming changes.--</DELETED>
<DELETED> (A) Clause (i) of section 401(a)(9)(B) (as
so redesignated) is amended--</DELETED>
<DELETED> (i) by striking ``for other
cases'' in the heading, and</DELETED>
<DELETED> (ii) by striking ``the
distribution of the employee's interest has
begun in accordance with subparagraph (A)(ii)''
and inserting ``his entire interest has been
distributed to him,''.</DELETED>
<DELETED> (B) Clause (ii) of section 401(a)(9)(B)
(as so redesignated) is amended by striking ``clause
(ii)'' and inserting ``clause (i)''.</DELETED>
<DELETED> (C) Clause (iii) of section 401(a)(9)(B)
(as so redesignated) is amended--</DELETED>
<DELETED> (i) by striking ``clause
(iii)(I)'' and inserting ``clause
(ii)(I)'',</DELETED>
<DELETED> (ii) by striking ``clause
(iii)(III)'' in subclause (I) and inserting
``clause (ii)(III)'',</DELETED>
<DELETED> (iii) by striking ``the date on
which the employee would have attained the age
70</DELETED>\<DELETED>1/
2</DELETED>\<DELETED>,'' in subclause (I) and
inserting ``April 1 of the calendar year
following the calendar year in which the spouse
attains 70</DELETED>\<DELETED>1/
2</DELETED>\<DELETED>,'', and</DELETED>
<DELETED> (iv) by striking ``the
distributions to such spouse begin,'' in
subclause (II) and inserting ``his entire
interest has been distributed to
him,''.</DELETED>
<DELETED> (3) Effective date.--The amendments made by this
subsection shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED> (c) Reduction in Excise Tax.--</DELETED>
<DELETED> (1) In general.--Subsection (a) of section 4974 is
amended by striking ``50 percent'' and inserting ``10
percent''.</DELETED>
<DELETED> (2) Effective date.--The amendment made by this
subsection shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 325. CLARIFICATION OF TAX TREATMENT OF DIVISION OF
SECTION 457 PLAN BENEFITS UPON DIVORCE.</DELETED>
<DELETED> (a) In General.--Section 414(p)(11) (relating to
application of rules to governmental and church plans) is amended--
</DELETED>
<DELETED> (1) by inserting ``or an eligible deferred
compensation plan (within the meaning of section 457(b))''
after ``subsection (e))'', and</DELETED>
<DELETED> (2) in the heading, by striking ``governmental and
church plans'' and inserting ``certain other plans''.</DELETED>
<DELETED> (b) Waiver of Certain Distribution Requirements.--
Paragraph (10) of section 414(p) is amended by striking ``and section
409(d)'' and inserting ``section 409(d), and section
457(d)''.</DELETED>
<DELETED> (c) Tax Treatment of Payments From a Section 457 Plan.--
Subsection (p) of section 414 is amended by redesignating paragraph
(12) as paragraph (13) and inserting after paragraph (11) the following
new paragraph:</DELETED>
<DELETED> ``(12) Tax treatment of payments from a section
457 plan.--If a distribution or payment from an eligible
deferred compensation plan described in section 457(b) is made
pursuant to a qualified domestic relations order, rules similar
to the rules of section 402(e)(1)(A) shall apply to such
distribution or payment.''.</DELETED>
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to transfers, distributions, and payments made after
December 31, 2000.</DELETED>
<DELETED>SEC. 326. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP
WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.</DELETED>
<DELETED> (a) In General.--The Secretary of the Treasury shall
revise the regulations relating to hardship distributions under section
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide
that the period an employee is prohibited from making elective and
employee contributions in order for a distribution to be deemed
necessary to satisfy financial need shall be equal to 6
months.</DELETED>
<DELETED> (b) Effective Date.--The revised regulations under
subsection (a) shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED>Subtitle C--Increasing Portability for Participants</DELETED>
<DELETED>SEC. 331. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF
PLANS.</DELETED>
<DELETED> (a) Rollovers From and to Section 457 Plans.--</DELETED>
<DELETED> (1) Rollovers from section 457 plans.--</DELETED>
<DELETED> (A) In general.--Section 457(e) (relating
to other definitions and special rules) is amended by
adding at the end the following:</DELETED>
<DELETED> ``(16) Rollover amounts.--</DELETED>
<DELETED> ``(A) General rule.--In the case of an
eligible deferred compensation plan established and
maintained by an employer described in subsection
(e)(1)(A), if--</DELETED>
<DELETED> ``(i) any portion of the balance
to the credit of an employee in such plan is
paid to such employee in an eligible rollover
distribution (within the meaning of section
402(c)(4) without regard to subparagraph (C)
thereof),</DELETED>
<DELETED> ``(ii) the employee transfers any
portion of the property such employee receives
in such distribution to an eligible retirement
plan described in section 402(c)(8)(B),
and</DELETED>
<DELETED> ``(iii) in the case of a
distribution of property other than money, the
amount so transferred consists of the property
distributed,</DELETED>
<DELETED>then such distribution (to the extent so
transferred) shall not be includible in gross income
for the taxable year in which paid.</DELETED>
<DELETED> ``(B) Certain rules made applicable.--The
rules of paragraphs (2) through (7) (other than
paragraph (4)(C)) and (9) of section 402(c) and section
402(f) shall apply for purposes of subparagraph
(A).</DELETED>
<DELETED> ``(C) Reporting.--Rollovers under this
paragraph shall be reported to the Secretary in the
same manner as rollovers from qualified retirement
plans (as defined in section 4974(c)).''.</DELETED>
<DELETED> (B) Deferral limit determined without
regard to rollover amounts.--Section 457(b)(2)
(defining eligible deferred compensation plan) is
amended by inserting ``(other than rollover amounts)''
after ``taxable year''.</DELETED>
<DELETED> (C) Direct rollover.--Paragraph (1) of
section 457(d) is amended by striking ``and'' at the
end of subparagraph (A), by striking the period at the
end of subparagraph (B) and inserting ``, and'', and by
inserting after subparagraph (B) the
following:</DELETED>
<DELETED> ``(C) in the case of a plan maintained by
an employer described in subsection (e)(1)(A), the plan
meets requirements similar to the requirements of
section 401(a)(31).</DELETED>
<DELETED>Any amount transferred in a direct trustee-to-trustee
transfer in accordance with section 401(a)(31) shall not be
includible in gross income for the taxable year of
transfer.''.</DELETED>
<DELETED> (D) Withholding.--</DELETED>
<DELETED> (i) Paragraph (12) of section
3401(a) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(E) under or to an eligible deferred
compensation plan which, at the time of such payment,
is a plan described in section 457(b) maintained by an
employer described in section 457(e)(1)(A);
or''.</DELETED>
<DELETED> (ii) Paragraph (3) of section
3405(c) is amended to read as
follows:</DELETED>
<DELETED> ``(3) Eligible rollover distribution.--For
purposes of this subsection, the term `eligible rollover
distribution' has the meaning given such term by section
402(f)(2)(A).''.</DELETED>
<DELETED> (iii) Liability for withholding.--
Subparagraph (B) of section 3405(d)(2) is
amended by striking ``or'' at the end of clause
(ii), by striking the period at the end of
clause (iii) and inserting ``, or'', and by
adding at the end the following:</DELETED>
<DELETED> ``(iv) section
457(b).''.</DELETED>
<DELETED> (2) Rollovers to section 457 plans.--</DELETED>
<DELETED> (A) In general.--Section 402(c)(8)(B)
(defining eligible retirement plan) is amended by
striking ``and'' at the end of clause (iii),
by striking the period at the end of clause (iv) and inserting ``,
and'', and by inserting after clause (iv) the following new
clause:</DELETED>
<DELETED> ``(v) an eligible deferred
compensation plan described in section 457(b)
of an employer described in section
457(e)(1)(A).''.</DELETED>
<DELETED> (B) Separate accounting.--Section 402(c)
is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(11) Separate accounting.--Unless a plan
described in clause (v) of paragraph (8)(B) agrees to
separately account for amounts rolled into such plan from
eligible retirement plans not described in such clause, the
plan described in such clause may not accept transfers or
rollovers from such retirement plans.''.</DELETED>
<DELETED> (C) 10 percent additional tax.--Subsection
(t) of section 72 (relating to 10-percent additional
tax on early distributions from qualified retirement
plans) is amended by adding at the end the following
new paragraph:</DELETED>
<DELETED> ``(9) Special rule for rollovers to section 457
plans.--For purposes of this subsection, a distribution from an
eligible deferred compensation plan (as defined in section
457(b)) of an employer described in section 457(e)(1)(A) shall
be treated as a distribution from a qualified retirement plan
described in 4974(c)(1) to the extent that such distribution is
attributable to an amount transferred to an eligible deferred
compensation plan from a qualified retirement plan (as defined
in section 4974(c)).''.</DELETED>
<DELETED> (b) Allowance of Rollovers From and to 403 (b) Plans.--
</DELETED>
<DELETED> (1) Rollovers from section 403 (b) plans.--Section
403(b)(8)(A)(ii) (relating to rollover amounts) is amended by
striking ``such distribution'' and all that follows and
inserting ``such distribution to an eligible retirement plan
described in section 402(c)(8)(B), and''.</DELETED>
<DELETED> (2) Rollovers to section 403 (b) plans.--Section
402(c)(8)(B) (defining eligible retirement plan), as amended by
subsection (a), is amended by striking ``and'' at the end of
clause (iv), by striking the period at the end of clause (v)
and inserting ``, and'', and by inserting after clause (v) the
following new clause:</DELETED>
<DELETED> ``(vi) an annuity contract
described in section 403(b).''.</DELETED>
<DELETED> (c) Expanded Explanation to Recipients of Rollover
Distributions.--Paragraph (1) of section 402(f) (relating to written
explanation to recipients of distributions eligible for rollover
treatment) is amended by striking ``and'' at the end of subparagraph
(C), by striking the period at the end of subparagraph (D) and
inserting ``, and'', and by adding at the end the following new
subparagraph:</DELETED>
<DELETED> ``(E) of the provisions under which
distributions from the eligible retirement plan
receiving the distribution may be subject to
restrictions and tax consequences which are different
from those applicable to distributions from the plan
making such distribution.''.</DELETED>
<DELETED> (d) Spousal Rollovers.--Section 402(c)(9) (relating to
rollover where spouse receives distribution after death of employee) is
amended by striking ``; except that'' and all that follows up to the
end period.</DELETED>
<DELETED> (e) Conforming Amendments.--</DELETED>
<DELETED> (1) Section 72(o)(4) is amended by striking ``and
408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and
457(e)(16)''.</DELETED>
<DELETED> (2) Section 219(d)(2) is amended by striking ``or
408(d)(3)'' and inserting ``408(d)(3), or
457(e)(16)''.</DELETED>
<DELETED> (3) Section 401(a)(31)(B) is amended by striking
``and 403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and
457(e)(16)''.</DELETED>
<DELETED> (4) Subparagraph (A) of section 402(f)(2) is
amended by striking ``or paragraph (4) of section 403(a)'' and
inserting ``, paragraph (4) of section 403(a), subparagraph (A)
of section 403(b)(8), or subparagraph (A) of section
457(e)(16)''.</DELETED>
<DELETED> (5) Paragraph (1) of section 402(f) is amended by
striking ``from an eligible retirement plan''.</DELETED>
<DELETED> (6) Subparagraphs (A) and (B) of section 402(f)(1)
are amended by striking ``another eligible retirement plan''
and inserting ``an eligible retirement plan''.</DELETED>
<DELETED> (7) Subparagraph (B) of section 403(b)(8) is
amended to read as follows:</DELETED>
<DELETED> ``(B) Certain rules made applicable.--The
rules of paragraphs (2) through (7) and (9) of section
402(c) and section 402(f) shall apply for purposes of
subparagraph (A), except that section 402(f) shall be
applied to the payor in lieu of the plan
administrator.''.</DELETED>
<DELETED> (8) Section 408(a)(1) is amended by striking ``or
403(b)(8)'' and inserting ``, 403(b)(8), or
457(e)(16)''.</DELETED>
<DELETED> (9) Subparagraphs (A) and (B) of section 415(b)(2)
are each amended by striking ``and 408(d)(3)'' and inserting
``403(b)(8), 408(d)(3), and 457(e)(16)''.</DELETED>
<DELETED> (10) Section 415(c)(2) is amended by striking
``and 408(d)(3)'' and inserting ``408(d)(3), and
457(e)(16)''.</DELETED>
<DELETED> (11) Section 4973(b)(1)(A) is amended by striking
``or 408(d)(3)'' and inserting ``408(d)(3), or
457(e)(16)''.</DELETED>
<DELETED> (f) Effective Date; Special Rule.--</DELETED>
<DELETED> (1) Effective date.--The amendments made by this
section shall apply to distributions after December 31,
2000.</DELETED>
<DELETED> (2) Special rule.--Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of section 1122
of the Tax Reform Act of 1986 shall not apply to any
distribution from an eligible retirement plan (as defined in
clause (iii) or (iv) of section 402(c)(8)(B) of the Internal
Revenue Code of 1986) on behalf of an individual if there was a
rollover to such plan on behalf of such individual which is
permitted solely by reason of any amendment made by this
section.</DELETED>
<DELETED>SEC. 332. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT
PLANS.</DELETED>
<DELETED> (a) In General.--Subparagraph (A) of section 408(d)(3)
(relating to rollover amounts) is amended by adding ``or'' at the end
of clause (i), by striking clauses (ii) and (iii), and by adding at the
end the following:</DELETED>
<DELETED> ``(ii) the entire amount received
(including money and any other property) is
paid into an eligible retirement plan for the
benefit of such individual not later than the
60th day after the date on which the payment or
distribution is received, except that the
maximum amount which may be paid into such plan
may not exceed the portion of the amount
received which is includible in gross income
(determined without regard to this
paragraph).</DELETED>
<DELETED>For purposes of clause (ii), the term
`eligible retirement plan' means an eligible retirement
plan described in clause (iii), (iv), (v), or (vi) of
section 402(c)(8)(B).''.</DELETED>
<DELETED> (b) Conforming Amendments.--</DELETED>
<DELETED> (1) Paragraph (1) of section 403(b) is amended by
striking ``section 408(d)(3)(A)(iii)'' and inserting ``section
408(d)(3)(A)(ii)''.</DELETED>
<DELETED> (2) Clause (i) of section 408(d)(3)(D) is amended
by striking ``(i), (ii), or (iii)'' and inserting ``(i) or
(ii)''.</DELETED>
<DELETED> (3) Subparagraph (G) of section 408(d)(3) is
amended to read as follows:</DELETED>
<DELETED> ``(G) Simple retirement accounts.--In the
case of any payment or distribution out of a simple
retirement account (as defined in subsection (p)) to
which section 72(t)(6) applies, this paragraph shall
not apply unless such payment or distribution is paid
into another simple retirement account.''.</DELETED>
<DELETED> (c) Effective Date; Special Rule.--</DELETED>
<DELETED> (1) Effective date.--The amendments made by this
section shall apply to distributions after December 31,
2000.</DELETED>
<DELETED> (2) Special rule.--Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of section 1122
of the Tax Reform Act of 1986 shall not apply to any
distribution from an eligible retirement plan (as defined in
clause (iii) or (iv) of section 402(c)(8)(B) of the Internal
Revenue Code of 1986) on behalf of an individual if there was a
rollover to such plan on behalf of such individual which is
permitted solely by reason of the amendments made by this
section.</DELETED>
<DELETED>SEC. 333. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.</DELETED>
<DELETED> (a) Rollovers From Exempt Trusts.--Paragraph (2) of
section 402(c) (relating to maximum amount which may be rolled over) is
amended by adding at the end the following: ``The preceding sentence
shall not apply to such distribution to the extent--</DELETED>
<DELETED> ``(A) such portion is transferred in a
direct trustee-to-trustee transfer to a qualified trust
which is part of a plan which is a defined contribution
plan and which agrees to separately account for amounts
so transferred, including separately accounting for the
portion of such distribution which is includible in
gross income and the portion of such distribution which
is not so includible, or</DELETED>
<DELETED> ``(B) such portion is transferred to an
eligible retirement plan described in clause (i) or
(ii) of paragraph (8)(B).''.</DELETED>
<DELETED> (b) Optional Direct Transfer of Eligible Rollover
Distributions.--Subparagraph (B) of section 401(a)(31) (relating to
limitation) is amended by adding at the end the following: ``The
preceding sentence shall not apply to such distribution if the plan to
which such distribution is transferred--</DELETED>
<DELETED> ``(i) agrees to separately account
for amounts so transferred, including
separately accounting for the portion of such
distribution which is includible in gross
income and the portion of such distribution
which is not so includible, or</DELETED>
<DELETED> ``(ii) is an eligible retirement
plan described in clause (i) or (ii) of section
402(c)(8)(B).''.</DELETED>
<DELETED> (c) Rules for Applying Section 72 to IRAs.--Paragraph (3)
of section 408(d) (relating to special rules for applying section 72)
is amended by inserting at the end the following:</DELETED>
<DELETED> ``(H) Application of section 72.--
</DELETED>
<DELETED> ``(i) In general.--If--</DELETED>
<DELETED> ``(I) a distribution is
made from an individual retirement
plan, and</DELETED>
<DELETED> ``(II) a rollover
contribution is made to an eligible
retirement plan described in section
402(c)(8)(B)(iii), (iv), (v), or (vi)
with respect to all or part of such
distribution,</DELETED>
<DELETED>then, notwithstanding paragraph (2),
the rules of clause (ii) shall apply for
purposes of applying section 72.</DELETED>
<DELETED> ``(ii) Applicable rules.--In the
case of a distribution described in clause
(i)--</DELETED>
<DELETED> ``(I) section 72 shall be
applied separately to such
distribution,</DELETED>
<DELETED> ``(II) notwithstanding the
pro rata allocation of income on, and
investment in, the contract to
distributions under section 72, the
portion of such distribution rolled
over to an eligible retirement plan
described in clause (i) shall be
treated as from income on the contract
(to the extent of the aggregate income
on the contract from all individual
retirement plans of the distributee),
and</DELETED>
<DELETED> ``(III) appropriate
adjustments shall be made in applying
section 72 to other distributions in
such taxable year and subsequent
taxable years.''.</DELETED>
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2000.</DELETED>
<DELETED>SEC. 334. HARDSHIP EXCEPTION TO 60-DAY RULE.</DELETED>
<DELETED> (a) Exempt Trusts.--Paragraph (3) of section 402(c)
(relating to transfer must be made within 60 days of receipt) is
amended to read as follows:</DELETED>
<DELETED> ``(3) Transfer must be made within 60 days of
receipt.--</DELETED>
<DELETED> ``(A) In general.--Except as provided in
subparagraph (B), paragraph (1) shall not apply to any
transfer of a distribution made after the 60th day
following the day on which the distributee received the
property distributed.</DELETED>
<DELETED> ``(B) Hardship exception.--The Secretary
may waive the 60-day requirement under subparagraph (A)
where the failure to waive such requirement would be
against equity or good conscience, including casualty,
disaster, or other events beyond the reasonable control
of the individual subject to such
requirement.''.</DELETED>
<DELETED> (b) IRAs.--Paragraph (3) of section 408(d) (relating to
rollover contributions), as amended by section 229, is amended by
adding after subparagraph (H) the following new subparagraph:</DELETED>
<DELETED> ``(I) Waiver of 60-day requirement.--The
Secretary may waive the 60-day requirement under
subparagraphs (A) and (D) where the failure to waive
such requirement would be against equity or good
conscience, including casualty, disaster, or other
events beyond the reasonable control of the individual
subject to such requirement.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2000.</DELETED>
<DELETED>SEC. 335. TREATMENT OF FORMS OF DISTRIBUTION.</DELETED>
<DELETED> (a) Plan Transfers.--</DELETED>
<DELETED> (1) Amendment to internal revenue code of 1986.--
Paragraph (6) of section 411(d) (relating to accrued benefit
not to be decreased by amendment) is amended by adding at the
end the following:</DELETED>
<DELETED> ``(D) Plan transfers.--</DELETED>
<DELETED> ``(i) A defined contribution plan
(in this subparagraph referred to as the
`transferee plan') shall not be treated as
failing to meet the requirements of
this subsection merely because the transferee plan does not provide
some or all of the forms of distribution previously available under
another defined contribution plan (in this subparagraph referred to as
the `transferor plan') to the extent that--</DELETED>
<DELETED> ``(I) the forms of
distribution previously available under
the transferor plan applied to the
account of a participant or beneficiary
under the transferor plan that was
transferred from the transferor plan to
the transferee plan pursuant to a
direct transfer rather than pursuant to
a distribution from the transferor
plan,</DELETED>
<DELETED> ``(II) the terms of both
the transferor plan and the transferee
plan authorize the transfer described
in subclause (I),</DELETED>
<DELETED> ``(III) the transfer
described in subclause (I) was made
pursuant to a voluntary election by the
participant or beneficiary whose
account was transferred to the
transferee plan,</DELETED>
<DELETED> ``(IV) the election
described in subclause (III) was made
after the participant or beneficiary
received a notice describing the
consequences of making the
election,</DELETED>
<DELETED> ``(V) if the transferor
plan provides for an annuity as the
normal form of distribution under the
plan in accordance with section 417,
the transfer is made with the consent
of the participant's spouse (if any),
and such consent meets requirements
similar to the requirements imposed by
section 417(a)(2), and</DELETED>
<DELETED> ``(VI) the transferee plan
allows the participant or beneficiary
described in clause (iii) to receive
any distribution to which the
participant or beneficiary is entitled
under the transferee plan in the form
of a single sum distribution.</DELETED>
<DELETED> ``(ii) Clause (i) shall apply to
plan mergers and other transactions having the
effect of a direct transfer, including
consolidations of benefits attributable to
different employers within a multiple employer
plan.</DELETED>
<DELETED> ``(E) Elimination of form of
distribution.--Except to the extent provided in
regulations, a defined contribution plan shall not be
treated as failing to meet the requirements of this
section merely because of the elimination of a form of
distribution previously available thereunder. This
subparagraph shall not apply to the elimination of a
form of distribution with respect to any participant
unless--</DELETED>
<DELETED> ``(i) a single sum payment is
available to such participant at the same time
or times as the form of distribution being
eliminated, and</DELETED>
<DELETED> ``(ii) such single sum payment is
based on the same or greater portion of the
participant's account as the form of
distribution being eliminated.''.</DELETED>
<DELETED> (2) Amendment to erisa.--Section 204(g) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1054(g)) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(4)(A) A defined contribution plan (in this subparagraph
referred to as the `transferee plan') shall not be treated as failing
to meet the requirements of this subsection merely because the
transferee plan does not provide some or all of the forms of
distribution previously available under another defined contribution
plan (in this subparagraph referred to as the `transferor plan') to the
extent that--</DELETED>
<DELETED> ``(i) the forms of distribution previously
available under the transferor plan applied to the account of a
participant or beneficiary under the transferor plan that was
transferred from the transferor plan to the transferee plan
pursuant to a direct transfer rather than pursuant to a
distribution from the transferor plan;</DELETED>
<DELETED> ``(ii) the terms of both the transferor plan and
the transferee plan authorize the transfer described in clause
(i);</DELETED>
<DELETED> ``(iii) the transfer described in clause (i) was
made pursuant to a voluntary election by the participant or
beneficiary whose account was transferred to the transferee
plan;</DELETED>
<DELETED> ``(iv) the election described in clause (iii) was
made after the participant or beneficiary received a notice
describing the consequences of making the election;</DELETED>
<DELETED> ``(v) if the transferor plan provides for an
annuity as the normal form of distribution under the plan in
accordance with section 205, the transfer is made with the
consent of the participant's spouse (if any), and such consent
meets requirements similar to the requirements imposed by
section 205(c)(2); and</DELETED>
<DELETED> ``(vi) the transferee plan allows the participant
or beneficiary described in clause (iii) to receive any
distribution to which the participant or beneficiary is
entitled under the transferee plan in the form of a single sum
distribution.</DELETED>
<DELETED> ``(B) Subparagraph (A) shall apply to plan mergers and
other transactions having the effect of a direct transfer, including
consolidations of benefits attributable to different employers within a
multiple employer plan.</DELETED>
<DELETED> ``(5) Elimination of form of distribution.--Except to the
extent provided in regulations, a defined contribution plan shall not
be treated as failing to meet the requirements of this section merely
because of the elimination of a form of distribution previously
available thereunder. This paragraph shall not apply to the elimination
of a form of distribution with respect to any participant unless--
</DELETED>
<DELETED> ``(A) a single sum payment is available to such
participant at the same time or times as the form of
distribution being eliminated; and</DELETED>
<DELETED> ``(B) such single sum payment is based on the same
or greater portion of the participant's account as the form of
distribution being eliminated.''.</DELETED>
<DELETED> (3) Effective date.--The amendments made by this
subsection shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED> (b) Regulations.--</DELETED>
<DELETED> (1) Amendment to internal revenue code of 1986.--
The last sentence of paragraph (6)(B) of section 411(d)
(relating to accrued benefit not to be decreased by amendment)
is amended to read as follows: ``The Secretary shall by
regulations provide that this subparagraph shall not apply to
any plan amendment that does not adversely affect the rights of
participants in a material manner.''.</DELETED>
<DELETED> (2) Amendment to erisa.--The last sentence of
section 204(g)(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1054(g)(2)) is amended to read as
follows: ``The Secretary of the Treasury shall by regulations
provide that this paragraph shall not apply to any plan
amendment that does not adversely affect the rights of
participants in a material manner.''.</DELETED>
<DELETED> (3) Secretary directed.--Not later than December
31, 2001, the Secretary of the Treasury is directed to issue
final regulations under section 411(d)(6) of the Internal
Revenue Code of 1986 and section 204(g) of the Employee
Retirement Income Security Act of 1974, including the
regulations required by the amendments made by this subsection.
Such regulations shall apply to plan years beginning after
December 31, 2001, or such earlier date as is specified by the
Secretary of the Treasury.</DELETED>
<DELETED>SEC. 336. RATIONALIZATION OF RESTRICTIONS ON
DISTRIBUTIONS.</DELETED>
<DELETED> (a) Modification of Same Desk Exception.--</DELETED>
<DELETED> (1) Section 401(k).--</DELETED>
<DELETED> (A) Section 401(k)(2)(B)(i)(I) (relating
to qualified cash or deferred arrangements) is amended
by striking ``separation from service'' and inserting
``severance from employment''.</DELETED>
<DELETED> (B) Subparagraph (A) of section 401(k)(10)
(relating to distributions upon termination of plan or
disposition of assets or subsidiary) is amended to read
as follows:</DELETED>
<DELETED> ``(A) In general.--An event described in
this subparagraph is the termination of the plan
without establishment or maintenance of another defined
contribution plan (other than an employee stock
ownership plan as defined in section
4975(e)(7)).''.</DELETED>
<DELETED> (C) Section 401(k)(10) is amended--
</DELETED>
<DELETED> (i) in subparagraph (B)--
</DELETED>
<DELETED> (I) by striking ``An
event'' in clause (i) and inserting ``A
termination'', and</DELETED>
<DELETED> (II) by striking ``the
event'' in clause (i) and inserting
``the termination'',</DELETED>
<DELETED> (ii) by striking subparagraph (C),
and</DELETED>
<DELETED> (iii) by striking ``or disposition
of assets or subsidiary'' in the
heading.</DELETED>
<DELETED> (2) Section 403(b).--</DELETED>
<DELETED> (A) Paragraphs (7)(A)(ii) and (11)(A) of
section 403(b) are each amended by striking ``separates
from service'' and inserting ``has a severance from
employment''.</DELETED>
<DELETED> (B) The heading for paragraph (11) of
section 403(b) is amended by striking ``separation from
service'' and inserting ``severance from employment''.</DELETED>
<DELETED> (3) Section 457.--Clause (ii) of section
457(d)(1)(A) is amended by striking ``is separated from
service'' and inserting ``has a severance from
employment''.</DELETED>
<DELETED> (b) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2000.</DELETED>
<DELETED>SEC. 337. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED
BENEFIT PLANS.</DELETED>
<DELETED> (a) 403(b) Plans.--Subsection (b) of section 403 is
amended by adding at the end the following new paragraph:</DELETED>
<DELETED> ``(13) Trustee-to-trustee transfers to purchase
permissive service credit.--No amount shall be includible in
gross income by reason of a direct trustee-to-trustee transfer
to a defined benefit governmental plan (as defined in section
414(d)) if such transfer is--</DELETED>
<DELETED> ``(A) for the purchase of permissive
service credit (as defined in section 415(n)(3)(A))
under such plan, or</DELETED>
<DELETED> ``(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.''.</DELETED>
<DELETED> (b) 457 Plans.--</DELETED>
<DELETED> (1) Subsection (e) of section 457 is amended by
adding after paragraph (16) the following new
paragraph:</DELETED>
<DELETED> ``(17) Trustee-to-trustee transfers to purchase
permissive service credit.--No amount shall be includible in
gross income by reason of a direct trustee-to-trustee transfer
to a defined benefit governmental plan (as defined in section
414(d)) if such transfer is--</DELETED>
<DELETED> ``(A) for the purchase of permissive
service credit (as defined in section 415(n)(3)(A))
under such plan, or</DELETED>
<DELETED> ``(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.''.</DELETED>
<DELETED> (2) Section 457(b)(2) is amended by striking
``(other than rollover amounts)'' and inserting ``(other than
rollover amounts and amounts received in a transfer referred to
in subsection (e)(17))''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to trustee-to-trustee transfers after December 31,
2000.</DELETED>
<DELETED>SEC. 338. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF
CASH-OUT AMOUNTS.</DELETED>
<DELETED> (a) Qualified Plans.--</DELETED>
<DELETED> (1) Amendment to internal revenue code of 1986.--
Section 411(a)(11) (relating to restrictions on certain
mandatory distributions) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(D) Special rule for rollover
contributions.--A plan shall not fail to meet the
requirements of this paragraph if, under the terms of
the plan, the present value of the nonforfeitable
accrued benefit is determined without regard to that
portion of such benefit which is attributable to
rollover contributions (and earnings allocable
thereto). For purposes of this subparagraph, the term
`rollover contributions' means any rollover
contribution under sections 402(c), 403(a)(4),
403(b)(8), 408(d)(3)(A)(ii), and
457(e)(16).''.</DELETED>
<DELETED> (2) Amendment to erisa.--Section 203(e) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(c)) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(4) A plan shall not fail to meet the requirements of
this subsection if, under the terms of the plan, the present value of
the nonforfeitable accrued benefit is determined without regard to that
portion of such benefit which is attributable to rollover contributions
(and earnings allocable thereto). For purposes of this subparagraph,
the term `rollover contributions' means any rollover contribution under
sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16)
of the Internal Revenue Code of 1986.''.</DELETED>
<DELETED> (b) Eligible Deferred Compensation Plans.--Clause (i) of
section 457(e)(9)(A) is amended by striking ``such amount'' and
inserting ``the portion of such amount which is not attributable to
rollover contributions (as defined in section
411(a)(11)(D))''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2000.</DELETED>
<DELETED>SEC. 339. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR
SECTION 457 PLANS.</DELETED>
<DELETED> (a) Minimum Distribution Requirements.--Paragraph (2) of
section 457(d) (relating to distribution requirements) is amended to
read as follows:</DELETED>
<DELETED> ``(2) Minimum distribution requirements.--A plan
meets the minimum distribution requirements of this paragraph
if such plan meets the requirements of section
401(a)(9).''.</DELETED>
<DELETED> (b) Inclusion in Gross Income.--</DELETED>
<DELETED> (1) Year of inclusion.--Subsection (a) of section
457 (relating to year of inclusion in gross income) is amended
to read as follows:</DELETED>
<DELETED> ``(a) Year of Inclusion in Gross Income.--</DELETED>
<DELETED> ``(1) In general.--Any amount of compensation
deferred under an eligible deferred compensation plan, and any
income attributable to the amounts so deferred, shall be
includible in gross income only for the taxable year in which
such compensation or other income--</DELETED>
<DELETED> ``(A) is paid to the participant or other
beneficiary, in the case of a plan of an eligible
employer described in subsection (e)(1)(A),
and</DELETED>
<DELETED> ``(B) is paid or otherwise made available
to the participant or other beneficiary, in the case of
a plan of an eligible employer described in subsection
(e)(1)(B).</DELETED>
<DELETED> ``(2) Special rule for rollover amounts.--To the
extent provided in section 72(t)(9), section 72(t) shall apply
to any amount includible in gross income under this
subsection.''.</DELETED>
<DELETED> (2) Conforming amendments.--</DELETED>
<DELETED> (A) So much of paragraph (9) of section
457(e) as precedes subparagraph (A) is amended to read
as follows:</DELETED>
<DELETED> ``(9) Benefits of tax exempt organization plans
not treated as made available by reason of certain elections,
etc.--In the case of an eligible deferred compensation plan of
an employer described in subsection (e)(1)(B)--''.</DELETED>
<DELETED> (B) Section 457(d) is amended by adding at
the end the following new paragraph:</DELETED>
<DELETED> ``(3) Special rule for government plan.--An
eligible deferred compensation plan of an employer described in
subsection (e)(1)(A) shall not be treated as failing to meet
the requirements of this subsection solely by reason of making
a distribution described in subsection (e)(9)(A).''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2000.</DELETED>
<DELETED>Subtitle D--Strengthening Pension Security and
Enforcement</DELETED>
<DELETED>SEC. 341. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING
LIMIT.</DELETED>
<DELETED> (a) Amendment to Internal Revenue Code of 1986.--Section
412(c)(7) (relating to full-funding limitation) is amended--</DELETED>
<DELETED> (1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2004, the applicable
percentage'', and</DELETED>
<DELETED> (2) by amending subparagraph (F) to read as
follows:</DELETED>
<DELETED> ``(F) Applicable percentage.--For purposes
of subparagraph (A)(i)(I), the applicable percentage
shall be determined in accordance with the following
table:</DELETED>
<DELETED>``In the case of any plan
year</DELETED>
The applicable
<DELETED> beginning in--</DELETED>
percentage is--
<DELETED> 2001.......................... 160
<DELETED> 2002.......................... 165
<DELETED> 2003.......................... 170.''.
<DELETED> (b) Amendment to ERISA.--Section 302(c)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is
amended--</DELETED>
<DELETED> (1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2004, the applicable
percentage'', and</DELETED>
<DELETED> (2) by amending subparagraph (F) to read as
follows:</DELETED>
<DELETED> ``(F) Applicable percentage.--For purposes
of subparagraph (A)(i)(I), the applicable percentage
shall be determined in accordance with the following
table:</DELETED>
<DELETED>``In the case of any plan
year</DELETED>
The applicable
<DELETED> beginning in--</DELETED>
percentage is--
<DELETED> 2001.......................... 160
<DELETED> 2002.......................... 165
<DELETED> 2003.......................... 170.''.
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 342. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND
APPLIED TO ALL DEFINED BENEFIT PLANS.</DELETED>
<DELETED> (a) In General.--Subparagraph (D) of section 404(a)(1)
(relating to special rule in case of certain plans) is amended to read
as follows:</DELETED>
<DELETED> ``(D) Special rule in case of certain
plans.--</DELETED>
<DELETED> ``(i) In general.--In the case of
any defined benefit plan, except as provided in
regulations, the maximum amount deductible
under the limitations of this paragraph shall
not be less than the unfunded termination liability (determined as if
the proposed termination date referred to in section
4041(b)(2)(A)(i)(II) of the Employee Retirement Income Security Act of
1974 were the last day of the plan year).</DELETED>
<DELETED> ``(ii) Plans with less than 100
participants.--For purposes of this
subparagraph, in the case of a plan which has
less than 100 participants for the plan year,
termination liability shall not include the
liability attributable to benefit increases for
highly compensated employees (as defined in
section 414(q)) resulting from a plan amendment
which is made or becomes effective, whichever
is later, within the last 2 years before the
termination date.</DELETED>
<DELETED> ``(iii) Rule for determining
number of participants.--For purposes of
determining whether a plan has more than 100
participants, all defined benefit plans
maintained by the same employer (or any member
of such employer's controlled group (within the
meaning of section 412(l)(8)(C))) shall be
treated as one plan, but only employees of such
member or employer shall be taken into
account.</DELETED>
<DELETED> ``(iv) Plans established and
maintained by professional service employers.--
Clause (i) shall not apply to a plan described
in section 4021(b)(13) of the Employee
Retirement Income Security Act of
1974.''.</DELETED>
<DELETED> (b) Conforming Amendment.--Paragraph (6) of section
4972(c) is amended to read as follows:</DELETED>
<DELETED> ``(6) Exceptions.--In determining the amount of
nondeductible contributions for any taxable year, there shall
not be taken into account so much of the contributions to one
or more defined contribution plans which are not deductible
when contributed solely because of section 404(a)(7) as does
not exceed the greater of--</DELETED>
<DELETED> ``(A) the amount of contributions not in
excess of 6 percent of compensation (within the meaning
of section 404(a)) paid or accrued (during the taxable
year for which the contributions were made) to
beneficiaries under the plans, or</DELETED>
<DELETED> ``(B) the sum of--</DELETED>
<DELETED> ``(i) the amount of contributions
described in section 401(m)(4)(A),
plus</DELETED>
<DELETED> ``(ii) the amount of contributions
described in section 402(g)(3)(A).</DELETED>
<DELETED>For purposes of this paragraph, the deductible limits
under section 404(a)(7) shall first be applied to amounts
contributed to a defined benefit plan and then to amounts
described in subparagraph (B).''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 343. MISSING PARTICIPANTS.</DELETED>
<DELETED> (a) In General.--Section 4050 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1350) is amended by
redesignating subsection (c) as subsection (e) and by inserting after
subsection (b) the following:</DELETED>
<DELETED> ``(c) Multiemployer Plans.--The corporation shall
prescribe rules similar to the rules in subsection (a) for
multiemployer plans covered by this title that terminate under section
4041A.</DELETED>
<DELETED> ``(d) Plans Not Otherwise Subject to Title.--</DELETED>
<DELETED> ``(1) Transfer to corporation.--The plan
administrator of a plan described in paragraph (4) may elect to
transfer a missing participant's benefits to the corporation
upon termination of the plan.</DELETED>
<DELETED> ``(2) Information to the corporation.--To the
extent provided in regulations, the plan administrator of a
plan described in paragraph (4) shall, upon termination of the
plan, provide the corporation information with respect to
benefits of a missing participant if the plan transfers such
benefits--</DELETED>
<DELETED> ``(A) to the corporation, or</DELETED>
<DELETED> ``(B) to an entity other than the
corporation or a plan described in paragraph
(4)(B)(ii).</DELETED>
<DELETED> ``(3) Payment by the corporation.--If benefits of
a missing participant were transferred to the corporation under
paragraph (1), the corporation shall, upon location of the
participant or beneficiary, pay to the participant or
beneficiary the amount transferred (or the appropriate survivor
benefit) either--</DELETED>
<DELETED> ``(A) in a single sum (plus interest),
or</DELETED>
<DELETED> ``(B) in such other form as is specified
in regulations of the corporation.</DELETED>
<DELETED> ``(4) Plans described.--A plan is described in
this paragraph if--</DELETED>
<DELETED> ``(A) the plan is a pension plan (within
the meaning of section 3(2))--</DELETED>
<DELETED> ``(i) to which the provisions of
this section do not apply (without regard to
this subsection), and</DELETED>
<DELETED> ``(ii) which is not a plan
described in paragraphs (2) through (11) of
section 4021(b), and</DELETED>
<DELETED> ``(B) at the time the assets are to be
distributed upon termination, the plan--</DELETED>
<DELETED> ``(i) has missing participants,
and</DELETED>
<DELETED> ``(ii) has not provided for the
transfer of assets to pay the benefits of all
missing participants to another pension plan
(within the meaning of section 3(2)).</DELETED>
<DELETED> ``(5) Certain provisions not to apply.--
Subsections (a)(1) and (a)(3) shall not apply to a plan
described in paragraph (4).''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to distributions made after final regulations implementing
subsections (c) and (d) of section 4050 of the Employee Retirement
Income Security Act of 1974 (as added by subsection (a)), respectively,
are prescribed.</DELETED>
<DELETED>SEC. 344. PERIODIC PENSION BENEFITS STATEMENTS.</DELETED>
<DELETED> (a) In General.--Section 105(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to read as
follows:</DELETED>
<DELETED> ``(a)(1) Except as provided in paragraph (2)--</DELETED>
<DELETED> ``(A) The administrator of an individual account
plan shall furnish a pension benefit statement--</DELETED>
<DELETED> ``(i) to a plan participant at least once
annually, and</DELETED>
<DELETED> ``(ii) to a plan beneficiary upon written
request.</DELETED>
<DELETED> ``(B) The administrator of a defined benefit plan
shall furnish a pension benefit statement--</DELETED>
<DELETED> ``(i) at least once every 3 years to each
participant with a nonforfeitable accrued benefit who
is employed by the employer maintaining the plan at the
time the statement is furnished to participants,
and</DELETED>
<DELETED> ``(ii) to a participant or beneficiary of
the plan upon written request.</DELETED>
<DELETED> ``(2) Notwithstanding paragraph (1), the administrator of
a plan to which more than 1 unaffiliated employer is required to
contribute shall only be required to furnish a pension benefit
statement under paragraph (1) upon the written request of a participant
or beneficiary of the plan.</DELETED>
<DELETED> ``(3) A pension benefit statement under paragraph (1)--
</DELETED>
<DELETED> ``(A) shall indicate, on the basis of the latest
available information--</DELETED>
<DELETED> ``(i) the total benefits accrued,
and</DELETED>
<DELETED> ``(ii) the nonforfeitable pension
benefits, if any, which have accrued, or the earliest
date on which benefits will become
nonforfeitable,</DELETED>
<DELETED> ``(B) shall be communicated in a manner calculated
to be understood by the average plan participant, and</DELETED>
<DELETED> ``(C) may be provided in written, electronic,
telephonic, or other appropriate form.</DELETED>
<DELETED> ``(4) In the case of a defined benefit plan, the
requirements of paragraph (1)(B)(i) shall be treated as met with
respect to a participant if the administrator provides the participant
at least once each year with notice of the availability of the pension
benefit statement and the ways in which the participant may obtain such
statement. Such notice shall be provided in written, electronic,
telephonic, or other appropriate form, and may be included with other
communications to the participant if done in a manner reasonably
designed to attract the attention of the participant.''.</DELETED>
<DELETED> (b) Conforming Amendments.--</DELETED>
<DELETED> (1) Section 105 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1025) is amended by striking
subsection (d).</DELETED>
<DELETED> (2) Section 105(b) of such Act (29 U.S.C. 1025(b))
is amended to read as follows:</DELETED>
<DELETED> ``(b) In no case shall a participant or beneficiary of a
plan be entitled to more than one statement described in subsection
(a)(1)(A) or (a)(1)(B)(ii), whichever is applicable, in any 12-month
period.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 345. CIVIL PENALTIES FOR BREACH OF FIDUCIARY
RESPONSIBILITY.</DELETED>
<DELETED> (a) Imposition and Amount of Penalty Made Discretionary.--
Section 502(l)(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1132(l)(1)) is amended--</DELETED>
<DELETED> (1) by striking ``shall'' and inserting ``may'',
and</DELETED>
<DELETED> (2) by striking ``equal to'' and inserting ``not
greater than''.</DELETED>
<DELETED> (b) Applicable Recovery Amount.--Section 502(l)(2) of such
Act (29 U.S.C. 1132(l)(2)) is amended to read as follows:</DELETED>
<DELETED> ``(2) For purposes of paragraph (1), the term `applicable
recovery amount' means any amount which is recovered from any fiduciary
or other person (or from any other person on behalf of any such
fiduciary or other person) with respect to a breach or violation
described in paragraph (1) on or after the 30th day following receipt
by such fiduciary or other person of written notice from the Secretary
of the violation, whether paid voluntarily or by order of a court in a
judicial proceeding instituted by the Secretary under subsection (a)(2)
or (a)(5). The Secretary may, in the Secretary's sole discretion,
extend the 30-day period described in the preceding
sentence.''.</DELETED>
<DELETED> (c) Other Rules.--Section 502(l) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1132(l)) is amended
by adding at the end the following:</DELETED>
<DELETED> ``(5) A person shall be jointly and severally liable for
the penalty described in paragraph (1) to the same extent that such
person is jointly and severally liable for the applicable recovery
amount on which the penalty is based.</DELETED>
<DELETED> ``(6) No penalty shall be assessed under this subsection
unless the person against whom the penalty is assessed is given notice
and opportunity for a hearing with respect to the violation and
applicable recovery amount.''.</DELETED>
<DELETED> (d) Effective Dates.--</DELETED>
<DELETED> (1) In general.--The amendments made by this
section shall apply to any breach of fiduciary responsibility
or other violation of part 4 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 occurring on or
after the date of enactment of this Act.</DELETED>
<DELETED> (2) Transition rule.--In applying the amendment
made by subsection (b) (relating to applicable recovery
amount), a breach or other violation occurring before the date
of enactment of this Act which continues after the 180th day
after such date (and which may have been discontinued at any
time during its existence) shall be treated as having occurred
after such date of enactment.</DELETED>
<DELETED>SEC. 346. EXCISE TAX RELIEF FOR SOUND PENSION
FUNDING.</DELETED>
<DELETED> (a) In General.--Subsection (c) of section 4972 (relating
to nondeductible contributions) is amended by adding at the end the
following new paragraph:</DELETED>
<DELETED> ``(7) Defined benefit plan exception.--In
determining the amount of nondeductible contributions for any
taxable year, an employer may elect for such year not to take
into account any contributions to a defined benefit plan except
to the extent that such contributions exceed the full-funding
limitation (as defined in section 412(c)(7), determined without
regard to subparagraph (A)(i)(I) thereof). For purposes of this
paragraph, the deductible limits under section 404(a)(7) shall
first be applied to amounts contributed to defined contribution
plans and then to amounts described in this paragraph. If an
employer makes an election under this paragraph for a taxable
year, paragraph (6) shall not apply to such employer for such
taxable year.''.</DELETED>
<DELETED> (b) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 347. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED
BENEFIT PLANS SIGNIFICANTLY REDUCING FUTURE BENEFIT
ACCRUALS.</DELETED>
<DELETED> (a) Amendment to 1986 Code.--Chapter 43 (relating to
qualified pension, etc., plans) is amended by adding at the end the
following new section:</DELETED>
<DELETED>``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT
ACCRUALS TO SATISFY NOTICE REQUIREMENTS.</DELETED>
<DELETED> ``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of any applicable pension plan to meet the requirements of
subsection (e) with respect to any applicable individual.</DELETED>
<DELETED> ``(b) Amount of Tax.--</DELETED>
<DELETED> ``(1) In general.--The amount of the tax imposed
by subsection (a) on any failure with respect to any applicable
individual shall be $100 for each day in the noncompliance
period with respect to such failure.</DELETED>
<DELETED> ``(2) Noncompliance period.--For purposes of this
section, the term `noncompliance period' means, with respect to
any failure, the period beginning on the date the failure first
occurs and ending on the date the failure is
corrected.</DELETED>
<DELETED> ``(c) Limitations on Amount of Tax.--</DELETED>
<DELETED> ``(1) Overall limitation for unintentional
failures.--In the case of failures that are due to reasonable
cause and not to willful neglect, the tax imposed by subsection
(a) for failures during the taxable year of the employer (or,
in the case of a multiemployer plan, the taxable year of the
trust forming part of the plan) shall not exceed $500,000. For
purposes of the preceding sentence, all multiemployer plans of which
the same trust forms a part shall be treated as one plan. For purposes
of this paragraph, if not all persons who are treated as a single
employer for purposes of this section have the same taxable year, the
taxable years taken into account shall be determined under principles
similar to the principles of section 1561.</DELETED>
<DELETED> ``(2) Waiver by secretary.--In the case of a
failure which is due to reasonable cause and not to willful
neglect, the Secretary may waive part or all of the tax imposed
by subsection (a) to the extent that the payment of such tax
would be excessive relative to the failure involved.</DELETED>
<DELETED> ``(d) Liability for Tax.--The following shall be liable
for the tax imposed by subsection (a):</DELETED>
<DELETED> ``(1) In the case of a plan other than a
multiemployer plan, the employer.</DELETED>
<DELETED> ``(2) In the case of a multiemployer plan, the
plan.</DELETED>
<DELETED> ``(e) Notice Requirements for Plans Significantly Reducing
Benefit Accruals.--</DELETED>
<DELETED> ``(1) In general.--If an applicable pension plan
is amended to provide for a significant reduction in the rate
of future benefit accrual, the plan administrator shall provide
written notice to each applicable individual (and to each
employee organization representing applicable
individuals).</DELETED>
<DELETED> ``(2) Notice.--The notice required by paragraph
(1) shall be written in a manner calculated to be understood by
the average plan participant and shall provide sufficient
information (as determined in accordance with regulations
prescribed by the Secretary) to allow applicable individuals to
understand the effect of the plan amendment.</DELETED>
<DELETED> ``(3) Timing of notice.--Except as provided in
regulations, the notice required by paragraph (1) shall be
provided within a reasonable time before the effective date of
the plan amendment.</DELETED>
<DELETED> ``(4) Designees.--Any notice under paragraph (1)
may be provided to a person designated, in writing, by the
person to which it would otherwise be provided.</DELETED>
<DELETED> ``(5) Notice before adoption of amendment.--A plan
shall not be treated as failing to meet the requirements of
paragraph (1) merely because notice is provided before the
adoption of the plan amendment if no material modification of
the amendment occurs before the amendment is adopted.</DELETED>
<DELETED> ``(f) Applicable Individual; Applicable Pension Plan.--For
purposes of this section--</DELETED>
<DELETED> ``(1) Applicable individual.--The term `applicable
individual' means, with respect to any plan amendment--
</DELETED>
<DELETED> ``(A) any participant in the plan,
and</DELETED>
<DELETED> ``(B) any beneficiary who is an alternate
payee (within the meaning of section 414(p)(8)) under
an applicable qualified domestic relations order
(within the meaning of section 414(p)(1)(A)),</DELETED>
<DELETED>who may reasonably be expected to be affected by such
plan amendment.</DELETED>
<DELETED> ``(2) Applicable pension plan.--The term
`applicable pension plan' means--</DELETED>
<DELETED> ``(A) any defined benefit plan,
or</DELETED>
<DELETED> ``(B) an individual account plan which is
subject to the funding standards of section
412,</DELETED>
<DELETED>which had 100 or more participants who had accrued a
benefit, or with respect to whom contributions were made, under
the plan (whether or not vested) as of the last day of the plan
year preceding the plan year in which the plan amendment
becomes effective. Such term shall not include a governmental
plan (within the meaning of section 414(d)) or a church plan
(within the meaning of section 414(e)) with respect to which
the election provided by section 410(d) has not been
made.''.</DELETED>
<DELETED> (b) Amendment to ERISA.--Section 204(h) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is amended
by adding at the end the following new paragraph:</DELETED>
<DELETED> ``(3)(A) A plan to which paragraph (1) applies shall not
be treated as meeting the requirements of such paragraph unless, in
addition to any notice required to be provided to an individual or
organization under such paragraph, the plan administrator provides the
notice described in subparagraph (B).</DELETED>
<DELETED> ``(B) The notice required by subparagraph (A) shall be
written in a manner calculated to be understood by the average plan
participant and shall provide sufficient information (as determined in
accordance with regulations prescribed by the Secretary of the
Treasury) to allow individuals to understand the effect of the plan
amendment.</DELETED>
<DELETED> ``(C) Except as provided in regulations prescribed by the
Secretary of the Treasury, the notice required by subparagraph (A)
shall be provided within a reasonable time before the effective date of
the plan amendment.</DELETED>
<DELETED> ``(D) A plan shall not be treated as failing to meet the
requirements of subparagraph (A) merely because notice is provided
before the adoption of the plan amendment if no material modification
of the amendment occurs before the amendment is adopted.''.</DELETED>
<DELETED> (c) Clerical Amendment.--The table of sections for chapter
43 is amended by adding at the end the following new item:</DELETED>
<DELETED> ``Sec. 4980F. Failure of
applicable plans reducing
benefit accruals to satisfy
notice requirements.''.
<DELETED> (d) Effective Dates.--</DELETED>
<DELETED> (1) In general.--The amendments made by this
section shall apply to plan amendments taking effect on or
after the date of the enactment of this Act.</DELETED>
<DELETED> (2) Transition.--Until such time as the Secretary
of the Treasury issues regulations under sections 4980F(e)(2)
and (3) of the Internal Revenue Code of 1986 and section
204(h)(3) of the Employee Retirement Income Security Act of
1974 (as added by the amendments made by this section), a plan
shall be treated as meeting the requirements of such sections
if it makes a good faith effort to comply with such
requirements.</DELETED>
<DELETED> (3) Special rule.--The period for providing any
notice required by the amendments made by this section shall
not end before the date which is 3 months after the date of the
enactment of this Act.</DELETED>
<DELETED>SEC. 348. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS
TO 401(K) PLANS.</DELETED>
<DELETED> (a) In General.--Section 1524(b) of the Taxpayer Relief
Act of 1997 is amended to read as follows:</DELETED>
<DELETED> ``(b) Effective Date.--</DELETED>
<DELETED> ``(1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall apply to
elective deferrals for plan years beginning after December 31,
1998.</DELETED>
<DELETED> ``(2) Nonapplication to previously acquired
property.--The amendments made by this section shall not apply
to any elective deferral which is invested in assets consisting
of qualifying employer securities, qualifying employer real
property, or both, if such assets were acquired before January
1, 1999.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply as if included in the provision of the Taxpayer Relief Act
of 1997 to which it relates.</DELETED>
<DELETED>SEC. 349. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION
415.</DELETED>
<DELETED> (a) Compensation Limit.--Paragraph (11) of section 415(b)
(relating to limitation for defined benefit plans) is amended to read
as follows:</DELETED>
<DELETED> ``(11) Special limitation rule for governmental
and multiemployer plans.--In the case of a governmental plan
(as defined in section 414(d)) or a multiemployer plan (as
defined in section 414(f)), subparagraph (B) of paragraph (1)
shall not apply.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 350. TECHNICAL CORRECTIONS TO SAVER ACT.</DELETED>
<DELETED> Section 517 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1147) is amended--</DELETED>
<DELETED> (1) in subsection (a), by striking ``2001 and 2005
on or after September 1 of each year involved'' and inserting
``2001, 2005, and 2009 in the month of September of each year
involved'';</DELETED>
<DELETED> (2) in subsection (b), by adding at the end the
following new sentence: ``To effectuate the purposes of this
paragraph, the Secretary may enter into a cooperative
agreement, pursuant to the Federal Grant and Cooperative
Agreement Act of 1977 (31 U.S.C. 6301 et seq.), with the
American Savings Education Council.'';</DELETED>
<DELETED> (3) in subsection (e)(2)--</DELETED>
<DELETED> (A) by striking subparagraph (D) and
inserting the following:</DELETED>
<DELETED> ``(D) the Chairman and Ranking Member of
the Subcommittee on Labor, Health and Human Services,
and Education of the Committee on Appropriations of the
House of Representatives and the Chairman and Ranking
Member of the Subcommittee on Labor, Health and Human
Services, and Education of the Committee on
Appropriations of the Senate;'';</DELETED>
<DELETED> (B) by redesignating subparagraph (G) as
subparagraph (J); and</DELETED>
<DELETED> (C) by inserting after subparagraph (F)
the following new subparagraphs:</DELETED>
<DELETED> ``(G) the Chairman and Ranking Member of
the Committee on Finance of the Senate;</DELETED>
<DELETED> ``(H) the Chairman and Ranking Member of
the Committee on Ways and Means of the House of
Representatives;</DELETED>
<DELETED> ``(I) the Chairman and Ranking Member of
the Subcommittee on Employer-Employee Relations of the
Committee on Education and the Workforce of the House
of Representatives; and'';</DELETED>
<DELETED> (4) in subsection (e)(3)(A)--</DELETED>
<DELETED> (A) by striking ``There shall be no more
than 200 additional participants.'' and inserting ``The
participants in the National Summit shall also include additional
participants appointed under this subparagraph.'';</DELETED>
<DELETED> (B) by striking ``one-half shall be
appointed by the President,'' in clause (i) and
inserting ``not more than 100 participants shall be
appointed under this clause by the President,'', and by
striking ``and'' at the end of clause (i);</DELETED>
<DELETED> (C) by striking ``one-half shall be
appointed by the elected leaders of Congress'' in
clause (ii) and inserting ``not more than 100
participants shall be appointed under this clause by
the elected leaders of Congress'', and by striking the
period at the end of clause (ii) and inserting ``;
and''; and</DELETED>
<DELETED> (D) by adding at the end the following new
clause:</DELETED>
<DELETED> ``(iii) The President, in
consultation with the elected leaders of
Congress referred to in subsection (a), may
appoint under this clause additional
participants to the National Summit. The number
of such additional participants appointed under
this clause may not exceed the lesser of 3
percent of the total number of all additional
participants appointed under this paragraph, or
10. Such additional participants shall be
appointed from persons nominated by the
organization referred to in subsection (b)(2)
which is made up of private sector businesses
and associations partnered with Government
entities to promote long term financial
security in retirement through savings and with
which the Secretary is required thereunder to
consult and cooperate and shall not be Federal,
State, or local government
employees.'';</DELETED>
<DELETED> (5) in subsection (e)(3)(B), by striking ``January
31, 1998'' in subparagraph (B) and inserting ``May 1, 2001, May
1, 2005, and May 1, 2009, for each of the subsequent summits,
respectively'';</DELETED>
<DELETED> (6) in subsection (f)(1)(C), by inserting ``, no
later than 90 days prior to the date of the commencement of the
National Summit,'' after ``comment'' in paragraph
(1)(C);</DELETED>
<DELETED> (7) in subsection (g), by inserting ``, in
consultation with the congressional leaders specified in
subsection (e)(2),'' after ``report'';</DELETED>
<DELETED> (8) in subsection (i)--</DELETED>
<DELETED> (A) by striking ``beginning on or after
October 1, 1997'' in paragraph (1) and inserting
``2001, 2005, and 2009''; and</DELETED>
<DELETED> (B) by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
received in connection with the National Summit prior to using
funds appropriated for purposes of the National Summit pursuant
to this paragraph.''; and</DELETED>
<DELETED> (9) in subsection (k)--</DELETED>
<DELETED> (A) by striking ``shall enter into a
contract on a sole-source basis'' and inserting ``may
enter into a contract on a sole-source basis'';
and</DELETED>
<DELETED> (B) by striking ``fiscal year 1998'' and
inserting ``fiscal years 2001, 2005, and
2009''.</DELETED>
<DELETED>SEC. 351. MODEL SPOUSAL CONSENT LANGUAGE AND QUALIFIED
DOMESTIC RELATIONS ORDER.</DELETED>
<DELETED> (a) Model Spousal Consent Language.--Section 205(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)) is
amended by adding at the end the following new paragraph:</DELETED>
<DELETED> ``(9) Not later than January 1, 2001, the Secretary of
Labor shall develop model language for the spousal consent required
under paragraph (2) which--</DELETED>
<DELETED> ``(A) is written in a manner calculated to be
understood by the average person, and</DELETED>
<DELETED> ``(B) discloses in plain terms whether--</DELETED>
<DELETED> ``(i) the waiver is irrevocable,
and</DELETED>
<DELETED> ``(ii) the waiver may be revoked by a
qualified domestic relations order.''.</DELETED>
<DELETED> (b) Model Qualified Domestic Relations Order.--Section
206(d)(3) of such Act (29 U.S.C. 1056(d)(3)) is amended by adding at
the end the following new subparagraph:</DELETED>
<DELETED> ``(O) Not later than January 1, 2001, the Secretary shall
develop language for a qualified domestic relations order which meets--
</DELETED>
<DELETED> ``(i) the requirements of subparagraph (B)(i),
and</DELETED>
<DELETED> ``(ii) the requirements of this Act related to the
need to consider the treatment of any lump sum payment,
qualified joint and survivor annuity, or qualified
preretirement survivor annuity.''.</DELETED>
<DELETED> (c) Publicity.--The Secretary of Labor shall include
publicity for the model language required by the amendments made by
this section in the pension outreach efforts undertaken by each
Secretary.</DELETED>
<DELETED>SEC. 352. ELIMINATION OF ERISA DOUBLE JEOPARDY.</DELETED>
<DELETED> (a) Elimination of Second Lawsuits by the Secretary.--
Section 502(h) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1132(h)) is amended--</DELETED>
<DELETED> (1) by inserting ``(1)'' after ``(h)'',
and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(2) In any case in which--</DELETED>
<DELETED> ``(A) a complaint in an action brought against a
person under subsection (a)(2) is served in accordance with
paragraph (1), and</DELETED>
<DELETED> ``(B) the action is maintained as a class action
or derivative action under the Federal Rules of Civil
Procedure,</DELETED>
<DELETED> ``(C) the action is resolved by a court-approved
settlement agreement,</DELETED>
<DELETED> ``(D) the complaint is served upon the Secretary
at least 90 days prior to final court approval of the
settlement agreement, and</DELETED>
<DELETED> ``(E) the Secretary receives a fully executed copy
of the settlement agreement within the time established by the
court for notifying the plan's participants of the proposed
compromise pursuant to Rule 23 or 23.1 of the Federal Rules of
Civil Procedure,</DELETED>
<DELETED>the Secretary shall be barred from litigating any claim
against such person under subsection (a)(2) that was, or could have
been, brought in that action with respect to the same plan.
Notwithstanding this paragraph, the Secretary shall not be barred from
litigating any claim against such person under subsection (a)(2) if the
Secretary filed a complaint under subsection (a)(2) prior to the final
court approval of the settlement agreement.''.</DELETED>
<DELETED> (b) Effective Date.--The amendments made by this section
are effective with respect to all actions or claims commenced by the
Secretary that are pending on or after the date of the enactment of
this Act.</DELETED>
<DELETED>Subtitle E--Reducing Regulatory Burdens</DELETED>
<DELETED>SEC. 361. MODIFICATION OF TIMING OF PLAN VALUATIONS.</DELETED>
<DELETED> (a) In General.--Section 412(c)(9) (relating to annual
valuation) is amended--</DELETED>
<DELETED> (1) by striking ``For purposes'' and inserting the
following:</DELETED>
<DELETED> ``(A) In general.--For purposes'',
and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(B) Election to use prior year
valuation.--</DELETED>
<DELETED> ``(i) In general.--Except as
provided in clause (ii), if, for any plan
year--</DELETED>
<DELETED> ``(I) an election is in
effect under this subparagraph with
respect to a plan, and</DELETED>
<DELETED> ``(II) the assets of the
plan are not less than 125 percent of
the plan's current liability (as
defined in paragraph (7)(B)),
determined as of the valuation date for
the preceding plan year,</DELETED>
<DELETED>then this section shall be applied
using the information available as of such
valuation date.</DELETED>
<DELETED> ``(ii) Exceptions.--</DELETED>
<DELETED> ``(I) Actual valuation
every 3 years.--Clause (i) shall not
apply for more than 2 consecutive plan
years and valuation shall be under
subparagraph (A) with respect to any
plan year to which clause (i) does not
apply by reason of this
subclause.</DELETED>
<DELETED> ``(II) Regulations.--
Clause (i) shall not apply to the
extent that more frequent valuations
are required under the regulations
under subparagraph (A).</DELETED>
<DELETED> ``(iii) Adjustments.--Information
under clause (i) shall, in accordance with
regulations, be actuarially adjusted to reflect
significant differences in
participants.</DELETED>
<DELETED> ``(iv) Election.--An election
under this subparagraph, once made, shall be
irrevocable without the consent of the
Secretary.''.</DELETED>
<DELETED> (b) Amendments to ERISA.--Paragraph (9) of section 302(c)
of the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(c)) is amended--</DELETED>
<DELETED> (1) by inserting ``(A)'' after ``(9)'',
and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(B)(i) Except as provided in clause (ii), if, for any
plan year--</DELETED>
<DELETED> ``(I) an election is in effect under this
subparagraph with respect to a plan, and</DELETED>
<DELETED> ``(II) the assets of the plan are not less than
125 percent of the plan's current liability (as defined in
paragraph (7)(B)), determined as of the valuation date for the
preceding plan year,</DELETED>
<DELETED>then this section shall be applied using the information
available as of such valuation date.</DELETED>
<DELETED> ``(ii)(I) Clause (i) shall not apply for more than 2
consecutive plan years and valuation shall be under subparagraph (A)
with respect to any plan year to which clause (i) does not apply by
reason of this subclause.</DELETED>
<DELETED> ``(II) Clause (i) shall not apply to the extent that more
frequent valuations are required under the regulations under
subparagraph (A).</DELETED>
<DELETED> ``(iii) Information under clause (i) shall, in accordance
with regulations, be actuarially adjusted to reflect significant
differences in participants.</DELETED>
<DELETED> ``(iv) An election under this subparagraph, once made,
shall be irrevocable without the consent of the Secretary of the
Treasury.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 362. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF
DIVIDEND DEDUCTION.</DELETED>
<DELETED> (a) In General.--Section 404(k)(2)(A) (defining applicable
dividends) is amended by striking ``or'' at the end of clause (ii), by
redesignating clause (iii) as clause (iv), and by inserting after
clause (ii) the following new clause:</DELETED>
<DELETED> ``(iii) is, at the election of
such participants or their beneficiaries--
</DELETED>
<DELETED> ``(I) payable as provided
in clause (i) or (ii), or</DELETED>
<DELETED> ``(II) paid to the plan
and reinvested in qualifying employer
securities, or''.</DELETED>
<DELETED> (b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 363. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY
COMPENSATED EMPLOYEES.</DELETED>
<DELETED> (a) In General.--Paragraph (4) of section 1114(c) of the
Tax Reform Act of 1986 is hereby repealed.</DELETED>
<DELETED> (b) Effective Date.--The repeal made by subsection (a)
shall apply to plan years beginning after December 31, 1999.</DELETED>
<DELETED>SEC. 364. EMPLOYEES OF TAX-EXEMPT ENTITIES.</DELETED>
<DELETED> (a) In General.--The Secretary of the Treasury shall
modify Treasury Regulations section 1.410(b)-6(g) to provide that
employees of an organization described in section 403(b)(1)(A)(i) of
the Internal Revenue Code of 1986 who are eligible to make
contributions under section 403(b) of such Code pursuant to a salary
reduction agreement may be treated as excludable with respect to a plan
under section 401 (k) or (m) of such Code that is provided under the
same general arrangement as a plan under such section 401(k), if--
</DELETED>
<DELETED> (1) no employee of an organization described in
section 403(b)(1)(A)(i) of such Code is eligible to participate
in such section 401(k) plan or section 401(m) plan,
and</DELETED>
<DELETED> (2) 95 percent of the employees who are not
employees of an organization described in section
403(b)(1)(A)(i) of such Code are eligible to participate in
such plan under such section 401 (k) or (m).</DELETED>
<DELETED> (b) Effective Date.--The modification required by
subsection (a) shall apply as of the same date set forth in section
1426(b) of the Small Business Job Protection Act of 1996.</DELETED>
<DELETED>SEC. 365. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED
RETIREMENT ADVICE.</DELETED>
<DELETED> (a) In General.--Subsection (a) of section 132 (relating
to exclusion from gross income) is amended by striking ``or'' at the
end of paragraph (5), by striking the period at the end of paragraph
(6) and inserting ``, or'', and by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(7) qualified retirement planning
services.''.</DELETED>
<DELETED> (b) Qualified Retirement Planning Services Defined.--
Section 132 is amended by redesignating subsection (m) as subsection
(n) and by inserting after subsection (l) the following:</DELETED>
<DELETED> ``(m) Qualified Retirement Planning Services.--</DELETED>
<DELETED> ``(1) In general.--For purposes of this section,
the term `qualified retirement planning services' means any
retirement planning service provided to an employee and his
spouse by an employer maintaining a qualified employer
plan.</DELETED>
<DELETED> ``(2) Nondiscrimination rule.--Subsection (a)(7)
shall apply in the case of highly compensated employees only if
such services are available on substantially the same terms to
each member of the group of employees normally provided
education and information regarding the employer's qualified
employer plan.</DELETED>
<DELETED> ``(3) Qualified employer plan.--For purposes of
this subsection, the term `qualified employer plan' means a
plan, contract, pension, or account described in section
219(g)(5).''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 366. REPORTING SIMPLIFICATION.</DELETED>
<DELETED> (a) Simplified Annual Filing Requirement for Owners and
Their Spouses.--</DELETED>
<DELETED> (1) In general.--The Secretary of the Treasury
shall modify the requirements for filing annual returns with
respect to one-participant retirement plans to ensure that such
plans with assets of $250,000 or less as of the close of the
plan year need not file a return for that year.</DELETED>
<DELETED> (2) One-participant retirement plan defined.--For
purposes of this subsection, the term ``one-participant
retirement plan'' means a retirement plan that--</DELETED>
<DELETED> (A) on the first day of the plan year--
</DELETED>
<DELETED> (i) covered only the employer (and
the employer's spouse) and the employer owned
the entire business (whether or not
incorporated), or</DELETED>
<DELETED> (ii) covered only one or more
partners (and their spouses) in a business
partnership (including partners in an S or C
corporation),</DELETED>
<DELETED> (B) meets the minimum coverage
requirements of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any other plan
of the business that covers the employees of the
business,</DELETED>
<DELETED> (C) does not provide benefits to anyone
except the employer (and the employer's spouse) or the
partners (and their spouses),</DELETED>
<DELETED> (D) does not cover a business that is a
member of an affiliated service group, a controlled
group of corporations, or a group of businesses under
common control, and</DELETED>
<DELETED> (E) does not cover a business that leases
employees.</DELETED>
<DELETED> (3) Other definitions.--Terms used in paragraph
(2) which are also used in section 414 of the Internal Revenue
Code of 1986 shall have the respective meanings given such
terms by such section.</DELETED>
<DELETED> (b) Simplified Annual Filing Requirement for Plans With
Fewer Than 25 Employees.--In the case of a retirement plan which covers
less than 25 employees on the first day of the plan year and meets the
requirements described in subparagraphs (B), (D), and (E) of subsection
(a)(2), the Secretary of the Treasury shall provide for the filing of a
simplified annual return that is substantially similar to the annual
return required to be filed by a one-participant retirement
plan.</DELETED>
<DELETED> (c) Effective Date.--The provisions of this section shall
take effect on January 1, 2001.</DELETED>
<DELETED>SEC. 367. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION
SYSTEM.</DELETED>
<DELETED> The Secretary of the Treasury shall continue to update and
improve the Employee Plans Compliance Resolution System (or any
successor program) giving special attention to--</DELETED>
<DELETED> (1) increasing the awareness and knowledge of
small employers concerning the availability and use of the
program,</DELETED>
<DELETED> (2) taking into account special concerns and
circumstances that small employers face with respect to
compliance and correction of compliance failures,</DELETED>
<DELETED> (3) extending the duration of the self-correction
period under the Administrative Policy Regarding Self-
Correction for significant compliance failures,</DELETED>
<DELETED> (4) expanding the availability to correct
insignificant compliance failures under the Administrative
Policy Regarding Self-Correction during audit, and</DELETED>
<DELETED> (5) assuring that any tax, penalty, or sanction
that is imposed by reason of a compliance failure is not
excessive and bears a reasonable relationship to the nature,
extent, and severity of the failure.</DELETED>
<DELETED>SEC. 368. SUBSTANTIAL OWNER BENEFITS IN TERMINATED
PLANS.</DELETED>
<DELETED> (a) Modification of Phase-In of Guarantee.--Section
4022(b)(5) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1322(b)(5)) is amended to read as follows:</DELETED>
<DELETED> ``(5)(A) For purposes of this paragraph, the term
`majority owner' means an individual who, at any time during the 60-
month period ending on the date the determination is being made--
</DELETED>
<DELETED> ``(i) owns the entire interest in an
unincorporated trade or business,</DELETED>
<DELETED> ``(ii) in the case of a partnership, is a partner
who owns, directly or indirectly, 50 percent or more of either
the capital interest or the profits interest in such
partnership, or</DELETED>
<DELETED> ``(iii) in the case of a corporation, owns,
directly or indirectly, 50 percent or more in value of either
the voting stock of that corporation or all the stock of that
corporation.</DELETED>
<DELETED>For purposes of clause (iii), the constructive ownership rules
of section 1563(e) of the Internal Revenue Code of 1986 shall apply
(determined without regard to section 1563(e)(3)(C)).</DELETED>
<DELETED> ``(B) In the case of a participant who is a majority
owner, the amount of benefits guaranteed under this section shall equal
the product of--</DELETED>
<DELETED> ``(i) a fraction (not to exceed 1) the numerator
of which is the number of years from the later of the effective
date or the adoption date of the plan to the termination date,
and the denominator of which is 10, and</DELETED>
<DELETED> ``(ii) the amount of benefits that would be
guaranteed under this section if the participant were not a
majority owner.''.</DELETED>
<DELETED> (b) Modification of Allocation of Assets.--</DELETED>
<DELETED> (1) Section 4044(a)(4)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1344(a)(4)(B)) is amended by striking ``section 4022(b)(5)''
and inserting ``section 4022(b)(5)(B)''.</DELETED>
<DELETED> (2) Section 4044(b) of such Act (29 U.S.C.
1344(b)) is amended--</DELETED>
<DELETED> (A) by striking ``(5)'' in paragraph (2)
and inserting ``(4), (5),'', and</DELETED>
<DELETED> (B) by redesignating paragraphs (3)
through (6) as paragraphs (4) through (7),
respectively, and by inserting after paragraph (2) the
following:</DELETED>
<DELETED> ``(3) If assets available for allocation under
paragraph (4) of subsection (a) are insufficient to satisfy in
full the benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any remaining
assets shall then be allocated to benefits described in
subparagraph (B) of that paragraph. If assets allocated to such
subparagraph (B) are insufficient to satisfy in full the
benefits described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of the
present value (as of the termination date) of their respective
benefits described in that subparagraph.''.</DELETED>
<DELETED> (c) Conforming Amendments.--</DELETED>
<DELETED> (1) Section 4021 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1321) is amended--</DELETED>
<DELETED> (A) in subsection (b)(9), by striking ``as
defined in section 4022(b)(6)'', and</DELETED>
<DELETED> (B) by adding at the end the
following:</DELETED>
<DELETED> ``(d) For purposes of subsection (b)(9), the term
`substantial owner' means an individual who, at any time during the 60-
month period ending on the date the determination is being made--
</DELETED>
<DELETED> ``(1) owns the entire interest in an
unincorporated trade or business,</DELETED>
<DELETED> ``(2) in the case of a partnership, is a partner
who owns, directly or indirectly, more than 10 percent of
either the capital interest or the profits interest in such
partnership, or</DELETED>
<DELETED> ``(3) in the case of a corporation, owns, directly
or indirectly, more than 10 percent in value of either the
voting stock of that corporation or all the stock of that
corporation.</DELETED>
<DELETED>For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986 shall
apply (determined without regard to section
1563(e)(3)(C)).''.</DELETED>
<DELETED> (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting ``section
4021(d)''.</DELETED>
<DELETED> (d) Effective Dates.--</DELETED>
<DELETED> (1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall apply to plan
terminations--</DELETED>
<DELETED> (A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)) with respect to which notices of intent to
terminate are provided under section 4041(a)(2) of such
Act (29 U.S.C. 1341(a)(2)) after December 31, 2000,
and</DELETED>
<DELETED> (B) under section 4042 of such Act (29
U.S.C. 1342) with respect to which proceedings are
instituted by the corporation after such
date.</DELETED>
<DELETED> (2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on the date of the enactment
of this Act.</DELETED>
<DELETED>SEC. 369. MODIFICATION OF EXCLUSION FOR EMPLOYER PROVIDED
TRANSIT PASSES.</DELETED>
<DELETED> (a) In General.--Section 132(f)(3) (relating to cash
reimbursements) is amended by striking the last sentence.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1999.</DELETED>
<DELETED>SEC. 370. REPEAL OF THE MULTIPLE USE TEST.</DELETED>
<DELETED> (a) In General.--Paragraph (9) of section 401(m) is
amended to read as follows:</DELETED>
<DELETED> ``(9) Regulations.--The Secretary shall prescribe
such regulations as may be necessary to carry out the purposes
of this subsection and subsection (k), including regulations
permitting appropriate aggregation of plans and
contributions.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 371. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE
OF BUSINESS RULES.</DELETED>
<DELETED> (a) Nondiscrimination.--</DELETED>
<DELETED> (1) In general.--The Secretary of the Treasury
shall, by regulation, provide that a plan shall be deemed to
satisfy the requirements of section 401(a)(4) of the Internal
Revenue Code of 1986 if such plan satisfies the facts and
circumstances test under section 401(a)(4) of such Code, as in
effect before January 1, 1994, but only if--</DELETED>
<DELETED> (A) the plan satisfies conditions
prescribed by the Secretary to appropriately limit the
availability of such test, and</DELETED>
<DELETED> (B) the plan is submitted to the Secretary
for a determination of whether it satisfies such
test.</DELETED>
<DELETED>Subparagraph (B) shall only apply to the extent
provided by the Secretary.</DELETED>
<DELETED> (2) Effective dates.--</DELETED>
<DELETED> (A) Regulations.--The regulation required
by paragraph (1) shall apply to years beginning after
December 31, 2000.</DELETED>
<DELETED> (B) Conditions of availability.--Any
condition of availability prescribed by the Secretary
under paragraph (1)(A) shall not apply before the first
year beginning not less than 120 days after the date on
which such condition is prescribed.</DELETED>
<DELETED> (b) Coverage Test.--</DELETED>
<DELETED> (1) In general.--Section 410(b)(1) (relating to
minimum coverage requirements) is amended by adding at the end
the following:</DELETED>
<DELETED> ``(D) In the case that the plan fails to
meet the requirements of subparagraphs (A), (B) and
(C), the plan--</DELETED>
<DELETED> ``(i) satisfies subparagraph (B),
as in effect immediately before the enactment
of the Tax Reform Act of 1986,</DELETED>
<DELETED> ``(ii) is submitted to the
Secretary for a determination of whether it
satisfies the requirement described in clause
(i), and</DELETED>
<DELETED> ``(iii) satisfies conditions
prescribed by the Secretary by regulation that
appropriately limit the availability of this
subparagraph.</DELETED>
<DELETED>Clause (ii) shall apply only to the extent
provided by the Secretary.''.</DELETED>
<DELETED> (2) Effective dates.--</DELETED>
<DELETED> (A) In general.--The amendment made by
paragraph (1) shall apply to years beginning after
December 31, 2000.</DELETED>
<DELETED> (B) Conditions of availability.--Any
condition of availability prescribed by the Secretary
under regulations prescribed by the Secretary under
section 410(b)(1)(D) of the Internal Revenue Code of
1986 shall not apply before the first year beginning
not less than 120 days after the date on which such
condition is prescribed.</DELETED>
<DELETED> (c) Line of Business Rules.--The Secretary of the Treasury
shall, on or before December 31, 2000, modify the existing regulations
issued under section 414(r) of the Internal Revenue Code of 1986 in
order to expand (to the extent that the Secretary determines
appropriate) the ability of a pension plan to demonstrate compliance
with the line of business requirements based upon the facts and
circumstances surrounding the design and operation of the plan, even
though the plan is unable to satisfy the mechanical tests currently
used to determine compliance.</DELETED>
<DELETED>SEC. 372. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF
MORATORIUM ON APPLICATION OF CERTAIN NONDISCRIMINATION
RULES APPLICABLE TO STATE AND LOCAL PLANS.</DELETED>
<DELETED> (a) In General.--Subparagraph (G) of section 401(a)(5),
subparagraph (H) of section 401(a)(26), subparagraph (G) of section
401(k)(3), and paragraph (2) of section 1505(d) of the Taxpayer Relief
Act of 1997 are each amended by inserting ``or by an international
organization which is described in section 414(d)'' after ``or
instrumentality thereof)''.</DELETED>
<DELETED> (b) Conforming Amendments.--</DELETED>
<DELETED> (1) The headings for subparagraph (G) of section
401(a)(5) and subparagraph (H) of section 401(a)(26) are each
amended by inserting ``and international organization'' after
``governmental''.</DELETED>
<DELETED> (2) Subparagraph (G) of section 401(k)(3) is
amended by inserting ``State and local governmental and
international organization plans.--'' after ``(G)''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2000.</DELETED>
<DELETED>SEC. 373. NOTICE AND CONSENT PERIOD REGARDING
DISTRIBUTIONS.</DELETED>
<DELETED> (a) Expansion of Period.--</DELETED>
<DELETED> (1) In general.--Subparagraph (A) of section
205(c)(7) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1055) is amended by striking ``90-day'' and
inserting ``180-day''.</DELETED>
<DELETED> (2) Modification of regulations.--The Secretary of
the Treasury shall modify the regulations of such Secretary
under part 2 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 to the extent that they
relate to sections 203(e) and 205 of such Act to substitute
``180 days'' for ``90 days'' each place it appears.</DELETED>
<DELETED> (3) Effective date.--The amendments made by
paragraph (1) and the modifications required by paragraph (2)
shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED> (b) Consent Regulation Inapplicable to Certain
Distributions.--</DELETED>
<DELETED> (1) In general.--The Secretary of the Treasury
shall modify the regulations under section 205 of the Employee
Retirement Income Security Act of 1974 to provide that the
description of a participant's right, if any, to defer receipt
of a distribution shall also describe the consequences of
failing to defer such receipt.</DELETED>
<DELETED> (2) Effective date.--The modifications required by
paragraph (1) shall apply to years beginning after December 31,
2000.</DELETED>
<DELETED>SEC. 374. ANNUAL REPORT DISSEMINATION.</DELETED>
<DELETED> (a) In General.--Section 104(b)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is
amended by striking ``shall furnish'' and inserting ``shall make
available for examination (and, upon request, shall
furnish)''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to reports for years beginning after December 31,
1998.</DELETED>
<DELETED>SEC. 375. EXCESS BENEFIT PLANS.</DELETED>
<DELETED> (a) In General.--Section 3(36) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(36)) is amended to read as
follows:</DELETED>
<DELETED> ``(36) The term `excess benefit plan' means a plan,
without regard to whether such plan is funded, maintained by an
employer solely for the purpose of providing benefits to employees in
excess of any limitation imposed by section 401(a)(17) or 415 of the
Internal Revenue Code of 1986 or any other limitation on contributions
or benefits in such Code on plans to which any of such sections apply.
To the extent that a separable part of a plan (as determined by the
Secretary of Labor) maintained by an employer is maintained for such
purpose, that part shall be treated as a separate plan which is an
excess benefit plan.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 1999.</DELETED>
<DELETED>SEC. 376. BENEFIT SUSPENSION NOTICE.</DELETED>
<DELETED> (a) Modification of Regulation.--The Secretary of Labor
shall modify the regulation under section 203(a)(3)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to
provide that, except in the case of employment, subsequent to the
commencement of payment of benefits, with a former employer, the
notification required by such regulation--</DELETED>
<DELETED> (1) may be included in the summary plan
description for the plan furnished in accordance with section
104(b) of such Act (29 U.S.C. 1024(b)), rather than in a
separate notice, and</DELETED>
<DELETED> (2) need not include a copy of the relevant plan
provisions.</DELETED>
<DELETED> (c) Effective Date.--The modification made under this
section shall apply to plan years beginning after December 31,
1999.</DELETED>
<DELETED>SEC. 377. CLARIFICATION OF CHURCH WELFARE PLAN STATUS UNDER
STATE INSURANCE LAW.</DELETED>
<DELETED> For purposes of determining the status under State
insurance law of a church plan (as defined in section 414(e) of the
Internal Revenue Code and section 3(33) of the Employee Retirement
Income Security Act that is a welfare plan (as defined in section
3(1)), such church plan (and any trust under such plan) shall be deemed
a single-employer plan that--</DELETED>
<DELETED> (1) reimburses costs from general church
assets;</DELETED>
<DELETED> (2) purchases insurance coverage with general
church assets; or</DELETED>
<DELETED> (3) both.</DELETED>
<DELETED>For purposes of this paragraph, the term ``reimbursing costs
from general church assets'' means engaging in a practice that does not
have the effect of transferring or spreading risk. The scope of this
paragraph is limited to determining the status of a church welfare plan
under State insurance law, and does not otherwise recharacterized the
status, or modify or affect the rights, of any plan participant,
including those who make plan contributions.</DELETED>
<DELETED>Subtitle F--Plan Amendments</DELETED>
<DELETED>SEC. 381. PROVISIONS RELATING TO PLAN AMENDMENTS.</DELETED>
<DELETED> (a) In General.--If this section applies to any plan or
contract amendment--</DELETED>
<DELETED> (1) such plan or contract shall be treated as
being operated in accordance with the terms of the plan during
the period described in subsection (b)(2)(A), and</DELETED>
<DELETED> (2) such plan shall not fail to meet the
requirements of section 411(d)(6) of the Internal Revenue Code
of 1986 by reason of such amendment.</DELETED>
<DELETED> (b) Amendments to Which Section Applies.--</DELETED>
<DELETED> (1) In general.--This section shall apply to any
amendment to any plan or annuity contract which is made--
</DELETED>
<DELETED> (A) pursuant to any amendment made by this
title, or pursuant to any regulation issued under this
title, and</DELETED>
<DELETED> (B) on or before the last day of the first
plan year beginning on or after January 1,
2003.</DELETED>
<DELETED>In the case of a government plan (as defined in
section 414(d) of the Internal Revenue Code of 1986), this
paragraph shall be applied by substituting ``2005'' for
``2003''.</DELETED>
<DELETED> (2) Conditions.--This section shall not apply to
any amendment unless--</DELETED>
<DELETED> (A) during the period--</DELETED>
<DELETED> (i) beginning on the date the
legislative or regulatory amendment described
in paragraph (1)(A) takes effect (or in the
case of a plan or contract amendment not
required by such legislative or regulatory
amendment, the effective date specified by the
plan), and</DELETED>
<DELETED> (ii) ending on the date described
in paragraph (1)(B) (or, if earlier, the date
the plan or contract amendment is
adopted),</DELETED>
<DELETED>the plan or contract is operated as if such
plan or contract amendment were in effect,
and</DELETED>
<DELETED> (B) such plan or contract amendment
applies retroactively for such period.</DELETED>
<DELETED>TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-
WORK CREDIT</DELETED>
<DELETED>SEC. 401. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK
CREDIT.</DELETED>
<DELETED> (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f)
(relating to termination) are each amended by striking ``June 30,
1999'' and inserting ``December 31, 2001''.</DELETED>
<DELETED> (b) Clarification of First Year of Employment.--Paragraph
(2) of section 51(i) is amended by striking ``during which he was not a
member of a targeted group''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to individuals who begin work for the employer after June
30, 1999.</DELETED>
<DELETED>TITLE V--ESTATE TAX RELIEF</DELETED>
<DELETED>Subtitle A--Reductions of Estate and Gift Tax Rates</DELETED>
<DELETED>SEC. 501. REDUCTIONS OF ESTATE AND GIFT TAX RATES.</DELETED>
<DELETED> (a) Maximum Rate of Tax Reduced to 50 Percent.--</DELETED>
<DELETED> (1) In general.--The table contained in section
2001(c)(1) is amended by striking the two highest brackets and
inserting the following:</DELETED>
<DELETED>``Over $2,500,000.....
<DELETED>$1,025,800, plus 50%
of the excess over
$2,500,000.''.
<DELETED> (2) Phase-in of reduced rate.--Subsection (c) of
section 2001 is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(3) Phase-in of reduced rate.--In the case of
decedents dying, and gifts made, during 2001, the last item in
the table contained in paragraph (1) shall be applied by
substituting `53%' for `50%'.''.</DELETED>
<DELETED> (b) Repeal of Phaseout of Graduated Rates.--Subsection (c)
of section 2001 is amended by striking paragraph (2) and redesignating
paragraph (3), as added by subsection (a), as paragraph (2).</DELETED>
<DELETED> (c) Additional Reductions of Rates of Tax.--Subsection (c)
of section 2001, as so amended, is amended by adding at the end the
following new paragraph:</DELETED>
<DELETED> ``(3) Phasedown of tax.--In the case of estates of
decedents dying, and gifts made, during any calendar year after
2002--</DELETED>
<DELETED> ``(A) In general.--Except as provided in
subparagraph (C), the tentative tax under this
subsection shall be determined by using a table
prescribed by the Secretary (in lieu of using the table
contained in paragraph (1)) which is the same as such
table; except that--</DELETED>
<DELETED> ``(i) each of the rates of tax
shall be reduced by the number of percentage
points determined under subparagraph (B),
and</DELETED>
<DELETED> ``(ii) the amounts setting forth
the tax shall be adjusted to the extent
necessary to reflect the adjustments under
clause (i).</DELETED>
<DELETED> ``(B) Percentage points of reduction.--
</DELETED>
<DELETED> </DELETED>
The number of
<DELETED>``For calendar year:</DELETED>
percentage points is:
<DELETED> 2003.......................... 1.0
<DELETED> 2004 and thereafter........... 2.0.
<DELETED> ``(C) Coordination with credit for state
death taxes.--Rules similar to the rules of
subparagraph (A) shall apply to the table contained in
section 2011(b) except that the Secretary shall
prescribe percentage point reductions which maintain
the proportionate relationship (as in effect before any
reduction under this paragraph) between the credit
under section 2011 and the tax rates under subsection
(c).''.</DELETED>
<DELETED> (d) Effective Dates.--</DELETED>
<DELETED> (1) Subsections (a) and (b).--The amendments made
by subsections (a) and (b) shall apply to estates of decedents
dying, and gifts made, after December 31, 2000.</DELETED>
<DELETED> (2) Subsection (c).--The amendment made by
subsection (c) shall apply to estates of decedents dying, and
gifts made, after December 31, 2002.</DELETED>
<DELETED>Subtitle B--Unified Credit Replaced With Unified Exemption
Amount</DELETED>
<DELETED>SEC. 511. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES
REPLACED WITH UNIFIED EXEMPTION AMOUNT.</DELETED>
<DELETED> (a) In General.--</DELETED>
<DELETED> (1) Estate tax.--Part IV of subchapter A of
chapter 11 is amended by inserting after section 2051 the
following new section:</DELETED>
<DELETED>``SEC. 2052. EXEMPTION.</DELETED>
<DELETED> ``(a) In general.--For purposes of the tax imposed by
section 2001, the value of the taxable estate shall be determined by
deducting from the value of the gross estate an amount equal to the
excess (if any) of--</DELETED>
<DELETED> ``(1) the exemption amount for the calendar year
in which the decedent died, over</DELETED>
<DELETED> ``(2) the sum of--</DELETED>
<DELETED> ``(A) the aggregate amount allowed as an
exemption under section 2521 with respect to gifts made
by the decedent after December 31, 2000, and</DELETED>
<DELETED> ``(B) the aggregate amount of gifts made
by the decedent for which credit was allowed by section
2505 (as in effect on the day before the date of the
enactment of the Wage and Employment Growth Act of
1999).</DELETED>
<DELETED>Gifts which are includible in the gross estate of the decedent
shall not be taken into account in determining the amounts under
paragraph (2).</DELETED>
<DELETED> ``(b) Exemption Amount.--For purposes of subsection (a),
the term `exemption amount' means the amount determined in accordance
with the following table:</DELETED>
<DELETED>``In the case of</DELETED>
The exemption
<DELETED> calendar year:</DELETED>
amount is:
<DELETED>2001................................ $675,000
<DELETED>2002 and 2003....................... $700,000
<DELETED>2004................................ $850,000
<DELETED>2005................................ $950,000
<DELETED>2006 or thereafter.................. $1,000,000.''.
<DELETED> (2) Gift tax.--Subchapter C of chapter 12
(relating to deductions) is amended by inserting before section
2522 the following new section:</DELETED>
<DELETED>``SEC. 2521. EXEMPTION.</DELETED>
<DELETED> ``In computing taxable gifts for any calendar year, there
shall be allowed as a deduction in the case of a citizen or resident of
the United States an amount equal to the excess of--</DELETED>
<DELETED> ``(1) the exemption amount determined under
section 2052 for such calendar year, over</DELETED>
<DELETED> ``(2) the sum of--</DELETED>
<DELETED> ``(A) the aggregate amount allowed as an
exemption under this section for all preceding calendar
years after 2000, and</DELETED>
<DELETED> ``(B) the aggregate amount of gifts for
which credit was allowed by section 2505 (as in effect
on the day before the date of the enactment of the Wage
and Employment Growth Act of 1999).''.</DELETED>
<DELETED> (b) Repeal of Unified Credits.--</DELETED>
<DELETED> (1) Section 2010 (relating to unified credit
against estate tax) is hereby repealed.</DELETED>
<DELETED> (2) Section 2505 (relating to unified credit
against gift tax) is hereby repealed.</DELETED>
<DELETED> (c) Conforming Amendments.--</DELETED>
<DELETED> (1) Subparagraph (B) of section 2001(b)(1) is
amended by inserting before the comma ``reduced by the amount
described in section 2052(a)(2)(B)''.</DELETED>
<DELETED> (2)(A) Subsection (b) of section 2011 is amended--
</DELETED>
<DELETED> (i) by striking ``adjusted'' in the table,
and</DELETED>
<DELETED> (ii) by striking the last
sentence.</DELETED>
<DELETED> (B) Subsection (f) of section 2011 is amended by
striking ``, reduced by the amount of the unified credit
provided by section 2010''.</DELETED>
<DELETED> (3) Subsection (a) of section 2012 is amended by
striking ``and the unified credit provided by section
2010''.</DELETED>
<DELETED> (4)(A) Subsection (b) of section 2013 is amended
by inserting before the period at the end of the first sentence
``and increased by the exemption allowed under section 2052 or
2106(a)(4) (or the corresponding provisions of prior law) in
determining the taxable estate of the transferor for purposes
of the estate tax''.</DELETED>
<DELETED> (B) Subparagraph (A) of section 2013(c)(1) is
amended by striking ``2010,''.</DELETED>
<DELETED> (5) Paragraph (2) of section 2014(b) is amended by
striking ``2010,''.</DELETED>
<DELETED> (6) Clause (ii) of section 2056A(b)(12)(C) is
amended to read as follows:</DELETED>
<DELETED> ``(ii) to treat any reduction in
the tax imposed by paragraph (1)(A) by reason
of the credit allowable under section 2010 (as
in effect on the day before the date of the
enactment of the Wage and Employment Growth Act
of 1999) or the exemption allowable under
section 2052 with respect to the decedent as a
credit under section 2505 (as so in effect) or
exemption under section 2521 (as the case may
be) allowable to such surviving spouse for
purposes of determining the amount of the
exemption allowable under section 2521 with
respect to taxable gifts made by the surviving
spouse during the year in which the spouse
becomes a citizen or any subsequent
year,''.</DELETED>
<DELETED> (7) Paragraph (3) of section 2057(a) is amended to
read as follows:</DELETED>
<DELETED> ``(3) Coordination with exemption amount.--
</DELETED>
<DELETED> ``(A) In general.--Except as provided in
subparagraph (B), if this section applies to an estate,
the exemption amount under section 2052 shall be
$625,000.</DELETED>
<DELETED> ``(B) Increase in exemption amount if
deduction is less than $675,000.--If the deduction
allowed by this section is less than $675,000, the
amount of the exemption amount under section 2052 shall
be increased (but not above the amount which would
apply to the estate without regard to this section) by
the excess of $675,000 over the amount of the deduction
allowed.''.</DELETED>
<DELETED> (8)(A) Subparagraph (B) of section 2101(b)(1) is
amended by inserting before the comma ``reduced by the
aggregate amount of gifts for which credit was allowed by
section 2505 (as in effect on the day before the date of the
enactment of the Wage and Employment Growth Act of
1999)''</DELETED>
<DELETED> (B) Subsection (b) of section 2101 is amended by
striking the last sentence.</DELETED>
<DELETED> (9) Section 2102 is amended by striking subsection
(c).</DELETED>
<DELETED> (10) Subsection (a) of section 2106 is amended by
adding at the end the following new paragraph:</DELETED>
<DELETED> ``(4) Exemption.--</DELETED>
<DELETED> ``(A) In general.--An exemption of
$60,000.</DELETED>
<DELETED> ``(B) Residents of possessions of the
united states.--In the case of a decedent who is
considered to be a nonresident not a citizen of the
United States under section 2209, the exemption under
this paragraph shall be the greater of--</DELETED>
<DELETED> ``(i) $60,000, or</DELETED>
<DELETED> ``(ii) that proportion of $175,000
which the value of that part of the decedent's
gross estate which at the time of his death is
situated in the United States bears to the
value of his entire gross estate wherever
situated.</DELETED>
<DELETED> ``(C) Special rules.--</DELETED>
<DELETED> ``(i) Coordination with
treaties.--To the extent required under any
treaty obligation of the United States, the
exemption allowed under this paragraph shall be
equal to the amount which bears the same ratio
to the exemption amount under section 2052 (for
the calendar year in which the decedent died)
as the value of the part of the decedent's
gross estate which at the time of his death is
situated in the United States bears to the
value of his entire gross estate wherever
situated. For purposes of the preceding
sentence, property shall not be treated as
situated in the United States if such property
is exempt from the tax imposed by this
subchapter under any treaty obligation of the
United States.</DELETED>
<DELETED> ``(ii) Coordination with gift tax
exemption and unified credit.--If an exemption
has been allowed under section 2521 (or a
credit has been allowed under section 2505 as
in effect on the day before the date of the
enactment of the Wage and Employment Growth
Act of 1999) with respect to any gift made by the decedent, each dollar
amount contained in subparagraph (A) or (B) or the exemption amount
applicable under clause (i) of this subparagraph (whichever applies)
shall be reduced by the exemption so allowed under 2521 (or, in the
case of such a credit, by the amount of the gift for which the credit
was so allowed).''.</DELETED>
<DELETED> (11)(A) Subsection (a) of section 2107 is amended
by adding at the end the following new paragraph:</DELETED>
<DELETED> ``(3) Limitation on exemption amount.--
Subparagraphs (B) and (C) of section 2106(a)(4) shall not apply
in applying section 2106 for purposes of this
section.''.</DELETED>
<DELETED> (B) Subsection (c) of section 2107 is amended--
</DELETED>
<DELETED> (i) by striking paragraph (1) and
by redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively,
and</DELETED>
<DELETED> (ii) by striking the second
sentence of paragraph (2) (as so
redesignated).</DELETED>
<DELETED> (12) Section 2206 is amended by striking ``the
taxable estate'' in the first sentence and inserting ``the sum
of the taxable estate and the amount of the exemption allowed
under section 2052 or 2106(a)(4) in computing the taxable
estate''.</DELETED>
<DELETED> (13) Section 2207 is amended by striking ``the
taxable estate'' in the first sentence and inserting ``the sum
of the taxable estate and the amount of the exemption allowed
under section 2052 or 2106(a)(4) in computing the taxable
estate''.</DELETED>
<DELETED> (14) Subparagraph (B) of section 2207B(a)(1) is
amended to read as follows:</DELETED>
<DELETED> ``(B) the sum of the taxable estate and
the amount of the exemption allowed under section 2052
or 2106(a)(4) in computing the taxable
estate.''.</DELETED>
<DELETED> (15) Subsection (a) of section 2503 is amended by
striking ``section 2522'' and inserting ``section
2521''.</DELETED>
<DELETED> (16) Paragraph (1) of section 6018(a) is amended
by striking ``the applicable exclusion amount in effect under
section 2010(c)'' and inserting ``the exemption amount under
section 2052''.</DELETED>
<DELETED> (17) Subparagraph (A) of section 6601(j)(2) is
amended to read as follows:</DELETED>
<DELETED> ``(A) the amount of the tax which would be
imposed by chapter 11 on an amount of taxable estate
equal to $1,000,000, or''.</DELETED>
<DELETED> (18) The table of sections for part II of
subchapter A of chapter 11 is amended by striking the item
relating to section 2010.</DELETED>
<DELETED> (19) The table of sections for part IV of
subchapter A of chapter 11 is amended by inserting after the
item relating to section 2051 the following new item:</DELETED>
<DELETED>``Sec. 2052. Exemption.''.
<DELETED> (20) The table of sections for subchapter A of
chapter 12 is amended by striking the item relating to section
2505.</DELETED>
<DELETED> (21) The table of sections for subchapter C of
chapter 12 is amended by inserting before the item relating to
section 2522 the following new item:</DELETED>
<DELETED>``Sec. 2521. Exemption.''.
<DELETED> (d) Effective Date.--The amendments made by this section--
</DELETED>
<DELETED> (1) insofar as they relate to the tax imposed by
chapter 11 of the Internal Revenue Code of 1986, shall apply to
estates of decedents dying after December 31, 2000,
and</DELETED>
<DELETED> (2) insofar as they relate to the tax imposed by
chapter 12 of such Code, shall apply to gifts made after
December 31, 2000.</DELETED>
<DELETED>Subtitle C--Modifications of Generation-skipping Transfer
Tax</DELETED>
<DELETED>SEC. 521. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME
TRANSFERS TO TRUSTS; RETROACTIVE ALLOCATIONS.</DELETED>
<DELETED> (a) In General.--Section 2632 (relating to special rules
for allocation of GST exemption) is amended by redesignating subsection
(c) as subsection (e) and by inserting after subsection (b) the
following new subsections:</DELETED>
<DELETED> ``(c) Deemed Allocation to Certain Lifetime Transfers to
GST Trusts.--</DELETED>
<DELETED> ``(1) In general.--If any individual makes an
indirect skip during such individual's lifetime, any unused
portion of such individual's GST exemption shall be allocated
to the property transferred to the extent necessary to make the
inclusion ratio for such property zero. If the amount of the
indirect skip exceeds such unused portion, the entire unused
portion shall be allocated to the property
transferred.</DELETED>
<DELETED> ``(2) Unused portion.--For purposes of paragraph
(1), the unused portion of an individual's GST exemption is
that portion of such exemption which has not previously been--
</DELETED>
<DELETED> ``(A) allocated by such
individual,</DELETED>
<DELETED> ``(B) treated as allocated under
subsection (b) with respect to a direct skip occurring
during or before the calendar year in which the
indirect skip is made, or</DELETED>
<DELETED> ``(C) treated as allocated under paragraph
(1) with respect to a prior indirect skip.</DELETED>
<DELETED> ``(3) Definitions.--</DELETED>
<DELETED> ``(A) Indirect skip.--For purposes of this
subsection, the term `indirect skip' means any transfer
of property (other than a direct skip) subject to the
tax imposed by chapter 12 made to a GST
trust.</DELETED>
<DELETED> ``(B) GST trust.--The term `GST trust'
means a trust that could have a generation-skipping
transfer with respect to the transferor unless--
</DELETED>
<DELETED> ``(i) the trust instrument
provides that more than 25 percent of the trust
corpus must be distributed to or may be
withdrawn by 1 or more individuals who are non-
skip persons--</DELETED>
<DELETED> ``(I) before the date that
the individual attains age
46,</DELETED>
<DELETED> ``(II) on or before one or
more dates specified in the trust
instrument that will occur before the
date that such individual attains age
46, or</DELETED>
<DELETED> ``(III) upon the
occurrence of an event that, in
accordance with regulations prescribed
by the Secretary, may reasonably be
expected to occur before the date that
such individual attains age
46;</DELETED>
<DELETED> ``(ii) the trust instrument
provides that more than 25 percent of the trust
corpus must be distributed to or may be
withdrawn by one or more individuals who are
non-skip persons and who are living on the date
of death of another person identified in the
instrument (by name or by class) who is more
than 10 years older than such
individuals;</DELETED>
<DELETED> ``(iii) the trust instrument
provides that, if one or more individuals who
are non-skip persons die on or before a date or
event described in clause (i) or (ii), more
than 25 percent of the trust corpus either must
be distributed to the estate or estates of one
or more of such individuals or is subject to a
general power of appointment exercisable by one
or more of such individuals;</DELETED>
<DELETED> ``(iv) the trust is a trust any
portion of which would be included in the gross
estate of a non-skip person (other than the
transferor) if such person died immediately
after the transfer;</DELETED>
<DELETED> ``(v) the trust is a charitable
lead annuity trust (within the meaning of
section 2642(e)(3)(A)) or a charitable
remainder annuity trust or a charitable
remainder unitrust (within the meaning of
section 664(d)); or</DELETED>
<DELETED> ``(vi) the trust is a trust with
respect to which a deduction was allowed under
section 2522 for the amount of an interest in
the form of the right to receive annual
payments of a fixed percentage of the net fair
market value of the trust property (determined
yearly) and which is required to pay principal
to a non-skip person if such person is alive
when the yearly payments for which the
deduction was allowed terminate.</DELETED>
<DELETED>For purposes of this subparagraph, the value
of transferred property shall not be considered to be
includible in the gross estate of a non-skip person or
subject to a right of withdrawal by reason of such
person holding a right to withdraw so much of such
property as does not exceed the amount referred to in
section 2503(b) with respect to any transferor, and it
shall be assumed that powers of appointment held by
non-skip persons will not be exercised.</DELETED>
<DELETED> ``(4) Automatic allocations to certain gst
trusts.--For purposes of this subsection, an indirect skip to
which section 2642(f) applies shall be deemed to have been made
only at the close of the estate tax inclusion period. The fair
market value of such transfer shall be the fair market value of
the trust property at the close of the estate tax inclusion
period.</DELETED>
<DELETED> ``(5) Applicability and effect.--</DELETED>
<DELETED> ``(A) In general.--An individual--
</DELETED>
<DELETED> ``(i) may elect to have this
subsection not apply to--</DELETED>
<DELETED> ``(I) an indirect skip,
or</DELETED>
<DELETED> ``(II) any or all
transfers made by such individual to a
particular trust, and</DELETED>
<DELETED> ``(ii) may elect to treat any
trust as a GST trust for purposes of this
subsection with respect to any or all transfers
made by such individual to such
trust.</DELETED>
<DELETED> ``(B) Elections.--</DELETED>
<DELETED> ``(i) Elections with respect to
indirect skips.--An election under subparagraph
(A)(i)(I) shall be deemed to be timely if filed
on a timely filed gift tax return for the
calendar year in which the transfer was made or
deemed to have been made pursuant to paragraph
(4) or on such later date or dates as may be
prescribed by the Secretary.</DELETED>
<DELETED> ``(ii) Other elections.--An
election under clause (i)(II) or (ii) of
subparagraph (A) may be made on a timely filed
gift tax return for the calendar year for which
the election is to become effective.</DELETED>
<DELETED> ``(d) Retroactive Allocations.--</DELETED>
<DELETED> ``(1) In general.--If--</DELETED>
<DELETED> ``(A) a non-skip person has an interest or
a future interest in a trust to which any transfer has
been made,</DELETED>
<DELETED> ``(B) such person--</DELETED>
<DELETED> ``(i) is a lineal descendant of a
grandparent of the transferor or of a
grandparent of the transferor's spouse or
former spouse, and</DELETED>
<DELETED> ``(ii) is assigned to a generation
below the generation assignment of the
transferor, and</DELETED>
<DELETED> ``(C) such person predeceases the
transferor,</DELETED>
<DELETED>then the transferor may make an allocation of any of
such transferor's unused GST exemption to any previous transfer
or transfers to the trust on a chronological basis.</DELETED>
<DELETED> ``(2) Special rules.--If the allocation under
paragraph (1) by the transferor is made on a gift tax return
filed on or before the date prescribed by section 6075(b) for
gifts made within the calendar year within which the non-skip
person's death occurred--</DELETED>
<DELETED> ``(A) the value of such transfer or
transfers for purposes of section 2642(a) shall be
determined as if such allocation had been made on a
timely filed gift tax return for each calendar year
within which each transfer was made,</DELETED>
<DELETED> ``(B) such allocation shall be effective
immediately before such death, and</DELETED>
<DELETED> ``(C) the amount of the transferor's
unused GST exemption available to be allocated shall be
determined immediately before such death.</DELETED>
<DELETED> ``(3) Future interest.--For purposes of this
subsection, a person has a future interest in a trust if the
trust may permit income or corpus to be paid to such person on
a date or dates in the future.''.</DELETED>
<DELETED> (b) Conforming Amendment.--Paragraph (2) of section
2632(b) is amended by striking ``with respect to a direct skip'' and
inserting ``or subsection (c)(1)''.</DELETED>
<DELETED> (c) Effective Dates.--</DELETED>
<DELETED> (1) Deemed allocation.--Section 2632(c) of the
Internal Revenue Code of 1986 (as added by subsection (a)), and
the amendment made by subsection (b), shall apply to transfers
subject to chapter 11 or 12 made after December 31, 1999, and
to estate tax inclusion periods ending after December 31,
1999.</DELETED>
<DELETED> (2) Retroactive allocations.--Section 2632(d) of
the Internal Revenue Code of 1986 (as added by subsection (a))
shall apply to deaths of non-skip persons occurring after the
date of the enactment of this Act.</DELETED>
<DELETED>SEC. 522. SEVERING OF TRUSTS.</DELETED>
<DELETED> (a) In General.--Subsection (a) of section 2642 (relating
to inclusion ratio) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(3) Severing of trusts.--</DELETED>
<DELETED> ``(A) In general.--If a trust is severed
in a qualified severance, the trusts resulting from
such severance shall be treated as separate trusts
thereafter for purposes of this chapter.</DELETED>
<DELETED> ``(B) Qualified severance.--For purposes
of subparagraph (A)--</DELETED>
<DELETED> ``(i) In general.--The term
`qualified severance' means the division of a
single trust and the creation (by any means
available under the governing instrument or
under local law) of two or more trusts if--
</DELETED>
<DELETED> ``(I) the single trust was
divided on a fractional basis,
and</DELETED>
<DELETED> ``(II) the terms of the
new trusts, in the aggregate, provide
for the same succession of interests of
beneficiaries as are provided in the
original trust.</DELETED>
<DELETED> ``(ii) Trusts with inclusion ratio
greater than zero.--If a trust has an inclusion
ratio of greater than zero and less than 1, a
severance is a qualified severance only if the
single trust is divided into two trusts, one of
which receives a fractional share of the total
value of all trust assets equal to the
applicable fraction of the single trust
immediately before the severance. In such case,
the trust receiving such fractional share shall
have an inclusion ratio of zero and the other
trust shall have an inclusion ratio of
1.</DELETED>
<DELETED> ``(iii) Regulations.--The term
`qualified severance' includes any other
severance permitted under regulations
prescribed by the Secretary.</DELETED>
<DELETED> ``(C) Timing and manner of severances.--A
severance pursuant to this paragraph may be made at any
time. The Secretary shall prescribe by forms or
regulations the manner in which the qualified severance
shall be reported to the Secretary.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to severances after the date of the enactment of this
Act.</DELETED>
<DELETED>SEC. 523. MODIFICATION OF CERTAIN VALUATION RULES.</DELETED>
<DELETED> (a) Gifts for Which Gift Tax Return Filed or Deemed
Allocation Made.--Paragraph (1) of section 2642(b) (relating to
valuation rules, etc.) is amended to read as follows:</DELETED>
<DELETED> ``(1) Gifts for which gift tax return filed or
deemed allocation made.--If the allocation of the GST exemption
to any transfers of property is made on a gift tax return filed
on or before the date prescribed by section 6075(b) for such
transfer or is deemed to be made under section 2632 (b)(1) or
(c)(1)--</DELETED>
<DELETED> ``(A) the value of such property for
purposes of subsection (a) shall be its value as
finally determined for purposes of chapter 12 (within
the meaning of section 2001(f)(2)), or, in the case of
an allocation deemed to have been made at the close of
an estate tax inclusion period, its value at the time
of the close of the estate tax inclusion period,
and</DELETED>
<DELETED> ``(B) such allocation shall be effective
on and after the date of such transfer, or, in the case
of an allocation deemed to have been made at the close
of an estate tax inclusion period, on and after the
close of such estate tax inclusion period.''.</DELETED>
<DELETED> (b) Transfers at Death.--Subparagraph (A) of section
2642(b)(2) is amended to read as follows:</DELETED>
<DELETED> ``(A) Transfers at death.--If property is
transferred as a result of the death of the transferor,
the value of such property for purposes of subsection
(a) shall be its value as finally determined for
purposes of chapter 11; except that, if the
requirements prescribed by the Secretary respecting
allocation of post-death changes in value are not met,
the value of such property shall be determined as of
the time of the distribution concerned.''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by section 1431
of the Tax Reform Act of 1986.</DELETED>
<DELETED>SEC. 524. RELIEF PROVISIONS.</DELETED>
<DELETED> (a) In General.--Section 2642 is amended by adding at the
end the following new subsection:</DELETED>
<DELETED> ``(g) Relief Provisions.--</DELETED>
<DELETED> ``(1) Relief for late elections.--</DELETED>
<DELETED> ``(A) In general.--The Secretary shall by
regulation prescribe such circumstances and procedures
under which extensions of time will be granted to
make--</DELETED>
<DELETED> ``(i) an allocation of GST
exemption described in paragraph (1) or (2) of
subsection (b), and</DELETED>
<DELETED> ``(ii) an election under
subsection (b)(3) or (c)(5) of section
2632.</DELETED>
<DELETED>Such regulations shall include procedures for
requesting comparable relief with respect to transfers
made before the date of the enactment of this
paragraph.</DELETED>
<DELETED> ``(B) Basis for determinations.--In
determining whether to grant relief under this
paragraph, the Secretary shall take into account all
relevant circumstances, including evidence of intent
contained in the trust instrument or instrument of
transfer and such other factors as the Secretary deems
relevant. For purposes of determining whether to grant
relief under this paragraph, the time for making the
allocation (or election) shall be treated as if not expressly
prescribed by statute.</DELETED>
<DELETED> ``(2) Substantial compliance.--An allocation of
GST exemption under section 2632 that demonstrates an intent to
have the lowest possible inclusion ratio with respect to a
transfer or a trust shall be deemed to be an allocation of so
much of the transferor's unused GST exemption as produces the
lowest possible inclusion ratio. In determining whether there
has been substantial compliance, all relevant circumstances
shall be taken into account, including evidence of intent
contained in the trust instrument or instrument of transfer and
such other factors as the Secretary deems
relevant.''.</DELETED>
<DELETED> (b) Effective Dates.--</DELETED>
<DELETED> (1) Relief for late elections.--Section 2642(g)(1)
of the Internal Revenue Code of 1986 (as added by subsection
(a)) shall apply to requests pending on, or filed after, the
date of the enactment of this Act.</DELETED>
<DELETED> (2) Substantial compliance.--Section 2642(g)(2) of
such Code (as so added) shall take effect on the date of the
enactment of this Act and shall apply to allocations made prior
to such date for purposes of determining the tax consequences
of generation-skipping transfers with respect to which the
period of time for filing claims for refund has not expired. No
implication is intended with respect to the availability of
relief for late elections or the application of a rule of
substantial compliance prior to the enactment of this
amendment.</DELETED>
<DELETED>Subtitle D--Conservation Easements</DELETED>
<DELETED>SEC. 531. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION
EASEMENTS.</DELETED>
<DELETED> (a) Where Land Is Located.--</DELETED>
<DELETED> (1) In general.--Clause (i) of section
2031(c)(8)(A) (defining land subject to a conservation
easement) is amended--</DELETED>
<DELETED> (A) by striking ``25 miles'' both places
it appears and inserting ``50 miles'', and</DELETED>
<DELETED> (B) striking ``10 miles'' and inserting
``25 miles''.</DELETED>
<DELETED> (2) Effective date.--The amendments made by this
subsection shall apply to estates of decedents dying after
December 31, 1999.</DELETED>
<DELETED> (b) Clarification of Date for Determining Value of Land
and Easement.--</DELETED>
<DELETED> (1) In general.--Section 2031(c)(2) (defining
applicable percentage) is amended by adding at the end the
following new sentence: ``The values taken into account under
the preceding sentence shall be such values as of the date of
the contribution referred to in paragraph (8)(B).''.</DELETED>
<DELETED> (2) Effective date.--The amendment made by this
subsection shall apply to estates of decedents dying after
December 31, 1997.</DELETED>
<DELETED>TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND
INDUSTRIES</DELETED>
<DELETED>Subtitle A--American Community Renewal Act of 1999</DELETED>
<DELETED>SEC. 601. SHORT TITLE.</DELETED>
<DELETED> This subtitle may be cited as the ``American Community
Renewal Act of 1999''.</DELETED>
<DELETED>SEC. 602. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL
COMMUNITIES.</DELETED>
<DELETED> (a) In General.--Chapter 1 is amended by adding at the end
the following new subchapter:</DELETED>
<DELETED>``Subchapter X--Renewal Communities</DELETED>
<DELETED>``Part I. Designation.
<DELETED>``Part II. Renewal community
capital gain; renewal community
business.
<DELETED>``Part III. Family development
accounts.
<DELETED>``Part IV. Additional
incentives.
<DELETED>``PART I--DESIGNATION</DELETED>
<DELETED>``Sec. 1400E. Designation of
renewal communities.
<DELETED>``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.</DELETED>
<DELETED> ``(a) Designation.--</DELETED>
<DELETED> ``(1) Definitions.--For purposes of this title,
the term `renewal community' means any area--</DELETED>
<DELETED> ``(A) which is nominated by one or more
local governments and the State or States in which it
is located for designation as a renewal community
(hereinafter in this section referred to as a
`nominated area'); and</DELETED>
<DELETED> ``(B) which the Secretary of Housing and
Urban Development designates as a renewal community,
after consultation with--</DELETED>
<DELETED> ``(i) the Secretaries of
Agriculture, Commerce, Labor, and the Treasury;
the Director of the Office of Management and
Budget; and the Administrator of the Small
Business Administration; and</DELETED>
<DELETED> ``(ii) in the case of an area on
an Indian reservation, the Secretary of the
Interior.</DELETED>
<DELETED> ``(2) Number of designations.--</DELETED>
<DELETED> ``(A) In general.--The Secretary of
Housing and Urban Development may designate not more
than 15 nominated areas as renewal communities of
which--</DELETED>
<DELETED> ``(i) only 5 may be designated
during the first 12 months of the period
referred to in paragraph (4)(B),</DELETED>
<DELETED> ``(ii) an additional 5 may be
designated during the second 12 months of such
period, and</DELETED>
<DELETED> ``(iii) the remaining 5 may be
designated during the last 12 months of such
period.</DELETED>
<DELETED> ``(B) Minimum designation in rural
areas.--Of the areas designated under paragraph (1), at
least 3 must be areas--</DELETED>
<DELETED> ``(i) which are within a local
government jurisdiction or jurisdictions with a
population of less than 50,000,</DELETED>
<DELETED> ``(ii) which are outside of a
metropolitan statistical area (within the
meaning of section 143(k)(2)(B)), or</DELETED>
<DELETED> ``(iii) which are determined by
the Secretary of Housing and Urban Development,
after consultation with the Secretary of
Commerce, to be rural areas.</DELETED>
<DELETED> ``(3) Areas designated based on degree of poverty,
etc.--</DELETED>
<DELETED> ``(A) In general.--Except as otherwise
provided in this section, the nominated areas
designated as renewal communities under this subsection
shall be those nominated areas with the highest average
ranking with respect to the criteria described in
subparagraphs (B), (C), and (D) of subsection (c)(3).
For purposes of the preceding sentence, an area shall
be ranked within each such criterion on the basis of
the amount by which the area exceeds such criterion,
with the area which exceeds such criterion by the
greatest amount given the highest ranking.</DELETED>
<DELETED> ``(B) Exception where inadequate course of
action, etc.--An area shall not be designated under
subparagraph (A) if the Secretary of Housing and Urban
Development determines that the course of action
described in subsection (d)(2) with respect to such
area is inadequate.</DELETED>
<DELETED> ``(C) Priority for empowerment zones and
enterprise communities with respect to first half of
designations.--With respect to the first 10
designations made under this section--</DELETED>
<DELETED> ``(i) all shall be chosen from
nominated areas which are empowerment zones or
enterprise communities (and are otherwise
eligible for designation under this section);
and</DELETED>
<DELETED> ``(ii) two shall be areas
described in paragraph (2)(B).</DELETED>
<DELETED> ``(4) Limitation on designations.--</DELETED>
<DELETED> ``(A) Publication of regulations.--The
Secretary of Housing and Urban Development shall
prescribe by regulation no later than 4 months after
the date of the enactment of this section, after
consultation with the officials described in paragraph
(1)(B)--</DELETED>
<DELETED> ``(i) the procedures for
nominating an area under paragraph
(1)(A);</DELETED>
<DELETED> ``(ii) the parameters relating to
the size and population characteristics of a
renewal community; and</DELETED>
<DELETED> ``(iii) the manner in which
nominated areas will be evaluated based on the
criteria specified in subsection (d).</DELETED>
<DELETED> ``(B) Time limitations.--The Secretary of
Housing and Urban Development may designate nominated
areas as renewal communities only during the 36-month
period beginning on the first day of the first month
following the month in which the regulations described
in subparagraph (A) are prescribed.</DELETED>
<DELETED> ``(C) Procedural rules.--The Secretary of
Housing and Urban Development shall not make any
designation of a nominated area as a renewal community
under paragraph (2) unless--</DELETED>
<DELETED> ``(i) the local governments and
the States in which the nominated area is
located have the authority--</DELETED>
<DELETED> ``(I) to nominate such
area for designation as a renewal
community;</DELETED>
<DELETED> ``(II) to make the State
and local commitments described in
subsection (d); and</DELETED>
<DELETED> ``(III) to provide
assurances satisfactory to the
Secretary of Housing and Urban
Development that such commitments will
be fulfilled,</DELETED>
<DELETED> ``(ii) a nomination regarding such
area is submitted in such a manner and in such
form, and contains such information, as the
Secretary of Housing and Urban Development
shall by regulation prescribe; and</DELETED>
<DELETED> ``(iii) the Secretary of Housing
and Urban Development determines that any
information furnished is reasonably
accurate.</DELETED>
<DELETED> ``(5) Nomination process for indian
reservations.--For purposes of this subchapter, in the case of
a nominated area on an Indian reservation, the reservation
governing body (as determined by the Secretary of the Interior)
shall be treated as being both the State and local governments
with respect to such area.</DELETED>
<DELETED> ``(b) Period for Which Designation Is in Effect.--
</DELETED>
<DELETED> ``(1) In general.--Any designation of an area as a
renewal community shall remain in effect during the period
beginning on the date of the designation and ending on the
earliest of--</DELETED>
<DELETED> ``(A) December 31, 2007,</DELETED>
<DELETED> ``(B) the termination date designated by
the State and local governments in their nomination,
or</DELETED>
<DELETED> ``(C) the date the Secretary of Housing
and Urban Development revokes such
designation.</DELETED>
<DELETED> ``(2) Revocation of designation.--The Secretary of
Housing and Urban Development may revoke the designation under
this section of an area if such Secretary determines that the
local government or the State in which the area is located--
</DELETED>
<DELETED> ``(A) has modified the boundaries of the
area, or</DELETED>
<DELETED> ``(B) is not complying substantially with,
or fails to make progress in achieving, the State or
local commitments, respectively, described in
subsection (d).</DELETED>
<DELETED> ``(c) Area and Eligibility Requirements.--</DELETED>
<DELETED> ``(1) In general.--The Secretary of Housing and
Urban Development may designate a nominated area as a renewal
community under subsection (a) only if the area meets the
requirements of paragraphs (2) and (3) of this
subsection.</DELETED>
<DELETED> ``(2) Area requirements.--A nominated area meets
the requirements of this paragraph if--</DELETED>
<DELETED> ``(A) the area is within the jurisdiction
of one or more local governments;</DELETED>
<DELETED> ``(B) the boundary of the area is
continuous; and</DELETED>
<DELETED> ``(C) the area--</DELETED>
<DELETED> ``(i) has a population, of at
least--</DELETED>
<DELETED> ``(I) 4,000 if any portion
of such area (other than a rural area
described in subsection (a)(2)(B)(i))
is located within a metropolitan
statistical area (within the meaning of
section 143(k)(2)(B)) which has a
population of 50,000 or greater;
or</DELETED>
<DELETED> ``(II) 1,000 in any other
case; or</DELETED>
<DELETED> ``(ii) is entirely within an
Indian reservation (as determined by the
Secretary of the Interior).</DELETED>
<DELETED> ``(3) Eligibility requirements.--A nominated area
meets the requirements of this paragraph if the State and the
local governments in which it is located certify (and the
Secretary of Housing and Urban Development, after such review
of supporting data as he deems appropriate, accepts such
certification) that--</DELETED>
<DELETED> ``(A) the area is one of pervasive
poverty, unemployment, and general distress;</DELETED>
<DELETED> ``(B) the unemployment rate in the area,
as determined by the most recent available data, was at
least 1</DELETED>\<DELETED>1/2</DELETED>\
<DELETED>times the national unemployment rate for the
period to which such data relate;</DELETED>
<DELETED> ``(C) the poverty rate for each population
census tract within the nominated area is at least 20
percent; and</DELETED>
<DELETED> ``(D) in the case of an urban area, at
least 70 percent of the households living in the area
have incomes below 80 percent of the median income of
households within the jurisdiction of the local
government (determined in the same manner as under
section 119(b)(2) of the Housing and Community
Development Act of 1974).</DELETED>
<DELETED> ``(4) Consideration of high incidence of crime.--
The Secretary of Housing and Urban Development shall take into
account, in selecting nominated areas for designation as
renewal communities under this section, the extent to which
such areas have a high incidence of crime.</DELETED>
<DELETED> ``(5) Consideration of communities identified in
gao study.--The Secretary of Housing and Urban Development
shall take into account, in selecting nominated areas for
designation as renewal communities under this section, if the area has
census tracts identified in the May 12, 1998, report of the Government
Accounting Office regarding the identification of economically
distressed areas.</DELETED>
<DELETED> ``(d) Required State and Local Commitments.--</DELETED>
<DELETED> ``(1) In general.--The Secretary of Housing and
Urban Development may designate any nominated area as a renewal
community under subsection (a) only if--</DELETED>
<DELETED> ``(A) the local government and the State
in which the area is located agree in writing that,
during any period during which the area is a renewal
community, such governments will follow a specified
course of action which meets the requirements of
paragraph (2) and is designed to reduce the various
burdens borne by employers or employees in such area;
and</DELETED>
<DELETED> ``(B) the economic growth promotion
requirements of paragraph (3) are met.</DELETED>
<DELETED> ``(2) Course of action.--</DELETED>
<DELETED> ``(A) In general.--A course of action
meets the requirements of this paragraph if such course
of action is a written document, signed by a State (or
local government) and neighborhood organizations, which
evidences a partnership between such State or
government and community-based organizations and which
commits each signatory to specific and measurable
goals, actions, and timetables. Such course of action
shall include at least five of the following:</DELETED>
<DELETED> ``(i) A reduction of tax rates or
fees applying within the renewal
community.</DELETED>
<DELETED> ``(ii) An increase in the level of
efficiency of local services within the renewal
community.</DELETED>
<DELETED> ``(iii) Crime reduction
strategies, such as crime prevention (including
the provision of such services by
nongovernmental entities).</DELETED>
<DELETED> ``(iv) Actions to reduce, remove,
simplify, or streamline governmental
requirements applying within the renewal
community.</DELETED>
<DELETED> ``(v) Involvement in the program
by private entities, organizations,
neighborhood organizations, and community
groups, particularly those in the renewal
community, including a commitment from such
private entities to provide jobs and job
training for, and technical, financial, or
other assistance to, employers, employees, and
residents from the renewal community.</DELETED>
<DELETED> ``(vi) State or local income tax
benefits for fees paid for services performed
by a nongovernmental entity which were formerly
performed by a governmental entity.</DELETED>
<DELETED> ``(vii) The gift (or sale at below
fair market value) of surplus real property
(such as land, homes, and commercial or
industrial structures) in the renewal community
to neighborhood organizations, community
development corporations, or private
companies.</DELETED>
<DELETED> ``(B) Recognition of past efforts.--For
purposes of this section, in evaluating the course of
action agreed to by any State or local government, the
Secretary of Housing and Urban Development shall take
into account the past efforts of such State or local
government in reducing the various burdens borne by
employers and employees in the area involved.</DELETED>
<DELETED> ``(3) Economic growth promotion requirements.--The
economic growth promotion requirements of this paragraph are
met with respect to a nominated area if the local government
and the State in which such area is located certify in writing
that such government and State, respectively, have repealed or
otherwise will not enforce within the area, if such area is
designated as a renewal community--</DELETED>
<DELETED> ``(A) licensing requirements for
occupations that do not ordinarily require a
professional degree;</DELETED>
<DELETED> ``(B) zoning restrictions on home-based
businesses which do not create a public
nuisance;</DELETED>
<DELETED> ``(C) permit requirements for street
vendors who do not create a public nuisance;</DELETED>
<DELETED> ``(D) zoning or other restrictions that
impede the formation of schools or child care centers;
and</DELETED>
<DELETED> ``(E) franchises or other restrictions on
competition for businesses providing public services,
including but not limited to taxicabs, jitneys, cable
television, or trash hauling,</DELETED>
<DELETED>except to the extent that such regulation of
businesses and occupations is necessary for and well-tailored
to the protection of health and safety.</DELETED>
<DELETED> ``(e) Coordination With Treatment of Empowerment Zones and
Enterprise Communities.--For purposes of this title, if there are in
effect with respect to the same area both--</DELETED>
<DELETED> ``(1) a designation as a renewal community;
and</DELETED>
<DELETED> ``(2) a designation as an empowerment zone or
enterprise community,</DELETED>
<DELETED>both of such designations shall be given full effect with
respect to such area.</DELETED>
<DELETED> ``(f) Definitions and Special Rules.--For purposes of this
subchapter--</DELETED>
<DELETED> ``(1) Governments.--If more than one government
seeks to nominate an area as a renewal community, any reference
to, or requirement of, this section shall apply to all such
governments.</DELETED>
<DELETED> ``(2) State.--The term `State' includes Puerto
Rico, the Virgin Islands of the United States, Guam, American
Samoa, the Northern Mariana Islands, and any other possession
of the United States.</DELETED>
<DELETED> ``(3) Local government.--The term `local
government' means--</DELETED>
<DELETED> ``(A) any county, city, town, township,
parish, village, or other general purpose political
subdivision of a State;</DELETED>
<DELETED> ``(B) any combination of political
subdivisions described in subparagraph (A) recognized
by the Secretary of Housing and Urban Development;
and</DELETED>
<DELETED> ``(C) the District of Columbia.</DELETED>
<DELETED> ``(4) Application of rules relating to census
tracts and census data.--The rules of sections 1392(b)(4) and
1393(a)(9) shall apply.</DELETED>
<DELETED>``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY
BUSINESS</DELETED>
<DELETED>``Sec. 1400F. Renewal community
capital gain.
<DELETED>``Sec. 1400G. Renewal community
business defined.
<DELETED>``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.</DELETED>
<DELETED> ``(a) General Rule.--Gross income does not include any
qualified capital gain recognized on the sale or exchange of a
qualified community asset held for more than 5 years.</DELETED>
<DELETED> ``(b) Qualified Community Asset.--For purposes of this
section--</DELETED>
<DELETED> ``(1) In general.--The term `qualified community
asset' means--</DELETED>
<DELETED> ``(A) any qualified community
stock;</DELETED>
<DELETED> ``(B) any qualified community partnership
interest; and</DELETED>
<DELETED> ``(C) any qualified community business
property.</DELETED>
<DELETED> ``(2) Qualified community stock.--</DELETED>
<DELETED> ``(A) In general.--Except as provided in
subparagraph (B), the term `qualified community stock'
means any stock in a domestic corporation if--
</DELETED>
<DELETED> ``(i) such stock is acquired by
the taxpayer after December 31, 2000, and
before January 1, 2008, at its original issue
(directly or through an underwriter) from the
corporation solely in exchange for
cash;</DELETED>
<DELETED> ``(ii) as of the time such stock
was issued, such corporation was a renewal
community business (or, in the case of a new
corporation, such corporation was being
organized for purposes of being a renewal
community business); and</DELETED>
<DELETED> ``(iii) during substantially all
of the taxpayer's holding period for such
stock, such corporation qualified as a renewal
community business.</DELETED>
<DELETED> ``(B) Redemptions.--A rule similar to the
rule of section 1202(c)(3) shall apply for purposes of
this paragraph.</DELETED>
<DELETED> ``(3) Qualified community partnership interest.--
The term `qualified community partnership interest' means any
capital or profits interest in a domestic partnership if--
</DELETED>
<DELETED> ``(A) such interest is acquired by the
taxpayer after December 31, 2000, and before January 1,
2008;</DELETED>
<DELETED> ``(B) as of the time such interest was
acquired, such partnership was a renewal community
business (or, in the case of a new partnership, such
partnership was being organized for purposes of being a
renewal community business); and</DELETED>
<DELETED> ``(C) during substantially all of the
taxpayer's holding period for such interest, such
partnership qualified as a renewal community
business.</DELETED>
<DELETED>A rule similar to the rule of paragraph (2)(B) shall
apply for purposes of this paragraph.</DELETED>
<DELETED> ``(4) Qualified community business property.--
</DELETED>
<DELETED> ``(A) In general.--The term `qualified
community business property' means tangible property
if--</DELETED>
<DELETED> ``(i) such property was acquired
by the taxpayer by purchase (as defined in
section 179(d)(2)) after December 31, 2000, and
before January 1, 2008;</DELETED>
<DELETED> ``(ii) the original use of such
property in the renewal community commences
with the taxpayer; and</DELETED>
<DELETED> ``(iii) during substantially all
of the taxpayer's holding period for such
property, substantially all of the use of such
property was in a renewal community business of
the taxpayer.</DELETED>
<DELETED> ``(B) Special rule for substantial
improvements.--The requirements of clauses (i) and (ii)
of subparagraph (A) shall be treated as satisfied with
respect to--</DELETED>
<DELETED> ``(i) property which is
substantially improved (within the meaning of
section 1400B(b)(4)(B)(ii)) by the taxpayer
before January 1, 2008; and</DELETED>
<DELETED> ``(ii) any land on which such
property is located.</DELETED>
<DELETED> ``(c) Certain Rules To Apply.--Rules similar to the rules
of paragraphs (5), (6), and (7) of subsection (b), and subsections (e),
(f), and (g), of section 1400B shall apply for purposes of this
section.</DELETED>
<DELETED>``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.</DELETED>
<DELETED> ``For purposes of this part, the term `renewal community
business' means any entity or proprietorship which would be a qualified
business entity or qualified proprietorship under section 1397B if--
</DELETED>
<DELETED> ``(1) references to renewal communities were
substituted for references to empowerment zones in such
section; and</DELETED>
<DELETED> ``(2) `80 percent' were substituted for `50
percent' in subsections (b)(2) and (c)(1) of such
section.</DELETED>
<DELETED>``PART III--FAMILY DEVELOPMENT ACCOUNTS</DELETED>
<DELETED>``Sec. 1400H. Family development
accounts for renewal community
EITC recipients.
<DELETED>``Sec. 1400I. Designation of
earned income tax credit
payments for deposit to family
development account.
<DELETED>``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL
COMMUNITY EITC RECIPIENTS.</DELETED>
<DELETED> ``(a) Allowance of Deduction.--</DELETED>
<DELETED> ``(1) In general.--There shall be allowed as a
deduction--</DELETED>
<DELETED> ``(A) in the case of a qualified
individual, the amount paid in cash for the taxable
year by such individual to any family development
account for such individual's benefit; and</DELETED>
<DELETED> ``(B) in the case of any person other than
a qualified individual, the amount paid in cash for the
taxable year by such person to any family development
account for the benefit of a qualified individual but
only if the amount so paid is designated for purposes
of this section by such individual.</DELETED>
<DELETED> ``(2) Limitation.--</DELETED>
<DELETED> ``(A) In general.--The amount allowable as
a deduction to any individual for any taxable year by
reason of paragraph (1)(A) shall not exceed the lesser
of--</DELETED>
<DELETED> ``(i) $2,000, or</DELETED>
<DELETED> ``(ii) an amount equal to the
compensation includible in the individual's
gross income for such taxable year.</DELETED>
<DELETED> ``(B) Persons donating to family
development accounts of others.--The amount which may
be designated under paragraph (1)(B) by any qualified
individual for any taxable year of such individual
shall not exceed $1,000.</DELETED>
<DELETED> ``(3) Special rules for certain married
individuals.--Rules similar to rules of section 219(c) shall
apply to the limitation in paragraph (2)(A).</DELETED>
<DELETED> ``(4) Coordination with iras.--No deduction shall
be allowed under this section for any taxable year to any
person by reason of a payment to an account for the benefit of
a qualified individual if any amount is paid for such taxable
year into an individual retirement account (including a Roth
IRA) for the benefit of such individual.</DELETED>
<DELETED> ``(5) Rollovers.--No deduction shall be allowed
under this section with respect to any rollover
contribution.</DELETED>
<DELETED> ``(b) Tax Treatment of Distributions.--</DELETED>
<DELETED> ``(1) Inclusion of amounts in gross income.--
Except as otherwise provided in this subsection, any amount
paid or distributed out of a family development account shall
be included in gross income by the payee or distributee, as the
case may be.</DELETED>
<DELETED> ``(2) Exclusion of qualified family development
distributions.--Paragraph (1) shall not apply to any qualified
family development distribution.</DELETED>
<DELETED> ``(c) Qualified Family Development Distribution.--For
purposes of this section--</DELETED>
<DELETED> ``(1) In general.--The term `qualified family
development distribution' means any amount paid or distributed
out of a family development account which would otherwise be
includible in gross income, to the extent that such payment or
distribution is used exclusively to pay qualified family
development expenses for the holder of the account or the
spouse or dependent (as defined in section 152) of such
holder.</DELETED>
<DELETED> ``(2) Qualified family development expenses.--The
term `qualified family development expenses' means any of the
following:</DELETED>
<DELETED> ``(A) Qualified higher education
expenses.</DELETED>
<DELETED> ``(B) Qualified first-time homebuyer
costs.</DELETED>
<DELETED> ``(C) Qualified business capitalization
costs.</DELETED>
<DELETED> ``(D) Qualified medical
expenses.</DELETED>
<DELETED> ``(E) Qualified rollovers.</DELETED>
<DELETED> ``(3) Qualified higher education expenses.--
</DELETED>
<DELETED> ``(A) In general.--The term `qualified
higher education expenses' has the meaning given such
term by section 72(t)(7), determined by treating
postsecondary vocational educational schools as
eligible educational institutions.</DELETED>
<DELETED> ``(B) Postsecondary vocational education
school.--The term `postsecondary vocational educational
school' means an area vocational education school (as
defined in subparagraph (C) or (D) of section 521(4) of
the Carl D. Perkins Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4))) which is in any
State (as defined in section 521(33) of such Act), as
such sections are in effect on the date of the
enactment of this section.</DELETED>
<DELETED> ``(C) Coordination with other benefits.--
The amount of qualified higher education expenses for
any taxable year shall be reduced as provided in
section 25A(g)(2).</DELETED>
<DELETED> ``(4) Qualified first-time homebuyer costs.--The
term `qualified first-time homebuyer costs' means qualified
acquisition costs (as defined in section 72(t)(8) without
regard to subparagraph (B) thereof) with respect to a principal
residence (within the meaning of section 121) for a qualified
first-time homebuyer (as defined in section
72(t)(8)).</DELETED>
<DELETED> ``(5) Qualified business capitalization costs.--
</DELETED>
<DELETED> ``(A) In general.--The term `qualified
business capitalization costs' means qualified
expenditures for the capitalization of a qualified
business pursuant to a qualified plan.</DELETED>
<DELETED> ``(B) Qualified expenditures.--The term
`qualified expenditures' means expenditures included in
a qualified plan, including capital, plant, equipment,
working capital, and inventory expenses.</DELETED>
<DELETED> ``(C) Qualified business.--The term
`qualified business' means any trade or business other
than any trade or business--</DELETED>
<DELETED> ``(i) which consists of the
operation of any facility described in section
144(c)(6)(B), or</DELETED>
<DELETED> ``(ii) which contravenes any
law.</DELETED>
<DELETED> ``(D) Qualified plan.--The term `qualified
plan' means a business plan which meets such
requirements as the Secretary may specify.</DELETED>
<DELETED> ``(6) Qualified medical expenses.--The term
`qualified medical expenses' means any amount paid during the
taxable year, not compensated for by insurance or otherwise,
for medical care (as defined in section 213(d)) of the
taxpayer, his spouse, or his dependent (as defined in section
152).</DELETED>
<DELETED> ``(7) Qualified rollovers.--The term `qualified
rollover' means any amount paid from a family development
account of a taxpayer into another such account established for
the benefit of--</DELETED>
<DELETED> ``(A) such taxpayer, or</DELETED>
<DELETED> ``(B) any qualified individual who is--
</DELETED>
<DELETED> ``(i) the spouse of such taxpayer,
or</DELETED>
<DELETED> ``(ii) any dependent (as defined
in section 152) of the taxpayer.</DELETED>
<DELETED>Rules similar to the rules of section 408(d)(3) shall
apply for purposes of this paragraph.</DELETED>
<DELETED> ``(d) Tax Treatment of Accounts.--</DELETED>
<DELETED> ``(1) In general.--Any family development account
is exempt from taxation under this subtitle unless such account
has ceased to be a family development account by reason of
paragraph (2). Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc., organizations). Notwithstanding any other
provision of this title (including chapters 11 and 12), the
basis of any person in such an account is zero.</DELETED>
<DELETED> ``(2) Loss of exemption in case of prohibited
transactions.--For purposes of this section, rules similar to
the rules of section 408(e) shall apply.</DELETED>
<DELETED> ``(3) Other rules to apply.--Rules similar to the
rules of paragraphs (4), (5), and (6) of section 408(d) shall
apply for purposes of this section.</DELETED>
<DELETED> ``(e) Family Development Account.--For purposes of this
title, the term `family development account' means a trust created or
organized in the United States for the exclusive benefit of a qualified
individual or his beneficiaries, but only if the written governing
instrument creating the trust meets the following
requirements:</DELETED>
<DELETED> ``(1) Except in the case of a qualified rollover
(as defined in subsection (c)(7))--</DELETED>
<DELETED> ``(A) no contribution will be accepted
unless it is in cash; and</DELETED>
<DELETED> ``(B) contributions will not be accepted
for the taxable year in excess of $3,000.</DELETED>
<DELETED> ``(2) The requirements of paragraphs (2) through
(6) of section 408(a) are met.</DELETED>
<DELETED> ``(f) Qualified Individual.--For purposes of this section,
the term `qualified individual' means, for any taxable year, an
individual--</DELETED>
<DELETED> ``(1) who is a bona fide resident of a renewal
community throughout the taxable year; and</DELETED>
<DELETED> ``(2) to whom a credit was allowed under section
32 for the preceding taxable year.</DELETED>
<DELETED> ``(g) Other Definitions and Special Rules.--</DELETED>
<DELETED> ``(1) Compensation.--The term `compensation' has
the meaning given such term by section 219(f)(1).</DELETED>
<DELETED> ``(2) Married individuals.--The maximum deduction
under subsection (a) shall be computed separately for each
individual, and this section shall be applied without regard to
any community property laws.</DELETED>
<DELETED> ``(3) Time when contributions deemed made.--For
purposes of this section, a taxpayer shall be deemed to have
made a contribution to a family development 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).</DELETED>
<DELETED> ``(4) Employer payments; custodial accounts.--
Rules similar to the rules of sections 219(f)(5) and 408(h)
shall apply for purposes of this section.</DELETED>
<DELETED> ``(5) Reports.--The trustee of a family
development account shall make such reports regarding such
account to the Secretary and to the individual for whom the
account is maintained with respect to contributions (and the
years to which they relate), distributions, and such other
matters as the Secretary may require under regulations. The
reports required by this paragraph--</DELETED>
<DELETED> ``(A) shall be filed at such time and in
such manner as the Secretary prescribes in such
regulations; and</DELETED>
<DELETED> ``(B) shall be furnished to individuals--
</DELETED>
<DELETED> ``(i) not later than January 31 of
the calendar year following the calendar year
to which such reports relate; and</DELETED>
<DELETED> ``(ii) in such manner as the
Secretary prescribes in such
regulations.</DELETED>
<DELETED> ``(6) Investment in collectibles treated as
distributions.--Rules similar to the rules of section 408(m)
shall apply for purposes of this section.</DELETED>
<DELETED> ``(h) Penalty for Distributions Not Used for Qualified
Family Development Expenses.--</DELETED>
<DELETED> ``(1) In general.--If any amount is distributed
from a family development account and is not used exclusively
to pay qualified family development expenses for the holder of
the account or the spouse or dependent (as defined in section
152) of such holder, the tax imposed by this chapter for the
taxable year of such distribution shall be increased by 10
percent of the portion of such amount which is includible in
gross income.</DELETED>
<DELETED> ``(2) Exception for certain distributions.--
Paragraph (1) shall not apply to distributions which are--
</DELETED>
<DELETED> ``(A) made on or after the date on which
the account holder attains age 59</DELETED>\<DELETED>1/
2</DELETED>\<DELETED>,</DELETED>
<DELETED> ``(B) made to a beneficiary (or the estate
of the account holder) on or after the death of the
account holder, or</DELETED>
<DELETED> ``(C) attributable to the account holder's
being disabled within the meaning of section
72(m)(7).</DELETED>
<DELETED> ``(i) Application of Section.--This section shall apply to
amounts paid to a family development account for any taxable year
beginning after December 31, 2000, and before January 1,
2008.</DELETED>
<DELETED>``SEC. 1400I. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS
FOR DEPOSIT TO FAMILY DEVELOPMENT ACCOUNT.</DELETED>
<DELETED> ``(a) In General.--With respect to the return of any
qualified individual (as defined in section 1400H(f)) for the taxable
year of the tax imposed by this chapter, such individual may designate
that a specified portion (not less than $1) of any overpayment of tax
for such taxable year which is attributable to the earned income tax
credit shall be deposited by the Secretary into a family development
account of such individual. The Secretary shall so deposit such portion
designated under this subsection.</DELETED>
<DELETED> ``(b) Manner and Time of Designation.--A designation under
subsection (a) may be made with respect to any taxable year--</DELETED>
<DELETED> ``(1) at the time of filing the return of the tax
imposed by this chapter for such taxable year, or</DELETED>
<DELETED> ``(2) at any other time (after the time of filing
the return of the tax imposed by this chapter for such taxable
year) specified in regulations prescribed by the
Secretary.</DELETED>
<DELETED>Such designation shall be made in such manner as the Secretary
prescribes by regulations.</DELETED>
<DELETED> ``(c) Portion Attributable to Earned Income Tax Credit.--
For purposes of subsection (a), an overpayment for any taxable year
shall be treated as attributable to the earned income tax credit to the
extent that such overpayment does not exceed the credit allowed to the
taxpayer under section 32 for such taxable year.</DELETED>
<DELETED> ``(d) Overpayments Treated as Refunded.--For purposes of
this title, any portion of an overpayment of tax designated under
subsection (a) shall be treated as being refunded to the taxpayer as of
the last date prescribed for filing the return of tax imposed by this
chapter (determined without regard to extensions) or, if later, the
date the return is filed.</DELETED>
<DELETED> ``(e) Termination.--This section shall not apply to any
taxable year beginning after December 31, 2007.</DELETED>
<DELETED>``PART IV--ADDITIONAL INCENTIVES</DELETED>
<DELETED>``Sec. 1400K. Commercial
revitalization deduction.
<DELETED>``Sec. 1400L. Increase in
expensing under section 179.
<DELETED>``SEC. 1400K. COMMERCIAL REVITALIZATION DEDUCTION.</DELETED>
<DELETED> ``(a) General Rule.--At the election of the taxpayer,
either--</DELETED>
<DELETED> ``(1) one-half of any qualified revitalization
expenditures chargeable to capital account with respect to any
qualified revitalization building shall be allowable as a
deduction for the taxable year in which the building is placed
in service, or</DELETED>
<DELETED> ``(2) a deduction for all such expenditures shall
be allowable ratably over the 120-month period beginning with
the month in which the building is placed in service.</DELETED>
<DELETED>The deduction provided by this section with respect to such
expenditure shall be in lieu of any depreciation deduction otherwise
allowable on account of such expenditure.</DELETED>
<DELETED> ``(b) Qualified Revitalization Buildings and
Expenditures.--For purposes of this section--</DELETED>
<DELETED> ``(1) Qualified revitalization building.--The term
`qualified revitalization building' means any building (and its
structural components) if--</DELETED>
<DELETED> ``(A) such building is located in a
renewal community and is placed in service after
December 31, 2000;</DELETED>
<DELETED> ``(B) a commercial revitalization
deduction amount is allocated to the building under
subsection (d); and</DELETED>
<DELETED> ``(C) depreciation (or amortization in
lieu of depreciation) is allowable with respect to the
building (without regard to this section).</DELETED>
<DELETED> ``(2) Qualified revitalization expenditure.--
</DELETED>
<DELETED> ``(A) In general.--The term `qualified
revitalization expenditure' means any amount properly
chargeable to capital account--</DELETED>
<DELETED> ``(i) for property for which
depreciation is allowable under section 168
(without regard to this section) and which is--
</DELETED>
<DELETED> ``(I) nonresidential real
property; or</DELETED>
<DELETED> ``(II) an addition or
improvement to property described in
subclause (I);</DELETED>
<DELETED> ``(ii) in connection with the
construction of any qualified revitalization
building which was not previously placed in
service or in connection with the substantial
rehabilitation (within the meaning of section
47(c)(1)(C)) of a building which was placed in
service before the beginning of such
rehabilitation; and</DELETED>
<DELETED> ``(iii) for land (including land
which is functionally related to such property
and subordinate thereto).</DELETED>
<DELETED> ``(B) Dollar limitation.--The aggregate
amount which may be treated as qualified revitalization
expenditures with respect to any qualified
revitalization building for any taxable year shall not exceed the
excess of--</DELETED>
<DELETED> ``(i) $10,000,000, reduced
by</DELETED>
<DELETED> ``(ii) any such expenditures with
respect to the building taken into account by
the taxpayer or any predecessor in determining
the amount of the deduction under this section
for all preceding taxable years.</DELETED>
<DELETED> ``(C) Certain expenditures not included.--
The term `qualified revitalization expenditure' does
not include--</DELETED>
<DELETED> ``(i) Acquisition costs.--The
costs of acquiring any building or interest
therein and any land in connection with such
building to the extent that such costs exceed
30 percent of the qualified revitalization
expenditures determined without regard to this
clause.</DELETED>
<DELETED> ``(ii) Credits.--Any expenditure
which the taxpayer may take into account in
computing any credit allowable under this title
unless the taxpayer elects to take the
expenditure into account only for purposes of
this section.</DELETED>
<DELETED> ``(c) When Expenditures Taken Into Account.--Qualified
revitalization expenditures with respect to any qualified
revitalization building shall be taken into account for the taxable
year in which the qualified revitalization building is placed in
service. For purposes of the preceding sentence, a substantial
rehabilitation of a building shall be treated as a separate
building.</DELETED>
<DELETED> ``(d) Limitation on Aggregate Deductions Allowable With
Respect to Buildings Located in a State.--</DELETED>
<DELETED> ``(1) In general.--The amount of the deduction
determined under this section for any taxable year with respect
to any building shall not exceed the commercial revitalization
deduction amount (in the case of an amount determined under
subsection (a)(2), the present value of such amount as
determined under the rules of section 42(b)(2)(C) by
substituting `100 percent' for `72 percent' in clause (ii)
thereof) allocated to such building under this subsection by
the commercial revitalization agency. Such allocation shall be
made at the same time and in the same manner as under
paragraphs (1) and (7) of section 42(h).</DELETED>
<DELETED> ``(2) Commercial revitalization deduction amount
for agencies.--</DELETED>
<DELETED> ``(A) In general.--The aggregate
commercial revitalization deduction amount which a
commercial revitalization agency may allocate for any
calendar year is the amount of the State commercial
revitalization deduction ceiling determined under this
paragraph for such calendar year for such
agency.</DELETED>
<DELETED> ``(B) State commercial revitalization
deduction ceiling.--The State commercial revitalization
deduction ceiling applicable to any State--</DELETED>
<DELETED> ``(i) for each calendar year after
2000 and before 2008 is $6,000,000 for each
renewal community in the State; and</DELETED>
<DELETED> ``(ii) zero for each calendar year
thereafter.</DELETED>
<DELETED> ``(C) Commercial revitalization agency.--
For purposes of this section, the term `commercial
revitalization agency' means any agency authorized by a
State to carry out this section.</DELETED>
<DELETED> ``(e) Responsibilities of Commercial Revitalization
Agencies.--</DELETED>
<DELETED> ``(1) Plans for allocation.--Notwithstanding any
other provision of this section, the commercial revitalization
deduction amount with respect to any building shall be zero
unless--</DELETED>
<DELETED> ``(A) such amount was allocated pursuant
to a qualified allocation plan of the commercial
revitalization agency which is approved (in accordance
with rules similar to the rules of section 147(f)(2)
(other than subparagraph (B)(ii) thereof)) by the
governmental unit of which such agency is a part;
and</DELETED>
<DELETED> ``(B) such agency notifies the chief
executive officer (or its equivalent) of the local
jurisdiction within which the building is located of
such allocation and provides such individual a
reasonable opportunity to comment on the
allocation.</DELETED>
<DELETED> ``(2) Qualified allocation plan.--For purposes of
this subsection, the term `qualified allocation plan' means any
plan--</DELETED>
<DELETED> ``(A) which sets forth selection criteria
to be used to determine priorities of the commercial
revitalization agency which are appropriate to local
conditions;</DELETED>
<DELETED> ``(B) which considers--</DELETED>
<DELETED> ``(i) the degree to which a
project contributes to the implementation of a
strategic plan that is devised for a renewal
community through a citizen participation process;</DELETED>
<DELETED> ``(ii) the amount of any increase
in permanent, full-time employment by reason of
any project; and</DELETED>
<DELETED> ``(iii) the active involvement of
residents and nonprofit groups within the
renewal community; and</DELETED>
<DELETED> ``(C) which provides a procedure that the
agency (or its agent) will follow in monitoring
compliance with this section.</DELETED>
<DELETED> ``(f) Regulations.--For purposes of this section, the
Secretary shall, by regulations, provide for the application of rules
similar to the rules of section 49 and subsections (a) and (b) of
section 50.</DELETED>
<DELETED> ``(g) Termination.--This section shall not apply to any
building placed in service after December 31, 2007.</DELETED>
<DELETED>``SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION
179.</DELETED>
<DELETED> ``(a) General Rule.--In the case of a renewal community
business (as defined in section 1400G), for purposes of section 179--
</DELETED>
<DELETED> ``(1) the limitation under section 179(b)(1) shall
be increased by the lesser of--</DELETED>
<DELETED> ``(A) $35,000; or</DELETED>
<DELETED> ``(B) the cost of section 179 property
which is qualified renewal property placed in service
during the taxable year; and</DELETED>
<DELETED> ``(2) the amount taken into account under section
179(b)(2) with respect to any section 179 property which is
qualified renewal property shall be 50 percent of the cost
thereof.</DELETED>
<DELETED> ``(b) Recapture.--Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified renewal property
which ceases to be used in a renewal community by a renewal community
business.</DELETED>
<DELETED> ``(c) Qualified Renewal Property.--For purposes of this
section--</DELETED>
<DELETED> ``(1) In general.--The term `qualified renewal
property' means any property to which section 168 applies (or
would apply but for section 179) if--</DELETED>
<DELETED> ``(A) such property was acquired by the
taxpayer by purchase (as defined in section 179(d)(2))
after December 31, 2000, and before January 1, 2008;
and</DELETED>
<DELETED> ``(B) such property would be qualified
zone property (as defined in section 1397C) if
references to renewal communities were substituted for
references to empowerment zones in section
1397C.</DELETED>
<DELETED> ``(2) Certain rules to apply.--The rules of
subsections (a)(2) and (b) of section 1397C shall apply for
purposes of this section.''.</DELETED>
<DELETED>SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION
COSTS TO RENEWAL COMMUNITIES.</DELETED>
<DELETED> (a) Extension.--Paragraph (2) of section 198(c) (defining
targeted area) is amended by redesignating subparagraph (C) as
subparagraph (D) and by inserting after subparagraph (B) the following
new subparagraph:</DELETED>
<DELETED> ``(C) Renewal communities included.--
Except as provided in subparagraph (B), such term shall
include a renewal community (as defined in section
1400E) with respect to expenditures paid or incurred
after December 31, 2000.''.</DELETED>
<DELETED> (b) Extension of Termination Date for Renewal
Communities.--Subsection (h) of section 198 is amended by inserting
before the period ``(December 31, 2007, in the case of a renewal
community, as defined in section 1400E).''.</DELETED>
<DELETED>SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL
COMMUNITIES.</DELETED>
<DELETED> (a) Extension.--Subsection (c) of section 51 (relating to
termination) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(5) Extension of credit for renewal
communities.--</DELETED>
<DELETED> ``(A) In general.--In the case of an
individual who begins work for the employer after the
date contained in paragraph (4)(B), for purposes of
section 38--</DELETED>
<DELETED> ``(i) in lieu of applying
subsection (a), the amount of the work
opportunity credit determined under this
section for the taxable year shall be equal
to--</DELETED>
<DELETED> ``(I) 15 percent of the
qualified first-year wages for such
year; and</DELETED>
<DELETED> ``(II) 30 percent of the
qualified second-year wages for such
year;</DELETED>
<DELETED> ``(ii) subsection (b)(3) shall be
applied by substituting `$10,000' for
`$6,000';</DELETED>
<DELETED> ``(iii) paragraph (4)(B) shall be
applied by substituting for the date contained
therein the last day for which the designation
under section 1400E of the renewal community
referred to in subparagraph (B)(i) is in effect; and</DELETED>
<DELETED> ``(iv) rules similar to the rules
of section 51A(b)(5)(C) shall apply.</DELETED>
<DELETED> ``(B) Qualified first- and second-year
wages.--For purposes of subparagraph (A)--</DELETED>
<DELETED> ``(i) In general.--The term
`qualified wages' means, with respect to each
1-year period referred to in clause (ii) or
(iii), as the case may be, the wages paid or
incurred by the employer during the taxable
year to any individual but only if--</DELETED>
<DELETED> ``(I) the employer is
engaged in a trade or business in a
renewal community throughout such 1-
year period;</DELETED>
<DELETED> ``(II) the principal place
of abode of such individual is in such
renewal community throughout such 1-
year period; and</DELETED>
<DELETED> ``(III) substantially all
of the services which such individual
performs for the employer during such
1-year period are performed in such
renewal community.</DELETED>
<DELETED> ``(ii) Qualified first-year
wages.--The term `qualified first-year wages'
means, with respect to any individual,
qualified wages attributable to service
rendered during the 1-year period beginning
with the day the individual begins work for the
employer.</DELETED>
<DELETED> ``(iii) Qualified second-year
wages.--The term `qualified second-year wages'
means, with respect to any individual,
qualified wages attributable to service
rendered during the 1-year period beginning on
the day after the last day of the 1-year period
with respect to such individual determined
under clause (ii).''.</DELETED>
<DELETED> (b) Congruent Treatment of Renewal Communities and
Enterprise Zones for Purposes of Youth Residence Requirements.--
</DELETED>
<DELETED> (1) High-risk youth.--Subparagraphs (A)(ii) and
(B) of section 51(d)(5) are each amended by striking
``empowerment zone or enterprise community'' and inserting
``empowerment zone, enterprise community, or renewal
community''.</DELETED>
<DELETED> (2) Qualified summer youth employee.--Clause (iv)
of section 51(d)(7)(A) is amended by striking ``empowerment
zone or enterprise community'' and inserting ``empowerment
zone, enterprise community, or renewal community''.</DELETED>
<DELETED> (3) Headings.--Paragraphs (5)(B) and (7)(C) of
section 51(d) are each amended by inserting ``or community'' in
the heading after ``zone''.</DELETED>
<DELETED> (4) Effective date.--The amendments made by this
subsection shall apply to individuals who begin work for the
employer after December 31, 2000.</DELETED>
<DELETED>SEC. 605. CONFORMING AND CLERICAL AMENDMENTS.</DELETED>
<DELETED> (a) Deduction for Contributions to Family Development
Accounts Allowable Whether or Not Taxpayer Itemizes.--Subsection (a) of
section 62 (relating to adjusted gross income defined) is amended by
inserting after paragraph (19) the following new paragraph:</DELETED>
<DELETED> ``(20) Family development accounts.--The deduction
allowed by section 1400H(a)(1).''.</DELETED>
<DELETED> (b) Tax on Excess Contributions.--</DELETED>
<DELETED> (1) Tax imposed.--Subsection (a) of section 4973
is amended by striking ``or'' at the end of paragraph (3),
adding ``or'' at the end of paragraph (4), and inserting after
paragraph (4) the following new paragraph:</DELETED>
<DELETED> ``(5) a family development account (within the
meaning of section 1400H(e)),''.</DELETED>
<DELETED> (2) Excess contributions.--Section 4973 is amended
by adding at the end the following new subsection:</DELETED>
<DELETED> ``(g) Family Development Accounts.--For purposes of this
section, in the case of family development accounts, the term `excess
contributions' means the sum of--</DELETED>
<DELETED> ``(1) the excess (if any) of--</DELETED>
<DELETED> ``(A) the amount contributed for the
taxable year to the accounts (other than a qualified
rollover, as defined in section 1400H(c)(7)),
over</DELETED>
<DELETED> ``(B) the amount allowable as a deduction
under section 1400H for such contributions;
and</DELETED>
<DELETED> ``(2) the amount determined under this subsection
for the preceding taxable year reduced by the sum of--
</DELETED>
<DELETED> ``(A) the distributions out of the
accounts for the taxable year which were included in
the gross income of the payee under section
1400H(b)(1);</DELETED>
<DELETED> ``(B) the distributions out of the
accounts for the taxable year to which rules similar to
the rules of section 408(d)(5) apply by reason of
section 1400H(d)(3); and</DELETED>
<DELETED> ``(C) the excess (if any) of the maximum
amount allowable as a deduction under section 1400H for
the taxable year over the amount contributed to the
account for the taxable year.</DELETED>
<DELETED>For purposes of this subsection, any contribution which is
distributed from the family development account in a distribution to
which rules similar to the rules of section 408(d)(4) apply by reason
of section 1400H(d)(3) shall be treated as an amount not
contributed.''.</DELETED>
<DELETED> (c) Tax on Prohibited Transactions.--Section 4975 is
amended--</DELETED>
<DELETED> (1) by adding at the end of subsection (c) the
following new paragraph:</DELETED>
<DELETED> ``(6) Special rule for family development
accounts.--An individual for whose benefit a family development
account is established and any contributor to such account
shall be exempt from the tax imposed by this section with
respect to any transaction concerning such account (which would
otherwise be taxable under this section) if, with respect to
such transaction, the account ceases to be a family development
account by reason of the application of section 1400H(d)(2) to
such account.''; and</DELETED>
<DELETED> (2) in subsection (e)(1), by striking ``or'' at
the end of subparagraph (E), by redesignating subparagraph (F)
as subparagraph (G), and by inserting after subparagraph (E)
the following new subparagraph:</DELETED>
<DELETED> ``(F) a family development account
described in section 1400H(e), or''.</DELETED>
<DELETED> (d) Information Relating to Certain Trusts and Annuity
Plans.--Subsection (c) of section 6047 is amended--</DELETED>
<DELETED> (1) by inserting ``or section 1400H'' after
``section 219''; and</DELETED>
<DELETED> (2) by inserting ``, of any family development
account described in section 1400H(e),'', after ``section
408(a)''.</DELETED>
<DELETED> (e) Inspection of Applications for Tax Exemption.--Clause
(i) of section 6104(a)(1)(B) is amended by inserting ``a family
development account described in section 1400H(e),'' after ``section
408(a),''.</DELETED>
<DELETED> (f) Failure To Provide Reports on Family Development
Accounts.--Paragraph (2) of section 6693(a) is amended by striking
``and'' at the end of subparagraph (C), by striking the period and
inserting
``, and'' at the end of subparagraph (D), and by adding at the end the
following new subparagraph:</DELETED>
<DELETED> ``(E) section 1400H(g)(6) (relating to
family development accounts).''.</DELETED>
<DELETED> (g) Conforming Amendments Regarding Commercial
Revitalization Deduction.--</DELETED>
<DELETED> (1) Section 172 is amended by redesignating
subsection (j) as subsection (k) and by inserting after
subsection (i) the following new subsection:</DELETED>
<DELETED> ``(j) No Carryback of Section 1400k Deduction Before Date
of the Enactment.--No portion of the net operating loss for any taxable
year which is attributable to any commercial revitalization deduction
determined under section 1400K may be carried back to a taxable year
ending before the date of the enactment of section 1400K.''.</DELETED>
<DELETED> (2) Subparagraph (B) of section 48(a)(2) is
amended by inserting ``or commercial revitalization'' after
``rehabilitation'' each place it appears in the text and
heading.</DELETED>
<DELETED> (3) Subparagraph (C) of section 469(i)(3) is
amended--</DELETED>
<DELETED> (A) by inserting ``or section 1400K''
after ``section 42''; and</DELETED>
<DELETED> (B) by inserting ``and commercial
revitalization deduction'' after ``credit'' in the
heading.</DELETED>
<DELETED> (h) Clerical Amendments.--The table of subchapters for
chapter 1 is amended by adding at the end the following new
item:</DELETED>
<DELETED>``Subchapter X. Renewal
Communities.''.
<DELETED>Subtitle B--Timber Incentives</DELETED>
<DELETED>SEC. 611. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF
AMORTIZABLE REFORESTATION EXPENDITURES.</DELETED>
<DELETED> (a) Increase in Dollar Limitation.--Paragraph (1) of
section 194(b) (relating to amortization of reforestation expenditures)
is amended by striking ``$10,000 ($5,000'' and inserting ``$25,000
($12,500''.</DELETED>
<DELETED> (b) Temporary Suspension of Increased Dollar Limitation.--
Subsection (b) of section 194(b) (relating to amortization of
reforestation expenditures) is amended by adding at the end the
following new paragraph:</DELETED>
<DELETED> ``(5) Suspension of dollar limitation.--Paragraph
(1) shall not apply to taxable years beginning after December
31, 1999, and before January 1, 2004.</DELETED>
<DELETED> (c) Conforming Amendment.--Paragraph (1) of section 48(b)
is amended by striking ``section 194(b)(1)'' and inserting ``section
194(b)(1) and without regard to section 194(b)(5)''.</DELETED>
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>TITLE VII--REAL ESTATE PROVISIONS</DELETED>
<DELETED>Subtitle A--Improvements in Low-Income Housing
Credit</DELETED>
<DELETED>SEC. 701. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING
CREDIT.</DELETED>
<DELETED> (a) In General.--Clauses (i) and (ii) of section
42(h)(3)(C) (relating to State housing credit ceiling) are amended to
read as follows:</DELETED>
<DELETED> ``(i) the unused State housing
credit ceiling (if any) of such State for the
preceding calendar year,</DELETED>
<DELETED> ``(ii) the greater of--</DELETED>
<DELETED> ``(I) the applicable
amount under subparagraph (H)
multiplied by the State population,
or</DELETED>
<DELETED> ``(II)
$2,000,000,''.</DELETED>
<DELETED> (b) Applicable Amount.--Paragraph (3) of section 42(h)
(relating to housing credit dollar amount for agencies) is amended by
adding at the end the following new subparagraph:</DELETED>
<DELETED> ``(H) Applicable amount of state
ceiling.--For purposes of subparagraph (C)(ii), the
applicable amount shall be determined under the
following table:</DELETED>
<DELETED>``For calendar year:</DELETED>
The applicable amount is:
<DELETED> 2000.......................... $1.35
<DELETED> 2001.......................... 1.45
<DELETED> 2002.......................... 1.55
<DELETED> 2003.......................... 1.65
<DELETED> 2004 and thereafter.......... 1.75.''.
<DELETED> (c) Adjustment of State Ceiling for Increases in Cost-of-
Living.--Paragraph (3) of section 42(h) (relating to housing credit
dollar amount for agencies), as amended by subsection (c), is amended
by adding at the end the following new subparagraph:</DELETED>
<DELETED> ``(I) Cost-of-living adjustment.--
</DELETED>
<DELETED> ``(i) In general.--In the case of
a calendar year after 2004, the $2,000,000 in
subparagraph (C) and the $1.75 amount in
subparagraph (H) shall each be increased by an
amount equal to--</DELETED>
<DELETED> ``(I) such dollar amount,
multiplied by</DELETED>
<DELETED> ``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2003' for
`calendar year 1992' in subparagraph
(B) thereof.</DELETED>
<DELETED> ``(ii) Rounding.--</DELETED>
<DELETED> ``(I) In the case of the
amount in subparagraph (C), any
increase under clause (i) which is not
a multiple of $5,000 shall be rounded
to the next lowest multiple of
$5,000.</DELETED>
<DELETED> ``(II) In the case of the
amount in subparagraph (H), any
increase under clause (i) which is not
a multiple of 5 cents shall be rounded
to the next lowest multiple of 5
cents.''.</DELETED>
<DELETED> (d) Conforming Amendments.--</DELETED>
<DELETED> (1) Section 42(h)(3)(C), as amended by subsection
(a), is amended--</DELETED>
<DELETED> (A) by striking ``clause (ii)'' in the
matter following clause (iv) and inserting ``clause
(i)'', and</DELETED>
<DELETED> (B) by striking ``clauses (i)'' in the
matter following clause (iv) and inserting ``clauses
(ii)''.</DELETED>
<DELETED> (2) Section 42(h)(3)(D)(ii) is amended--</DELETED>
<DELETED> (A) by striking ``subparagraph (C)(ii)''
and inserting ``subparagraph (C)(i)'', and</DELETED>
<DELETED> (B) by striking ``clauses (i)'' in
subclause (II) and inserting ``clauses
(ii)''.</DELETED>
<DELETED> (e) Effective Date.--The amendments made by this section
shall apply to calendar years after 2000.</DELETED>
<DELETED>SEC. 702. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING
CREDITS AMONG PROJECTS.</DELETED>
<DELETED> (a) Selection Criteria.--Subparagraph (C) of section
42(m)(1) (relating to certain selection criteria must be used) is
amended--</DELETED>
<DELETED> (1) by inserting ``, including whether the project
includes the use of existing housing as part of a community
revitalization plan'' before the comma at the end of clause
(iii), and</DELETED>
<DELETED> (2) by striking clauses (v), (vi), and (vii) and
inserting the following new clauses:</DELETED>
<DELETED> ``(v) tenant populations with
special housing needs,</DELETED>
<DELETED> ``(vi) public housing waiting
lists,</DELETED>
<DELETED> ``(vii) tenant populations of
individuals with children, and</DELETED>
<DELETED> ``(viii) projects intended for
eventual tenant ownership.''.</DELETED>
<DELETED> (b) Preference for Community Revitalization Projects
Located in Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B)
is amended by striking ``and'' at the end of subclause (I), by adding
``and'' at the end of subclause (II), and by inserting after subclause
(II) the following new subclause:</DELETED>
<DELETED> ``(III) projects which are
located in qualified census tracts (as
defined in subsection (d)(5)(C)) and
the development of which contributes to
a concerted community revitalization
plan,''.</DELETED>
<DELETED>SEC. 703. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT
AGENCIES.</DELETED>
<DELETED> (a) Market Study; Public Disclosure of Rationale for Not
Following Credit Allocation Priorities.--Subparagraph (A) of section
42(m)(1) (relating to responsibilities of housing credit agencies) is
amended by striking ``and'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting a comma, and by adding
at the end the following new clauses:</DELETED>
<DELETED> ``(iii) a comprehensive market
study of the housing needs of low-income
individuals in the area to be served by the
project is conducted before the credit
allocation is made and at the developer's
expense by a disinterested party who is
approved by such agency, and</DELETED>
<DELETED> ``(iv) a written explanation is
available to the general public for any
allocation of a housing credit dollar amount
which is not made in accordance with
established priorities and selection criteria
of the housing credit agency.''.</DELETED>
<DELETED> (b) Site Visits.--Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by inserting before
the period ``and in monitoring for noncompliance with habitability
standards through regular site visits''.</DELETED>
<DELETED>SEC. 704. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING
WHICH IS ELIGIBLE FOR CREDIT.</DELETED>
<DELETED> (a) Adjusted Basis To Include Portion of Certain Buildings
Used by Low-Income Individuals Who Are Not Tenants and by Project
Employees.--Paragraph (4) of section 42(d) (relating to special rules
relating to determination of adjusted basis) is amended--</DELETED>
<DELETED> (1) by striking ``subparagraph (B)'' in
subparagraph (A) and inserting ``subparagraphs (B) and
(C)'',</DELETED>
<DELETED> (2) by redesignating subparagraph (C) as
subparagraph (D), and</DELETED>
<DELETED> (3) by inserting after subparagraph (B) the
following new subparagraph:</DELETED>
<DELETED> ``(C) Inclusion of basis of property used
to provide services for certain nontenants.--</DELETED>
<DELETED> ``(i) In general.--The adjusted
basis of any building located in a qualified
census tract (as defined in paragraph (5)(C))
shall be determined by taking into account the
adjusted basis of property (of a character
subject to the allowance for depreciation and
not otherwise taken into account) used
throughout the taxable year in providing any
community service facility.</DELETED>
<DELETED> ``(ii) Limitation.--The increase
in the adjusted basis of any building which is
taken into account by reason of clause (i)
shall not exceed 10 percent of the eligible
basis of the qualified low-income housing
project of which it is a part. For purposes of
the preceding sentence, all community service
facilities which are part of the same qualified
low-income housing project shall be treated as
one facility.</DELETED>
<DELETED> ``(iii) Community service
facility.--For purposes of this subparagraph,
the term `community service facility' means any
facility designed to serve primarily
individuals whose income is 60 percent or less
of area median income (within the meaning of
subsection (g)(1)(B)).''.</DELETED>
<DELETED> (b) Certain Native American Housing Assistance Disregarded
in Determining Whether Building Is Federally Subsidized for Purposes of
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2)
(relating to determination of whether building is federally subsidized)
is amended--</DELETED>
<DELETED> (1) in clause (i), by inserting ``or the Native
American Housing Assistance and Self-Determination Act of 1996
(25 U.S.C. 4101 et seq.) (as in effect on October 1, 1997)''
after ``this subparagraph)'', and</DELETED>
<DELETED> (2) in the subparagraph heading, by inserting ``or
native american housing assistance'' after ``home
assistance''.</DELETED>
<DELETED>SEC. 705. OTHER MODIFICATIONS.</DELETED>
<DELETED> (a) Allocation of Credit Limit to Certain Buildings.--
</DELETED>
<DELETED> (1) The first sentence of section 42(h)(1)(E)(ii)
is amended by striking ``(as of'' the first place it appears
and inserting ``(as of the later of the date which is 6 months
after the date that the allocation was made or''.</DELETED>
<DELETED> (2) The last sentence of section 42(h)(3)(C) is
amended by striking ``project which'' and inserting ``project
which fails to meet the 10 percent test under paragraph
(1)(E)(ii) on a date after the close of the calendar year in
which the allocation was made or which''.</DELETED>
<DELETED> (b) Determination of Whether Buildings Are Located in High
Cost Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is
amended--</DELETED>
<DELETED> (1) by inserting ``either'' before ``in which 50
percent'', and</DELETED>
<DELETED> (2) by inserting before the period ``or which has
a poverty rate of at least 25 percent''.</DELETED>
<DELETED>SEC. 706. CARRYFORWARD RULES.</DELETED>
<DELETED> (a) In General.--Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated among certain
States) is amended by striking ``the excess'' and all that follows and
inserting ``the excess (if any) of--</DELETED>
<DELETED> ``(I) the unused State
housing credit ceiling for the year
preceding such year, over</DELETED>
<DELETED> ``(II) the aggregate
housing credit dollar amount allocated
for such year.''.</DELETED>
<DELETED> (b) Conforming Amendment.--The second sentence of section
42(h)(3)(C) (relating to State housing credit ceiling) is amended by
striking ``clauses (i) and (iii)'' and inserting ``clauses (i) through
(iv)''.</DELETED>
<DELETED>SEC. 707. EFFECTIVE DATE.</DELETED>
<DELETED> Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to--</DELETED>
<DELETED> (1) housing credit dollar amounts allocated after
December 31, 1999, and</DELETED>
<DELETED> (2) buildings placed in service after such date to
the extent paragraph (1) of section 42(h) of the Internal
Revenue Code of 1986 does not apply to any building by reason
of paragraph (4) thereof, but only with respect to bonds issued
after such date.</DELETED>
<DELETED>Subtitle B--Provisions Relating to Real Estate Investment
Trusts</DELETED>
<DELETED>PART I--TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE
REIT SUBSIDIARIES</DELETED>
<DELETED>SEC. 711. MODIFICATIONS TO ASSET DIVERSIFICATION
TEST.</DELETED>
<DELETED> (a) In General.--Subparagraph (B) of section 856(c)(4) is
amended to read as follows:</DELETED>
<DELETED> ``(B)(i) not more than 25 percent of the
value of its total assets is represented by securities
(other than those includible under subparagraph (A)),
and</DELETED>
<DELETED> ``(ii) except with respect to a taxable
REIT subsidiary and securities includible under
subparagraph (A)--</DELETED>
<DELETED> ``(I) not more than 5 percent of
the value of its total assets is represented by
securities of any one issuer,</DELETED>
<DELETED> ``(II) the trust does not hold
securities possessing more than 10 percent of
the total voting power of the outstanding
securities of any one issuer, and</DELETED>
<DELETED> ``(III) the trust does not hold
securities having a value of more than 10
percent of the total value of the outstanding
securities of any one issuer.''.</DELETED>
<DELETED> (b) Exception for Straight Debt Securities.--Subsection
(c) of section 856 is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(7) Straight debt safe harbor in applying
paragraph (4).--Securities of an issuer which are straight debt
(as defined in section 1361(c)(5) without regard to
subparagraph (B)(iii) thereof) shall not be taken into account
in applying paragraph (4)(B)(ii)(III) if--</DELETED>
<DELETED> ``(A) the issuer is an individual,
or</DELETED>
<DELETED> ``(B) the only securities of such issuer
which are held by the trust or a taxable REIT
subsidiary of the trust are straight debt (as so
defined), or</DELETED>
<DELETED> ``(C) the issuer is a partnership and the
trust holds at least a 20 percent profits interest in
the partnership.''.</DELETED>
<DELETED>SEC. 712. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE
REIT SUBSIDIARIES.</DELETED>
<DELETED> (a) Income From Taxable REIT Subsidiaries Not Treated as
Impermissible Tenant Service Income.--Clause (i) of section
856(d)(7)(C) (relating to exceptions to impermissible tenant service
income) is amended by inserting ``or through a taxable REIT subsidiary
of such trust'' after ``income''.</DELETED>
<DELETED> (b) Certain Income From Taxable REIT Subsidiaries Not
Excluded From Rents From Real Property.--</DELETED>
<DELETED> (1) In general.--Subsection (d) of section 856
(relating to rents from real property defined) is amended by
adding at the end the following new paragraphs:</DELETED>
<DELETED> ``(8) Special rule for taxable reit
subsidiaries.--For purposes of this subsection, amounts paid to
a real estate investment trust by a taxable REIT subsidiary of
such trust shall not be excluded from rents from real property
by reason of paragraph (2)(B) if the requirements of either of
the following subparagraphs are met:</DELETED>
<DELETED> ``(A) Limited rental exception.--The
requirements of this subparagraph are met with respect
to any property if at least 90 percent of the leased
space of the property is rented to persons other than
taxable REIT subsidiaries of such trust and other than
persons described in section 856(d)(2)(B). The
preceding sentence shall apply only to the extent that
the amounts paid to the trust as rents from real
property (as defined in paragraph (1) without regard to
paragraph (2)(B)) from such property are substantially
comparable to such rents made by the other tenants of
the trust's property for comparable space.</DELETED>
<DELETED> ``(B) Exception for certain lodging
facilities.--The requirements of this subparagraph are
met with respect to an interest in real property which
is a qualified lodging facility leased by the trust to
a taxable REIT subsidiary of the trust if the property
is operated on behalf of such subsidiary by a person
who is an eligible independent contractor.</DELETED>
<DELETED> ``(9) Eligible independent contractor.--For
purposes of paragraph (8)(B)--</DELETED>
<DELETED> ``(A) In general.--The term `eligible
independent contractor' means, with respect to any
qualified lodging facility, any independent contractor
if, at the time such contractor enters into a
management agreement or other similar service contract
with the taxable REIT subsidiary to operate the
facility, such contractor (or any related person) is
actively engaged in the trade or business of operating
qualified lodging facilities for any person who is not
a related person with respect to the real estate
investment trust or the taxable REIT
subsidiary.</DELETED>
<DELETED> ``(B) Special rules.--Solely for purposes
of this paragraph and paragraph (8)(B), a person shall
not fail to be treated as an independent contractor
with respect to any qualified lodging facility by
reason of any of the following:</DELETED>
<DELETED> ``(i) The taxable REIT subsidiary
bears the expenses for the operation of the
facility pursuant to the management agreement
or other similar service contract.</DELETED>
<DELETED> ``(ii) The taxable REIT subsidiary
receives the revenues from the operation of
such facility, net of expenses for such
operation and fees payable to the operator
pursuant to such agreement or
contract.</DELETED>
<DELETED> ``(iii) The real estate investment
trust receives income from such person with
respect to another property that is
attributable to a lease of such other property
to such person that was in effect as of the
later of--</DELETED>
<DELETED> ``(I) January 1, 1999,
or</DELETED>
<DELETED> ``(II) the earliest date
that any taxable REIT subsidiary of
such trust entered into a management
agreement or other similar service
contract with such person with respect
to such qualified lodging
facility.</DELETED>
<DELETED> ``(C) Renewals, etc., of existing
leases.--For purposes of subparagraph (B)(iii)--
</DELETED>
<DELETED> ``(i) a lease shall be treated as
in effect on January 1, 1999, without regard to
its renewal after such date, so long as such
renewal is pursuant to the terms of such lease
as in effect on whichever of the dates under
subparagraph (B)(iii) is the latest,
and</DELETED>
<DELETED> ``(ii) a lease of a property
entered into after whichever of the dates under
subparagraph (B)(iii) is the latest shall be
treated as in effect on such date if--
</DELETED>
<DELETED> ``(I) on such date, a
lease of such property from the trust
was in effect, and</DELETED>
<DELETED> ``(II) under the terms of
the new lease, such trust receives a
substantially similar or lesser benefit
in comparison to the lease referred to in subclause (I).</DELETED>
<DELETED> ``(D) Qualified lodging facility.--For
purposes of this paragraph--</DELETED>
<DELETED> ``(i) In general.--The term
`qualified lodging facility' means any lodging
facility unless wagering activities are
conducted at or in connection with such
facility by any person who is engaged in the
business of accepting wagers and who is legally
authorized to engage in such business at or in
connection with such facility.</DELETED>
<DELETED> ``(ii) Lodging facility.--The term
`lodging facility' means a hotel, motel, or
other establishment more than one-half of the
dwelling units in which are used on a transient
basis.</DELETED>
<DELETED> ``(iii) Customary amenities and
facilities.--The term `lodging facility'
includes customary amenities and facilities
operated as part of, or associated with, the
lodging facility so long as such amenities and
facilities are customary for other properties
of a comparable size and class owned by other
owners unrelated to such real estate investment
trust.</DELETED>
<DELETED> ``(E) Operate includes manage.--References
in this paragraph to operating a property shall be
treated as including a reference to managing the
property.</DELETED>
<DELETED> ``(F) Related person.--Persons shall be
treated as related to each other if such persons are
treated as a single employer under subsection (a) or
(b) of section 52.''.</DELETED>
<DELETED> (2) Conforming amendment.--Subparagraph (B) of
section 856(d)(2) is amended by inserting ``except as provided
in paragraph (8),'' after ``(B)''.</DELETED>
<DELETED> (3) Determining rents from real property.--
</DELETED>
<DELETED> (A)(i) Paragraph (1) of section 856(d) is
amended by striking ``adjusted bases'' each place it
occurs and inserting ``fair market values''.</DELETED>
<DELETED> (ii) The amendment made by this
subparagraph shall apply to taxable years beginning
after December 31, 2000.</DELETED>
<DELETED> (B)(i) Clause (i) of section 856(d)(2)(B)
is amended by striking ``number'' and inserting
``value''.</DELETED>
<DELETED> (ii) The amendment made by this
subparagraph shall apply to amounts received or accrued
in taxable years beginning after December 31, 2000,
except for amounts paid pursuant to leases in effect on
July 12, 1999, or pursuant to a binding contract in
effect on such date and at all times
thereafter.</DELETED>
<DELETED>SEC. 713. TAXABLE REIT SUBSIDIARY.</DELETED>
<DELETED> (a) In General.--Section 856 is amended by adding at the
end the following new subsection:</DELETED>
<DELETED> ``(l) Taxable REIT Subsidiary.--For purposes of this
part--</DELETED>
<DELETED> ``(1) In general.--The term `taxable REIT
subsidiary' means, with respect to a real estate investment
trust, a corporation (other than a real estate investment
trust) if--</DELETED>
<DELETED> ``(A) such trust directly or indirectly
owns stock in such corporation, and</DELETED>
<DELETED> ``(B) such trust and such corporation
jointly elect that such corporation shall be treated as
a taxable REIT subsidiary of such trust for purposes of
this part.</DELETED>
<DELETED>Such an election, once made, shall be irrevocable
unless both such trust and corporation consent to its
revocation. Such election, and any revocation thereof, may be
made without the consent of the Secretary.</DELETED>
<DELETED> ``(2) 35 percent ownership in another taxable reit
subsidiary.--The term `taxable REIT subsidiary' includes, with
respect to any real estate investment trust, any corporation
(other than a real estate investment trust) with respect to
which a taxable REIT subsidiary of such trust owns directly or
indirectly--</DELETED>
<DELETED> ``(A) securities possessing more than 35
percent of the total voting power of the outstanding
securities of such corporation, or</DELETED>
<DELETED> ``(B) securities having a value of more
than 35 percent of the total value of the outstanding
securities of such corporation.</DELETED>
<DELETED>The preceding sentence shall not apply to a qualified
REIT subsidiary (as defined in subsection (i)(2)). The rule of
section 856(c)(7) shall apply for purposes of subparagraph
(B).</DELETED>
<DELETED> ``(3) Exceptions.--The term `taxable REIT
subsidiary' shall not include--</DELETED>
<DELETED> ``(A) any corporation which directly or
indirectly operates or manages a lodging facility or a
health care facility, and</DELETED>
<DELETED> ``(B) any corporation which directly or
indirectly provides to any other person (under a
franchise, license, or otherwise) rights to any brand
name under which any lodging facility or health care
facility is operated.</DELETED>
<DELETED>Subparagraph (B) shall not apply to rights provided to
an eligible independent contractor to operate or manage a
lodging facility if such rights are held by such corporation as
a franchisee, licensee, or in a similar capacity and such
lodging facility is either owned by such corporation or is
leased to such corporation from the real estate investment
trust.</DELETED>
<DELETED> ``(4) Definitions.--For purposes of paragraph
(3)--</DELETED>
<DELETED> ``(A) Lodging facility.--The term `lodging
facility' has the meaning given to such term by
paragraph (9)(D)(ii).</DELETED>
<DELETED> ``(B) Health care facility.--The term
`health care facility' has the meaning given to such
term by subsection (e)(6)(D)(ii).''.</DELETED>
<DELETED> (b) Conforming Amendment.--Paragraph (2) of section 856(i)
is amended by adding at the end the following new sentence: ``Such term
shall not include a taxable REIT subsidiary.''.</DELETED>
<DELETED>SEC. 714. LIMITATION ON EARNINGS STRIPPING.</DELETED>
<DELETED> Paragraph (3) of section 163(j) (relating to limitation on
deduction for interest on certain indebtedness) is amended by striking
``and'' at the end of subparagraph (A), by striking the period at the
end of subparagraph (B) and inserting ``, and'', and by adding at the
end the following new subparagraph:</DELETED>
<DELETED> ``(C) any interest paid or accrued
(directly or indirectly) by a taxable REIT subsidiary
(as defined in section 856(l)) of a real estate
investment trust to such trust.''.</DELETED>
<DELETED>SEC. 715. 100 PERCENT TAX ON IMPROPERLY ALLOCATED
AMOUNTS.</DELETED>
<DELETED> (a) In General.--Subsection (b) of section 857 (relating
to method of taxation of real estate investment trusts and holders of
shares or certificates of beneficial interest) is amended by
redesignating paragraphs (7) and (8) as paragraphs (8) and (9),
respectively, and by inserting after paragraph (6) the following new
paragraph:</DELETED>
<DELETED> ``(7) Income from redetermined rents, redetermined
deductions, and excess interest.--</DELETED>
<DELETED> ``(A) Imposition of tax.--There is hereby
imposed for each taxable year of the real estate
investment trust a tax equal to 100 percent of
redetermined rents, redetermined deductions, and excess
interest.</DELETED>
<DELETED> ``(B) Redetermined rents.--</DELETED>
<DELETED> ``(i) In general.--The term
`redetermined rents' means rents from real
property (as defined in subsection 856(d)) the
amount of which would (but for subparagraph
(E)) be reduced on distribution, apportionment,
or allocation under section 482 to clearly
reflect income as a result of services
furnished or rendered by a taxable REIT
subsidiary of the real estate investment trust
to a tenant of such trust.</DELETED>
<DELETED> ``(ii) Exception for certain
services.--Clause (i) shall not apply to
amounts received directly or indirectly by a
real estate investment trust for services
described in paragraph (1)(B) or (7)(C)(i) of
section 856(d).</DELETED>
<DELETED> ``(iii) Exception for de minimis
amounts.--Clause (i) shall not apply to amounts
described in section 856(d)(7)(A) with respect
to a property to the extent such amounts do not
exceed the one percent threshold described in
section 856(d)(7)(B) with respect to such
property.</DELETED>
<DELETED> ``(iv) Exception for comparably
priced services.--Clause (i) shall not apply to
any service rendered by a taxable REIT
subsidiary of a real estate investment trust to
a tenant of such trust if--</DELETED>
<DELETED> ``(I) such subsidiary
renders a significant amount of similar
services to persons other than such
trust and tenants of such trust who are
unrelated (within the meaning of
section 856(d)(8)(F)) to such
subsidiary, trust, and tenants,
but</DELETED>
<DELETED> ``(II) only to the extent
the charge for such service so rendered
is substantially comparable to the
charge for the similar services
rendered to persons referred to in
subclause (I).</DELETED>
<DELETED> ``(v) Exception for certain
separately charged services.--Clause (i) shall
not apply to any service rendered by a taxable
REIT subsidiary of a real estate investment
trust to a tenant of such trust if--</DELETED>
<DELETED> ``(I) the rents paid to
the trust by tenants (leasing at least
25 percent of the net leasable space in
the trust's property) who are not
receiving such service from such
subsidiary are substantially comparable
to the rents paid by tenants leasing
comparable space who are receiving such
service from such subsidiary,
and</DELETED>
<DELETED> ``(II) the charge for such
service from such subsidiary is
separately stated.</DELETED>
<DELETED> ``(vi) Exception for certain
services based on subsidiary's income from the
services.--Clause (i) shall not apply to any
service rendered by a taxable REIT subsidiary
of a real estate investment trust to a tenant
of such trust if the gross income of such
subsidiary from such service is not less than
150 percent of such subsidiary's direct cost in
furnishing or rendering the service.</DELETED>
<DELETED> ``(vii) Exceptions granted by
secretary.--The Secretary may waive the tax
otherwise imposed by subparagraph (A) if the
trust establishes to the satisfaction of the
Secretary that rents charged to tenants were
established on an arms' length basis even
though a taxable REIT subsidiary of the trust
provided services to such tenants.</DELETED>
<DELETED> ``(C) Redetermined deductions.--The term
`redetermined deductions' means deductions (other than
redetermined rents) of a taxable REIT subsidiary of a
real estate investment trust if the amount of such
deductions would (but for subparagraph (E)) be
decreased on distribution, apportionment, or allocation
under section 482 to clearly reflect income as between
such subsidiary and such trust.</DELETED>
<DELETED> ``(D) Excess interest.--The term `excess
interest' means any deductions for interest payments by
a taxable REIT subsidiary of a real estate investment
trust to such trust to the extent that the interest
payments are in excess of a rate that is commercially
reasonable.</DELETED>
<DELETED> ``(E) Coordination with section 482.--The
imposition of tax under subparagraph (A) shall be in
lieu of any distribution, apportionment, or allocation
under section 482.</DELETED>
<DELETED> ``(F) Regulatory authority.--The Secretary
shall prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this
paragraph. Until the Secretary prescribes such
regulations, real estate investment trusts and their
taxable REIT subsidiaries may base their allocations on
any reasonable method.''.</DELETED>
<DELETED> (b) Amount Subject to Tax Not Required To Be
Distributed.--Subparagraph (E) of section 857(b)(2) (relating to real
estate investment trust taxable income) is amended by striking
``paragraph (5)'' and inserting ``paragraphs (5) and (7)''.</DELETED>
<DELETED>SEC. 716. EFFECTIVE DATE.</DELETED>
<DELETED> (a) In General.--The amendments made by this part shall
apply to taxable years beginning after December 31, 2000.</DELETED>
<DELETED> (b) Transitional Rules Related to Section 711.--</DELETED>
<DELETED> (1) Existing arrangements.--</DELETED>
<DELETED> (A) In general.--Except as otherwise
provided in this paragraph, the amendment made by
section 711 shall not apply to a real estate investment
trust with respect to--</DELETED>
<DELETED> (i) securities of a corporation
held directly or indirectly by such trust on
July 12, 1999,</DELETED>
<DELETED> (ii) securities of a corporation
held by an entity on July 12, 1999, if such
trust acquires control of such entity pursuant
to a written binding contract in effect on such
date and at all times thereafter before such
acquisition,</DELETED>
<DELETED> (iii) securities received by such
trust (or a successor) in exchange for, or with
respect to, securities described in clause (i)
or (ii) in a transaction in which gain or loss
is not recognized, and</DELETED>
<DELETED> (iv) securities acquired directly
or indirectly by such trust as part of a
reorganization (as defined in section 368(a)(1)
of the Internal Revenue Code of 1986) with
respect to such trust if such securities are
described in clause (i), (ii), or (iii) with
respect to any other real estate investment
trust.</DELETED>
<DELETED> (B) New trade or business or substantial
new assets.--Subparagraph (A) shall cease to apply to
securities of a corporation as of the first day after
July 12, 1999, on which such corporation engages in a substantial new
line of business, or acquires any substantial asset, other than--
</DELETED>
<DELETED> (i) pursuant to a binding contract
in effect on such date and at all times
thereafter before the acquisition of such
asset,</DELETED>
<DELETED> (ii) in a transaction in which
gain or loss is not recognized by reason of
section 1031 or 1033 of the Internal Revenue
Code of 1986, or</DELETED>
<DELETED> (iii) in a reorganization (as so
defined) with another corporation the
securities of which are described in paragraph
(1)(A) of this subsection.</DELETED>
<DELETED> (C) Limitation on transition rules.--
Subparagraph (A) shall cease to apply to securities of
a corporation held, acquired, or received, directly or
indirectly, by a real estate investment trust as of the
first day after July 12, 1999, on which such trust
acquires any additional securities of such corporation
other than--</DELETED>
<DELETED> (i) pursuant to a binding contract
in effect on July 12, 1999, and at all times
thereafter, or</DELETED>
<DELETED> (ii) in a reorganization (as so
defined) with another corporation the
securities of which are described in paragraph
(1)(A) of this subsection.</DELETED>
<DELETED> (2) Tax-free conversion.--If--</DELETED>
<DELETED> (A) at the time of an election for a
corporation to become a taxable REIT subsidiary, the
amendment made by section 1021 does not apply to such
corporation by reason of paragraph (1), and</DELETED>
<DELETED> (B) such election first takes effect
before January 1, 2004,</DELETED>
<DELETED>such election shall be treated as a reorganization
qualifying under section 368(a)(1)(A) of such Code.</DELETED>
<DELETED>PART II--HEALTH CARE REITS</DELETED>
<DELETED>SEC. 721. HEALTH CARE REITS.</DELETED>
<DELETED> (a) Special Foreclosure Rule for Health Care Properties.--
Subsection (e) of section 856 (relating to special rules for
foreclosure property) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(6) Special rule for qualified health care
properties.--For purposes of this subsection--</DELETED>
<DELETED> ``(A) Acquisition at expiration of
lease.--The term `foreclosure property' shall include
any qualified health care property acquired by a real
estate investment trust as the result of the
termination of a lease of such property (other than a
termination by reason of a default, or the imminence of
a default, on the lease).</DELETED>
<DELETED> ``(B) Grace period.--In the case of a
qualified health care property which is foreclosure
property solely by reason of subparagraph (A), in lieu
of applying paragraphs (2) and (3)--</DELETED>
<DELETED> ``(i) the qualified health care
property shall cease to be foreclosure property
as of the close of the second taxable year
after the taxable year in which such trust
acquired such property, and</DELETED>
<DELETED> ``(ii) if the real estate
investment trust establishes to the
satisfaction of the Secretary that an extension
of the grace period in clause (i) is necessary
to the orderly leasing or liquidation of the
trust's interest in such qualified health care
property, the Secretary may grant one or more
extensions of the grace period for such
qualified health care property.</DELETED>
<DELETED>Any such extension shall not extend the grace
period beyond the close of the 6th year after the
taxable year in which such trust acquired such
qualified health care property.</DELETED>
<DELETED> ``(C) Income from independent
contractors.--For purposes of applying paragraph (4)(C)
with respect to qualified health care property which is
foreclosure property by reason of subparagraph (A) or
paragraph (1), income derived or received by the trust
from an independent contractor shall be disregarded to
the extent such income is attributable to--</DELETED>
<DELETED> ``(i) any lease of property in
effect on the date the real estate investment
trust acquired the qualified health care
property (without regard to its renewal after
such date so long as such renewal is pursuant
to the terms of such lease as in effect on such
date), or</DELETED>
<DELETED> ``(ii) any lease of property
entered into after such date if--</DELETED>
<DELETED> ``(I) on such date, a
lease of such property from the trust
was in effect, and</DELETED>
<DELETED> ``(II) under the terms of
the new lease, such trust receives a
substantially similar or lesser benefit
in comparison to the lease referred to
in subclause (I).</DELETED>
<DELETED> ``(D) Qualified health care property.--
</DELETED>
<DELETED> ``(i) In general.--The term
`qualified health care property' means any real
property (including interests therein), and any
personal property incident to such real
property, which--</DELETED>
<DELETED> ``(I) is a health care
facility, or</DELETED>
<DELETED> ``(II) is necessary or
incidental to the use of a health care
facility.</DELETED>
<DELETED> ``(ii) Health care facility.--For
purposes of clause (i), the term `health care
facility' means a hospital, nursing facility,
assisted living facility, congregate care
facility, qualified continuing care facility
(as defined in section 7872(g)(4)), or other
licensed facility which extends medical or
nursing or ancillary services to patients and
which, immediately before the termination,
expiration, default, or breach of the lease of
or mortgage secured by such facility, was
operated by a provider of such services which
was eligible for participation in the medicare
program under title XVIII of the Social
Security Act with respect to such
facility.''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>PART III--CONFORMITY WITH REGULATED INVESTMENT COMPANY
RULES</DELETED>
<DELETED>SEC. 731. CONFORMITY WITH REGULATED INVESTMENT COMPANY
RULES.</DELETED>
<DELETED> (a) Distribution Requirement.--Clauses (i) and (ii) of
section 857(a)(1)(A) (relating to requirements applicable to real
estate investment trusts) are each amended by striking ``95 percent (90
percent for taxable years beginning before January 1, 1980)'' and
inserting ``90 percent''.</DELETED>
<DELETED> (b) Imposition of Tax.--Clause (i) of section 857(b)(5)(A)
(relating to imposition of tax in case of failure to meet certain
requirements) is amended by striking ``95 percent (90 percent in the
case of taxable years beginning before January 1, 1980)'' and inserting
``90 percent''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>PART IV--CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT
SERVICE INCOME</DELETED>
<DELETED>SEC. 741. CLARIFICATION OF EXCEPTION FOR INDEPENDENT
OPERATORS.</DELETED>
<DELETED> (a) In General.--Paragraph (3) of section 856(d) (relating
to independent contractor defined) is amended by adding at the end the
following flush sentence:</DELETED>
<DELETED>``In the event that any class of stock of either the
real estate investment trust or such person is regularly traded
on an established securities market, only persons who own,
directly or indirectly, more than 5 percent of such class of
stock shall be taken into account as owning any of the stock of
such class for purposes of applying the 35 percent limitation
set forth in subparagraph (B) (but all of the outstanding stock
of such class shall be considered outstanding in order to
compute the denominator for purpose of determining the
applicable percentage of ownership).''.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2000.</DELETED>
<DELETED>PART V--MODIFICATION OF EARNINGS AND PROFITS RULES</DELETED>
<DELETED>SEC. 751. MODIFICATION OF EARNINGS AND PROFITS
RULES.</DELETED>
<DELETED> (a) Rules for Determining Whether Regulated Investment
Company Has Earnings and Profits From Non-RIC Year.--</DELETED>
<DELETED> (1) In general.--Subsection (c) of section 852 is
amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(3) Distributions to meet requirements of
subsection (a)(2)(B).--Any distribution which is made in order
to comply with the requirements of subsection (a)(2)(B)--
</DELETED>
<DELETED> ``(A) shall be treated for purposes of
this subsection and subsection (a)(2)(B) as made from
earnings and profits which, but for the distribution,
would result in a failure to meet such requirements
(and allocated to such earnings on a first-in, first-
out basis), and</DELETED>
<DELETED> ``(B) to the extent treated under
subparagraph (A) as made from accumulated earnings and
profits, shall not be treated as a distribution for
purposes of subsection (b)(2)(D) and section
855.''.</DELETED>
<DELETED> (2) Conforming amendment.--Subparagraph (A) of
section 857(d)(3) is amended to read as follows:</DELETED>
<DELETED> ``(A) shall be treated for purposes of
this subsection and subsection (a)(2)(B) as made from
earnings and profits which, but for the distribution,
would result in a failure to meet such requirements
(and allocated to such earnings on a first-in, first-
out basis), and''.</DELETED>
<DELETED> (b) Clarification of Application of REIT Spillover
Dividend Rules to Distributions To Meet Qualification Requirement.--
Subparagraph (B) of section 857(d)(3) is amended by inserting before
the period ``and section 858''.</DELETED>
<DELETED> (c) Application of Deficiency Dividend Procedures.--
Paragraph (1) of section 852(e) is amended by adding at the end the
following new sentence: ``If the determination under subparagraph (A)
is solely as a result of the failure to meet the requirements of
subsection (a)(2), the preceding sentence shall also apply for purposes
of applying subsection (a)(2) to the non-RIC year and the amount
referred to in paragraph (2)(A)(i) shall be the portion of the
accumulated earnings and profits which resulted in such
failure.''.</DELETED>
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2000.</DELETED>
<DELETED>Subtitle C--Private Activity Bond Volume Cap</DELETED>
<DELETED>SEC. 761. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP
ON PRIVATE ACTIVITY BONDS.</DELETED>
<DELETED> (a) In General.--The table contained in section 146(d)(2)
(relating to per capita limit; aggregate limit) is amended to read as
follows:</DELETED>
<DELETED>
``Calendar Year Per Capita Limit Aggregate Limit
------------------------------------------------------------------------
2000....................... $55.00 165,000,000
2001....................... 60.00 180,000,000
2002....................... 65.00 195,000,000
2003....................... 70.00 210,000,000
2004 and thereafter........ 75.00 225,000,000.''.
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to calendar years beginning after 1999.</DELETED>
<DELETED>Subtitle D--Exclusion from gross income for certain forgiven
mortgage obligations</DELETED>
<DELETED>SEC. 771. EXCLUSION FROM GROSS INCOME FOR CERTAIN FORGIVEN
MORTGAGE OBLIGATIONS.</DELETED>
<DELETED> (a) In General.--Paragraph (1) of section 108(a) of the
Internal Revenue Code of 1986 (relating to exclusion from gross income)
is amended by striking ``or'' at the end of both subparagraphs (A) and
(C), by striking the period at the end of subparagraph (D) and
inserting ``, or'', and by inserting after subparagraph (D) the
following new subparagraph:</DELETED>
<DELETED> ``(E) in the case of an individual, the
indebtedness discharged is qualified residential
indebtedness.''.</DELETED>
<DELETED> (b) Qualified Residential Indebtedness Shortfall.--Section
108 of such Code (relating to discharge of indebtedness) is amended by
adding at the end the following new subsection:</DELETED>
<DELETED> ``(h) Qualified Residential Indebtedness.--</DELETED>
<DELETED> ``(1) Limitations.--The amount excluded under
subparagraph (E) of subsection (a)(1) with respect to any
qualified residential indebtedness shall not exceed the excess
(if any) of--</DELETED>
<DELETED> ``(A) the outstanding principal amount of
such indebtedness (immediately before the discharge),
over</DELETED>
<DELETED> ``(B) the sum of--</DELETED>
<DELETED> ``(i) the amount realized from the
sale of the real property securing such
indebtedness reduced by the cost of such sale,
and</DELETED>
<DELETED> ``(ii) the outstanding principal
amount of any other indebtedness secured by
such property.</DELETED>
<DELETED> ``(2) Qualified residential indebtedness.--
</DELETED>
<DELETED> ``(A) In general.--The term `qualified
residential indebtedness' means indebtedness which--
</DELETED>
<DELETED> ``(i) was incurred or assumed by
the taxpayer in connection with real property
used as a residence and is secured by such real
property,</DELETED>
<DELETED> ``(ii) is incurred or assumed to
acquire, construct, reconstruct, or
substantially improve such real property,
and</DELETED>
<DELETED> ``(iii) with respect to which such
taxpayer makes an election to have this
paragraph apply.</DELETED>
<DELETED> ``(B) Refinanced indebtedness.--Such term
shall include indebtedness resulting from the
refinancing of indebtedness under subparagraph (A)(ii),
but only to the extent the refinanced indebtedness does
not exceed the amount of the indebtedness being
refinanced.</DELETED>
<DELETED> ``(C) Exceptions.--Such term shall not
include qualified farm indebtedness or qualified real
property business indebtedness.''.</DELETED>
<DELETED> (c) Conforming Amendments.--</DELETED>
<DELETED> (1) Paragraph (2) of section 108(a) of such Code
is amended--</DELETED>
<DELETED> (A) in subparagraph (A) by striking ``and
(D)'' and inserting ``(D), and (E)'', and</DELETED>
<DELETED> (B) by amending subparagraph (B) to read
as follows:</DELETED>
<DELETED> ``(B) Insolvency exclusion takes
precedence over qualified farm exclusion; qualified
real property business exclusion; and qualified
residential shortfall exclusion.--Subparagraphs (C),
(D), and (E) of paragraph (1) shall not apply to a
discharge to the extent the taxpayer is
insolvent.''.</DELETED>
<DELETED> (2) Paragraph (1) of section 108(b) of such Code
is amended by striking ``or (C)'' and inserting ``(C), or
(E)''.</DELETED>
<DELETED> (3) Subsection (c) of section 121 of such Code is
amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(4) Special rule relating to discharge of
indebtedness.--The amount of gain which (but for this
paragraph) would be excluded from gross income under subsection
(a) with respect to a principal residence shall be reduced by
the amount excluded from gross income under section
108(a)(1)(E) with respect to such residence.''.</DELETED>
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to discharges after the date of the enactment of this
Act.</DELETED>
<DELETED>TITLE VIII--MISCELLANEOUS PROVISIONS</DELETED>
<DELETED>SEC. 801. CREDIT FOR MODIFICATIONS TO INTER-CITY BUSES
REQUIRED UNDER THE AMERICANS WITH DISABILITIES ACT OF
1990.</DELETED>
<DELETED> (a) In General.--Subsection (a) of section 44 (relating to
expenditures to provide access to disabled individuals) is amended to
read as follows:</DELETED>
<DELETED> ``(a) General Rule.--For purposes of section 38, the
amount of the disabled access credit determined under this section for
any taxable year shall be an amount equal to the sum of--</DELETED>
<DELETED> ``(1) in the case of an eligible small business,
50 percent of so much of the eligible access expenditures for
the taxable year as exceed $250 but do not exceed $10,250,
and</DELETED>
<DELETED> ``(2) 50 percent of so much of the eligible bus
access expenditures for the taxable year with respect to each
eligible bus as exceed $250 but do not exceed
$30,250.''.</DELETED>
<DELETED> (b) Eligible Bus Access Expenditures.--Section 44 is
amended by redesignating subsections (d) and (e) as subsections (e) and
(f), respectively, and by inserting after subsection (c) the following
new subsection:</DELETED>
<DELETED> ``(d) Eligible Bus Access Expenditures.--For purposes of
this section--</DELETED>
<DELETED> ``(1) In general.--The term `eligible bus access
expenditures' means amounts paid or incurred by the taxpayer
for the purpose of enabling the taxpayer's eligible bus to
comply with applicable requirements under the Americans With
Disabilities Act of 1990 (as in effect on the date of the
enactment of this subsection).</DELETED>
<DELETED> ``(2) Certain expenditures not included.--The
amount of eligible bus access expenditures otherwise taken into
account under subsection (a)(2) shall be reduced to the extent
that funds for such expenditures are received under any
Federal, State, or local program.</DELETED>
<DELETED> ``(3) Eligible bus.--The term `eligible bus' means
any automobile bus eligible for a refund under section 6427(b)
by reason of transportation described in section
6427(b)(1)(A).''.</DELETED>
<DELETED> (c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1999, and
before January 1, 2012.</DELETED>
<DELETED>SEC. 802. CERTAIN EDUCATIONAL BENEFITS PROVIDED BY AN EMPLOYER
TO CHILDREN OF EMPLOYEES EXCLUDABLE FROM GROSS INCOME AS
A SCHOLARSHIP.</DELETED>
<DELETED> (a) In General.--Section 117 (relating to qualified
scholarships) is amended by adding at the end the following new
subsection:</DELETED>
<DELETED> ``(e) Employer-Provided Educational Benefits Provided to
Children of Employees.--</DELETED>
<DELETED> ``(1) In general.--In determining whether any
amount is a qualified scholarship for purposes of subsection
(a), the fact that such amount is provided in connection with
an employment relationship shall be disregarded if--</DELETED>
<DELETED> ``(A) such amount is provided by the
employer to a child (as defined in section 151(c)(3))
of an employee of such employer,</DELETED>
<DELETED> ``(B) such amount is provided pursuant to
a plan which meets the nondiscrimination requirements
of subsection (d)(3), and</DELETED>
<DELETED> ``(C) amounts provided under such plan are
in addition to any other compensation payable to
employees and such plan does not provide employees with
a choice between such amounts and any other
benefit.</DELETED>
<DELETED>For purposes of subparagraph (C), the business
practices of the employer (as well as such plan) shall be taken
into account.</DELETED>
<DELETED> ``(2) Dollar limitations.--</DELETED>
<DELETED> ``(A) Per child.--The amount excluded from
the gross income of the employee by reason of paragraph
(1) for a taxable year with respect to amounts provided
to each child of such employee shall not exceed
$2,000.</DELETED>
<DELETED> ``(B) Aggregate limit.--The amount
excluded from the gross income of the employee by
reason of paragraph (1) for a taxable year (after the
application of subparagraph (A)) shall not exceed the
excess of the dollar amount contained in section
127(a)(2) over the amount excluded from the employee's
gross income under section 127 for such year.</DELETED>
<DELETED> ``(3) Principal shareholders and owners.--
Paragraph (1) shall not apply to any amount provided to any
child of any individual if such individual (or such
individual's spouse) owns (on any day of the year) more than 5
percent of the stock or of the capital or profits interest in
the employer.</DELETED>
<DELETED> ``(4) Degree requirement not to apply.--In the
case of an amount which is treated as a qualified scholarship
by reason of this subsection, subsection (a) shall be applied
without regard to the requirement that the recipient be a
candidate for a degree.</DELETED>
<DELETED> ``(5) Certain other rules to apply.--Rules similar
to the rules of paragraphs (4), (5), and (7) of section 127(c)
shall apply for purposes of this subsection.''</DELETED>
<DELETED> (b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the enactment
of this Act.</DELETED>
<DELETED>SEC. 803. TAX INCENTIVES FOR QUALIFIED UNITED STATES
INDEPENDENT FILM AND TELEVISION PRODUCTION.</DELETED>
<DELETED> (a) In General.--Subpart C of part IV of subchapter A of
chapter 1 (relating to refundable credits) is amended by redesignating
section 35 as section 36 and by inserting after section 34 the
following new section:</DELETED>
<DELETED>``SEC. 35. UNITED STATES INDEPENDENT FILM AND TELEVISION
PRODUCTION WAGE CREDIT.</DELETED>
<DELETED> ``(a) Amount of Credit.--There shall be allowed as a
credit against the tax imposed by this subtitle for the taxable year an
amount equal to 20 percent of the qualified wages paid or incurred
during the calendar year which ends with or within the taxable
year.</DELETED>
<DELETED> ``(b) Only First $20,000 of Wages per Year Taken Into
Account.--With respect to each qualified United States independent film
and television production, the amount of qualified wages paid or
incurred to each qualified United States independent film and
television production employee which may be taken into account for a
calendar year shall not exceed $20,000.</DELETED>
<DELETED> ``(c) Qualified Wages.--For purposes of this section--
</DELETED>
<DELETED> ``(1) In general.--The term `qualified wages'
means any wages paid or incurred by an employer for services
performed by an employee while such employee is a qualified
United States independent film and television production
employee.</DELETED>
<DELETED> ``(2) Qualified united states independent film and
television production employee.--</DELETED>
<DELETED> ``(A) In general.--The term `qualified
United States independent film and television
production employee' means, with respect to any period,
any employee of an employer if substantially all of the
services performed during such period by such employee
for such employer are performed in an activity related
to any qualified United States independent film and
television production in a trade or business of the
employer.</DELETED>
<DELETED> ``(B) Certain individuals not eligible.--
Such term shall not include--</DELETED>
<DELETED> ``(i) any individual described in
subparagraph (A), (B), or (C) of section
51(i)(1), and</DELETED>
<DELETED> ``(ii) any 5-percent owner (as
defined in section 416(i)(1)(B).</DELETED>
<DELETED> ``(3) Coordination with other wage credits.--No
credit shall be allowed under any other provision of this
chapter for wages paid to any employee during any calendar year
if the employer is allowed a credit under this section for any
of such wages.</DELETED>
<DELETED> ``(4) Wages.--The term `wages' has the same
meaning as when used in section 51.</DELETED>
<DELETED> ``(d) Qualified United States Independent Film and
Television Production.--For purposes of this section--</DELETED>
<DELETED> ``(1) In general.--The term `qualified United
States independent film and television production' means any
production of any motion picture (whether released theatrically
or directly to video cassette or any other format), a mini
series, or a pilot production for a dramatic series if--</DELETED>
<DELETED> ``(A) the production is produced in whole
or in substantial part within the United States
(determined on the basis of proportion of the qualified
United States independent film and television
production employees with respect to such production to
total employee performing services related to such
production),</DELETED>
<DELETED> ``(B) the production is created primarily
for use as public entertainment or for educational
purposes, and</DELETED>
<DELETED> ``(C) the total production cost of the
production is less than $10,000,000.</DELETED>
<DELETED> ``(2) Public entertainment.--The term `public
entertainment' includes a motion picture film, video tape, or
television program intended for initial broadcast via the
public broadcast spectrum or delivered via cable distribution,
or productions that are submitted to a national organization
that rates films for violent or adult content. Such term does
not include any film or tape the market for which is primarily
topical, is otherwise essentially transitory in nature, or is
produced for private noncommercial use.</DELETED>
<DELETED> ``(3) Total production cost.--The term `total
production cost' includes costs incurred in the delivery of the
final master copy but does not include development,
acquisition, and marketing costs of the qualified United States
independent film and television production.</DELETED>
<DELETED> ``(e) Controlled Groups.--For purposes of this section--
</DELETED>
<DELETED> ``(1) all employers treated as a single employer
under subsection (a) or (b) of section 52 shall be treated as a
single employer for purposes of this subpart, and</DELETED>
<DELETED> ``(2) the credit (if any) determined under this
section with respect to each such employer shall be its
proportionate share of the wages giving rise to such
credit.</DELETED>
<DELETED> ``(f) Certain Other Rules Made Applicable.--Rules similar
to the rules of section 51(k) and subsections (c) and (d) of section 52
shall apply for purposes of this section.''.</DELETED>
<DELETED> (b) Denial of Double Benefit.--Subsection (a) of section
280C is amended by inserting ``35,'' before ``45A(a),''.</DELETED>
<DELETED> (c) Conforming Amendments.--</DELETED>
<DELETED> (1) Paragraph (2) of section 1324(b) of title 31,
United States Code, is amended by inserting before the period
``, or from section 35 of such Code''.</DELETED>
<DELETED> (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:</DELETED>
<DELETED>``Sec. 35. United States
independent film and television
production wage credit.
<DELETED>``Sec. 36. Overpayments of
tax.''.
<DELETED> (d) Effective Date.--The amendments made by this section
shall apply to wages paid or incurred after the date of the enactment
of this Act in taxable years ending after such date.</DELETED>
TITLE II--SMALL BUSINESS PROVISIONS
SEC. 201. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) is amended to read
as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to 100 percent of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer and the taxpayer's spouse and dependents.''.
(b) Clarification of Limitations on Other Coverage.--The first
sentence of section 162(l)(2)(B) is amended to read as follows:
``Paragraph (1) shall not apply to any taxpayer for any calendar month
for which the taxpayer participates in any subsidized health plan
maintained by any employer (other than an employer described in section
401(c)(4)) of the taxpayer or the spouse of the taxpayer.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 202. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.
(a) In General.--Paragraph (1) of section 179(b) (relating to
dollar limitation) is amended to read as follows:
``(1) Dollar limitation.--The aggregate cost which may be
taken into account under subsection (a) for any taxable year
shall not exceed $30,000.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
SEC. 203. INCREASED DEDUCTION FOR MEAL EXPENSES.
(a) In General.--Paragraph (1) of section 274(n) (relating to only
50 percent of meal and entertainment expenses allowed as deduction) is
amended by striking ``50 percent'' in the text and inserting ``the
allowable percentage''.
(b) Allowable Percentages.--Subsection (n) of section 274 is
amended by redesignating paragraphs (2) and (3) as paragraphs (3) and
(4), respectively, and by inserting after paragraph (1) the following
new paragraph:
``(2) Allowable percentage.--For purposes of paragraph (1),
the allowable percentage is--
``(A) in the case of amounts for items described in
paragraph (1)(B), 50 percent, and
``(B) in the case of expenses for food or
beverages, 60 percent (55 percent for taxable years
beginning during 2001).''
(c) Conforming Amendment.--The heading for subsection (n) of
section 274 is amended by striking ``50 Percent'' and inserting
``Limited Percentages''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 204. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR
INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF
SERVICE.
(a) In General.--Paragraph (4) of section 274(n) (relating to
limited percentages of meal and entertainment expenses allowed as
deduction), as redesignated by section 203, is amended to read as
follows:
``(4) Special rule for individuals subject to federal hours
of service.--In the case of any expenses for food or beverages
consumed while away from home (within the meaning of section
162(a)(2)) by an individual during, or incident to, the period
of duty subject to the hours of service limitations of the
Department of Transportation, paragraph (2)(B) shall be applied
by substituting `80 percent' for the percentage otherwise
applicable under paragraph (2)(B).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2000.
SEC. 205. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.
Any option to accelerate the receipt of any payment under a
production flexibility contract which is payable under the Federal
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7200 et seq.),
as in effect on the date of the enactment of this Act, shall be
disregarded in determining the taxable year for which such payment is
properly includible in gross income for purposes of the Internal
Revenue Code of 1986.
SEC. 206. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO INCREASE
ALTERNATIVE MINIMUM TAX LIABILITY.
(a) In General.--Section 55(c) (defining regular tax) is amended by
redesignating paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following:
``(2) Coordination with income averaging for farmers and
fishermen.--Solely for purposes of this section, section 1301
(relating to averaging of farm and fishing income) shall not
apply in computing the regular tax.''.
(b) Allowing Income Averaging for Fishermen.--
(1) In general.--Section 1301(a) is amended by striking
``farming business'' and inserting ``farming business or
fishing business,''.
(2) Definition of elected farm income.--
(A) In general.--Clause (i) of section
1301(b)(1)(A) is amended by inserting ``or fishing
business'' before the semicolon.
(B) Conforming amendment.--Subparagraph (B) of
section 1301(b)(1) is amended by inserting ``or fishing
business'' after ``farming business'' both places it
occurs.
(3) Definition of fishing business.--Section 1301(b) is
amended by adding at the end the following new paragraph:
``(4) Fishing business.--The term `fishing business' means
the conduct of commercial fishing as defined in section 3 of
the Magnuson-Stevens Fishery Conservation and Management Act
(16 U.S.C. 1802).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 207. REPEAL OF OCCUPATIONAL TAXES RELATING TO DISTILLED SPIRITS,
WINE, AND BEER.
(a) Repeal of Occupational Taxes.--
(1) In general.--The following provisions of part II of
subchapter A of chapter 51 of the Internal Revenue Code of 1986
(relating to occupational taxes) are hereby repealed:
(A) Subpart A (relating to proprietors of distilled
spirits plants, bonded wine cellars, etc.).
(B) Subpart B (relating to brewer).
(C) Subpart D (relating to wholesale dealers)
(other than sections 5114 and 5116).
(D) Subpart E (relating to retail dealers) (other
than section 5124).
(E) Subpart G (relating to general provisions)
(other than sections 5142, 5143, 5145, and 5146).
(2) Nonbeverage domestic drawback.--Section 5131 is amended
by striking ``, on payment of a special tax per annum,''.
(3) Industrial use of distilled spirits.--Section 5276 is
hereby repealed.
(b) Conforming Amendments.--
(1)(A) The heading for part II of subchapter A of chapter
51 and the table of subparts for such part are amended to read
as follows:
``PART II--MISCELLANEOUS PROVISIONS
``Subpart A. Manufacturers of stills.
``Subpart B. Nonbeverage domestic
drawback claimants.
``Subpart C. Recordkeeping by dealers.
``Subpart D. Other provisions.''
(B) The table of parts for such subchapter A is amended by
striking the item relating to part II and inserting the
following new item:
``Part II. Miscellaneous provisions.''
(2) Subpart C of part II of such subchapter (relating to
manufacturers of stills) is redesignated as subpart A.
(3)(A) Subpart F of such part II (relating to nonbeverage
domestic drawback claimants) is redesignated as subpart B and
sections 5131 through 5134 are redesignated as sections 5111
through 5114, respectively.
(B) The table of sections for such subpart B, as so
redesignated, is amended--
(i) by redesignating the items relating to sections
5131 through 5134 as relating to sections 5111 through
5114, respectively, and
(ii) by striking ``and rate of tax'' in the item
relating to section 5111, as so redesignated.
(C) Section 5111, as redesignated by subparagraph (A), is
amended--
(i) by striking ``and rate of tax'' in the section
heading,
(ii) by striking ``(a) Eligibility for Drawback.--
'', and
(iii) by striking subsection (b).
(4) Part II of subchapter A of chapter 51 is amended by
adding after subpart B, as redesignated by paragraph (3), the
following new subpart:
``Subpart C--Recordkeeping by Dealers
``Sec. 5121. Recordkeeping by wholesale
dealers.
``Sec. 5122. Recordkeeping by retail
dealers.
``Sec. 5123. Preservation and inspection
of records, and entry of
premises for inspection.''
(5)(A) Section 5114 (relating to records) is moved to
subpart C of such part II and inserted after the table of
sections for such subpart.
(B) Section 5114 is amended--
(i) by striking the section heading and inserting
the following new heading:
``SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.'',
and
(ii) by redesignating subsection (c) as subsection
(d) and by inserting after subsection (b) the following
new subsection:
``(c) Wholesale Dealers.--For purposes of this part--
``(1) Wholesale dealer in liquors.--The term `wholesale
dealer in liquors' means any dealer (other than a wholesale
dealer in beer) who sells, or offers for sale, distilled
spirits, wines, or beer, to another dealer.
``(2) Wholesale dealer in beer.--The term `wholesale dealer
in beer' means any dealer who sells, or offers for sale, beer,
but not distilled spirits or wines, to another dealer.
``(3) Dealer.--The term `dealer' means any person who
sells, or offers for sale, any distilled spirits, wines, or
beer.
``(4) Presumption in case of sale of 20 wine gallons or
more.--The sale, or offer for sale, of distilled spirits,
wines, or beer, in quantities of 20 wine gallons or more to the
same person at the same time, shall be presumptive evidence
that the person making such sale, or offer for sale, is engaged
in or carrying on the business of a wholesale dealer in liquors
or a wholesale dealer in beer, as the case may be. Such
presumption may be overcome by evidence satisfactorily showing
that such sale, or offer for sale, was made to a person other
than a dealer.''
(C) Paragraph (3) of section 5121(d), as so redesignated,
is amended by striking ``section 5146'' and inserting ``section
5123''.
(6)(A) Section 5124 (relating to records) is moved to
subpart C of part II of subchapter A of chapter 51 and inserted
after section 5121.
(B) Section 5124 is amended--
(i) by striking the section heading and inserting
the following new heading:
``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',
(ii) by striking ``section 5146'' in subsection (c)
and inserting ``section 5123'', and
(iii) by redesignating subsection (c) as subsection
(d) and inserting after subsection (b) the following
new subsection:
``(c) Retail Dealers.--For purposes of this section--
``(1) Retail dealer in liquors.--The term `retail dealer in
liquors' means any dealer (other than a retail dealer in beer)
who sells, or offers for sale, distilled spirits, wines, or
beer, to any person other than a dealer.
``(2) Retail dealer in beer.--The term `retail dealer in
beer' means any dealer who sells, or offers for sale, beer, but
not distilled spirits or wines, to any person other than a
dealer.
``(3) Dealer.--The term `dealer' has the meaning given such
term by section 5121(c)(3).''
(7) Section 5146 is moved to subpart C of part II of
subchapter A of chapter 51, inserted after section 5122, and
redesignated as section 5123.
(8) Part II of subchapter A of chapter 51 is amended by
inserting after subpart C the following new subpart:
``Subpart D. Other Provisions
``Sec. 5131. Packaging distilled spirits
for industrial uses.
``Sec. 5132. Prohibited purchases by
dealers.''
(9) Section 5116 is moved to subpart D of part II of
subchapter A of chapter 51, inserted after the table of
sections, redesignated as section 5131, and amended by
inserting ``(as defined in section 5121(c))'' after ``dealer''
in subsection (a).
(10) Subpart D of part II of subchapter A of chapter 51 is
amended by adding at the end thereof the following new section:
``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.
``(a) In General.--Except as provided in regulations prescribed by
the Secretary, it shall be unlawful for a dealer to purchase distilled
spirits from any person other than a wholesale dealer in liquors who is
required to keep the records prescribed by section 5121.
``(b) Penalty and Forfeiture.--
``For penalty and forfeiture provisions
applicable to violations of subsection (a), see sections 5687 and
7302.''
(11) Subsection (b) of section 5002 is amended--
(A) by striking ``section 5112(a)'' and inserting
``section 5121(c)(3)'',
(B) by striking ``section 5112'' and inserting
``section 5121(c)'',
(C) by striking ``section 5122'' and inserting
``section 5122(c)''.
(12) Subparagraph (A) of section 5010(c)(2) is amended by
striking ``section 5134'' and inserting ``section 5114''.
(13) Subsection (d) of section 5052 is amended to read as
follows:
``(d) Brewer.--For purposes of this chapter, the term `brewer'
means any person who brews beer or produces beer for sale. Such term
shall not include any person who produces only beer exempt from tax
under section 5053(e).''
(14) The text of section 5182 is amended to read as
follows:
``For provisions requiring
recordkeeping by wholesale liquor dealers, see section 5112, and by
retail liquor dealers, see section 5122.''
(15) Subsection (b) of section 5402 is amended by striking
``section 5092'' and inserting ``section 5052(d)''.
(16) Section 5671 is amended by striking ``or 5091''.
(17)(A) Part V of subchapter J of chapter 51 is hereby
repealed.
(B) The table of parts for such subchapter J is amended by
striking the item relating to part V.
(18)(A) Sections 5142, 5143, and 5145 are moved to
subchapter D of chapter 52, inserted after section 5731,
redesignated as sections 5732, 5733, and 5734, respectively,
and amended--
(i) by striking ``this part'' each place it appears
and inserting ``this subchapter'', and
(ii) by striking ``this subpart'' in section
5732(c)(2) (as so redesignated) and inserting ``this
subchapter''.
(B) Section 5732, as redesignated by subparagraph (A), is
amended by striking ``(except the tax imposed by section
5131)'' each place it appears.
(C) Subsection (c) of section 5733, as redesignated by
subparagraph (A), is amended by striking paragraph (2) and by
redesignating paragraph (3) as paragraph (2).
(D) The table of sections for subchapter D of chapter 52 is
amended by adding at the end thereof the following:
``Sec. 5732. Payment of tax.
``Sec. 5733. Provisions relating to
liability for occupational
taxes.
``Sec. 5734. Application of State laws.''
(E) Section 5731 is amended by striking subsection (c) and
by redesignating subsection (d) as subsection (c).
(19) Subsection (c) of section 6071 is amended by striking
``section 5142'' and inserting ``section 5732''.
(20) Paragraph (1) of section 7652(g) is amended--
(A) by striking ``subpart F'' and inserting
``subpart B'', and
(B) by striking ``section 5131(a)'' and inserting
``section 5111(a)''.
(21) The table of sections for subchapter D of chapter 51
is amended by striking the item relating to section 5276.
(c) Effective Date.--The amendments made by this section shall take
effect on July 1, 2001, but shall not apply to taxes imposed for
periods before such date.
TITLE III--PENSION PROVISIONS
Subtitle A--Expanding Coverage
SEC. 301. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.
(a) Defined Benefit Plans.--
(1) Dollar limit.--
(A) Subparagraph (A) of section 415(b)(1) (relating
to limitation for defined benefit plans) is amended by
striking ``$90,000'' and inserting ``$160,000''.
(B) Subparagraphs (C) and (D) of section 415(b)(2)
are each amended by striking ``$90,000'' each place it
appears in the headings and the text and inserting
``$160,000''.
(C) Paragraph (7) of section 415(b) (relating to
benefits under certain collectively bargained plans) is
amended by striking ``the greater of $68,212 or one-
half the amount otherwise applicable for such year
under paragraph (1)(A) for `$90,000''' and inserting
``one-half the amount otherwise applicable for such
year under paragraph (1)(A) for `$160,000'''.
(2) Limit reduced when benefit begins before age 62.--
Subparagraph (C) of section 415(b)(2) is amended by striking
``the social security retirement age'' each place it appears in
the heading and text and inserting ``age 62''.
(3) Limit increased when benefit begins after age 65.--
Subparagraph (D) of section 415(b)(2) is amended by striking
``the social security retirement age'' each place it appears in
the heading and text and inserting ``age 65''.
(4) Cost-of-living adjustments.--Subsection (d) of section
415 (related to cost-of-living adjustments) is amended--
(A) by striking ``$90,000'' in paragraph (1)(A) and
inserting ``$160,000'', and
(B) in paragraph (3)(A)--
(i) by striking ``$90,000'' in the heading
and inserting ``$160,000'', and
(ii) by striking ``October 1, 1986'' and
inserting ``July 1, 2000''.
(5) Conforming amendment.--Section 415(b)(2) is amended by
striking subparagraph (F).
(b) Defined Contribution Plans.--
(1) Dollar limit.--Subparagraph (A) of section 415(c)(1)
(relating to limitation for defined contribution plans) is
amended by striking ``$30,000'' and inserting ``$40,000''.
(2) Cost-of-living adjustments.--Subsection (d) of section
415 (related to cost-of-living adjustments) is amended--
(A) by striking ``$30,000'' in paragraph (1)(C) and
inserting ``$40,000'', and
(B) in paragraph (3)(D)--
(i) by striking ``$30,000'' in the heading
and inserting ``$40,000'', and
(ii) by striking ``October 1, 1993'' and
inserting ``July 1, 2000''.
(c) Qualified Trusts.--
(1) Compensation limit.--Sections 401(a)(17), 404(l),
408(k), and 505(b)(7) are each amended by striking ``$150,000''
each place it appears and inserting ``$200,000''.
(2) Base period and rounding of cost-of-living
adjustment.--Subparagraph (B) of section 401(a)(17) is
amended--
(A) by striking ``October 1, 1993'' and inserting
``July 1, 2000'', and
(B) by striking ``$10,000'' both places it appears
and inserting ``$5,000''.
(d) Elective Deferrals.--
(1) In general.--Paragraph (1) of section 402(g) (relating
to limitation on exclusion for elective deferrals) is amended
to read as follows:
``(1) In general.--
``(A) Limitation.--Notwithstanding subsections
(e)(3) and (h)(1)(B), the elective deferrals of any
individual for any taxable year shall be included in
such individual's gross income to the extent the amount
of such deferrals for the taxable year exceeds the
applicable dollar amount.
``(B) Applicable dollar amount.--For purposes of
subparagraph (A), the applicable dollar amount shall be
the amount determined in accordance with the following
table:
``For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001................................... $11,000
2002................................... $12,000
2003................................... $13,000
2004 or thereafter..................... $14,000.''.
(2) Cost-of-living adjustment.--Paragraph (5) of section
402(g) is amended to read as follows:
``(5) Cost-of-living adjustment.--In the case of taxable
years beginning after December 31, 2004, the Secretary shall
adjust the $14,000 amount under paragraph (1)(B) at the same
time and in the same manner as under section 415(d), except
that the base period shall be the calendar quarter beginning
July 1, 2003, and any increase under this paragraph which is
not a multiple of $500 shall be rounded to the next lowest
multiple of $500.''.
(3) Conforming amendments.--
(A) Section 402(g) (relating to limitation on
exclusion for elective deferrals), as amended by
paragraphs (1) and (2), is further amended by striking
paragraph (4) and redesignating paragraphs (5), (6),
(7), (8), and (9) as paragraphs (4), (5), (6), (7), and
(8), respectively.
(B) Paragraph (2) of section 457(c) is amended by
striking ``402(g)(8)(A)(iii)'' and inserting
``402(g)(7)(A)(iii)''.
(C) Clause (iii) of section 501(c)(18)(D) is
amended by striking ``(other than paragraph (4)
thereof)''.
(e) Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations.--
(1) In general.--Section 457 (relating to deferred
compensation plans of State and local governments and tax-
exempt organizations) is amended--
(A) in subsections (b)(2)(A) and (c)(1) by striking
``$7,500'' each place it appears and inserting ``the
applicable dollar amount'', and
(B) in subsection (b)(3)(A) by striking ``$15,000''
and inserting ``twice the dollar amount in effect under
subsection (b)(2)(A)''.
(2) Applicable dollar amount; cost-of-living adjustment.--
Paragraph (15) of section 457(e) is amended to read as follows:
``(15) Applicable dollar amount.--
``(A) In general.--The applicable dollar amount
shall be the amount determined in accordance with the
following table:
``For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001................................... $11,000
2002................................... $12,000
2003................................... $13,000
2004 or thereafter..................... $14,000.
``(B) Cost-of-living adjustments.--In the case of
taxable years beginning after December 31, 2004, the
Secretary shall adjust the $14,000 amount specified in
the table in subparagraph (A) at the same time and in
the same manner as under section 415(d), except that
the base period shall be the calendar quarter beginning
July 1, 2003, and any increase under this paragraph
which is not a multiple of $500 shall be rounded to the
next lowest multiple of $500.''.
(f) Simple Retirement Accounts.--
(1) Limitation.--Clause (ii) of section 408(p)(2)(A)
(relating to general rule for qualified salary reduction
arrangement) is amended by striking ``$6,000'' and inserting
``the applicable dollar amount''.
(2) Applicable dollar amount.--Subparagraph (E) of
408(p)(2) is amended to read as follows:
``(E) Applicable dollar amount; cost-of-living
adjustment.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the applicable dollar
amount shall be the amount determined in
accordance with the following table:
``For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001......................... $7,000
2002......................... $8,000
2003......................... $9,000
2004 or thereafter........... $10,000.
``(ii) Cost-of-living adjustment.--In the
case of a year beginning after December 31,
2004, the Secretary shall adjust the $10,000
amount under clause (i) at the same time and in
the same manner as under section 415(d), except
that the base period taken into account shall
be the calendar quarter beginning July 1, 2003,
and any increase under this subparagraph which
is not a multiple of $500 shall be rounded to
the next lower multiple of $500.''.
(3) Conforming amendments.--
(A) Clause (I) of section 401(k)(11)(B)(i) is
amended by striking ``$6,000'' and inserting ``the
amount in effect under section 408(p)(2)(A)(ii)''.
(B) Section 401(k)(11) is amended by striking
subparagraph (E).
(g) Rounding Rule Relating to Defined Benefit Plans and Defined
Contribution Plans.--Paragraph (4) of section 415(d) is amended to read
as follows:
``(4) Rounding.--
``(A) $160,000 amount.--Any increase under
subparagraph (A) of paragraph (1) which is not a
multiple of $5,000 shall be rounded to the next lowest
multiple of $5,000.
``(B) $40,000 amount.--Any increase under
subparagraph (C) of paragraph (1) which is not a
multiple of $1,000 shall be rounded to the next lowest
multiple of $1,000.''.
(h) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 302. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND SOLE
PROPRIETORS.
(a) Amendment to 1986 Code.--Subparagraph (B) of section 4975(f)(6)
(relating to exemptions not to apply to certain transactions) is
amended by adding at the end the following new clause:
``(iii) Loan exception.--For purposes of
subparagraph (A)(i), the term `owner-employee'
shall only include a person described in
subclause (II) or (III) of clause (i).''.
(b) Amendment to ERISA.--Section 408(d)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is
amended by adding at the end the following new subparagraph:
``(C) For purposes of paragraph (1)(A), the term `owner-employee'
shall only include a person described in clause (ii) or (iii) of
subparagraph (A).''.
(c) Effective Date.--The amendments made by this section shall
apply to loans made after December 31, 2000.
SEC. 303. MODIFICATION OF TOP-HEAVY RULES.
(a) Simplification of Definition of Key Employee.--
(1) In general.--Section 416(i)(1)(A) (defining key
employee) is amended--
(A) by striking ``or any of the 4 preceding plan
years'' in the matter preceding clause (i),
(B) by striking clause (i) and inserting the
following:
``(i) an officer of the employer having an
annual compensation greater than $150,000,'',
(C) by striking clause (ii) and redesignating
clauses (iii) and (iv) as clauses (ii) and (iii),
respectively, and
(D) by striking the second sentence in the matter
following clause (iii), as redesignated by subparagraph
(C).
(2) Conforming amendment.--Section 416(i)(1)(B)(iii) is
amended by striking ``and subparagraph (A)(ii)''.
(b) Matching Contributions Taken Into Account for Minimum
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined
contribution plans) is amended by adding at the end the following:
``Employer matching contributions (as defined in section 401(m)(4)(A))
shall be taken into account for purposes of this subparagraph.''.
(c) Distributions During Last Year Before Determination Date Taken
Into Account.--
(1) In general.--Paragraph (3) of section 416(g) is amended
to read as follows:
``(3) Distributions during last year before determination
date taken into account.--
``(A) In general.--For purposes of determining--
``(i) the present value of the cumulative
accrued benefit for any employee, or
``(ii) the amount of the account of any
employee,
such present value or amount shall be increased by the
aggregate distributions made with respect to such
employee under the plan during the 1-year period ending
on the determination date. The preceding sentence shall
also apply to distributions under a terminated plan
which if it had not been terminated would have been
required to be included in an aggregation group.
``(B) 5-year period in case of in-service
distribution.--In the case of any distribution made for
a reason other than separation from service, death, or
disability, subparagraph (A) shall be applied by
substituting `5-year period' for `1-year period'.''.
(2) Benefits not taken into account.--Subparagraph (E) of
section 416(g)(4) is amended--
(A) by striking ``last 5 years'' in the heading and
inserting ``last year before determination date'', and
(B) by striking ``5-year period'' and inserting
``1-year period''.
(d) Definition of Top-Heavy Plans.--Paragraph (4) of section 416(g)
(relating to other special rules for top-heavy plans) is amended by
adding at the end the following new subparagraph:
``(H) Cash or deferred arrangements using
alternative methods of meeting nondiscrimination
requirements.--The term `top-heavy plan' shall not
include a plan which consists solely of--
``(i) a cash or deferred arrangement which
meets the requirements of section 401(k)(12),
and
``(ii) matching contributions with respect
to which the requirements of section 401(m)(11)
are met.
If, but for this subparagraph, a plan would be treated
as a top-heavy plan because it is a member of an
aggregation group which is a top-heavy group,
contributions under the plan may be taken into account
in determining whether any other plan in the group
meets the requirements of subsection (c)(2).''.
(e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit
plans) is amended--
(A) by striking ``clause (ii)'' in clause (i) and
inserting ``clause (ii) or (iii)'', and
(B) by adding at the end the following:
``(iii) Exception for frozen plan.--For
purposes of determining an employee's years of
service with the employer, any service with the
employer shall be disregarded to the extent
that such service occurs during a plan year
when the plan benefits (within the meaning of
section 410(b)) no employee or former
employee.''.
(f) Elimination of Family Attribution.--Section 416(i)(1)(B)
(defining 5-percent owner) is amended by adding at the end the
following new clause:
``(iv) Family attribution disregarded.--
Solely for purposes of applying this paragraph
(and not for purposes of any provision of this
title which incorporates by reference the
definition of a key employee or 5-percent owner
under this paragraph), section 318 shall be
applied without regard to subsection (a)(1)
thereof in determining whether any person is a
5-percent owner.''.
(g) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 304. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF
DEDUCTION LIMITS.
(a) In General.--Section 404 (relating to deduction for
contributions of an employer to an employees' trust or annuity plan and
compensation under a deferred payment plan) is amended by adding at the
end the following new subsection:
``(n) Elective Deferrals Not Taken Into Account for Purposes of
Deduction Limits.--Elective deferrals (as defined in section 402(g)(3))
shall not be subject to any limitation contained in paragraph (3), (7),
or (9) of subsection (a), and such elective deferrals shall not be
taken into account in applying any such limitation to any other
contributions.''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2000.
SEC. 305. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION
PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT
ORGANIZATIONS.
(a) In General.--Subsection (c) of section 457 (relating to
deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 211, is amended to read as
follows:
``(c) Limitation.--The maximum amount of the compensation of any
one individual which may be deferred under subsection (a) during any
taxable year shall not exceed the amount in effect under subsection
(b)(2)(A) (as modified by any adjustment provided under subsection
(b)(3)).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to years beginning after December 31, 2000.
SEC. 306. ELIMINATION OF USER FEE FOR REQUESTS TO IRS REGARDING PENSION
PLANS.
(a) Elimination of Certain User Fees.--The Secretary of the
Treasury or the Secretary's delegate shall not require payment of user
fees under the program established under section 7527 of the Internal
Revenue Code of 1986 for requests to the Internal Revenue Service for
determination letters with respect to the qualified status of a pension
benefit plan maintained solely by one or more eligible employers or any
trust which is part of the plan. The preceding sentence shall not apply
to any request--
(1) made after the 5th plan year the pension benefit plan
is in existence, or
(2) made by the sponsor of any prototype or similar plan
which the sponsor intends to market to participating employers.
(b) Pension Benefit Plan.--For purposes of this section, the term
``pension benefit plan'' means a pension, profit-sharing, stock bonus,
annuity, or employee stock ownership plan.
(c) Eligible Employer.--For purposes of this section, the term
``eligible employer'' has the same meaning given such term in section
408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The
determination of whether an employer is an eligible employer under this
section shall be made as of the date of the request described in
subsection (a).
(d) Effective Date.--The provisions of this section shall apply
with respect to requests made after December 31, 2000.
SEC. 307. DEDUCTION LIMITS.
(a) In General.--Section 404(a) (relating to general rule) is
amended by adding at the end the following:
``(12) Definition of compensation.--For purposes of
paragraphs (3), (7), (8), and (9), the term `compensation'
shall include amounts treated as participant's compensation
under subparagraph (C) or (D) of section 415(c)(3).''.
(b) Conforming Amendment.--Subparagraph (B) of section 404(a)(3) is
amended by striking the last sentence thereof.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 308. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX
CONTRIBUTIONS.
(a) In General.--Subpart A of part I of subchapter D of chapter 1
(relating to deferred compensation, etc.) is amended by inserting after
section 402 the following new section:
``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS
CONTRIBUTIONS.
``(a) General Rule.--If an applicable retirement plan includes a
qualified plus contribution program--
``(1) any designated plus contribution made by an employee
pursuant to the program shall be treated as an elective
deferral for purposes of this chapter, except that such
contribution shall not be excludable from gross income, and
``(2) such plan (and any arrangement which is part of such
plan) shall not be treated as failing to meet any requirement
of this chapter solely by reason of including such program.
``(b) Qualified Plus Contribution Program.--For purposes of this
section--
``(1) In general.--The term `qualified plus contribution
program' means a program under which an employee may elect to
make designated plus contributions in lieu of all or a portion
of elective deferrals the employee is otherwise eligible to
make under the applicable retirement plan.
``(2) Separate accounting required.--A program shall not be
treated as a qualified plus contribution program unless the
applicable retirement plan--
``(A) establishes separate accounts (`designated
plus accounts') for the designated plus contributions
of each employee and any earnings properly allocable to
the contributions, and
``(B) maintains separate recordkeeping with respect
to each account.
``(c) Definitions and Rules Relating to Designated Plus
Contributions.--For purposes of this section--
``(1) Designated plus contribution.--The term `designated
plus contribution' means any elective deferral which--
``(A) is excludable from gross income of an
employee without regard to this section, and
``(B) the employee designates (at such time and in
such manner as the Secretary may prescribe) as not
being so excludable.
``(2) Designation limits.--The amount of elective deferrals
which an employee may designate under paragraph (1) shall not
exceed the excess (if any) of--
``(A) the maximum amount of elective deferrals
excludable from gross income of the employee for the
taxable year (without regard to this section), over
``(B) the aggregate amount of elective deferrals of
the employee for the taxable year which the employee
does not designate under paragraph (1).
``(3) Rollover contributions.--
``(A) In general.--A rollover contribution of any
payment or distribution from a designated plus account
which is otherwise allowable under this chapter may be
made only if the contribution is to--
``(i) another designated plus account of
the individual from whose account the payment
or distribution was made, or
``(ii) a Roth IRA of such individual.
``(B) Coordination with limit.--Any rollover
contribution to a designated plus account under
subparagraph (A) shall not be taken into account for
purposes of paragraph (1).
``(d) Distribution Rules.--For purposes of this title--
``(1) Exclusion.--Any qualified distribution from a
designated plus account shall not be includible in gross
income.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified
distribution' has the meaning given such term by
section 408A(d)(2)(A) (without regard to clause (iv)
thereof).
``(B) Distributions within nonexclusion period.--A
payment or distribution from a designated plus account
shall not be treated as a qualified distribution if
such payment or distribution is made within the 5-
taxable-year period beginning with the earlier of--
``(i) the first taxable year for which the
individual made a designated plus contribution
to any designated plus account established for
such individual under the same applicable
retirement plan, or
``(ii) if a rollover contribution was made
to such designated plus account from a
designated plus account previously established
for such individual under another applicable
retirement plan, the first taxable year for
which the individual made a designated plus
contribution to such previously established
account.
``(C) Distributions of excess deferrals and
earnings.--The term `qualified distribution' shall not
include any distribution of any excess deferral under
section 402(g)(2) and any income on the excess
deferral.
``(3) Aggregation rules.--Section 72 shall be applied
separately with respect to distributions and payments from a
designated plus account and other distributions and payments
from the plan.
``(e) Other Definitions.--For purposes of this section--
``(1) Applicable retirement plan.--The term `applicable
retirement plan' means--
``(A) an employees' trust described in section
401(a) which is exempt from tax under section 501(a),
and
``(B) a plan under which amounts are contributed by
an individual's employer for an annuity contract
described in section 403(b).
``(2) Elective deferral.--The term `elective deferral'
means any elective deferral described in subparagraph (A) or
(C) of section 402(g)(3).''.
(b) Excess Deferrals.--Section 402(g) (relating to limitation on
exclusion for elective deferrals) is amended--
(1) by adding at the end of paragraph (1) the following new
sentence: ``The preceding sentence shall not apply to so much
of such excess as does not exceed the designated plus
contributions of the individual for the taxable year.'', and
(2) by inserting ``(or would be included but for the last
sentence thereof)'' after ``paragraph (1)'' in paragraph
(2)(A).
(c) Rollovers.--Subparagraph (B) of section 402(c)(8) is amended by
adding at the end the following:
``If any portion of an eligible rollover distribution
is attributable to payments or distributions from a
designated plus account (as defined in section 402A),
an eligible retirement plan with respect to such
portion shall include only another designated plus
account and a Roth IRA.''.
(d) Reporting Requirements.--
(1) W-2 information.--Section 6051(a)(8) is amended by
inserting ``, including the amount of designated plus
contributions (as defined in section 402A)'' before the comma
at the end.
(2) Information.--Section 6047 is amended by redesignating
subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
``(f) Designated Plus Contributions.--The Secretary shall require
the plan administrator of each applicable retirement plan (as defined
in section 402A) to make such returns and reports regarding designated
plus contributions (as so defined) to the Secretary, participants and
beneficiaries of the plan, and such other persons as the Secretary may
prescribe.''.
(e) Conforming Amendments.--
(1) Section 408A(e) is amended by adding after the first
sentence the following new sentence: ``Such term includes a
rollover contribution described in section 402A(c)(3)(A).''.
(2) The table of sections for subpart A of part I of
subchapter D of chapter 1 is amended by inserting after the
item relating to section 402 the following new item:
``Sec. 402A. Optional treatment of
elective deferrals as plus
contributions.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 309. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.
(a) In General.--Subparagraph (A) of section 4006(a)(3) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(A)) is amended--
(1) in clause (i), by inserting ``other than a new single-
employer plan (as defined in subparagraph (F)) maintained by a
small employer (as so defined),'' after ``single-employer
plan,'',
(2) in clause (iii), by striking the period at the end and
inserting ``, and'', and
(3) by adding at the end the following new clause:
``(iv) in the case of a new single-employer plan (as
defined in subparagraph (F)) maintained by a small employer (as
so defined) for the plan year, $5 for each individual who is a
participant in such plan during the plan year.''.
(b) Definition of New Single-Employer Plan.--Section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)) is amended by adding at the end the following new
subparagraph:
``(F)(i) For purposes of this paragraph, a single-employer plan
maintained by a contributing sponsor shall be treated as a new single-
employer plan for each of its first 5 plan years if, during the 36-
month period ending on the date of the adoption of such plan, the
sponsor or any member of such sponsor's controlled group (or any
predecessor of either) had not established or maintained a plan to
which this title applies with respect to which benefits were accrued
for substantially the same employees as are in the new single-employer
plan.
``(ii)(I) For purposes of this paragraph, the term `small employer'
means an employer which on the first day of any plan year has, in
aggregation with all members of the controlled group of such employer,
100 or fewer employees.
``(II) In the case of a plan maintained by two or more contributing
sponsors that are not part of the same controlled group, the employees
of all contributing sponsors and controlled groups of such sponsors
shall be aggregated for purposes of determining whether any
contributing sponsor is a small employer.''.
(c) Effective Date.--The amendments made by this section shall
apply to plans established after December 31, 2000.
SEC. 310. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND SMALL PLANS.
(a) New Plans.--Subparagraph (E) of section 4006(a)(3) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by adding at the end the following new
clause:
``(v) In the case of a new defined benefit plan, the amount
determined under clause (ii) for any plan year shall be an amount equal
to the product of the amount determined under clause (ii) and the
applicable percentage. For purposes of this clause, the term
`applicable percentage' means--
``(I) 0 percent, for the first plan year.
``(II) 20 percent, for the second plan year.
``(III) 40 percent, for the third plan year.
``(IV) 60 percent, for the fourth plan year.
``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as defined in
section 3(35)) maintained by a contributing sponsor shall be treated as
a new defined benefit plan for its first 5 plan years if, during the
36-month period ending on the date of the adoption of the plan, the
sponsor and each member of any controlled group including the sponsor
(or any predecessor of either) did not establish or maintain a plan to
which this title applies with respect to which benefits were accrued
for substantially the same employees as are in the new plan.''.
(b) Small Plans.--Paragraph (3) of section 4006(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is amended--
(1) by striking ``The'' in subparagraph (E)(i) and
inserting ``Except as provided in subparagraph (G), the'', and
(2) by inserting after subparagraph (F) the following new
subparagraph:
``(G)(i) In the case of an employer who has 25 or fewer employees
on the first day of the plan year, the additional premium determined
under subparagraph (E) for each participant shall not exceed $5
multiplied by the number of participants in the plan as of the close of
the preceding plan year.
``(ii) For purposes of clause (i), whether an employer has 25 or
fewer employees on the first day of the plan year is determined taking
into consideration all of the employees of all members of the
contributing sponsor's controlled group. In the case of a plan
maintained by two or more contributing sponsors, the employees of all
contributing sponsors and their controlled groups shall be aggregated
for purposes of determining whether 25-or-fewer-employees limitation
has been satisfied.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to plans established after December 31, 2000.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2000.
Subtitle B--Enhancing Fairness for Women
SEC. 321. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.
(a) In General.--Section 414 (relating to definitions and special
rules) is amended by adding at the end the following new subsection:
``(v) Catchup Contributions for Individuals Age 50 or Over.--
``(1) In general.--An applicable employer plan shall not be
treated as failing to meet any requirement of this title solely
because the plan permits an eligible participant to make
additional elective deferrals in any plan year.
``(2) Limitation on amount of additional deferrals.--
``(A) In general.--A plan shall not permit
additional elective deferrals under paragraph (1) for
any year in an amount greater than the lesser of--
``(i) the applicable percentage of the
applicable dollar amount for such elective
deferrals for such year, or
``(ii) the excess (if any) of--
``(I) the participant's
compensation for the year, over
``(II) any other elective deferrals
of the participant for such year which
are made without regard to this
subsection.
``(B) Applicable percentage.--For purposes of this
paragraph, the applicable percentage shall be
determined in accordance with the following table:
``For taxable years The applicable
beginning in: percentage is:
2001.......................................... 10 percent
2002.......................................... 20 percent
2003.......................................... 30 percent
2004 and thereafter........................... 40 percent.
``(3) Treatment of contributions.--In the case of any
contribution to a plan under paragraph (1)--
``(A) such contribution shall not, with respect to
the year in which the contribution is made--
``(i) be subject to any otherwise
applicable limitation contained in section
402(g), 402(h), 403(b), 404(a), 404(h), 408,
415, or 457, or
``(ii) be taken into account in applying
such limitations to other contributions or
benefits under such plan or any other such
plan, and
``(B) such plan shall not be treated as failing to
meet the requirements of section 401(a)(4), 401(a)(26),
401(k)(3), 401(k)(11), 401(k)(12), 401(m), 403(b)(12),
408(k), 408(p), 408B, 410(b), or 416 by reason of the
making of (or the right to make) such contribution.
``(4) Eligible participant.--For purposes of this
subsection, the term `eligible participant' means, with respect
to any plan year, a participant in a plan--
``(A) who has attained the age of 50 before the
close of the plan year, and
``(B) with respect to whom no other elective
deferrals may (without regard to this subsection) be
made to the plan for the plan year by reason of the
application of any limitation or other restriction
described in paragraph (3) or contained in the terms of
the plan.
``(5) Other definitions and rules.--For purposes of this
subsection--
``(A) Applicable dollar amount.--The term
`applicable dollar amount' means, with respect to any
year, the amount in effect under section 402(g)(1)(B),
408(p)(2)(E)(i), or 457(e)(15)(A), whichever is
applicable to an applicable employer plan, for such
year.
``(B) Applicable employer plan.--The term
`applicable employer plan' means--
``(i) an employees' trust described in
section 401(a) which is exempt from tax under
section 501(a),
``(ii) a plan under which amounts are
contributed by an individual's employer for an
annuity contract described in section 403(b),
``(iii) an eligible deferred compensation
plan under section 457 of an eligible employer
as defined in section 457(e)(1)(A), and
``(iv) an arrangement meeting the
requirements of section 408 (k) or (p).
``(C) Elective deferral.--The term `elective
deferral' has the meaning given such term by subsection
(u)(2)(C).
``(D) Exception for section 457 plans.--This
subsection shall not apply to an applicable employer
plan described in subparagraph (B)(iii) for any year to
which section 457(b)(3) applies.''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions in taxable years beginning after December 31, 2000.
SEC. 322. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED
CONTRIBUTION PLANS.
(a) Equitable Treatment.--
(1) In general.--Subparagraph (B) of section 415(c)(1)
(relating to limitation for defined contribution plans) is
amended by striking ``25 percent'' and inserting ``100
percent''.
(2) Application to section 403(b).--Section 403(b) is
amended--
(A) by striking ``the exclusion allowance for such
taxable year'' in paragraph (1) and inserting ``the
applicable limit under section 415'',
(B) by striking paragraph (2), and
(C) by inserting ``or any amount received by a
former employee after the 5th taxable year following
the taxable year in which such employee was
terminated'' before the period at the end of the second
sentence of paragraph (3).
(3) Conforming amendments.--
(A) Subsection (f) of section 72 is amended by
striking ``section 403(b)(2)(D)(iii))'' and inserting
``section 403(b)(2)(D)(iii), as in effect before the
enactment of the Wage and Employment Growth Act of
1999)''.
(B) Section 404(a)(10)(B) is amended by striking
``, the exclusion allowance under section 403(b)(2),''.
(C) Section 415(a)(2) is amended by striking ``,
and the amount of the contribution for such portion
shall reduce the exclusion allowance as provided in
section 403(b)(2)''.
(D) Section 415(c)(3) is amended by adding at the
end the following new subparagraph:
``(E) Annuity contracts.--In the case of an annuity
contract described in section 403(b), the term
`participant's compensation' means the participant's
includible compensation determined under section
403(b)(3).''.
(E) Section 415(c) is amended by striking paragraph
(4).
(F) Section 415(c)(7) is amended to read as
follows:
``(7) Certain contributions by church plans not treated as
exceeding limit.--
``(A) In general.--Notwithstanding any other
provision of this subsection, at the election of a
participant who is an employee of a church or a
convention or association of churches, including an
organization described in section 414(e)(3)(B)(ii),
contributions and other additions for an annuity
contract or retirement income account described in
section 403(b) with respect to such participant, when
expressed as an annual addition to such participant's
account, shall be treated as not exceeding the
limitation of paragraph (1) if such annual addition is
not in excess of $10,000.
``(B) $40,000 aggregate limitation.--The total
amount of additions with respect to any participant
which may be taken into account for purposes of this
subparagraph for all years may not exceed $40,000.
``(C) Annual addition.--For purposes of this
paragraph, the term `annual addition' has the meaning
given such term by paragraph (2).''.
(G) Subparagraph (B) of section 402(g)(7) (as
redesignated by section 211) is amended by inserting
before the period at the end the following: ``(as in
effect before the enactment of the Wage and Employment
Growth Act of 1999)''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2000.
(b) Special Rules for Sections 403(b) and 408.--
(1) In general.--Subsection (k) of section 415 is amended
by adding at the end the following new paragraph:
``(4) Special rules for sections 403(b) and 408.--For
purposes of this section, any annuity contract described in
section 403(b) for the benefit of a participant shall be
treated as a defined contribution plan maintained by each
employer with respect to which the participant has the control
required under subsection (b) or (c) of section 414 (as
modified by subsection (h)). For purposes of this section, any
contribution by an employer to a simplified employee pension
plan for an individual for a taxable year shall be treated as
an employer contribution to a defined contribution plan for
such individual for such year.''.
(2) Effective date.--
(A) In general.--The amendment made by paragraph
(1) shall apply to limitation years beginning after
December 31, 1999.
(B) Exclusion allowance.--Effective for limitation
years beginning in 2000, in the case of any annuity
contract described in section 403(b) of the Internal
Revenue Code of 1986, the amount of the contribution
disqualified by reason of section 415(g) of such Code
shall reduce the exclusion allowance as provided in
section 403(b)(2) of such Code.
(3) Modification of 403(b) exclusion allowance to conform
to 415 modification.--The Secretary of the Treasury shall
modify the regulations regarding the exclusion allowance under
section 403(b)(2) of the Internal Revenue Code of 1986 to
render void the requirement that contributions to a defined
benefit pension plan be treated as previously excluded amounts
for purposes of the exclusion allowance. For taxable years
beginning after December 31, 1999, such regulations shall be
applied as if such requirement were void.
(c) Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations.--
(1) In general.--Subparagraph (B) of section 457(b)(2)
(relating to salary limitation on eligible deferred
compensation plans) is amended by striking ``33\1/3\ percent''
and inserting ``100 percent''.
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning after December 31, 2000.
SEC. 323. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CONTRIBUTIONS.
(a) Amendments to 1986 Code.--Section 411(a) (relating to minimum
vesting standards) is amended--
(1) in paragraph (2), by striking ``A plan'' and inserting
``Except as provided in paragraph (12), a plan'', and
(2) by adding at the end the following:
``(12) Faster vesting for matching contributions.--In the
case of matching contributions (as defined in section
401(m)(4)(A)), paragraph (2) shall be applied--
``(A) by substituting `3 years' for `5 years' in
subparagraph (A), and
``(B) by substituting the following table for the
table contained in subparagraph (B):
The nonforfeitable
``Years of service: percentage is:
2............................................. 20
3............................................. 40
4............................................. 60
5............................................. 80
6............................................. 100.''.
(b) Amendments to ERISA.--Section 203(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
(1) in paragraph (2), by striking ``A plan'' and inserting
``Except as provided in paragraph (4), a plan'', and
(2) by adding at the end the following:
``(4) Faster vesting for matching contributions.--In the
case of matching contributions (as defined in section
401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph
(2) shall be applied--
``(A) by substituting `3 years' for `5 years' in
subparagraph (A), and
``(B) by substituting the following table for the
table contained in subparagraph (B):
The nonforfeitable
``Years of service: percentage is:
2............................................. 20
3............................................. 40
4............................................. 60
5............................................. 80
6............................................. 100.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
for plan years beginning after December 31, 2000.
(2) Collective bargaining agreements.--In the case of a
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified by the date of the enactment of this Act,
the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
(A) the later of--
(i) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof on or after such date of the
enactment), or
(ii) January 1, 2001, or
(B) January 1, 2005.
(3) Service required.--With respect to any plan, the
amendments made by this section shall not apply to any employee
before the date that such employee has 1 hour of service under
such plan in any plan year to which the amendments made by this
section apply.
SEC. 324. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.
(a) Simplification and Finalization of Minimum Distribution
Requirements.--
(1) In general.--The Secretary of the Treasury shall--
(A) simplify and finalize the regulations relating
to minimum distribution requirements under sections
401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and
457(d)(2) of the Internal Revenue Code of 1986, and
(B) modify such regulations to--
(i) reflect current life expectancy, and
(ii) revise the required distribution
methods so that, under reasonable assumptions,
the amount of the required minimum distribution
does not decrease over a participant's life
expectancy.
(2) Fresh start.--Notwithstanding subparagraph (D) of
section 401(a)(9) of such Code, during the first year that
regulations are in effect under this subsection, required
distributions for future years may be redetermined to reflect
changes under such regulations. Such redetermination shall
include the opportunity to choose a new designated beneficiary
and to elect a new method of calculating life expectancy.
(3) Effective date for regulations.--Regulations referred
to in paragraph (1) shall be effective for years beginning
after December 31, 2000, and shall apply in such years without
regard to whether an individual had previously begun receiving
minimum distributions.
(b) Repeal of Rule Where Distributions Had Begun Before Death
Occurs.--
(1) In general.--Subparagraph (B) of section 401(a)(9) is
amended by striking clause (i) and redesignating clauses (ii),
(iii), and (iv) as clauses (i), (ii), and (iii), respectively.
(2) Conforming changes.--
(A) Clause (i) of section 401(a)(9)(B) (as so
redesignated) is amended--
(i) by striking ``for other cases'' in the
heading, and
(ii) by striking ``the distribution of the
employee's interest has begun in accordance
with subparagraph (A)(ii)'' and inserting ``his
entire interest has been distributed to him,''.
(B) Clause (ii) of section 401(a)(9)(B) (as so
redesignated) is amended by striking ``clause (ii)''
and inserting ``clause (i)''.
(C) Clause (iii) of section 401(a)(9)(B) (as so
redesignated) is amended--
(i) by striking ``clause (iii)(I)'' and
inserting ``clause (ii)(I)'',
(ii) by striking ``clause (iii)(III)'' in
subclause (I) and inserting ``clause
(ii)(III)'',
(iii) by striking ``the date on which the
employee would have attained the age 70\1/2\,''
in subclause (I) and inserting ``April 1 of the
calendar year following the calendar year in
which the spouse attains 70\1/2\,'', and
(iv) by striking ``the distributions to
such spouse begin,'' in subclause (II) and
inserting ``his entire interest has been
distributed to him,''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2000.
(c) Reduction in Excise Tax.--
(1) In general.--Subsection (a) of section 4974 is amended
by striking ``50 percent'' and inserting ``10 percent''.
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning after December 31, 2000.
SEC. 325. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457
PLAN BENEFITS UPON DIVORCE.
(a) In General.--Section 414(p)(11) (relating to application of
rules to governmental and church plans) is amended--
(1) by inserting ``or an eligible deferred compensation
plan (within the meaning of section 457(b))'' after
``subsection (e))'', and
(2) in the heading, by striking ``governmental and church
plans'' and inserting ``certain other plans''.
(b) Waiver of Certain Distribution Requirements.--Paragraph (10) of
section 414(p) is amended by striking ``and section 409(d)'' and
inserting ``section 409(d), and section 457(d)''.
(c) Tax Treatment of Payments From a Section 457 Plan.--Subsection
(p) of section 414 is amended by redesignating paragraph (12) as
paragraph (13) and inserting after paragraph (11) the following new
paragraph:
``(12) Tax treatment of payments from a section 457 plan.--
If a distribution or payment from an eligible deferred
compensation plan described in section 457(b) is made pursuant
to a qualified domestic relations order, rules similar to the
rules of section 402(e)(1)(A) shall apply to such distribution
or payment.''.
(d) Effective Date.--The amendments made by this section shall
apply to transfers, distributions, and payments made after December 31,
2000.
SEC. 326. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP WITHDRAWALS
FROM CASH OR DEFERRED ARRANGEMENTS.
(a) In General.--The Secretary of the Treasury shall revise the
regulations relating to hardship distributions under section
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide
that the period an employee is prohibited from making elective and
employee contributions in order for a distribution to be deemed
necessary to satisfy financial need shall be equal to 6 months.
(b) Effective Date.--The revised regulations under subsection (a)
shall apply to years beginning after December 31, 2000.
Subtitle C--Increasing Portability for Participants
SEC. 331. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.
(a) Rollovers From and to Section 457 Plans.--
(1) Rollovers from section 457 plans.--
(A) In general.--Section 457(e) (relating to other
definitions and special rules) is amended by adding at
the end the following:
``(16) Rollover amounts.--
``(A) General rule.--In the case of an eligible
deferred compensation plan established and maintained
by an employer described in subsection (e)(1)(A), if--
``(i) any portion of the balance to the
credit of an employee in such plan is paid to
such employee in an eligible rollover
distribution (within the meaning of section
402(c)(4) without regard to subparagraph (C)
thereof),
``(ii) the employee transfers any portion
of the property such employee receives in such
distribution to an eligible retirement plan
described in section 402(c)(8)(B), and
``(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property
distributed,
then such distribution (to the extent so transferred)
shall not be includible in gross income for the taxable
year in which paid.
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) (other than paragraph
(4)(C)) and (9) of section 402(c) and section 402(f)
shall apply for purposes of subparagraph (A).
``(C) Reporting.--Rollovers under this paragraph
shall be reported to the Secretary in the same manner
as rollovers from qualified retirement plans (as
defined in section 4974(c)).''.
(B) Deferral limit determined without regard to
rollover amounts.--Section 457(b)(2) (defining eligible
deferred compensation plan) is amended by inserting
``(other than rollover amounts)'' after ``taxable
year''.
(C) Direct rollover.--Paragraph (1) of section
457(d) is amended by striking ``and'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, and'', and by
inserting after subparagraph (B) the following:
``(C) in the case of a plan maintained by an
employer described in subsection (e)(1)(A), the plan
meets requirements similar to the requirements of
section 401(a)(31).
Any amount transferred in a direct trustee-to-trustee transfer
in accordance with section 401(a)(31) shall not be includible
in gross income for the taxable year of transfer.''.
(D) Withholding.--
(i) Paragraph (12) of section 3401(a) is
amended by adding at the end the following:
``(E) under or to an eligible deferred compensation
plan which, at the time of such payment, is a plan
described in section 457(b) maintained by an employer
described in section 457(e)(1)(A); or''.
(ii) Paragraph (3) of section 3405(c) is
amended to read as follows:
``(3) Eligible rollover distribution.--For purposes of this
subsection, the term `eligible rollover distribution' has the
meaning given such term by section 402(f)(2)(A).''.
(iii) Liability for withholding.--
Subparagraph (B) of section 3405(d)(2) is
amended by striking ``or'' at the end of clause
(ii), by striking the period at the end of
clause (iii) and inserting ``, or'', and by
adding at the end the following:
``(iv) section 457(b).''.
(2) Rollovers to section 457 plans.--
(A) In general.--Section 402(c)(8)(B) (defining
eligible retirement plan) is amended by striking
``and'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``,
and'', and by inserting after clause (iv) the following
new clause:
``(v) an eligible deferred compensation
plan described in section 457(b) of an employer
described in section 457(e)(1)(A).''.
(B) Separate accounting.--Section 402(c) is amended
by adding at the end the following new paragraph:
``(11) Separate accounting.--Unless a plan described in
clause (v) of paragraph (8)(B) agrees to separately account for
amounts rolled into such plan from eligible retirement plans
not described in such clause, the plan described in such clause
may not accept transfers or rollovers from such retirement
plans.''.
(C) 10 percent additional tax.--Subsection (t) of
section 72 (relating to 10-percent additional tax on
early distributions from qualified retirement plans) is
amended by adding at the end the following new
paragraph:
``(9) Special rule for rollovers to section 457 plans.--For
purposes of this subsection, a distribution from an eligible
deferred compensation plan (as defined in section 457(b)) of an
employer described in section 457(e)(1)(A) shall be treated as
a distribution from a qualified retirement plan described in
4974(c)(1) to the extent that such distribution is attributable
to an amount transferred to an eligible deferred compensation
plan from a qualified retirement plan (as defined in section
4974(c)).''.
(b) Allowance of Rollovers From and to 403 (b) Plans.--
(1) Rollovers from section 403 (b) plans.--Section
403(b)(8)(A)(ii) (relating to rollover amounts) is amended by
striking ``such distribution'' and all that follows and
inserting ``such distribution to an eligible retirement plan
described in section 402(c)(8)(B), and''.
(2) Rollovers to section 403 (b) plans.--Section
402(c)(8)(B) (defining eligible retirement plan), as amended by
subsection (a), is amended by striking ``and'' at the end of
clause (iv), by striking the period at the end of clause (v)
and inserting ``, and'', and by inserting after clause (v) the
following new clause:
``(vi) an annuity contract described in
section 403(b).''.
(c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to
recipients of distributions eligible for rollover treatment) is amended
by striking ``and'' at the end of subparagraph (C), by striking the
period at the end of subparagraph (D) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(E) of the provisions under which distributions
from the eligible retirement plan receiving the
distribution may be subject to restrictions and tax
consequences which are different from those applicable
to distributions from the plan making such
distribution.''.
(d) Spousal Rollovers.--Section 402(c)(9) (relating to rollover
where spouse receives distribution after death of employee) is amended
by striking ``; except that'' and all that follows up to the end
period.
(e) Conforming Amendments.--
(1) Section 72(o)(4) is amended by striking ``and
408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and
457(e)(16)''.
(2) Section 219(d)(2) is amended by striking ``or
408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
(3) Section 401(a)(31)(B) is amended by striking ``and
403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and
457(e)(16)''.
(4) Subparagraph (A) of section 402(f)(2) is amended by
striking ``or paragraph (4) of section 403(a)'' and inserting
``, paragraph (4) of section 403(a), subparagraph (A) of
section 403(b)(8), or subparagraph (A) of section 457(e)(16)''.
(5) Paragraph (1) of section 402(f) is amended by striking
``from an eligible retirement plan''.
(6) Subparagraphs (A) and (B) of section 402(f)(1) are
amended by striking ``another eligible retirement plan'' and
inserting ``an eligible retirement plan''.
(7) Subparagraph (B) of section 403(b)(8) is amended to
read as follows:
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) and (9) of section 402(c)
and section 402(f) shall apply for purposes of
subparagraph (A), except that section 402(f) shall be
applied to the payor in lieu of the plan
administrator.''.
(8) Section 408(a)(1) is amended by striking ``or
403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
(9) Subparagraphs (A) and (B) of section 415(b)(2) are each
amended by striking ``and 408(d)(3)'' and inserting
``403(b)(8), 408(d)(3), and 457(e)(16)''.
(10) Section 415(c)(2) is amended by striking ``and
408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
(11) Section 4973(b)(1)(A) is amended by striking ``or
408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
(f) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to distributions after December 31, 2000.
(2) Special rule.--Notwithstanding any other provision of
law, subsections (h)(3) and (h)(5) of section 1122 of the Tax
Reform Act of 1986 shall not apply to any distribution from an
eligible retirement plan (as defined in clause (iii) or (iv) of
section 402(c)(8)(B) of the Internal Revenue Code of 1986) on
behalf of an individual if there was a rollover to such plan on
behalf of such individual which is permitted solely by reason
of any amendment made by this section.
SEC. 332. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.
(a) In General.--Subparagraph (A) of section 408(d)(3) (relating to
rollover amounts) is amended by adding ``or'' at the end of clause (i),
by striking clauses (ii) and (iii), and by adding at the end the
following:
``(ii) the entire amount received
(including money and any other property) is
paid into an eligible retirement plan for the
benefit of such individual not later than the
60th day after the date on which the payment or
distribution is received, except that the
maximum amount which may be paid into such plan
may not exceed the portion of the amount
received which is includible in gross income
(determined without regard to this paragraph).
For purposes of clause (ii), the term `eligible
retirement plan' means an eligible retirement plan
described in clause (iii), (iv), (v), or (vi) of
section 402(c)(8)(B).''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 403(b) is amended by striking
``section 408(d)(3)(A)(iii)'' and inserting ``section
408(d)(3)(A)(ii)''.
(2) Clause (i) of section 408(d)(3)(D) is amended by
striking ``(i), (ii), or (iii)'' and inserting ``(i) or (ii)''.
(3) Subparagraph (G) of section 408(d)(3) is amended to
read as follows:
``(G) Simple retirement accounts.--In the case of
any payment or distribution out of a simple retirement
account (as defined in subsection (p)) to which section
72(t)(6) applies, this paragraph shall not apply unless
such payment or distribution is paid into another
simple retirement account.''.
(c) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to distributions after December 31, 2000.
(2) Special rule.--Notwithstanding any other provision of
law, subsections (h)(3) and (h)(5) of section 1122 of the Tax
Reform Act of 1986 shall not apply to any distribution from an
eligible retirement plan (as defined in clause (iii) or (iv) of
section 402(c)(8)(B) of the Internal Revenue Code of 1986) on
behalf of an individual if there was a rollover to such plan on
behalf of such individual which is permitted solely by reason
of the amendments made by this section.
SEC. 333. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.
(a) Rollovers From Exempt Trusts.--Paragraph (2) of section 402(c)
(relating to maximum amount which may be rolled over) is amended by
adding at the end the following: ``The preceding sentence shall not
apply to such distribution to the extent--
``(A) such portion is transferred in a direct
trustee-to-trustee transfer to a qualified trust which
is part of a plan which is a defined contribution plan
and which agrees to separately account for amounts so
transferred, including separately accounting for the
portion of such distribution which is includible in
gross income and the portion of such distribution which
is not so includible, or
``(B) such portion is transferred to an eligible
retirement plan described in clause (i) or (ii) of
paragraph (8)(B).''.
(b) Optional Direct Transfer of Eligible Rollover Distributions.--
Subparagraph (B) of section 401(a)(31) (relating to limitation) is
amended by adding at the end the following: ``The preceding sentence
shall not apply to such distribution if the plan to which such
distribution is transferred--
``(i) agrees to separately account for
amounts so transferred, including separately
accounting for the portion of such distribution
which is includible in gross income and the
portion of such distribution which is not so
includible, or
``(ii) is an eligible retirement plan
described in clause (i) or (ii) of section
402(c)(8)(B).''.
(c) Rules for Applying Section 72 to IRAs.--Paragraph (3) of
section 408(d) (relating to special rules for applying section 72) is
amended by inserting at the end the following:
``(H) Application of section 72.--
``(i) In general.--If--
``(I) a distribution is made from
an individual retirement plan, and
``(II) a rollover contribution is
made to an eligible retirement plan
described in section 402(c)(8)(B)(iii),
(iv), (v), or (vi) with respect to all
or part of such distribution,
then, notwithstanding paragraph (2), the rules
of clause (ii) shall apply for purposes of
applying section 72.
``(ii) Applicable rules.--In the case of a
distribution described in clause (i)--
``(I) section 72 shall be applied
separately to such distribution,
``(II) notwithstanding the pro rata
allocation of income on, and investment
in, the contract to distributions under
section 72, the portion of such
distribution rolled over to an eligible
retirement plan described in clause (i)
shall be treated as from income on the
contract (to the extent of the
aggregate income on the contract from
all individual retirement plans of the
distributee), and
``(III) appropriate adjustments
shall be made in applying section 72 to
other distributions in such taxable
year and subsequent taxable years.''.
(d) Effective Date.--The amendments made by this section shall
apply to distributions made after December 31, 2000.
SEC. 334. HARDSHIP EXCEPTION TO 60-DAY RULE.
(a) Exempt Trusts.--Paragraph (3) of section 402(c) (relating to
transfer must be made within 60 days of receipt) is amended to read as
follows:
``(3) Transfer must be made within 60 days of receipt.--
``(A) In general.--Except as provided in
subparagraph (B), paragraph (1) shall not apply to any
transfer of a distribution made after the 60th day
following the day on which the distributee received the
property distributed.
``(B) Hardship exception.--The Secretary may waive
the 60-day requirement under subparagraph (A) where the
failure to waive such requirement would be against
equity or good conscience, including casualty,
disaster, or other events beyond the reasonable control
of the individual subject to such requirement.''.
(b) IRAs.--Paragraph (3) of section 408(d) (relating to rollover
contributions), as amended by section 333, is amended by adding after
subparagraph (H) the following new subparagraph:
``(I) Waiver of 60-day requirement.--The Secretary
may waive the 60-day requirement under subparagraphs
(A) and (D) where the failure to waive such requirement
would be against equity or good conscience, including
casualty, disaster, or other events beyond the
reasonable control of the individual subject to such
requirement.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2000.
SEC. 335. TREATMENT OF FORMS OF DISTRIBUTION.
(a) Plan Transfers.--
(1) Amendment to internal revenue code of 1986.--Paragraph
(6) of section 411(d) (relating to accrued benefit not to be
decreased by amendment) is amended by adding at the end the
following:
``(D) Plan transfers.--
``(i) A defined contribution plan (in this
subparagraph referred to as the `transferee
plan') shall not be treated as failing to meet
the requirements of this subsection merely
because the transferee plan does not provide
some or all of the forms of distribution
previously available under another defined
contribution plan (in this subparagraph
referred to as the `transferor plan') to the
extent that--
``(I) the forms of distribution
previously available under the
transferor plan applied to the account
of a participant or beneficiary under
the transferor plan that was
transferred from the transferor plan to
the transferee plan pursuant to a
direct transfer rather than pursuant to
a distribution from the transferor
plan,
``(II) the terms of both the
transferor plan and the transferee plan
authorize the transfer described in
subclause (I),
``(III) the transfer described in
subclause (I) was made pursuant to a
voluntary election by the participant
or beneficiary whose account was
transferred to the transferee plan,
``(IV) the election described in
subclause (III) was made after the
participant or beneficiary received a
notice describing the consequences of
making the election,
``(V) if the transferor plan
provides for an annuity as the normal
form of distribution under the plan in
accordance with section 417, the
transfer is made with the consent of
the participant's spouse (if any), and
such consent meets requirements similar
to the requirements imposed by section
417(a)(2), and
``(VI) the transferee plan allows
the participant or beneficiary
described in clause (iii) to receive
any distribution to which the
participant or beneficiary is entitled
under the transferee plan in the form
of a single sum distribution.
``(ii) Clause (i) shall apply to plan
mergers and other transactions having the
effect of a direct transfer, including
consolidations of benefits attributable to
different employers within a multiple employer
plan.
``(E) Elimination of form of distribution.--Except
to the extent provided in regulations, a defined
contribution plan shall not be treated as failing to
meet the requirements of this section merely because of
the elimination of a form of distribution previously
available thereunder. This subparagraph shall not apply
to the elimination of a form of distribution with
respect to any participant unless--
``(i) a single sum payment is available to
such participant at the same time or times as
the form of distribution being eliminated, and
``(ii) such single sum payment is based on
the same or greater portion of the
participant's account as the form of
distribution being eliminated.''.
(2) Amendment to erisa.--Section 204(g) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is
amended by adding at the end the following:
``(4)(A) A defined contribution plan (in this subparagraph referred
to as the `transferee plan') shall not be treated as failing to meet
the requirements of this subsection merely because the transferee plan
does not provide some or all of the forms of distribution previously
available under another defined contribution plan (in this subparagraph
referred to as the `transferor plan') to the extent that--
``(i) the forms of distribution previously available under
the transferor plan applied to the account of a participant or
beneficiary under the transferor plan that was transferred from
the transferor plan to the transferee plan pursuant to a direct
transfer rather than pursuant to a distribution from the
transferor plan;
``(ii) the terms of both the transferor plan and the
transferee plan authorize the transfer described in clause (i);
``(iii) the transfer described in clause (i) was made
pursuant to a voluntary election by the participant or
beneficiary whose account was transferred to the transferee
plan;
``(iv) the election described in clause (iii) was made
after the participant or beneficiary received a notice
describing the consequences of making the election;
``(v) if the transferor plan provides for an annuity as the
normal form of distribution under the plan in accordance with
section 205, the transfer is made with the consent of the
participant's spouse (if any), and such consent meets
requirements similar to the requirements imposed by section
205(c)(2); and
``(vi) the transferee plan allows the participant or
beneficiary described in clause (iii) to receive any
distribution to which the participant or beneficiary is
entitled under the transferee plan in the form of a single sum
distribution.
``(B) Subparagraph (A) shall apply to plan mergers and other
transactions having the effect of a direct transfer, including
consolidations of benefits attributable to different employers within a
multiple employer plan.
``(5) Elimination of form of distribution.--Except to the extent
provided in regulations, a defined contribution plan shall not be
treated as failing to meet the requirements of this section merely
because of the elimination of a form of distribution previously
available thereunder. This paragraph shall not apply to the elimination
of a form of distribution with respect to any participant unless--
``(A) a single sum payment is available to such participant
at the same time or times as the form of distribution being
eliminated; and
``(B) such single sum payment is based on the same or
greater portion of the participant's account as the form of
distribution being eliminated.''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2000.
(b) Regulations.--
(1) Amendment to internal revenue code of 1986.--The last
sentence of paragraph (6)(B) of section 411(d) (relating to
accrued benefit not to be decreased by amendment) is amended to
read as follows: ``The Secretary shall by regulations provide
that this subparagraph shall not apply to any plan amendment
that does not adversely affect the rights of participants in a
material manner.''.
(2) Amendment to erisa.--The last sentence of section
204(g)(2) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows:
``The Secretary of the Treasury shall by regulations provide
that this paragraph shall not apply to any plan amendment that
does not adversely affect the rights of participants in a
material manner.''.
(3) Secretary directed.--Not later than December 31, 2001,
the Secretary of the Treasury is directed to issue final
regulations under section 411(d)(6) of the Internal Revenue
Code of 1986 and section 204(g) of the Employee Retirement
Income Security Act of 1974, including the regulations required
by the amendments made by this subsection. Such regulations
shall apply to plan years beginning after December 31, 2001, or
such earlier date as is specified by the Secretary of the
Treasury.
SEC. 336. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.
(a) Modification of Same Desk Exception.--
(1) Section 401(k).--
(A) Section 401(k)(2)(B)(i)(I) (relating to
qualified cash or deferred arrangements) is amended by
striking ``separation from service'' and inserting
``severance from employment''.
(B) Subparagraph (A) of section 401(k)(10)
(relating to distributions upon termination of plan or
disposition of assets or subsidiary) is amended to read
as follows:
``(A) In general.--An event described in this
subparagraph is the termination of the plan without
establishment or maintenance of another defined
contribution plan (other than an employee stock
ownership plan as defined in section 4975(e)(7)).''.
(C) Section 401(k)(10) is amended--
(i) in subparagraph (B)--
(I) by striking ``An event'' in
clause (i) and inserting ``A
termination'', and
(II) by striking ``the event'' in
clause (i) and inserting ``the
termination'',
(ii) by striking subparagraph (C), and
(iii) by striking ``or disposition of
assets or subsidiary'' in the heading.
(2) Section 403(b).--
(A) Paragraphs (7)(A)(ii) and (11)(A) of section
403(b) are each amended by striking ``separates from
service'' and inserting ``has a severance from
employment''.
(B) The heading for paragraph (11) of section
403(b) is amended by striking ``separation from
service'' and inserting ``severance from employment''.
(3) Section 457.--Clause (ii) of section 457(d)(1)(A) is
amended by striking ``is separated from service'' and inserting
``has a severance from employment''.
(b) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2000.
SEC. 337. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT
PLANS.
(a) 403(b) Plans.--Subsection (b) of section 403 is amended by
adding at the end the following new paragraph:
``(13) Trustee-to-trustee transfers to purchase permissive
service credit.--No amount shall be includible in gross income
by reason of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section 414(d)) if
such transfer is--
``(A) for the purchase of permissive service credit
(as defined in section 415(n)(3)(A)) under such plan,
or
``(B) a repayment to which section 415 does not
apply by reason of subsection (k)(3) thereof.''.
(b) 457 Plans.--
(1) Subsection (e) of section 457 is amended by adding
after paragraph (16) the following new paragraph:
``(17) Trustee-to-trustee transfers to purchase permissive
service credit.--No amount shall be includible in gross income
by reason of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section 414(d)) if
such transfer is--
``(A) for the purchase of permissive service credit
(as defined in section 415(n)(3)(A)) under such plan,
or
``(B) a repayment to which section 415 does not
apply by reason of subsection (k)(3) thereof.''.
(2) Section 457(b)(2) is amended by striking ``(other than
rollover amounts)'' and inserting ``(other than rollover
amounts and amounts received in a transfer referred to in
subsection (e)(17))''.
(c) Effective Date.--The amendments made by this section shall
apply to trustee-to-trustee transfers after December 31, 2000.
SEC. 338. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF CASH-OUT
AMOUNTS.
(a) Qualified Plans.--
(1) Amendment to internal revenue code of 1986.--Section
411(a)(11) (relating to restrictions on certain mandatory
distributions) is amended by adding at the end the following:
``(D) Special rule for rollover contributions.--A
plan shall not fail to meet the requirements of this
paragraph if, under the terms of the plan, the present
value of the nonforfeitable accrued benefit is
determined without regard to that portion of such
benefit which is attributable to rollover contributions
(and earnings allocable thereto). For purposes of this
subparagraph, the term `rollover contributions' means
any rollover contribution under sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and
457(e)(16).''.
(2) Amendment to erisa.--Section 203(e) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is
amended by adding at the end the following:
``(4) A plan shall not fail to meet the requirements of this
subsection if, under the terms of the plan, the present value of the
nonforfeitable accrued benefit is determined without regard to that
portion of such benefit which is attributable to rollover contributions
(and earnings allocable thereto). For purposes of this subparagraph,
the term `rollover contributions' means any rollover contribution under
sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16)
of the Internal Revenue Code of 1986.''.
(b) Eligible Deferred Compensation Plans.--Clause (i) of section
457(e)(9)(A) is amended by striking ``such amount'' and inserting ``the
portion of such amount which is not attributable to rollover
contributions (as defined in section 411(a)(11)(D))''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2000.
SEC. 339. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR SECTION
457 PLANS.
(a) Minimum Distribution Requirements.--Paragraph (2) of section
457(d) (relating to distribution requirements) is amended to read as
follows:
``(2) Minimum distribution requirements.--A plan meets the
minimum distribution requirements of this paragraph if such
plan meets the requirements of section 401(a)(9).''.
(b) Inclusion in Gross Income.--
(1) Year of inclusion.--Subsection (a) of section 457
(relating to year of inclusion in gross income) is amended to
read as follows:
``(a) Year of inclusion in gross income.--
``(1) In general.--Any amount of compensation deferred
under an eligible deferred compensation plan, and any income
attributable to the amounts so deferred, shall be includible in
gross income only for the taxable year in which such
compensation or other income--
``(A) is paid to the participant or other
beneficiary, in the case of a plan of an eligible
employer described in subsection (e)(1)(A), and
``(B) is paid or otherwise made available to the
participant or other beneficiary, in the case of a plan
of an eligible employer described in subsection
(e)(1)(B).
``(2) Special rule for rollover amounts.--To the extent
provided in section 72(t)(9), section 72(t) shall apply to any
amount includible in gross income under this subsection.''.
(2) Conforming amendments.--
(A) So much of paragraph (9) of section 457(e) as
precedes subparagraph (A) is amended to read as
follows:
``(9) Benefits of tax exempt organization plans not treated
as made available by reason of certain elections, etc.--In the
case of an eligible deferred compensation plan of an employer
described in subsection (e)(1)(B)--''.
(B) Section 457(d) is amended by adding at the end
the following new paragraph:
``(3) Special rule for government plan.--An eligible
deferred compensation plan of an employer described in
subsection (e)(1)(A) shall not be treated as failing to meet
the requirements of this subsection solely by reason of making
a distribution described in subsection (e)(9)(A).''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2000.
Subtitle D--Strengthening Pension Security and Enforcement
SEC. 341. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.
(a) Amendment to Internal Revenue Code of 1986.--Section 412(c)(7)
(relating to full-funding limitation) is amended--
(1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2004, the applicable
percentage'', and
(2) by amending subparagraph (F) to read as follows:
``(F) Applicable percentage.--For purposes of
subparagraph (A)(i)(I), the applicable percentage shall
be determined in accordance with the following table:
``In the case of any plan year
The applicable
beginning in--
percentage is--
2001................................... 160
2002................................... 165
2003................................... 170.''.
(b) Amendment to ERISA.--Section 302(c)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is
amended--
(1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2004, the applicable
percentage'', and
(2) by amending subparagraph (F) to read as follows:
``(F) Applicable percentage.--For purposes of
subparagraph (A)(i)(I), the applicable percentage shall
be determined in accordance with the following table:
``In the case of any plan year
The applicable
beginning in--
percentage is--
2001................................... 160
2002................................... 165
2003................................... 170.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2000.
SEC. 342. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND APPLIED TO
ALL DEFINED BENEFIT PLANS.
(a) In General.--Subparagraph (D) of section 404(a)(1) (relating to
special rule in case of certain plans) is amended to read as follows:
``(D) Special rule in case of certain plans.--
``(i) In general.--In the case of any
defined benefit plan, except as provided in
regulations, the maximum amount deductible
under the limitations of this paragraph shall
not be less than the unfunded termination
liability (determined as if the proposed
termination date referred to in section
4041(b)(2)(A)(i)(II) of the Employee Retirement
Income Security Act of 1974 were the last day
of the plan year).
``(ii) Plans with less than 100
participants.--For purposes of this
subparagraph, in the case of a plan which has
less than 100 participants for the plan year,
termination liability shall not include the
liability attributable to benefit increases for
highly compensated employees (as defined in
section 414(q)) resulting from a plan amendment
which is made or becomes effective, whichever
is later, within the last 2 years before the
termination date.
``(iii) Rule for determining number of
participants.--For purposes of determining
whether a plan has more than 100 participants,
all defined benefit plans maintained by the
same employer (or any member of such employer's
controlled group (within the meaning of section
412(l)(8)(C))) shall be treated as one plan,
but only employees of such member or employer
shall be taken into account.
``(iv) Plans established and maintain by
professional service employers.--Clause (i)
shall not apply to a plan described in section
4021(b)(13) of the Employee Retirement Income
Security Act of 1974.''.
(b) Conforming Amendment.--Paragraph (6) of section 4972(c) is
amended to read as follows:
``(6) Exceptions.--In determining the amount of
nondeductible contributions for any taxable year, there shall
not be taken into account so much of the contributions to one
or more defined contribution plans which are not deductible
when contributed solely because of section 404(a)(7) as does
not exceed the greater of--
``(A) the amount of contributions not in excess of
6 percent of compensation (within the meaning of
section 404(a)) paid or accrued (during the taxable
year for which the contributions were made) to
beneficiaries under the plans, or
``(B) the sum of--
``(i) the amount of contributions described
in section 401(m)(4)(A), plus
``(ii) the amount of contributions
described in section 402(g)(3)(A).
For purposes of this paragraph, the deductible limits under
section 404(a)(7) shall first be applied to amounts contributed
to a defined benefit plan and then to amounts described in
subparagraph (B).''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2000.
SEC. 343. MISSING PARTICIPANTS.
(a) In General.--Section 4050 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating
subsection (c) as subsection (e) and by inserting after subsection (b)
the following:
``(c) Multiemployer Plans.--The corporation shall prescribe rules
similar to the rules in subsection (a) for multiemployer plans covered
by this title that terminate under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer a missing
participant's benefits to the corporation upon termination of
the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the plan,
provide the corporation information with respect to benefits of
a missing participant if the plan transfers such benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a
plan described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under paragraph
(1), the corporation shall, upon location of the participant or
beneficiary, pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in
regulations of the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the
meaning of section 3(2))--
``(i) to which the provisions of this
section do not apply (without regard to this
subsection), and
``(ii) which is not a plan described in
paragraphs (2) through (11) of section 4021(b),
and
``(B) at the time the assets are to be distributed
upon termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of
assets to pay the benefits of all missing
participants to another pension plan (within
the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made after final regulations implementing subsections
(c) and (d) of section 4050 of the Employee Retirement Income Security
Act of 1974 (as added by subsection (a)), respectively, are prescribed.
SEC. 344. PERIODIC PENSION BENEFITS STATEMENTS.
(a) In General.--Section 105(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to read as
follows:
``(a)(1) Except as provided in paragraph (2)--
``(A) The administrator of an individual account plan shall
furnish a pension benefit statement--
``(i) to a plan participant at least once annually,
and
``(ii) to a plan beneficiary upon written request.
``(B) The administrator of a defined benefit plan shall
furnish a pension benefit statement--
``(i) at least once every 3 years to each
participant with a nonforfeitable accrued benefit who
is employed by the employer maintaining the plan at the
time the statement is furnished to participants, and
``(ii) to a participant or beneficiary of the plan
upon written request.
``(2) Notwithstanding paragraph (1), the administrator of a plan to
which more than 1 unaffiliated employer is required to contribute shall
only be required to furnish a pension benefit statement under paragraph
(1) upon the written request of a participant or beneficiary of the
plan.
``(3) A pension benefit statement under paragraph (1)--
``(A) shall indicate, on the basis of the latest available
information--
``(i) the total benefits accrued, and
``(ii) the nonforfeitable pension benefits, if any,
which have accrued, or the earliest date on which
benefits will become nonforfeitable,
``(B) shall be communicated in a manner calculated to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, telephonic,
or other appropriate form.
``(4) In the case of a defined benefit plan, the requirements of
paragraph (1)(B)(i) shall be treated as met with respect to a
participant if the administrator provides the participant at least once
each year with notice of the availability of the pension benefit
statement and the ways in which the participant may obtain such
statement. Such notice shall be provided in written, electronic,
telephonic, or other appropriate form, and may be included with other
communications to the participant if done in a manner reasonably
designed to attract the attention of the participant.''.
(b) Conforming Amendments.--
(1) Section 105 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1025) is amended by striking subsection
(d).
(2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is
amended to read as follows:
``(b) In no case shall a participant or beneficiary of a plan be
entitled to more than one statement described in subsection (a)(1)(A)
or (a)(1)(B)(ii), whichever is applicable, in any 12-month period.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2000.
SEC. 345. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RESPONSIBILITY.
(a) Imposition and Amount of Penalty Made Discretionary.--Section
502(l)(1) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1132(l)(1)) is amended--
(1) by striking ``shall'' and inserting ``may'', and
(2) by striking ``equal to'' and inserting ``not greater
than''.
(b) Applicable Recovery Amount.--Section 502(l)(2) of such Act (29
U.S.C. 1132(l)(2)) is amended to read as follows:
``(2) For purposes of paragraph (1), the term `applicable recovery
amount' means any amount which is recovered from any fiduciary or other
person (or from any other person on behalf of any such fiduciary or
other person) with respect to a breach or violation described in
paragraph (1) on or after the 30th day following receipt by such
fiduciary or other person of written notice from the Secretary of the
violation, whether paid voluntarily or by order of a court in a
judicial proceeding instituted by the Secretary under subsection (a)(2)
or (a)(5). The Secretary may, in the Secretary's sole discretion,
extend the 30-day period described in the preceding sentence.''.
(c) Other Rules.--Section 502(l) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(l)) is amended by adding at the
end the following:
``(5) A person shall be jointly and severally liable for the
penalty described in paragraph (1) to the same extent that such person
is jointly and severally liable for the applicable recovery amount on
which the penalty is based.
``(6) No penalty shall be assessed under this subsection unless the
person against whom the penalty is assessed is given notice and
opportunity for a hearing with respect to the violation and applicable
recovery amount.''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to any breach of fiduciary responsibility or other
violation of part 4 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 occurring on or after
the date of enactment of this Act.
(2) Transition rule.--In applying the amendment made by
subsection (b) (relating to applicable recovery amount), a
breach or other violation occurring before the date of
enactment of this Act which continues after the 180th day after
such date (and which may have been discontinued at any time
during its existence) shall be treated as having occurred after
such date of enactment.
SEC. 346. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.
(a) In General.--Subsection (c) of section 4972 (relating to
nondeductible contributions) is amended by adding at the end the
following new paragraph:
``(7) Defined benefit plan exception.--In determining the
amount of nondeductible contributions for any taxable year, an
employer may elect for such year not to take into account any
contributions to a defined benefit plan except to the extent
that such contributions exceed the full-funding limitation (as
defined in section 412(c)(7), determined without regard to
subparagraph (A)(i)(I) thereof). For purposes of this
paragraph, the deductible limits under section 404(a)(7) shall
first be applied to amounts contributed to defined contribution
plans and then to amounts described in this paragraph. If an
employer makes an election under this paragraph for a taxable
year, paragraph (6) shall not apply to such employer for such
taxable year.''.
(b) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 347. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED BENEFIT
PLANS SIGNIFICANTLY REDUCING FUTURE BENEFIT ACCRUALS.
(a) Amendment to 1986 Code.--Chapter 43 (relating to qualified
pension, etc., plans) is amended by adding at the end the following new
section:
``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT ACCRUALS TO
SATISFY NOTICE REQUIREMENTS.
``(a) Imposition of Tax.--There is hereby imposed a tax on the
failure of any applicable pension plan to meet the requirements of
subsection (e) with respect to any applicable individual.
``(b) Amount of Tax.--
``(1) In general.--The amount of the tax imposed by
subsection (a) on any failure with respect to any applicable
individual shall be $100 for each day in the noncompliance
period with respect to such failure.
``(2) Noncompliance period.--For purposes of this section,
the term `noncompliance period' means, with respect to any
failure, the period beginning on the date the failure first
occurs and ending on the date the failure is corrected.
``(c) Limitations on Amount of Tax.--
``(1) Overall limitation for unintentional failures.--In
the case of failures that are due to reasonable cause and not
to willful neglect, the tax imposed by subsection (a) for
failures during the taxable year of the employer (or, in the
case of a multiemployer plan, the taxable year of the trust
forming part of the plan) shall not exceed $500,000. For
purposes of the preceding sentence, all multiemployer plans of
which the same trust forms a part shall be treated as one plan.
For purposes of this paragraph, if not all persons who are
treated as a single employer for purposes of this section have
the same taxable year, the taxable years taken into account
shall be determined under principles similar to the principles
of section 1561.
``(2) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax would
be excessive relative to the failure involved.
``(d) Liability for Tax.--The following shall be liable for the tax
imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Notice Requirements for Plans Significantly Reducing Benefit
Accruals.--
``(1) In general.--If an applicable pension plan is amended
to provide for a significant reduction in the rate of future
benefit accrual, the plan administrator shall provide written
notice to each applicable individual (and to each employee
organization representing applicable individuals).
``(2) Notice.--The notice required by paragraph (1) shall
be written in a manner calculated to be understood by the
average plan participant and shall provide sufficient
information (as determined in accordance with regulations
prescribed by the Secretary) to allow applicable individuals to
understand the effect of the plan amendment.
``(3) Timing of notice.--Except as provided in regulations,
the notice required by paragraph (1) shall be provided within a
reasonable time before the effective date of the plan
amendment.
``(4) Designees.--Any notice under paragraph (1) may be
provided to a person designated, in writing, by the person to
which it would otherwise be provided.
``(5) Notice before adoption of amendment.--A plan shall
not be treated as failing to meet the requirements of paragraph
(1) merely because notice is provided before the adoption of
the plan amendment if no material modification of the amendment
occurs before the amendment is adopted.
``(f) Applicable Individual; Applicable Pension Plan.--For purposes
of this section--
``(1) Applicable individual.--The term `applicable
individual' means, with respect to any plan amendment--
``(A) any participant in the plan, and
``(B) any beneficiary who is an alternate payee
(within the meaning of section 414(p)(8)) under an
applicable qualified domestic relations order (within
the meaning of section 414(p)(1)(A)),
who may reasonably be expected to be affected by such plan
amendment.
``(2) Applicable pension plan.--The term `applicable
pension plan' means--
``(A) any defined benefit plan, or
``(B) an individual account plan which is subject
to the funding standards of section 412,
which had 100 or more participants who had accrued a benefit,
or with respect to whom contributions were made, under the plan
(whether or not vested) as of the last day of the plan year
preceding the plan year in which the plan amendment becomes
effective. Such term shall not include a governmental plan
(within the meaning of section 414(d)) or a church plan (within
the meaning of section 414(e)) with respect to which the
election provided by section 410(d) has not been made.''.
(b) Amendment to ERISA.--Section 204(h) of the Employee Retirement
Income Security Act or 1974 (29 U.S.C. 1054(h)) is amended by adding at
the end the following new paragraph:
``(3)(A) A plan to which paragraph (1) applies shall not be treated
as meeting the requirements of such paragraph unless, in addition to
any notice required to be provided to an individual or organization
under such paragraph, the plan administrator provides the notice
described in subparagraph (B).
``(B) The notice required by subparagraph (A) shall be written in a
manner calculated to be understood by the average plan participant and
shall provide sufficient information (as determined in accordance with
regulations prescribed by the Secretary of the Treasury) to allow
individuals to understand the effect of the plan amendment.
``(C) Except as provided in regulations prescribed by the Secretary
of the Treasury, the notice required by subparagraph (A) shall be
provided within a reasonable time before the effective date of the plan
amendment.
``(D) A plan shall not be treated as failing to meet the
requirements of subparagraph (A) merely because notice is provided
before the adoption of the plan amendment if no material modification
of the amendment occurs before the amendment is adopted.''.
(c) Clerical Amendment.--The table of sections for chapter 43 is
amended by adding at the end the following new item:
``Sec. 4980F. Failure of applicable
plans reducing benefit accruals
to satisfy notice
requirements.''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan amendments taking effect on or after the date of
the enactment of this Act.
(2) Transition.--Until such time as the Secretary of the
Treasury issues regulations under sections 4980F(e)(2) and (3)
of the Internal Revenue Code of 1986 and section 204(h)(3) of
the Employee Retirement Income Security Act of 1974 (as added
by the amendments made by this section), a plan shall be
treated as meeting the requirements of such sections if it
makes a good faith effort to comply with such requirements.
(3) Special rule.--The period for providing any notice
required by the amendments made by this section shall not end
before the date which is 3 months after the date of the
enactment of this Act.
SEC. 348. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS TO 401(K)
PLANS.
(a) In General.--Section 1524(b) of the Taxpayer Relief Act of 1997
is amended to read as follows:
``(b) Effective Date.--
``(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to elective
deferrals for plan years beginning after December 31, 1998.
``(2) Nonapplication to previously acquired property.--The
amendments made by this section shall not apply to any elective
deferral which is invested in assets consisting of qualifying
employer securities, qualifying employer real property, or
both, if such assets were acquired before January 1, 1999.''.
(b) Effective Date.--The amendment made by this section shall apply
as if included in the provision of the Taxpayer Relief Act of 1997 to
which it relates.
SEC. 349. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.
(a) Compensation Limit.--Paragraph (11) of section 415(b) (relating
to limitation for defined benefit plans) is amended to read as follows:
``(11) Special limitation rule for governmental and
multiemployer plans.--In the case of a governmental plan (as
defined in section 414(d)) or a multiemployer plan (as defined
in section 414(f)), subparagraph (B) of paragraph (1) shall not
apply.''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2000.
SEC. 350. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1147) is amended--
(1) in subsection (a), by striking ``2001 and 2005 on or
after September 1 of each year involved'' and inserting ``2001,
2005, and 2009 in the month of September of each year
involved'';
(2) in subsection (b), by adding at the end the following
new sentence: ``To effectuate the purposes of this paragraph,
the Secretary may enter into a cooperative agreement, pursuant
to the Federal Grant and Cooperative Agreement Act of 1977 (31
U.S.C. 6301 et seq.), with the American Savings Education
Council.'';
(3) in subsection (e)(2)--
(A) by striking subparagraph (D) and inserting the
following:
``(D) the Chairman and Ranking Member of the
Subcommittee on Labor, Health and Human Services, and
Education of the Committee on Appropriations of the
House of Representatives and the Chairman and Ranking
Member of the Subcommittee on Labor, Health and Human
Services, and Education of the Committee on
Appropriations of the Senate;'';
(B) by redesignating subparagraph (G) as
subparagraph (J); and
(C) by inserting after subparagraph (F) the
following new subparagraphs:
``(G) the Chairman and Ranking Member of the
Committee on Finance of the Senate;
``(H) the Chairman and Ranking Member of the
Committee on Ways and Means of the House of
Representatives;
``(I) the Chairman and Ranking Member of the
Subcommittee on Employer-Employee Relations of the
Committee on Education and the Workforce of the House
of Representatives; and'';
(4) in subsection (e)(3)(A)--
(A) by striking ``There shall be no more than 200
additional participants.'' and inserting ``The
participants in the National Summit shall also include
additional participants appointed under this
subparagraph.'';
(B) by striking ``one-half shall be appointed by
the President,'' in clause (i) and inserting ``not more
than 100 participants shall be appointed under this
clause by the President,'', and by striking ``and'' at
the end of clause (i);
(C) by striking ``one-half shall be appointed by
the elected leaders of Congress'' in clause (ii) and
inserting ``not more than 100 participants shall be
appointed under this clause by the elected leaders of
Congress'', and by striking the period at the end of
clause (ii) and inserting ``; and''; and
(D) by adding at the end the following new clause:
``(iii) The President, in consultation with
the elected leaders of Congress referred to in
subsection (a), may appoint under this clause
additional participants to the National Summit.
The number of such additional participants
appointed under this clause may not exceed the
lesser of 3 percent of the total number of all
additional participants appointed under this
paragraph, or 10. Such additional participants
shall be appointed from persons nominated by
the organization referred to in subsection
(b)(2) which is made up of private sector
businesses and associations partnered with
Government entities to promote long term
financial security in retirement through
savings and with which the Secretary is
required thereunder to consult and cooperate
and shall not be Federal, State, or local
government employees.'';
(5) in subsection (e)(3)(B), by striking ``January 31,
1998'' in subparagraph (B) and inserting ``May 1, 2001, May 1,
2005, and May 1, 2009, for each of the subsequent summits,
respectively'';
(6) in subsection (f)(1)(C), by inserting ``, no later than
90 days prior to the date of the commencement of the National
Summit,'' after ``comment'' in paragraph (1)(C);
(7) in subsection (g), by inserting ``, in consultation
with the congressional leaders specified in subsection
(e)(2),'' after ``report'';
(8) in subsection (i)--
(A) by striking ``beginning on or after October 1,
1997'' in paragraph (1) and inserting ``2001, 2005, and
2009''; and
(B) by adding at the end the following new
paragraph:
``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
received in connection with the National Summit prior to using
funds appropriated for purposes of the National Summit pursuant
to this paragraph.''; and
(9) in subsection (k)--
(A) by striking ``shall enter into a contract on a
sole-source basis'' and inserting ``may enter into a
contract on a sole-source basis''; and
(B) by striking ``fiscal year 1998'' and inserting
``fiscal years 2001, 2005, and 2009''.
SEC. 351. MODEL SPOUSAL CONSENT LANGUAGE AND QUALIFIED DOMESTIC
RELATIONS ORDER.
(a) Model Spousal Consent Language.--Section 205(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)) is amended
by adding at the end the following new paragraph:
``(9) Not later than January 1, 2001, the Secretary of Labor shall
develop model language for the spousal consent required under paragraph
(2) which--
``(A) is written in a manner calculated to be understood by
the average person, and
``(B) discloses in plain terms whether--
``(i) the waiver is irrevocable, and
``(ii) the waiver may be revoked by a qualified
domestic relations order.''.
(b) Model Qualified Domestic Relations Order.--Section 206(d)(3) of
such Act (29 U.S.C. 1056(d)(3)) is amended by adding at the end the
following new subparagraph:
``(O) Not later than January 1, 2001, the Secretary shall develop
language for a qualified domestic relations order which meets--
``(i) the requirements of subparagraph (B)(i), and
``(ii) the requirements of this Act related to the need to
consider the treatment of any lump sum payment, qualified joint
and survivor annuity, or qualified preretirement survivor
annuity.''.
(c) Publicity.--The Secretary of Labor shall include publicity for
the model language required by the amendments made by this section in
the pension outreach efforts undertaken by each Secretary.
SEC. 352. ELIMINATION OF ERISA DOUBLE JEOPARDY.
(a) Elimination of Second Lawsuits by the Secretary.--Section
502(h) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1132(h)) is amended--
(1) by inserting ``(1)'' after ``(h)'', and
(2) by adding at the end the following:
``(2) In any case in which--
``(A) a complaint in an action brought against a person
under subsection (a)(2) is served in accordance with paragraph
(1), and
``(B) the action is maintained as a class action or
derivative action under the Federal Rules of Civil Procedure,
``(C) the action is resolved by a court-approved settlement
agreement,
``(D) the complaint is served upon the Secretary at least
90 days prior to final court approval of the settlement
agreement, and
``(E) the Secretary receives a fully executed copy of the
settlement agreement within the time established by the court
for notifying the plan's participants of the proposed
compromise pursuant to Rule 23 or 23.1 of the Federal Rules of
Civil Procedure,
the Secretary shall be barred from litigating any claim against such
person under subsection (a)(2) that was, or could have been, brought in
that action with respect to the same plan. Notwithstanding this
paragraph, the Secretary shall not be barred from litigating any claim
against such person under subsection (a)(2) if the Secretary filed a
complaint under subsection (a)(2) prior to the final court approval of
the settlement agreement.''.
(b) Effective Date.--The amendments made by this section are
effective with respect to all actions or claims commenced by the
Secretary that are pending on or after the date of the enactment of
this Act.
Subtitle E--Reducing Regulatory Burdens
SEC. 361. MODIFICATION OF TIMING OF PLAN VALUATIONS.
(a) Amendments to 1986 Code.--Section 412(c)(9) (relating to annual
valuation) is amended--
(1) by striking ``For purposes'' and inserting the
following:
``(A) In general.--For purposes'', and
(2) by adding at the end the following:
``(B) Election to use prior year valuation.--
``(i) In general.--Except as provided in
clause (ii), if, for any plan year--
``(I) an election is in effect
under this subparagraph with respect to
a plan, and
``(II) the assets of the plan are
not less than 125 percent of the plan's
current liability (as defined in
paragraph (7)(B)), determined as of the
valuation date for the preceding plan
year,
then this section shall be applied using the
information available as of such valuation
date.
``(ii) Exceptions.--
``(I) Actual valuation every 3
years.--Clause (i) shall not apply for
more than 2 consecutive plan years and
valuation shall be under subparagraph
(A) with respect to any plan year to
which clause (i) does not apply by
reason of this subclause.
``(II) Regulations.--Clause (i)
shall not apply to the extent that more
frequent valuations are required under
the regulations under subparagraph (A).
``(iii) Adjustments.--Information under
clause (i) shall, in accordance with
regulations, be actuarially adjusted to reflect
significant differences in participants.
``(iv) Election.--An election under this
subparagraph, once made, shall be irrevocable
without the consent of the Secretary.''.
(b) Amendments to ERISA.--Paragraph (9) of section 302(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is
amended--
(1) by inserting ``(A)'' after ``(9)'', and
(2) by adding at the end the following:
``(B)(i) Except as provided in clause (ii), if, for any plan year--
``(I) an election is in effect under this subparagraph with
respect to a plan, and
``(II) the assets of the plan are not less than 125 percent
of the plan's current liability (as defined in paragraph
(7)(B)), determined as of the valuation date for the preceding
plan year,
then this section shall be applied using the information available as
of such valuation date.
``(ii)(I) Clause (i) shall not apply for more than 2 consecutive
plan years and valuation shall be under subparagraph (A) with respect
to any plan year to which clause (i) does not apply by reason of this
subclause.
``(II) Clause (i) shall not apply to the extent that more frequent
valuations are required under the regulations under subparagraph (A).
``(iii) Information under clause (i) shall, in accordance with
regulations, be actuarially adjusted to reflect significant differences
in participants.
``(iv) An election under this subparagraph, once made, shall be
irrevocable without the consent of the Secretary of the Treasury.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2000.
SEC. 362. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND
DEDUCTION.
(a) In General.--Section 404(k)(2)(A) (defining applicable
dividends) is amended by striking ``or'' at the end of clause (ii), by
redesignating clause (iii) as clause (iv), and by inserting after
clause (ii) the following new clause:
``(iii) is, at the election of such
participants or their beneficiaries--
``(I) payable as provided in clause
(i) or (ii), or
``(II) paid to the plan and
reinvested in qualifying employer
securities, or''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 363. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY
COMPENSATED EMPLOYEES.
(a) In General.--Paragraph (4) of section 1114(c) of the Tax Reform
Act of 1986 is hereby repealed.
(b) Effective Date.--The repeal made by subsection (a) shall apply
to plan years beginning after December 31, 2000.
SEC. 364. EMPLOYEES OF TAX-EXEMPT ENTITIES.
(a) In General.--The Secretary of the Treasury shall modify
Treasury Regulations section 1.410(b)-6(g) to provide that employees of
an organization described in section 403(b)(1)(A)(i) of the Internal
Revenue Code of 1986 who are eligible to make contributions under
section 403(b) of such Code pursuant to a salary reduction agreement
may be treated as excludable with respect to a plan under section 401
(k) or (m) of such Code that is provided under the same general
arrangement as a plan under such section 401(k), if--
(1) no employee of an organization described in section
403(b)(1)(A)(i) of such Code is eligible to participate in such
section 401(k) plan or section 401(m) plan, and
(2) 95 percent of the employees who are not employees of an
organization described in section 403(b)(1)(A)(i) of such Code
are eligible to participate in such plan under such section 401
(k) or (m).
(b) Effective Date.--The modification required by subsection (a)
shall apply as of the same date set forth in section 1426(b) of the
Small Business Job Protection Act of 1996.
SEC. 365. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED RETIREMENT
ADVICE.
(a) In General.--Subsection (a) of section 132 (relating to
exclusion from gross income) is amended by striking ``or'' at the end
of paragraph (5), by striking the period at the end of paragraph (6)
and inserting ``, or'', and by adding at the end the following new
paragraph:
``(7) qualified retirement planning services.''.
(b) Qualified Retirement Planning Services Defined.--Section 132 is
amended by redesignating subsection (m) as subsection (n) and by
inserting after subsection (l) the following:
``(m) Qualified Retirement Planning Services.--
``(1) In general.--For purposes of this section, the term
`qualified retirement planning services' means any retirement
planning service provided to an employee and his spouse by an
employer maintaining a qualified employer plan.
``(2) Nondiscrimination rule.--Subsection (a)(7) shall
apply in the case of highly compensated employees only if such
services are available on substantially the same terms to each
member of the group of employees normally provided education
and information regarding the employer's qualified employer
plan.
``(3) Qualified employer plan.--For purposes of this
subsection, the term `qualified employer plan' means a plan,
contract, pension, or account described in section
219(g)(5).''.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 366. REPORTING SIMPLIFICATION.
(a) Simplified Annual Filing Requirement for Owners and Their
Spouses.--
(1) In general.--The Secretary of the Treasury shall modify
the requirements for filing annual returns with respect to one-
participant retirement plans to ensure that such plans with
assets of $250,000 or less as of the close of the plan year
need not file a return for that year.
(2) One-participant retirement plan defined.--For purposes
of this subsection, the term ``one-participant retirement
plan'' means a retirement plan that--
(A) on the first day of the plan year--
(i) covered only the employer (and the
employer's spouse) and the employer owned the
entire business (whether or not incorporated),
or
(ii) covered only one or more partners (and
their spouses) in a business partnership
(including partners in an S or C corporation),
(B) meets the minimum coverage requirements of
section 410(b) of the Internal Revenue Code of 1986
without being combined with any other plan of the
business that covers the employees of the business,
(C) does not provide benefits to anyone except the
employer (and the employer's spouse) or the partners
(and their spouses),
(D) does not cover a business that is a member of
an affiliated service group, a controlled group of
corporations, or a group of businesses under common
control, and
(E) does not cover a business that leases
employees.
(3) Other definitions.--Terms used in paragraph (2) which
are also used in section 414 of the Internal Revenue Code of
1986 shall have the respective meanings given such terms by
such section.
(b) Simplified Annual Filing Requirement for Plans With Fewer Than
25 Employees.--In the case of a retirement plan which covers less than
25 employees on the first day of the plan year and meets the
requirements described in subparagraphs (B), (D), and (E) of subsection
(a)(2), the Secretary of the Treasury shall provide for the filing of a
simplified annual return that is substantially similar to the annual
return required to be filed by a one-participant retirement plan.
(c) Effective Date.--The provisions of this section shall take
effect on January 1, 2001.
SEC. 367. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.
The Secretary of the Treasury shall continue to update and improve
the Employee Plans Compliance Resolution System (or any successor
program) giving special attention to--
(1) increasing the awareness and knowledge of small
employers concerning the availability and use of the program,
(2) taking into account special concerns and circumstances
that small employers face with respect to compliance and
correction of compliance failures,
(3) extending the duration of the self-correction period
under the Administrative Policy Regarding Self-Correction for
significant compliance failures,
(4) expanding the availability to correct insignificant
compliance failures under the Administrative Policy Regarding
Self-Correction during audit, and
(5) assuring that any tax, penalty, or sanction that is
imposed by reason of a compliance failure is not excessive and
bears a reasonable relationship to the nature, extent, and
severity of the failure.
SEC. 368. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.
(a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority owner'
means an individual who, at any time during the 60-month period ending
on the date the determination is being made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 shall apply
(determined without regard to section 1563(e)(3)(C)).
``(B) In the case of a participant who is a majority owner, the
amount of benefits guaranteed under this section shall equal the
product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date or
the adoption date of the plan to the termination date, and the
denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''.
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and
inserting ``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by
inserting after paragraph (2) the following:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any remaining
assets shall then be allocated to benefits described in
subparagraph (B) of that paragraph. If assets allocated to such
subparagraph (B) are insufficient to satisfy in full the
benefits described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of the
present value (as of the termination date) of their respective
benefits described in that subparagraph.''.
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined
in section 4022(b)(6)'', and
(B) by adding at the end the following:
``(d) For purposes of subsection (b)(9), the term `substantial
owner' means an individual who, at any time during the 60-month period
ending on the date the determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 shall apply
(determined without regard to section 1563(e)(3)(C)).''.
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is
amended by striking ``section 4022(b)(6)'' and inserting ``section
4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)) with respect to which notices of intent to
terminate are provided under section 4041(a)(2) of such
Act (29 U.S.C. 1341(a)(2)) after December 31, 2000, and
(B) under section 4042 of such Act (29 U.S.C. 1342)
with respect to which proceedings are instituted by the
corporation after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on the date of the enactment
of this Act.
SEC. 369. MODIFICATION OF EXCLUSION FOR EMPLOYER PROVIDED TRANSIT
PASSES.
(a) In General.--Section 132(f)(3) (relating to cash
reimbursements) is amended by striking the last sentence.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
SEC. 370. REPEAL OF THE MULTIPLE USE TEST.
(a) In General.--Paragraph (9) of section 401(m) is amended to read
as follows:
``(9) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection and subsection (k), including regulations
permitting appropriate aggregation of plans and
contributions.''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2000.
SEC. 371. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE OF
BUSINESS RULES.
(a) Nondiscrimination.--
(1) In general.--The Secretary of the Treasury shall, by
regulation, provide that a plan shall be deemed to satisfy the
requirements of section 401(a)(4) of the Internal Revenue Code
of 1986 if such plan satisfies the facts and circumstances test
under section 401(a)(4) of such Code, as in effect before
January 1, 1994, but only if--
(A) the plan satisfies conditions prescribed by the
Secretary to appropriately limit the availability of
such test, and
(B) the plan is submitted to the Secretary for a
determination of whether it satisfies such test.
Subparagraph (B) shall only apply to the extent provided by the
Secretary.
(2) Effective dates.--
(A) Regulations.--The regulation required by
paragraph (1) shall apply to years beginning after
December 31, 2000.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under
paragraph (1)(A) shall not apply before the first year
beginning not less than 120 days after the date on
which such condition is prescribed.
(b) Coverage Test.--
(1) In general.--Section 410(b)(1) (relating to minimum
coverage requirements) is amended by adding at the end the
following:
``(D) In the case that the plan fails to meet the
requirements of subparagraphs (A), (B) and (C), the
plan--
``(i) satisfies subparagraph (B), as in
effect immediately before the enactment of the
Tax Reform Act of 1986,
``(ii) is submitted to the Secretary for a
determination of whether it satisfies the
requirement described in clause (i), and
``(iii) satisfies conditions prescribed by
the Secretary by regulation that appropriately
limit the availability of this subparagraph.
Clause (ii) shall apply only to the extent provided by
the Secretary.''.
(2) Effective dates.--
(A) In general.--The amendment made by paragraph
(1) shall apply to years beginning after December 31,
2000.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under
regulations prescribed by the Secretary under section
410(b)(1)(D) of the Internal Revenue Code of 1986 shall
not apply before the first year beginning not less than
120 days after the date on which such condition is
prescribed.
(c) Line of Business Rules.--The Secretary of the Treasury shall,
on or before December 31, 2000, modify the existing regulations issued
under section 414(r) of the Internal Revenue Code of 1986 in order to
expand (to the extent that the Secretary determines appropriate) the
ability of a pension plan to demonstrate compliance with the line of
business requirements based upon the facts and circumstances
surrounding the design and operation of the plan, even though the plan
is unable to satisfy the mechanical tests currently used to determine
compliance.
SEC. 372. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF MORATORIUM ON
APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE
TO STATE AND LOCAL PLANS.
(a) In General.--Subparagraph (G) of section 401(a)(5),
subparagraph (H) of section 401(a)(26), subparagraph (G) of section
401(k)(3), and paragraph (2) of section 1505(d) of the Taxpayer Relief
Act of 1997 are each amended by inserting ``or by an international
organization which is described in section 414(d)'' after ``or
instrumentality thereof)''.
(b) Conforming Amendments.--
(1) The headings for subparagraph (G) of section 401(a)(5)
and subparagraph (H) of section 401(a)(26) are each amended by
inserting ``and international organization'' after
``governmental''.
(2) Subparagraph (G) of section 401(k)(3) is amended by
inserting ``State and local governmental and international
organization plans.--'' after ``(G)''.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2000.
SEC. 373. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.
(a) Expansion of Period.--
(1) Amendment to 1986 code.--Subparagraph (A) of section
417(a)(6) is amended by striking ``90-day'' and inserting
``180-day''.
(2) Amendment of erisa.--Subparagraph (A) of section
205(c)(7) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1055) is amended by striking ``90-day'' and
inserting ``180-day''.
(3) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under sections 402(f),
411(a)(11), and 417 of the Internal Revenue Code of 1986, and
the regulations of such Secretary under part 2 of subtitle B of
title I of the Employee Retirement Income Security Act of 1974
to the extent that they relate to sections 203(e) and 205 of
such Act, to substitute ``180 days'' for ``90 days'' each place
it appears--
(A) in Treasury Regulations sections 1.402(f)-1,
1.411(a)-11(c), and 1.417(e)-1(b), and
(B) in the regulations of such Secretary under such
part 2.
(4) Effective date.--The amendments made by paragraphs (1)
and (2) and the modifications required by paragraph (3) shall
apply to years beginning after December 31, 2000.
(b) Consent Regulation Inapplicable to Certain Distributions.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 411(a)(11) of the Internal
Revenue Code of 1986, and the regulations under section 205 of
the Employee Retirement Income Security Act of 1974, to provide
that the description of a participant's right, if any, to defer
receipt of a distribution shall also describe the consequences
of failing to defer such receipt.
(2) Effective date.--The modifications required by
paragraph (1) shall apply to years beginning after December 31,
2000.
SEC. 374. ANNUAL REPORT DISSEMINATION.
(a) In General.--Section 104(b)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is amended by
striking ``shall furnish'' and inserting ``shall make available for
examination (and, upon request, shall furnish)''.
(b) Effective Date.--The amendment made by this section shall apply
to reports for years beginning after December 31, 1998.
SEC. 375. EXCESS BENEFIT PLANS.
(a) In General.--Section 3(36) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(36)) is amended to read as
follows:
``(36) The term `excess benefit plan' means a plan, without regard
to whether such plan is funded, maintained by an employer solely for
the purpose of providing benefits to employees in excess of any
limitation imposed by section 401(a)(17) or 415 of the Internal Revenue
Code of 1986 or any other limitation on contributions or benefits in
such Code on plans to which any of such sections apply. To the extent
that a separable part of a plan (as determined by the Secretary of
Labor) maintained by an employer is maintained for such purpose, that
part shall be treated as a separate plan which is an excess benefit
plan.''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 1999.
SEC. 376. BENEFIT SUSPENSION NOTICE.
(a) Modification of Regulation.--The Secretary of Labor shall
modify the regulation under section 203(a)(3)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to
provide that, except in the case of employment, subsequent to the
commencement of payment of benefits, with a former employer, the
notification required by such regulation--
(1) may be included in the summary plan description for the
plan furnished in accordance with section 104(b) of such Act
(29 U.S.C. 1024(b)), rather than in a separate notice, and
(2) need not include a copy of the relevant plan
provisions.
(c) Effective Date.--The modification made under this section shall
apply to plan years beginning after December 31, 1999.
SEC. 377. CLARIFICATION OF CHURCH WELFARE PLAN STATUS UNDER STATE
INSURANCE LAW.
For purposes of determining the status under State insurance law of
a church plan (as defined in section 414(e) of the Internal Revenue
Code and section 3(33) of the Employee Retirement Income Security Act
that is a welfare plan (as defined in section 3(1)), such church plan
(and any trust under such plan) shall be deemed a single-employer plan
that--
(1) reimburses costs from general church assets;
(2) purchases insurance coverage with general church
assets; or
(3) both.
For purposes of this paragraph, the term ``reimbursing costs from
general church assets'' means engaging in a practice that does not have
the effect of transferring or spreading risk. The scope of this
paragraph is limited to determining the status of a church welfare plan
under State insurance law, and does not otherwise recharacterized the
status, or modify or affect the rights, of any plan participant,
including those who make plan contributions.
Subtitle F--Plan Amendments
SEC. 381. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any plan or contract
amendment--
(1) such plan or contract shall be treated as being
operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A), and
(2) such plan shall not fail to meet the requirements of
section 411(d)(6) of the Internal Revenue Code of 1986 by
reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any plan or annuity contract which is made--
(A) pursuant to any amendment made by this title,
or pursuant to any regulation issued under this title,
and
(B) on or before the last day of the first plan
year beginning on or after January 1, 2003.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2005'' for ``2003''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative
or regulatory amendment described in paragraph
(1)(A) takes effect (or in the case of a plan
or contract amendment not required by such
legislative or regulatory amendment, the
effective date specified by the plan), and
(ii) ending on the date described in
paragraph (1)(B) (or, if earlier, the date the
plan or contract amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect, and
(B) such plan or contract amendment applies
retroactively for such period.
TITLE IV--EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK
CREDIT
SEC. 401. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK CREDIT.
(a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f) (relating
to termination) are each amended by striking ``June 30, 1999'' and
inserting ``December 31, 2001''.
(b) Clarification of First Year of Employment.--Paragraph (2) of
section 51(i) is amended by striking ``during which he was not a member
of a targeted group''.
(c) Effective Date.--The amendments made by this section shall
apply to individuals who begin work for the employer after June 30,
1999.
(d) Special Rule.--
(1) In general.--For purposes of the Internal Revenue Code
of 1986, the credit determined under sections 51 and 51A of
such Code which is otherwise allowable under such Code and
which is attributable to the suspension period shall not be
taken into account prior to October 1, 2000. On or after such
date, such credit may be taken into account through the filing
of an amended return, an application for expedited refund, an
adjustment of estimated taxes, or other means allowed by such
Code.
(2) Suspension period.--For purposes of this subsection,
the suspension period is the period beginning on July 1, 1999,
and ending on September 30, 2000.
(3) Expedited refunds.--
(A) In general.--If there is an overpayment of tax
with respect to a taxable year by reason of paragraph
(1), the taxpayer may file an application for a
tentative refund of such overpayment. Such application
shall be in such manner and form, and contain such
information, as the Secretary may prescribe.
(B) Deadline for applications.--Subparagraph (A)
shall apply only to applications filed before October
1, 2001.
(C) Allowance of adjustments.--Not later than 90
days after the date on which an application is filed
under this paragraph, the Secretary shall--
(i) review the application,
(ii) determine the amount of the
overpayment, and
(iii) apply, credit, or refund such
overpayment,
in a manner similar to the manner provided in section
6411(b) of such Code.
(D) Consolidated returns.--The provisions of
section 6411(c) of such Code shall apply to an
adjustment under this paragraph in such manner as the
Secretary may provide.
(4) Credit attributable to suspension period.--
(A) In general.--For purposes of this subsection,
in the case of a taxable year which includes a portion
of the suspension period, the amount of credit
determined under sections 51 and 51A of such Code for
such taxable year which is attributable to such period
is the amount which bears the same ratio to the amount
of credit determined under such sections for such
taxable year as the number of months in the suspension
period which are during such taxable year bears to the
number of months in such taxable year.
(B) Waiver of estimated tax penalties.--No addition
to tax shall be made under section 6654 or 6655 of such
Code for any period before July 1, 1999, with respect
to any underpayment of tax imposed by such Code to the
extent such underpayment was created or increased by
reason of subparagraph (A).
(5) Secretary.--For purposes of this subsection, the term
``Secretary'' means the Secretary of the Treasury (or such
Secretary's delegate).
TITLE V--ESTATE TAX RELIEF
Subtitle A--Reductions of Estate and Gift Tax Rates
SEC. 501. REDUCTIONS OF ESTATE AND GIFT TAX RATES.
(a) Maximum Rate of Tax Reduced to 50 Percent.--
(1) In general.--The table contained in section 2001(c)(1)
is amended by striking the two highest brackets and inserting
the following:
``Over $2,500,000..............
$1,025,800, plus 50% of the
excess over
$2,500,000.''.
(2) Phase-in of reduced rate.--Subsection (c) of section
2001 is amended by adding at the end the following new
paragraph:
``(3) Phase-in of reduced rate.--In the case of decedents
dying, and gifts made, during 2001, the last item in the table
contained in paragraph (1) shall be applied by substituting
`53%' for `50%'.''.
(b) Repeal of Phaseout of Graduated Rates.--Subsection (c) of
section 2001 is amended by striking paragraph (2) and redesignating
paragraph (3), as added by subsection (a), as paragraph (2).
(c) Additional Reductions of Rates of Tax.--Subsection (c) of
section 2001, as so amended, is amended by adding at the end the
following new paragraph:
``(3) Phasedown of tax.--In the case of estates of
decedents dying, and gifts made, during any calendar year after
2002--
``(A) In general.--Except as provided in
subparagraph (C), the tentative tax under this
subsection shall be determined by using a table
prescribed by the Secretary (in lieu of using the table
contained in paragraph (1)) which is the same as such
table; except that--
``(i) each of the rates of tax shall be
reduced by the number of percentage points
determined under subparagraph (B), and
``(ii) the amounts setting forth the tax
shall be adjusted to the extent necessary to
reflect the adjustments under clause (i).
``(B) Percentage points of reduction.--
The number of
``For calendar year:
percentage points is:
2003................................... 1.0
2004................................... 2.0.
``(C) Table for years after 2004.--The table
applicable under this subsection to estates of
decedents dying, and gifts made, during calendar year
2004 shall apply to estates of decedents dying, and
gifts made, after calendar year 2004.
``(D) Coordination with credit for state death
taxes.--Rules similar to the rules of subparagraph (A)
shall apply the table contained in section 2011(b)
except that the Secretary shall prescribe percentage
point reductions which maintain the proportionate
relationship (as in effect before any reduction under
this paragraph) between the credit under section 2011
and the tax rates under subsection (c).''.
(d) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to estates of decedents
dying, and gifts made, after December 31, 2000.
(2) Subsection (c).--The amendment made by subsection (c)
shall apply to estates of decedents dying, and gifts made,
after December 31, 2002.
SEC. 502. SENSE OF THE CONGRESS CONCERNING REPEAL OF THE DEATH TAX.
(a) Findings.--Congress finds the following:
(1) The death tax stifles economic growth by taking
productive resources out of the private sector, thereby causing
unemployment and inhibiting job creation.
(2) The death tax penalizes hard work and entrepreneurial
activity by causing the demise of small, family-owned
businesses when an owner dies.
(3) The death tax rates in the United States are the second
highest among all industrialized nations.
(4) The death tax prevents minorities from gaining an
economic foothold in the economy since it limits the inter-
generational transfer of wealth, which is critical to
establishing a legacy and power base for minorities in our
society.
(5) The death tax presents serious challenges for farmers
whose value is in their land, not liquid assets, and who must
sell land to pay the tax, thereby jeopardizing the future
existence of the already-struggling family farm.
(6) The death tax contributes to the development of rural
areas by causing farms and ranches to be sold and subdivided.
(7) Previous attempts by Congress to create death tax
exemptions have been ineffective due to an inability to
legislatively duplicate the complex family relationships that
exist in our society.
(8) Increasing entrepreneurship and investment in
retirement will bring a whole new class of people under the
death tax.
(b) Sense of Congress.--It is the sense of Congress that the death
tax relief in this Act is considered a first step in our effort to
ultimately repeal this onerous tax.
Subtitle B--Unified Credit Replaced With Unified Exemption Amount
SEC. 511. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH
UNIFIED EXEMPTION AMOUNT.
(a) In General.--
(1) Estate tax.--Part IV of subchapter A of chapter 11 is
amended by inserting after section 2051 the following new
section:
``SEC. 2052. EXEMPTION.
``(a) In general.--For purposes of the tax imposed by section 2001,
the value of the taxable estate shall be determined by deducting from
the value of the gross estate an amount equal to the excess (if any)
of--
``(1) the exemption amount for the calendar year in which
the decedent died, over
``(2) the sum of--
``(A) the aggregate amount allowed as an exemption
under section 2521 with respect to gifts made by the
decedent after December 31, 2000, and
``(B) the aggregate amount of gifts made by the
decedent for which credit was allowed by section 2505
(as in effect on the day before the date of the
enactment of the Wage and Employment Growth Act of
1999).
Gifts which are includible in the gross estate of the decedent shall
not be taken into account in determining the amounts under paragraph
(2).
``(b) Exemption Amount.--For purposes of subsection (a), the term
`exemption amount' means the amount determined in accordance with the
following table:
``In the case of
The exemption
calendar year:
amount is:
2001......................................... $675,000
2002 and 2003................................ $700,000
2004......................................... $850,000
2005......................................... $950,000
2006 or thereafter........................... $1,000,000.''.
(2) Gift tax.--Subchapter C of chapter 12 (relating to
deductions) is amended by inserting before section 2522 the
following new section:
``SEC. 2521. EXEMPTION.
``In computing taxable gifts for any calendar year, there shall be
allowed as a deduction in the case of a citizen or resident of the
United States an amount equal to the excess of--
``(1) the exemption amount determined under section 2052
for such calendar year, over
``(2) the sum of--
``(A) the aggregate amount allowed as an exemption
under this section for all preceding calendar years
after 2000, and
``(B) the aggregate amount of gifts for which
credit was allowed by section 2505 (as in effect on the
day before the date of the enactment of the Wage and
Employment Growth Act of 1999).''.
(b) Repeal of Unified Credits.--
(1) Section 2010 (relating to unified credit against estate
tax) is hereby repealed.
(2) Section 2505 (relating to unified credit against gift
tax) is hereby repealed.
(c) Conforming Amendments.--
(1) Subparagraph (B) of section 2001(b)(1) is amended by
inserting before the comma ``reduced by the amount described in
section 2052(a)(2)(B)''.
(2)(A) Subsection (b) of section 2011 is amended--
(i) by striking ``adjusted'' in the table, and
(ii) by striking the last sentence.
(B) Subsection (f) of section 2011 is amended by striking
``, reduced by the amount of the unified credit provided by
section 2010''.
(3) Subsection (a) of section 2012 is amended by striking
``and the unified credit provided by section 2010''.
(4)(A) Subsection (b) of section 2013 is amended by
inserting before the period at the end of the first sentence
``and increased by the exemption allowed under section 2052 or
2106(a)(4) (or the corresponding provisions of prior law) in
determining the taxable estate of the transferor for purposes
of the estate tax''.
(B) Subparagraph (A) of section 2013(c)(1) is amended by
striking ``2010,''.
(5) Paragraph (2) of section 2014(b) is amended by striking
``2010,''.
(6) Clause (ii) of section 2056A(b)(12)(C) is amended to
read as follows:
``(ii) to treat any reduction in the tax
imposed by paragraph (1)(A) by reason of the
credit allowable under section 2010 (as in
effect on the day before the date of the
enactment of the Wage and Employment Growth Act
of 1999) or the exemption allowable under
section 2052 with respect to the decedent as a
credit under section 2505 (as so in effect) or
exemption under section 2521 (as the case may
be) allowable to such surviving spouse for
purposes of determining the amount of the
exemption allowable under section 2521 with
respect to taxable gifts made by the surviving
spouse during the year in which the spouse
becomes a citizen or any subsequent year,''.
(7) Paragraph (3) of section 2057(a) is amended to read as
follows:
``(3) Coordination with exemption amount.--
``(A) In general.--Except as provided in
subparagraph (B), if this section applies to an estate,
the exemption amount under section 2052 shall be
$625,000.
``(B) Increase in exemption amount if deduction is
less than $675,000.--If the deduction allowed by this
section is less than $675,000, the amount of the
exemption amount under section 2052 shall be increased
(but not above the amount which would apply to the
estate without regard to this section) by the excess of
$675,000 over the amount of the deduction allowed.''.
(8)(A) Subparagraph (B) of section 2101(b)(1) is amended by
inserting before the comma ``reduced by the aggregate amount of
gifts for which credit was allowed by section 2505 (as in
effect on the day before the date of the enactment of the Wage
and Employment Growth Act of 1999)''
(B) Subsection (b) of section 2101 is amended by striking
the last sentence.
(9) Section 2102 is amended by striking subsection (c).
(10) Subsection (a) of section 2106 is amended by adding at
the end the following new paragraph:
``(4) Exemption.--
``(A) In general.--An exemption of $60,000.
``(B) Residents of possessions of the united
states.--In the case of a decedent who is considered to
be a nonresident not a citizen of the United States
under section 2209, the exemption under this paragraph
shall be the greater of--
``(i) $60,000, or
``(ii) that proportion of $175,000 which
the value of that part of the decedent's gross
estate which at the time of his death is
situated in the United States bears to the
value of his entire gross estate wherever
situated.
``(C) Special rules.--
``(i) Coordination with treaties.--To the
extent required under any treaty obligation of
the United States, the exemption allowed under
this paragraph shall be equal to the amount
which bears the same ratio to the exemption
amount under section 2052 (for the calendar
year in which the decedent died) as the value
of the part of the decedent's gross estate
which at the time of his death is situated in
the United States bears to the value of his
entire gross estate wherever situated. For
purposes of the preceding sentence, property
shall not be treated as situated in the United
States if such property is exempt from the tax
imposed by this subchapter under any treaty
obligation of the United States.
``(ii) Coordination with gift tax exemption
and unified credit.--If an exemption has been
allowed under section 2521 (or a credit has
been allowed under section 2505 as in effect on
the day before the date of the enactment of the
Wage and Employment Growth Act of 1999) with
respect to any gift made by the decedent, each
dollar amount contained in subparagraph (A) or
(B) or the exemption amount applicable under
clause (i) of this subparagraph (whichever
applies) shall be reduced by the exemption so
allowed under 2521 (or, in the case of such a
credit, by the amount of the gift for which the
credit was so allowed).''.
(11)(A) Subsection (a) of section 2107 is amended by adding
at the end the following new paragraph:
``(3) Limitation on exemption amount.--Subparagraphs (B)
and (C) of section 2106(a)(4) shall not apply in applying
section 2106 for purposes of this section.''.
(B) Subsection (c) of section 2107 is amended--
(i) by striking paragraph (1) and by
redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively, and
(ii) by striking the second sentence of
paragraph (2) (as so redesignated).
(12) Section 2206 is amended by striking ``the taxable
estate'' in the first sentence and inserting ``the sum of the
taxable estate and the amount of the exemption allowed under
section 2052 or 2106(a)(4) in computing the taxable estate''.
(13) Section 2207 is amended by striking ``the taxable
estate'' in the first sentence and inserting ``the sum of the
taxable estate and the amount of the exemption allowed under
section 2052 or 2106(a)(4) in computing the taxable estate''.
(14) Subparagraph (B) of section 2207B(a)(1) is amended to
read as follows:
``(B) the sum of the taxable estate and the amount
of the exemption allowed under section 2052 or
2106(a)(4) in computing the taxable estate.''.
(15) Subsection (a) of section 2503 is amended by striking
``section 2522'' and inserting ``section 2521''.
(16) Paragraph (1) of section 6018(a) is amended by
striking ``the applicable exclusion amount in effect under
section 2010(c)'' and inserting ``the exemption amount under
section 2052''.
(17) Subparagraph (A) of section 6601(j)(2) is amended to
read as follows:
``(A) the amount of the tax which would be imposed
by chapter 11 on an amount of taxable estate equal to
$1,000,000, or''.
(18) The table of sections for part II of subchapter A of
chapter 11 is amended by striking the item relating to section
2010.
(19) The table of sections for part IV of subchapter A of
chapter 11 is amended by inserting after the item relating to
section 2051 the following new item:
``Sec. 2052. Exemption.''.
(20) The table of sections for subchapter A of chapter 12
is amended by striking the item relating to section 2505.
(21) The table of sections for subchapter C of chapter 12
is amended by inserting before the item relating to section
2522 the following new item:
``Sec. 2521. Exemption.''.
(d) Effective Date.--The amendments made by this section--
(1) insofar as they relate to the tax imposed by chapter 11
of the Internal Revenue Code of 1986, shall apply to estates of
decedents dying after December 31, 2000, and
(2) insofar as they relate to the tax imposed by chapter 12
of such Code, shall apply to gifts made after December 31,
2000.
Subtitle C--Modifications of Generation-skipping Transfer Tax
SEC. 521. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME TRANSFERS TO
TRUSTS; RETROACTIVE ALLOCATIONS.
(a) In General.--Section 2632 (relating to special rules for
allocation of GST exemption) is amended by redesignating subsection (c)
as subsection (e) and by inserting after subsection (b) the following
new subsections:
``(c) Deemed Allocation to Certain Lifetime Transfers to GST
Trusts.--
``(1) In general.--If any individual makes an indirect skip
during such individual's lifetime, any unused portion of such
individual's GST exemption shall be allocated to the property
transferred to the extent necessary to make the inclusion ratio
for such property zero. If the amount of the indirect skip
exceeds such unused portion, the entire unused portion shall be
allocated to the property transferred.
``(2) Unused portion.--For purposes of paragraph (1), the
unused portion of an individual's GST exemption is that portion
of such exemption which has not previously been--
``(A) allocated by such individual,
``(B) treated as allocated under subsection (b)
with respect to a direct skip occurring during or
before the calendar year in which the indirect skip is
made, or
``(C) treated as allocated under paragraph (1) with
respect to a prior indirect skip.
``(3) Definitions.--
``(A) Indirect skip.--For purposes of this
subsection, the term `indirect skip' means any transfer
of property (other than a direct skip) subject to the
tax imposed by chapter 12 made to a GST trust.
``(B) GST trust.--The term `GST trust' means a
trust that could have a generation-skipping transfer
with respect to the transferor unless--
``(i) the trust instrument provides that
more than 25 percent of the trust corpus must
be distributed to or may be withdrawn by 1 or
more individuals who are non-skip persons--
``(I) before the date that the
individual attains age 46,
``(II) on or before one or more
dates specified in the trust instrument
that will occur before the date that
such individual attains age 46, or
``(III) upon the occurrence of an
event that, in accordance with
regulations prescribed by the
Secretary, may reasonably be expected
to occur before the date that such
individual attains age 46;
``(ii) the trust instrument provides that
more than 25 percent of the trust corpus must
be distributed to or may be withdrawn by one or
more individuals who are non-skip persons and
who are living on the date of death of another
person identified in the instrument (by name or
by class) who is more than 10 years older than
such individuals;
``(iii) the trust instrument provides that,
if one or more individuals who are non-skip
persons die on or before a date or event
described in clause (i) or (ii), more than 25
percent of the trust corpus either must be
distributed to the estate or estates of one or
more of such individuals or is subject to a
general power of appointment exercisable by one
or more of such individuals;
``(iv) the trust is a trust any portion of
which would be included in the gross estate of
a non-skip person (other than the transferor)
if such person died immediately after the
transfer;
``(v) the trust is a charitable lead
annuity trust (within the meaning of section
2642(e)(3)(A)) or a charitable remainder
annuity trust or a charitable remainder
unitrust (within the meaning of section
664(d)); or
``(vi) the trust is a trust with respect to
which a deduction was allowed under section
2522 for the amount of an interest in the form
of the right to receive annual payments of a
fixed percentage of the net fair market value
of the trust property (determined yearly) and
which is required to pay principal to a non-
skip person if such person is alive when the
yearly payments for which the deduction was
allowed terminate.
For purposes of this subparagraph, the value of
transferred property shall not be considered to be
includible in the gross estate of a non-skip person or
subject to a right of withdrawal by reason of such
person holding a right to withdraw so much of such
property as does not exceed the amount referred to in
section 2503(b) with respect to any transferor, and it
shall be assumed that powers of appointment held by
non-skip persons will not be exercised.
``(4) Automatic allocations to certain gst trusts.--For
purposes of this subsection, an indirect skip to which section
2642(f) applies shall be deemed to have been made only at the
close of the estate tax inclusion period. The fair market value
of such transfer shall be the fair market value of the trust
property at the close of the estate tax inclusion period.
``(5) Applicability and effect.--
``(A) In general.--An individual--
``(i) may elect to have this subsection not
apply to--
``(I) an indirect skip, or
``(II) any or all transfers made by
such individual to a particular trust,
and
``(ii) may elect to treat any trust as a
GST trust for purposes of this subsection with
respect to any or all transfers made by such
individual to such trust.
``(B) Elections.--
``(i) Elections with respect to indirect
skips.--An election under subparagraph
(A)(i)(I) shall be deemed to be timely if filed
on a timely filed gift tax return for the
calendar year in which the transfer was made or
deemed to have been made pursuant to paragraph
(4) or on such later date or dates as may be
prescribed by the Secretary.
``(ii) Other elections.--An election under
clause (i)(II) or (ii) of subparagraph (A) may
be made on a timely filed gift tax return for
the calendar year for which the election is to
become effective.
``(d) Retroactive Allocations.--
``(1) In general.--If--
``(A) a non-skip person has an interest or a future
interest in a trust to which any transfer has been
made,
``(B) such person--
``(i) is a lineal descendant of a
grandparent of the transferor or of a
grandparent of the transferor's spouse or
former spouse, and
``(ii) is assigned to a generation below
the generation assignment of the transferor,
and
``(C) such person predeceases the transferor,
then the transferor may make an allocation of any of such
transferor's unused GST exemption to any previous transfer or
transfers to the trust on a chronological basis.
``(2) Special rules.--If the allocation under paragraph (1)
by the transferor is made on a gift tax return filed on or
before the date prescribed by section 6075(b) for gifts made
within the calendar year within which the non-skip person's
death occurred--
``(A) the value of such transfer or transfers for
purposes of section 2642(a) shall be determined as if
such allocation had been made on a timely filed gift
tax return for each calendar year within which each
transfer was made,
``(B) such allocation shall be effective
immediately before such death, and
``(C) the amount of the transferor's unused GST
exemption available to be allocated shall be determined
immediately before such death.
``(3) Future interest.--For purposes of this subsection, a
person has a future interest in a trust if the trust may permit
income or corpus to be paid to such person on a date or dates
in the future.''.
(b) Conforming Amendment.--Paragraph (2) of section 2632(b) is
amended by striking ``with respect to a direct skip'' and inserting
``or subsection (c)(1)''.
(c) Effective Dates.--
(1) Deemed allocation.--Section 2632(c) of the Internal
Revenue Code of 1986 (as added by subsection (a)), and the
amendment made by subsection (b), shall apply to transfers
subject to chapter 11 or 12 made after December 31, 1999, and
to estate tax inclusion periods ending after December 31, 1999.
(2) Retroactive allocations.--Section 2632(d) of the
Internal Revenue Code of 1986 (as added by subsection (a))
shall apply to deaths of non-skip persons occurring after
December 31, 1999.
SEC. 522. SEVERING OF TRUSTS.
(a) In General.--Subsection (a) of section 2642 (relating to
inclusion ratio) is amended by adding at the end the following new
paragraph:
``(3) Severing of trusts.--
``(A) In general.--If a trust is severed in a
qualified severance, the trusts resulting from such
severance shall be treated as separate trusts
thereafter for purposes of this chapter.
``(B) Qualified severance.--For purposes of
subparagraph (A)--
``(i) In general.--The term `qualified
severance' means the division of a single trust
and the creation (by any means available under
the governing instrument or under local law) of
two or more trusts if--
``(I) the single trust was divided
on a fractional basis, and
``(II) the terms of the new trusts,
in the aggregate, provide for the same
succession of interests of
beneficiaries as are provided in the
original trust.
``(ii) Trusts with inclusion ratio greater
than zero.--If a trust has an inclusion ratio
of greater than zero and less than 1, a
severance is a qualified severance only if the
single trust is divided into two trusts, one of
which receives a fractional share of the total
value of all trust assets equal to the
applicable fraction of the single trust
immediately before the severance. In such case,
the trust receiving such fractional share shall
have an inclusion ratio of zero and the other
trust shall have an inclusion ratio of 1.
``(iii) Regulations.--The term `qualified
severance' includes any other severance
permitted under regulations prescribed by the
Secretary.
``(C) Timing and manner of severances.--A severance
pursuant to this paragraph may be made at any time. The
Secretary shall prescribe by forms or regulations the
manner in which the qualified severance shall be
reported to the Secretary.''.
(b) Effective Date.--The amendment made by this section shall apply
to severances after December 31, 1999.
SEC. 523. MODIFICATION OF CERTAIN VALUATION RULES.
(a) Gifts for Which Gift Tax Return Filed or Deemed Allocation
Made.--Paragraph (1) of section 2642(b) (relating to valuation rules,
etc.) is amended to read as follows:
``(1) Gifts for which gift tax return filed or deemed
allocation made.--If the allocation of the GST exemption to any
transfers of property is made on a gift tax return filed on or
before the date prescribed by section 6075(b) for such transfer
or is deemed to be made under section 2632 (b)(1) or (c)(1)--
``(A) the value of such property for purposes of
subsection (a) shall be its value as finally determined
for purposes of chapter 12 (within the meaning of
section 2001(f)(2)), or, in the case of an allocation
deemed to have been made at the close of an estate tax
inclusion period, its value at the time of the close of
the estate tax inclusion period, and
``(B) such allocation shall be effective on and
after the date of such transfer, or, in the case of an
allocation deemed to have been made at the close of an
estate tax inclusion period, on and after the close of
such estate tax inclusion period.''.
(b) Transfers at Death.--Subparagraph (A) of section 2642(b)(2) is
amended to read as follows:
``(A) Transfers at death.--If property is
transferred as a result of the death of the transferor,
the value of such property for purposes of subsection
(a) shall be its value as finally determined for
purposes of chapter 11; except that, if the
requirements prescribed by the Secretary respecting
allocation of post-death changes in value are not met,
the value of such property shall be determined as of
the time of the distribution concerned.''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers subject to chapter 11 or 12 of the Internal Revenue
Code of 1986 made after December 31, 1999.
SEC. 524. RELIEF PROVISIONS.
(a) In General.--Section 2642 is amended by adding at the end the
following new subsection:
``(g) Relief Provisions.--
``(1) Relief for late elections.--
``(A) In general.--The Secretary shall by
regulation prescribe such circumstances and procedures
under which extensions of time will be granted to
make--
``(i) an allocation of GST exemption
described in paragraph (1) or (2) of subsection
(b), and
``(ii) an election under subsection (b)(3)
or (c)(5) of section 2632.
Such regulations shall include procedures for
requesting comparable relief with respect to transfers
made before the date of the enactment of this
paragraph.
``(B) Basis for determinations.--In determining
whether to grant relief under this paragraph, the
Secretary shall take into account all relevant
circumstances, including evidence of intent contained
in the trust instrument or instrument of transfer and
such other factors as the Secretary deems relevant. For
purposes of determining whether to grant relief under
this paragraph, the time for making the allocation (or
election) shall be treated as if not expressly
prescribed by statute.
``(2) Substantial compliance.--An allocation of GST
exemption under section 2632 that demonstrates an intent to
have the lowest possible inclusion ratio with respect to a
transfer or a trust shall be deemed to be an allocation of so
much of the transferor's unused GST exemption as produces the
lowest possible inclusion ratio. In determining whether there
has been substantial compliance, all relevant circumstances
shall be taken into account, including evidence of intent
contained in the trust instrument or instrument of transfer and
such other factors as the Secretary deems relevant.''.
(b) Effective Dates.--
(1) Relief for late elections.--Section 2642(g)(1) of the
Internal Revenue Code of 1986 (as added by subsection (a))
shall apply to requests pending on, or filed after, December
31, 1999.
(2) Substantial compliance.--Section 2642(g)(2) of such
Code (as so added) shall take effect on the date of the
enactment of this Act and shall apply to transfers subject to
chapter 11 or 12 of the Internal Revenue Code of 1986 made
after December 31, 1999.
Subtitle D--Conservation Easements
SEC. 531. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION EASEMENTS.
(a) Where Land Is Located.--
(1) In general.--Clause (i) of section 2031(c)(8)(A)
(defining land subject to a conservation easement) is amended--
(A) by striking ``25 miles'' both places it appears
and inserting ``50 miles'', and
(B) striking ``10 miles'' and inserting ``25
miles''.
(2) Effective date.--The amendments made by this subsection
shall apply to estates of decedents dying after December 31,
1999.
(b) Clarification of Date for Determining Value of Land and
Easement.--
(1) In general.--Section 2031(c)(2) (defining applicable
percentage) is amended by adding at the end the following new
sentence: ``The values taken into account under the preceding
sentence shall be such values as of the date of the
contribution referred to in paragraph (8)(B).''.
(2) Effective date.--The amendment made by this subsection
shall apply to estates of decedents dying after December 31,
1997.
TITLE VI--TAX RELIEF FOR DISTRESSED COMMUNITIES AND INDUSTRIES
Subtitle A--American Community Renewal Act of 1999
SEC. 601. SHORT TITLE.
This subtitle may be cited as the ``American Community Renewal Act
of 1999''.
SEC. 602. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.
(a) In General.--Chapter 1 is amended by adding at the end the
following new subchapter:
``Subchapter X--Renewal Communities
``Part I. Designation.
``Part II. Renewal community capital
gain; renewal community
business.
``Part III. Family development accounts.
``Part IV. Additional incentives.
``PART I--DESIGNATION
``Sec. 1400E. Designation of renewal
communities.
``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
``(a) Designation.--
``(1) Definitions.--For purposes of this title, the term
`renewal community' means any area--
``(A) which is nominated by one or more local
governments and the State or States in which it is
located for designation as a renewal community
(hereinafter in this section referred to as a
`nominated area'); and
``(B) which the Secretary of Housing and Urban
Development designates as a renewal community, after
consultation with--
``(i) the Secretaries of Agriculture,
Commerce, Labor, and the Treasury; the Director
of the Office of Management and Budget; and the
Administrator of the Small Business
Administration; and
``(ii) in the case of an area on an Indian
reservation, the Secretary of the Interior.
``(2) Number of designations.--
``(A) In general.--The Secretary of Housing and
Urban Development may designate not more than 15
nominated areas as renewal communities.
``(B) Minimum designation in rural areas.--Of the
areas designated under paragraph (1), at least 3 must
be areas--
``(i) which are within a local government
jurisdiction or jurisdictions with a population
of less than 50,000,
``(ii) which are outside of a metropolitan
statistical area (within the meaning of section
143(k)(2)(B)), or
``(iii) which are determined by the
Secretary of Housing and Urban Development,
after consultation with the Secretary of
Commerce, to be rural areas.
``(3) Areas designated based on degree of poverty, etc.--
``(A) In general.--Except as otherwise provided in
this section, the nominated areas designated as renewal
communities under this subsection shall be those
nominated areas with the highest average ranking with
respect to the criteria described in subparagraphs (B),
(C), and (D) of subsection (c)(3). For purposes of the
preceding sentence, an area shall be ranked within each
such criterion on the basis of the amount by which the
area exceeds such criterion, with the area which
exceeds such criterion by the greatest amount given the
highest ranking.
``(B) Exception where inadequate course of action,
etc.--An area shall not be designated under
subparagraph (A) if the Secretary of Housing and Urban
Development determines that the course of action
described in subsection (d)(2) with respect to such
area is inadequate.
``(C) Priority for empowerment zones and enterprise
communities with respect to first 10 designations.--
With respect to the first 10 designations made under
this section--
``(i) all shall be chosen from nominated
areas which are empowerment zones or enterprise
communities (and are otherwise eligible for
designation under this section); and
``(ii) two shall be areas described in
paragraph (2)(B).
``(4) Limitation on designations.--
``(A) Publication of regulations.--The Secretary of
Housing and Urban Development shall prescribe by
regulation no later than 4 months after the date of the
enactment of this section, after consultation with the
officials described in paragraph (1)(B)--
``(i) the procedures for nominating an area
under paragraph (1)(A);
``(ii) the parameters relating to the size
and population characteristics of a renewal
community; and
``(iii) the manner in which nominated areas
will be evaluated based on the criteria
specified in subsection (d).
``(B) Time limitations.--The Secretary of Housing
and Urban Development may designate nominated areas as
renewal communities only during the 36-month period
beginning on the first day of the first month following
the month in which the regulations described in
subparagraph (A) are prescribed.
``(C) Procedural rules.--The Secretary of Housing
and Urban Development shall not make any designation of
a nominated area as a renewal community under paragraph
(2) unless--
``(i) the local governments and the States
in which the nominated area is located have the
authority--
``(I) to nominate such area for
designation as a renewal community;
``(II) to make the State and local
commitments described in subsection
(d); and
``(III) to provide assurances
satisfactory to the Secretary of
Housing and Urban Development that such
commitments will be fulfilled,
``(ii) a nomination regarding such area is
submitted in such a manner and in such form,
and contains such information, as the Secretary
of Housing and Urban Development shall by
regulation prescribe; and
``(iii) the Secretary of Housing and Urban
Development determines that any information
furnished is reasonably accurate.
``(5) Nomination process for indian reservations.--For
purposes of this subchapter, in the case of a nominated area on
an Indian reservation, the reservation governing body (as
determined by the Secretary of the Interior) shall be treated
as being both the State and local governments with respect to
such area.
``(b) Period for Which Designation Is in Effect.--
``(1) In general.--Any designation of an area as a renewal
community shall remain in effect during the period beginning on
the date of the designation and ending on the earliest of--
``(A) December 31, 2007,
``(B) the termination date designated by the State
and local governments in their nomination, or
``(C) the date the Secretary of Housing and Urban
Development revokes such designation.
``(2) Revocation of designation.--The Secretary of Housing
and Urban Development may revoke the designation under this
section of an area if such Secretary determines that the local
government or the State in which the area is located--
``(A) has modified the boundaries of the area, or
``(B) is not complying substantially with, or fails
to make progress in achieving, the State or local
commitments, respectively, described in subsection (d).
``(c) Area and Eligibility Requirements.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate a nominated area as a renewal
community under subsection (a) only if the area meets the
requirements of paragraphs (2) and (3) of this subsection.
``(2) Area requirements.--A nominated area meets the
requirements of this paragraph if--
``(A) the area is within the jurisdiction of one or
more local governments;
``(B) the boundary of the area is continuous; and
``(C) the area--
``(i) has a population, of at least--
``(I) 4,000 if any portion of such
area (other than a rural area described
in subsection (a)(2)(B)(i)) is located
within a metropolitan statistical area
(within the meaning of section
143(k)(2)(B)) which has a population of
50,000 or greater; or
``(II) 1,000 in any other case; or
``(ii) is entirely within an Indian
reservation (as determined by the Secretary of
the Interior).
``(3) Eligibility requirements.--A nominated area meets the
requirements of this paragraph if the State and the local
governments in which it is located certify (and the Secretary
of Housing and Urban Development, after such review of
supporting data as he deems appropriate, accepts such
certification) that--
``(A) the area is one of pervasive poverty,
unemployment, and general distress;
``(B) the unemployment rate in the area, as
determined by the most recent available data, was at
least 1\1/2\ times the national unemployment rate for
the period to which such data relate;
``(C) the poverty rate for each population census
tract within the nominated area is at least 20 percent;
and
``(D) in the case of an urban area, at least 70
percent of the households living in the area have
incomes below 80 percent of the median income of
households within the jurisdiction of the local
government (determined in the same manner as under
section 119(b)(2) of the Housing and Community
Development Act of 1974).
``(4) Consideration of high incidence of crime.--The
Secretary of Housing and Urban Development shall take into
account, in selecting nominated areas for designation as
renewal communities under this section, the extent to which
such areas have a high incidence of crime.
``(5) Consideration of communities identified in gao
study.--The Secretary of Housing and Urban Development shall
take into account, in selecting nominated areas for designation
as renewal communities under this section, if the area has
census tracts identified in the May 12, 1998, report of the
Government Accounting Office regarding the identification of
economically distressed areas.
``(d) Required State and Local Commitments.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate any nominated area as a renewal
community under subsection (a) only if--
``(A) the local government and the State in which
the area is located agree in writing that, during any
period during which the area is a renewal community,
such governments will follow a specified course of
action which meets the requirements of paragraph (2)
and is designed to reduce the various burdens borne by
employers or employees in such area; and
``(B) the economic growth promotion requirements of
paragraph (3) are met.
``(2) Course of action.--
``(A) In general.--A course of action meets the
requirements of this paragraph if such course of action
is a written document, signed by a State (or local
government) and neighborhood organizations, which
evidences a partnership between such State or
government and community-based organizations and which
commits each signatory to specific and measurable
goals, actions, and timetables. Such course of action
shall include at least five of the following:
``(i) A reduction of tax rates or fees
applying within the renewal community.
``(ii) An increase in the level of
efficiency of local services within the renewal
community.
``(iii) Crime reduction strategies, such as
crime prevention (including the provision of
such services by nongovernmental entities).
``(iv) Actions to reduce, remove, simplify,
or streamline governmental requirements
applying within the renewal community.
``(v) Involvement in the program by private
entities, organizations, neighborhood
organizations, and community groups,
particularly those in the renewal community,
including a commitment from such private
entities to provide jobs and job training for,
and technical, financial, or other assistance
to, employers, employees, and residents from
the renewal community.
``(vi) State or local income tax benefits
for fees paid for services performed by a
nongovernmental entity which were formerly
performed by a governmental entity.
``(vii) The gift (or sale at below fair
market value) of surplus real property (such as
land, homes, and commercial or industrial
structures) in the renewal community to
neighborhood organizations, community
development corporations, or private companies.
``(B) Recognition of past efforts.--For purposes of
this section, in evaluating the course of action agreed
to by any State or local government, the Secretary of
Housing and Urban Development shall take into account
the past efforts of such State or local government in
reducing the various burdens borne by employers and
employees in the area involved.
``(3) Economic growth promotion requirements.--The economic
growth promotion requirements of this paragraph are met with
respect to a nominated area if the local government and the
State in which such area is located certify in writing that
such government and State, respectively, have repealed or
otherwise will not enforce within the area, if such area is
designated as a renewal community--
``(A) licensing requirements for occupations that
do not ordinarily require a professional degree;
``(B) zoning restrictions on home-based businesses
which do not create a public nuisance;
``(C) permit requirements for street vendors who do
not create a public nuisance;
``(D) zoning or other restrictions that impede the
formation of schools or child care centers; and
``(E) franchises or other restrictions on
competition for businesses providing public services,
including but not limited to taxicabs, jitneys, cable
television, or trash hauling,
except to the extent that such regulation of businesses and
occupations is necessary for and well-tailored to the
protection of health and safety.
``(e) Coordination With Treatment of Empowerment Zones and
Enterprise Communities.--For purposes of this title, if there are in
effect with respect to the same area both--
``(1) a designation as a renewal community; and
``(2) a designation as an empowerment zone or enterprise
community,
both of such designations shall be given full effect with respect to
such area.
``(f) Definitions and Special Rules.--For purposes of this
subchapter--
``(1) Governments.--If more than one government seeks to
nominate an area as a renewal community, any reference to, or
requirement of, this section shall apply to all such
governments.
``(2) State.--The term `State' includes Puerto Rico, the
Virgin Islands of the United States, Guam, American Samoa, the
Northern Mariana Islands, and any other possession of the
United States.
``(3) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish,
village, or other general purpose political subdivision
of a State;
``(B) any combination of political subdivisions
described in subparagraph (A) recognized by the
Secretary of Housing and Urban Development; and
``(C) the District of Columbia.
``(4) Application of rules relating to census tracts and
census data.--The rules of sections 1392(b)(4) and 1393(a)(9)
shall apply.
``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS
``Sec. 1400F. Renewal community capital
gain.
``Sec. 1400G. Renewal community business
defined.
``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
``(a) General Rule.--Gross income does not include any qualified
capital gain recognized on the sale or exchange of a qualified
community asset held for more than 5 years.
``(b) Qualified Community Asset.--For purposes of this section--
``(1) In general.--The term `qualified community asset'
means--
``(A) any qualified community stock;
``(B) any qualified community partnership interest;
and
``(C) any qualified community business property.
``(2) Qualified community stock.--
``(A) In general.--Except as provided in
subparagraph (B), the term `qualified community stock'
means any stock in a domestic corporation if--
``(i) such stock is acquired by the
taxpayer after December 31, 2000, and before
January 1, 2008, at its original issue
(directly or through an underwriter) from the
corporation solely in exchange for cash;
``(ii) as of the time such stock was
issued, such corporation was a renewal
community business (or, in the case of a new
corporation, such corporation was being
organized for purposes of being a renewal
community business); and
``(iii) during substantially all of the
taxpayer's holding period for such stock, such
corporation qualified as a renewal community
business.
``(B) Redemptions.--A rule similar to the rule of
section 1202(c)(3) shall apply for purposes of this
paragraph.
``(3) Qualified community partnership interest.--The term
`qualified community partnership interest' means any capital or
profits interest in a domestic partnership if--
``(A) such interest is acquired by the taxpayer
after December 31, 2000, and before January 1, 2008;
``(B) as of the time such interest was acquired,
such partnership was a renewal community business (or,
in the case of a new partnership, such partnership was
being organized for purposes of being a renewal
community business); and
``(C) during substantially all of the taxpayer's
holding period for such interest, such partnership
qualified as a renewal community business.
A rule similar to the rule of paragraph (2)(B) shall apply for
purposes of this paragraph.
``(4) Qualified community business property.--
``(A) In general.--The term `qualified community
business property' means tangible property if--
``(i) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after December 31, 2000, and before
January 1, 2008;
``(ii) the original use of such property in
the renewal community commences with the
taxpayer; and
``(iii) during substantially all of the
taxpayer's holding period for such property,
substantially all of the use of such property
was in a renewal community business of the
taxpayer.
``(B) Special rule for substantial improvements.--
The requirements of clauses (i) and (ii) of
subparagraph (A) shall be treated as satisfied with
respect to--
``(i) property which is substantially
improved (within the meaning of section
1400B(b)(4)(B)(ii)) by the taxpayer before
January 1, 2008; and
``(ii) any land on which such property is
located.
``(c) Certain Rules To Apply.--Rules similar to the rules of
paragraphs (5), (6), and (7) of subsection (b), and subsections (e),
(f), and (g), of section 1400B shall apply for purposes of this
section.
``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
``For purposes of this part, the term `renewal community business'
means any entity or proprietorship which would be a qualified business
entity or qualified proprietorship under section 1397B if--
``(1) references to renewal communities were substituted
for references to empowerment zones in such section; and
``(2) `80 percent' were substituted for `50 percent' in
subsections (b)(2) and (c)(1) of such section.
``PART III--FAMILY DEVELOPMENT ACCOUNTS
``Sec. 1400H. Family development accounts
for renewal community EITC
recipients.
``Sec. 1400I. Designation of earned
income tax credit payments for
deposit to family development
account.
``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL COMMUNITY EITC
RECIPIENTS.
``(a) Allowance of Deduction.--
``(1) In general.--There shall be allowed as a deduction--
``(A) in the case of a qualified individual, the
amount paid in cash for the taxable year by such
individual to any family development account for such
individual's benefit; and
``(B) in the case of any person other than a
qualified individual, the amount paid in cash for the
taxable year by such person to any family development
account for the benefit of a qualified individual but
only if the amount so paid is designated for purposes
of this section by such individual.
``(2) Limitation.--
``(A) In general.--The amount allowable as a
deduction to any individual for any taxable year by
reason of paragraph (1)(A) shall not exceed the lesser
of--
``(i) $2,000, or
``(ii) an amount equal to the compensation
includible in the individual's gross income for
such taxable year.
``(B) Persons donating to family development
accounts of others.--The amount which may be designated
under paragraph (1)(B) by any qualified individual for
any taxable year of such individual shall not exceed
$1,000.
``(3) Special rules for certain married individuals.--Rules
similar to rules of section 219(c) shall apply to the
limitation in paragraph (2)(A).
``(4) Coordination with iras.--No deduction shall be
allowed under this section for any taxable year to any person
by reason of a payment to an account for the benefit of a
qualified individual if any amount is paid for such taxable
year into an individual retirement account (including a Roth
IRA) for the benefit of such individual.
``(5) Rollovers.--No deduction shall be allowed under this
section with respect to any rollover contribution.
``(b) Tax Treatment of Distributions.--
``(1) Inclusion of amounts in gross income.--Except as
otherwise provided in this subsection, any amount paid or
distributed out of a family development account shall be
included in gross income by the payee or distributee, as the
case may be.
``(2) Exclusion of qualified family development
distributions.--Paragraph (1) shall not apply to any qualified
family development distribution.
``(c) Qualified Family Development Distribution.--For purposes of
this section--
``(1) In general.--The term `qualified family development
distribution' means any amount paid or distributed out of a
family development account which would otherwise be includible
in gross income, to the extent that such payment or
distribution is used exclusively to pay qualified family
development expenses for the holder of the account or the
spouse or dependent (as defined in section 152) of such holder.
``(2) Qualified family development expenses.--The term
`qualified family development expenses' means any of the
following:
``(A) Qualified higher education expenses.
``(B) Qualified first-time homebuyer costs.
``(C) Qualified business capitalization costs.
``(D) Qualified medical expenses.
``(E) Qualified rollovers.
``(3) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' has the meaning given such term by
section 72(t)(7), determined by treating postsecondary
vocational educational schools as eligible educational
institutions.
``(B) Postsecondary vocational education school.--
The term `postsecondary vocational educational school'
means an area vocational education school (as defined
in subparagraph (C) or (D) of section 521(4) of the
Carl D. Perkins Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4))) which is in any
State (as defined in section 521(33) of such Act), as
such sections are in effect on the date of the
enactment of this section.
``(C) Coordination with other benefits.--The amount
of qualified higher education expenses for any taxable
year shall be reduced as provided in section 25A(g)(2).
``(4) Qualified first-time homebuyer costs.--The term
`qualified first-time homebuyer costs' means qualified
acquisition costs (as defined in section 72(t)(8) without
regard to subparagraph (B) thereof) with respect to a principal
residence (within the meaning of section 121) for a qualified
first-time homebuyer (as defined in section 72(t)(8)).
``(5) Qualified business capitalization costs.--
``(A) In general.--The term `qualified business
capitalization costs' means qualified expenditures for
the capitalization of a qualified business pursuant to
a qualified plan.
``(B) Qualified expenditures.--The term `qualified
expenditures' means expenditures included in a
qualified plan, including capital, plant, equipment,
working capital, and inventory expenses.
``(C) Qualified business.--The term `qualified
business' means any trade or business other than any
trade or business--
``(i) which consists of the operation of
any facility described in section 144(c)(6)(B),
or
``(ii) which contravenes any law.
``(D) Qualified plan.--The term `qualified plan'
means a business plan which meets such requirements as
the Secretary may specify.
``(6) Qualified medical expenses.--The term `qualified
medical expenses' means any amount paid during the taxable
year, not compensated for by insurance or otherwise, for
medical care (as defined in section 213(d)) of the taxpayer,
his spouse, or his dependent (as defined in section 152).
``(7) Qualified rollovers.--The term `qualified rollover'
means any amount paid from a family development account of a
taxpayer into another such account established for the benefit
of--
``(A) such taxpayer, or
``(B) any qualified individual who is--
``(i) the spouse of such taxpayer, or
``(ii) any dependent (as defined in section
152) of the taxpayer.
Rules similar to the rules of section 408(d)(3) shall apply for
purposes of this paragraph.
``(d) Tax Treatment of Accounts.--
``(1) In general.--Any family development account is exempt
from taxation under this subtitle unless such account has
ceased to be a family development account by reason of
paragraph (2). Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc., organizations). Notwithstanding any other
provision of this title (including chapters 11 and 12), the
basis of any person in such an account is zero.
``(2) Loss of exemption in case of prohibited
transactions.--For purposes of this section, rules similar to
the rules of section 408(e) shall apply.
``(3) Other rules to apply.--Rules similar to the rules of
paragraphs (4), (5), and (6) of section 408(d) shall apply for
purposes of this section.
``(e) Family Development Account.--For purposes of this title, the
term `family development account' means a trust created or organized in
the United States for the exclusive benefit of a qualified individual
or his beneficiaries, but only if the written governing instrument
creating the trust meets the following requirements:
``(1) Except in the case of a qualified rollover (as
defined in subsection (c)(7))--
``(A) no contribution will be accepted unless it is
in cash; and
``(B) contributions will not be accepted for the
taxable year in excess of $3,000.
``(2) The requirements of paragraphs (2) through (6) of
section 408(a) are met.
``(f) Qualified Individual.--For purposes of this section, the term
`qualified individual' means, for any taxable year, an individual--
``(1) who is a bona fide resident of a renewal community
throughout the taxable year; and
``(2) to whom a credit was allowed under section 32 for the
preceding taxable year.
``(g) Other Definitions and Special Rules.--
``(1) Compensation.--The term `compensation' has the
meaning given such term by section 219(f)(1).
``(2) Married individuals.--The maximum deduction under
subsection (a) shall be computed separately for each
individual, and this section shall be applied without regard to
any community property laws.
``(3) Time when contributions deemed made.--For purposes of
this section, a taxpayer shall be deemed to have made a
contribution to a family development 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).
``(4) Employer payments; custodial accounts.--Rules similar
to the rules of sections 219(f)(5) and 408(h) shall apply for
purposes of this section.
``(5) Reports.--The trustee of a family development account
shall make such reports regarding such account to the Secretary
and to the individual for whom the account is maintained with
respect to contributions (and the years to which they relate),
distributions, and such other matters as the Secretary may
require under regulations. The reports required by this
paragraph--
``(A) shall be filed at such time and in such
manner as the Secretary prescribes in such regulations;
and
``(B) shall be furnished to individuals--
``(i) not later than January 31 of the
calendar year following the calendar year to
which such reports relate; and
``(ii) in such manner as the Secretary
prescribes in such regulations.
``(6) Investment in collectibles treated as
distributions.--Rules similar to the rules of section 408(m)
shall apply for purposes of this section.
``(h) Penalty for Distributions Not Used for Qualified Family
Development Expenses.--
``(1) In general.--If any amount is distributed from a
family development account and is not used exclusively to pay
qualified family development expenses for the holder of the
account or the spouse or dependent (as defined in section 152)
of such holder, the tax imposed by this chapter for the taxable
year of such distribution shall be increased by 10 percent of
the portion of such amount which is includible in gross income.
``(2) Exception for certain distributions.--Paragraph (1)
shall not apply to distributions which are--
``(A) made on or after the date on which the
account holder attains age 59\1/2\,
``(B) made to a beneficiary (or the estate of the
account holder) on or after the death of the account
holder, or
``(C) attributable to the account holder's being
disabled within the meaning of section 72(m)(7).
``(i) Application of Section.--This section shall apply to amounts
paid to a family development account for any taxable year beginning
after December 31, 2000, and before January 1, 2008.
``SEC. 1400I. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR
DEPOSIT TO FAMILY DEVELOPMENT ACCOUNT.
``(a) In General.--With respect to the return of any qualified
individual (as defined in section 1400H(f)) for the taxable year of the
tax imposed by this chapter, such individual may designate that a
specified portion (not less than $1) of any overpayment of tax for such
taxable year which is attributable to the earned income tax credit
shall be deposited by the Secretary into a family development account
of such individual. The Secretary shall so deposit such portion
designated under this subsection.
``(b) Manner and Time of Designation.--A designation under
subsection (a) may be made with respect to any taxable year--
``(1) at the time of filing the return of the tax imposed
by this chapter for such taxable year, or
``(2) at any other time (after the time of filing the
return of the tax imposed by this chapter for such taxable
year) specified in regulations prescribed by the Secretary.
Such designation shall be made in such manner as the Secretary
prescribes by regulations.
``(c) Portion Attributable to Earned Income Tax Credit.--For
purposes of subsection (a), an overpayment for any taxable year shall
be treated as attributable to the earned income tax credit to the
extent that such overpayment does not exceed the credit allowed to the
taxpayer under section 32 for such taxable year.
``(d) Overpayments Treated as Refunded.--For purposes of this
title, any portion of an overpayment of tax designated under subsection
(a) shall be treated as being refunded to the taxpayer as of the last
date prescribed for filing the return of tax imposed by this chapter
(determined without regard to extensions) or, if later, the date the
return is filed.
``(e) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2007.
``PART IV--ADDITIONAL INCENTIVES
``Sec. 1400K. Commercial revitalization
deduction.
``Sec. 1400L. Increase in expensing under
section 179.
``SEC. 1400K. COMMERCIAL REVITALIZATION DEDUCTION.
``(a) General Rule.--At the election of the taxpayer, either--
``(1) one-half of any qualified revitalization expenditures
chargeable to capital account with respect to any qualified
revitalization building shall be allowable as a deduction for
the taxable year in which the building is placed in service, or
``(2) a deduction for all such expenditures shall be
allowable ratably over the 120-month period beginning with the
month in which the building is placed in service.
The deduction provided by this section with respect to such expenditure
shall be in lieu of any depreciation deduction otherwise allowable on
account of such expenditure.
``(b) Qualified Revitalization Buildings and Expenditures.--For
purposes of this section--
``(1) Qualified revitalization building.--The term
`qualified revitalization building' means any building (and its
structural components) if--
``(A) such building is located in a renewal
community and is placed in service after December 31,
2000;
``(B) a commercial revitalization deduction amount
is allocated to the building under subsection (d); and
``(C) depreciation (or amortization in lieu of
depreciation) is allowable with respect to the building
(without regard to this section).
``(2) Qualified revitalization expenditure.--
``(A) In general.--The term `qualified
revitalization expenditure' means any amount properly
chargeable to capital account--
``(i) for property for which depreciation
is allowable under section 168 (without regard
to this section) and which is--
``(I) nonresidential real property;
or
``(II) an addition or improvement
to property described in subclause (I);
``(ii) in connection with the construction
of any qualified revitalization building which
was not previously placed in service or in
connection with the substantial rehabilitation
(within the meaning of section 47(c)(1)(C)) of
a building which was placed in service before
the beginning of such rehabilitation; and
``(iii) for land (including land which is
functionally related to such property and
subordinate thereto).
``(B) Dollar limitation.--The aggregate amount
which may be treated as qualified revitalization
expenditures with respect to any qualified
revitalization building for any taxable year shall not
exceed the excess of--
``(i) $10,000,000, reduced by
``(ii) any such expenditures with respect
to the building taken into account by the
taxpayer or any predecessor in determining the
amount of the deduction under this section for
all preceding taxable years.
``(C) Certain expenditures not included.--The term
`qualified revitalization expenditure' does not
include--
``(i) Acquisition costs.--The costs of
acquiring any building or interest therein and
any land in connection with such building to
the extent that such costs exceed 30 percent of
the qualified revitalization expenditures
determined without regard to this clause.
``(ii) Credits.--Any expenditure which the
taxpayer may take into account in computing any
credit allowable under this title unless the
taxpayer elects to take the expenditure into
account only for purposes of this section.
``(c) When Expenditures Taken Into Account.--Qualified
revitalization expenditures with respect to any qualified
revitalization building shall be taken into account for the taxable
year in which the qualified revitalization building is placed in
service. For purposes of the preceding sentence, a substantial
rehabilitation of a building shall be treated as a separate building.
``(d) Limitation on Aggregate Deductions Allowable With Respect to
Buildings Located in a State.--
``(1) In general.--The amount of the deduction determined
under this section for any taxable year with respect to any
building shall not exceed the commercial revitalization
deduction amount (in the case of an amount determined under
subsection (a)(2), the present value of such amount as
determined under the rules of section 42(b)(2)(C) by
substituting `100 percent' for `72 percent' in clause (ii)
thereof) allocated to such building under this subsection by
the commercial revitalization agency. Such allocation shall be
made at the same time and in the same manner as under
paragraphs (1) and (7) of section 42(h).
``(2) Commercial revitalization deduction amount for
agencies.--
``(A) In general.--The aggregate commercial
revitalization deduction amount which a commercial
revitalization agency may allocate for any calendar
year is the amount of the State commercial
revitalization deduction ceiling determined under this
paragraph for such calendar year for such agency.
``(B) State commercial revitalization deduction
ceiling.--The State commercial revitalization deduction
ceiling applicable to any State--
``(i) for each calendar year after 2000 and
before 2008 is $6,000,000 for each renewal
community in the State; and
``(ii) zero for each calendar year
thereafter.
``(C) Commercial revitalization agency.--For
purposes of this section, the term `commercial
revitalization agency' means any agency authorized by a
State to carry out this section.
``(e) Responsibilities of Commercial Revitalization Agencies.--
``(1) Plans for allocation.--Notwithstanding any other
provision of this section, the commercial revitalization
deduction amount with respect to any building shall be zero
unless--
``(A) such amount was allocated pursuant to a
qualified allocation plan of the commercial
revitalization agency which is approved (in accordance
with rules similar to the rules of section 147(f)(2)
(other than subparagraph (B)(ii) thereof)) by the
governmental unit of which such agency is a part; and
``(B) such agency notifies the chief executive
officer (or its equivalent) of the local jurisdiction
within which the building is located of such allocation
and provides such individual a reasonable opportunity
to comment on the allocation.
``(2) Qualified allocation plan.--For purposes of this
subsection, the term `qualified allocation plan' means any
plan--
``(A) which sets forth selection criteria to be
used to determine priorities of the commercial
revitalization agency which are appropriate to local
conditions;
``(B) which considers--
``(i) the degree to which a project
contributes to the implementation of a
strategic plan that is devised for a renewal
community through a citizen participation
process;
``(ii) the amount of any increase in
permanent, full-time employment by reason of
any project; and
``(iii) the active involvement of residents
and nonprofit groups within the renewal
community; and
``(C) which provides a procedure that the agency
(or its agent) will follow in monitoring compliance
with this section.
``(f) Regulations.--For purposes of this section, the Secretary
shall, by regulations, provide for the application of rules similar to
the rules of section 49 and subsections (a) and (b) of section 50.
``(g) Termination.--This section shall not apply to any building
placed in service after December 31, 2007.
``SEC. 1400L. INCREASE IN EXPENSING UNDER SECTION 179.
``(a) General Rule.--In the case of a renewal community business
(as defined in section 1400G), for purposes of section 179--
``(1) the limitation under section 179(b)(1) shall be
increased by the lesser of--
``(A) $35,000; or
``(B) the cost of section 179 property which is
qualified renewal property placed in service during the
taxable year; and
``(2) the amount taken into account under section 179(b)(2)
with respect to any section 179 property which is qualified
renewal property shall be 50 percent of the cost thereof.
``(b) Recapture.--Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified renewal property
which ceases to be used in a renewal community by a renewal community
business.
``(c) Qualified Renewal Property.--For purposes of this section--
``(1) In general.--The term `qualified renewal property'
means any property to which section 168 applies (or would apply
but for section 179) if--
``(A) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after
December 31, 2000, and before January 1, 2008; and
``(B) such property would be qualified zone
property (as defined in section 1397C) if references to
renewal communities were substituted for references to
empowerment zones in section 1397C.
``(2) Certain rules to apply.--The rules of subsections
(a)(2) and (b) of section 1397C shall apply for purposes of
this section.''.
SEC. 603. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS TO
RENEWAL COMMUNITIES.
(a) Extension.--Paragraph (2) of section 198(c) (defining targeted
area) is amended by redesignating subparagraph (C) as subparagraph (D)
and by inserting after subparagraph (B) the following new subparagraph:
``(C) Renewal communities included.--Except as
provided in subparagraph (B), such term shall include a
renewal community (as defined in section 1400E) with
respect to expenditures paid or incurred after December
31, 2000.''.
(b) Extension of Termination Date for Renewal Communities.--
Subsection (h) of section 198 is amended by inserting before the period
``(December 31, 2007, in the case of a renewal community, as defined in
section 1400E).''.
SEC. 604. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR RENEWAL
COMMUNITIES.
(a) Extension.--Subsection (c) of section 51 (relating to
termination) is amended by adding at the end the following new
paragraph:
``(5) Extension of credit for renewal communities.--
``(A) In general.--In the case of an individual who
begins work for the employer after the date contained
in paragraph (4)(B), for purposes of section 38--
``(i) in lieu of applying subsection (a),
the amount of the work opportunity credit
determined under this section for the taxable
year shall be equal to--
``(I) 15 percent of the qualified
first-year wages for such year; and
``(II) 30 percent of the qualified
second-year wages for such year;
``(ii) subsection (b)(3) shall be applied
by substituting `$10,000' for `$6,000';
``(iii) paragraph (4)(B) shall be applied
by substituting for the date contained therein
the last day for which the designation under
section 1400E of the renewal community referred
to in subparagraph (B)(i) is in effect; and
``(iv) rules similar to the rules of
section 51A(b)(5)(C) shall apply.
``(B) Qualified first- and second-year wages.--For
purposes of subparagraph (A)--
``(i) In general.--The term `qualified
wages' means, with respect to each 1-year
period referred to in clause (ii) or (iii), as
the case may be, the wages paid or incurred by
the employer during the taxable year to any
individual but only if--
``(I) the employer is engaged in a
trade or business in a renewal
community throughout such 1-year
period;
``(II) the principal place of abode
of such individual is in such renewal
community throughout such 1-year
period; and
``(III) substantially all of the
services which such individual performs
for the employer during such 1-year
period are performed in such renewal
community.
``(ii) Qualified first-year wages.--The
term `qualified first-year wages' means, with
respect to any individual, qualified wages
attributable to service rendered during the 1-
year period beginning with the day the
individual begins work for the employer.
``(iii) Qualified second-year wages.--The
term `qualified second-year wages' means, with
respect to any individual, qualified wages
attributable to service rendered during the 1-
year period beginning on the day after the last
day of the 1-year period with respect to such
individual determined under clause (ii).''.
(b) Congruent Treatment of Renewal Communities and Enterprise Zones
for Purposes of Youth Residence Requirements.--
(1) High-risk youth.--Subparagraphs (A)(ii) and (B) of
section 51(d)(5) are each amended by striking ``empowerment
zone or enterprise community'' and inserting ``empowerment
zone, enterprise community, or renewal community''.
(2) Qualified summer youth employee.--Clause (iv) of
section 51(d)(7)(A) is amended by striking ``empowerment zone
or enterprise community'' and inserting ``empowerment zone,
enterprise community, or renewal community''.
(3) Headings.--Paragraphs (5)(B) and (7)(C) of section
51(d) are each amended by inserting ``or community'' in the
heading after ``zone''.
(4) Effective date.--The amendments made by this subsection
shall apply to individuals who begin work for the employer
after December 31, 2000.
SEC. 605. CONFORMING AND CLERICAL AMENDMENTS.
(a) Deduction for Contributions to Family Development Accounts
Allowable Whether or Not Taxpayer Itemizes.--Subsection (a) of section
62 (relating to adjusted gross income defined) is amended by inserting
after paragraph (19) the following new paragraph:
``(20) Family development accounts.--The deduction allowed
by section 1400H(a)(1).''.
(b) Tax on Excess Contributions.--
(1) Tax imposed.--Subsection (a) of section 4973 is amended
by striking ``or'' at the end of paragraph (3), adding ``or''
at the end of paragraph (4), and inserting after paragraph (4)
the following new paragraph:
``(5) a family development account (within the meaning of
section 1400H(e)),''.
(2) Excess contributions.--Section 4973 is amended by
adding at the end the following new subsection:
``(g) Family Development Accounts.--For purposes of this section,
in the case of family development accounts, the term `excess
contributions' means the sum of--
``(1) the excess (if any) of--
``(A) the amount contributed for the taxable year
to the accounts (other than a qualified rollover, as
defined in section 1400H(c)(7)), over
``(B) the amount allowable as a deduction under
section 1400H for such contributions; and
``(2) the amount determined under this subsection for the
preceding taxable year reduced by the sum of--
``(A) the distributions out of the accounts for the
taxable year which were included in the gross income of
the payee under section 1400H(b)(1);
``(B) the distributions out of the accounts for the
taxable year to which rules similar to the rules of
section 408(d)(5) apply by reason of section
1400H(d)(3); and
``(C) the excess (if any) of the maximum amount
allowable as a deduction under section 1400H for the
taxable year over the amount contributed to the account
for the taxable year.
For purposes of this subsection, any contribution which is distributed
from the family development account in a distribution to which rules
similar to the rules of section 408(d)(4) apply by reason of section
1400H(d)(3) shall be treated as an amount not contributed.''.
(c) Tax on Prohibited Transactions.--Section 4975 is amended--
(1) by adding at the end of subsection (c) the following
new paragraph:
``(6) Special rule for family development accounts.--An
individual for whose benefit a family development account is
established and any contributor to such account shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a family development
account by reason of the application of section 1400H(d)(2) to
such account.''; and
(2) in subsection (e)(1), by striking ``or'' at the end of
subparagraph (E), by redesignating subparagraph (F) as
subparagraph (G), and by inserting after subparagraph (E) the
following new subparagraph:
``(F) a family development account described in
section 1400H(e), or''.
(d) Information Relating to Certain Trusts and Annuity Plans.--
Subsection (c) of section 6047 is amended--
(1) by inserting ``or section 1400H'' after ``section
219''; and
(2) by inserting ``, of any family development account
described in section 1400H(e),'', after ``section 408(a)''.
(e) Inspection of Applications for Tax Exemption.--Clause (i) of
section 6104(a)(1)(B) is amended by inserting ``a family development
account described in section 1400H(e),'' after ``section 408(a),''.
(f) Failure To Provide Reports on Family Development Accounts.--
Paragraph (2) of section 6693(a) is amended by striking ``and'' at the
end of subparagraph (C), by striking the period and inserting ``, and''
at the end of subparagraph (D), and by adding at the end the following
new subparagraph:
``(E) section 1400H(g)(6) (relating to family
development accounts).''.
(g) Conforming Amendments Regarding Commercial Revitalization
Deduction.--
(1) Section 172 is amended by redesignating subsection (j)
as subsection (k) and by inserting after subsection (i) the
following new subsection:
``(j) No carryback of section 1400k Deduction Before Date of the
Enactment.--No portion of the net operating loss for any taxable year
which is attributable to any commercial revitalization deduction
determined under section 1400K may be carried back to a taxable year
ending before the date of the enactment of section 1400K.''.
(2) Subparagraph (B) of section 48(a)(2) is amended by
inserting ``or commercial revitalization'' after
``rehabilitation'' each place it appears in the text and
heading.
(3) Subparagraph (C) of section 469(i)(3) is amended--
(A) by inserting ``or section 1400K'' after
``section 42''; and
(B) by inserting ``and commercial revitalization
deduction'' after ``credit'' in the heading.
(h) Clerical Amendments.--The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
``Subchapter X. Renewal Communities.''.
Subtitle B--Timber Incentives
SEC. 611. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF AMORTIZABLE
REFORESTATION EXPENDITURES.
(a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b)
(relating to amortization of reforestation expenditures) is amended by
striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''.
(b) Temporary Suspension of Increased Dollar Limitation.--
Subsection (b) of section 194(b) (relating to amortization of
reforestation expenditures) is amended by adding at the end the
following new paragraph:
``(5) Suspension of dollar limitation.--Paragraph (1) shall
not apply to taxable years beginning after December 31, 2000,
and before January 1, 2004.
(c) Conforming Amendment.--Paragraph (1) of section 48(b) is
amended by striking ``section 194(b)(1)'' and inserting ``section
194(b)(1) and without regard to section 194(b)(5)''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
TITLE VII--REAL ESTATE PROVISIONS
Subtitle A--Improvements in Low-Income Housing Credit
SEC. 701. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING CREDIT.
(a) In General.--Clauses (i) and (ii) of section 42(h)(3)(C)
(relating to State housing credit ceiling) are amended to read as
follows:
``(i) the unused State housing credit
ceiling (if any) of such State for the
preceding calendar year,
``(ii) the greater of--
``(I) the applicable amount under
subparagraph (H) multiplied by the
State population, or
``(II) $2,000,000,''.
(b) Applicable Amount.--Paragraph (3) of section 42(h) (relating to
housing credit dollar amount for agencies) is amended by adding at the
end the following new subparagraph:
``(H) Applicable amount of state ceiling.--For
purposes of subparagraph (C)(ii), the applicable amount
shall be determined under the following table:
``For calendar year:
The applicable amount is:
2001................................... $1.35
2002................................... 1.45
2003................................... 1.55
2004 and thereafter.................... 1.65.''.
(c) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar
amount for agencies), as amended by subsection (c), is amended by
adding at the end the following new subparagraph:
``(I) Cost-of-living adjustment.--
``(i) In general.--In the case of a
calendar year after 2004, the $2,000,000 in
subparagraph (C) and the $1.65 amount in
subparagraph (H) shall each 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 such calendar year by
substituting `calendar year 2003' for
`calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--
``(I) In the case of the amount in
subparagraph (C), any increase under
clause (i) which is not a multiple of
$5,000 shall be rounded to the next
lowest multiple of $5,000.
``(II) In the case of the amount in
subparagraph (H), any increase under
clause (i) which is not a multiple of 5
cents shall be rounded to the next
lowest multiple of 5 cents.''.
(d) Conforming Amendments.--
(1) Section 42(h)(3)(C), as amended by subsection (a), is
amended--
(A) by striking ``clause (ii)'' in the matter
following clause (iv) and inserting ``clause (i)'', and
(B) by striking ``clauses (i)'' in the matter
following clause (iv) and inserting ``clauses (ii)''.
(2) Section 42(h)(3)(D)(ii) is amended--
(A) by striking ``subparagraph (C)(ii)'' and
inserting ``subparagraph (C)(i)'', and
(B) by striking ``clauses (i)'' in subclause (II)
and inserting ``clauses (ii)''.
(e) Effective Date.--The amendments made by this section shall
apply to calendar years after 2000.
SEC. 702. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG
PROJECTS.
(a) Selection Criteria.--Subparagraph (C) of section 42(m)(1)
(relating to certain selection criteria must be used) is amended--
(1) by inserting ``, including whether the project includes
the use of existing housing as part of a community
revitalization plan'' before the comma at the end of clause
(iii), and
(2) by striking clauses (v), (vi), and (vii) and inserting
the following new clauses:
``(v) tenant populations with special
housing needs,
``(vi) public housing waiting lists,
``(vii) tenant populations of individuals
with children, and
``(viii) projects intended for eventual
tenant ownership.''.
(b) Preference for Community Revitalization Projects Located in
Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B) is amended
by striking ``and'' at the end of subclause (I), by adding ``and'' at
the end of subclause (II), and by inserting after subclause (II) the
following new subclause:
``(III) projects which are located
in qualified census tracts (as defined
in subsection (d)(5)(C)) and the
development of which contributes to a
concerted community revitalization
plan,''.
SEC. 703. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES.
(a) Market Study; Public Disclosure of Rationale for Not Following
Credit Allocation Priorities.--Subparagraph (A) of section 42(m)(1)
(relating to responsibilities of housing credit agencies) is amended by
striking ``and'' at the end of clause (i), by striking the period at
the end of clause (ii) and inserting a comma, and by adding at the end
the following new clauses:
``(iii) a comprehensive market study of the
housing needs of low-income individuals in the
area to be served by the project is conducted
before the credit allocation is made and at the
developer's expense by a disinterested party
who is approved by such agency, and
``(iv) a written explanation is available
to the general public for any allocation of a
housing credit dollar amount which is not made
in accordance with established priorities and
selection criteria of the housing credit
agency.''.
(b) Site Visits.--Clause (iii) of section 42(m)(1)(B) (relating to
qualified allocation plan) is amended by inserting before the period
``and in monitoring for noncompliance with habitability standards
through regular site visits''.
SEC. 704. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING WHICH IS
ELIGIBLE FOR CREDIT.
(a) Adjusted Basis To Include Portion of Certain Buildings Used by
Low-Income Individuals Who Are Not Tenants and by Project Employees.--
Paragraph (4) of section 42(d) (relating to special rules relating to
determination of adjusted basis) is amended--
(1) by striking ``subparagraph (B)'' in subparagraph (A)
and inserting ``subparagraphs (B) and (C)'',
(2) by redesignating subparagraph (C) as subparagraph (D),
and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Inclusion of basis of property used to
provide services for certain nontenants.--
``(i) In general.--The adjusted basis of
any building located in a qualified census
tract (as defined in paragraph (5)(C)) shall be
determined by taking into account the adjusted
basis of property (of a character subject to
the allowance for depreciation and not
otherwise taken into account) used throughout
the taxable year in providing any community
service facility.
``(ii) Limitation.--The increase in the
adjusted basis of any building which is taken
into account by reason of clause (i) shall not
exceed 10 percent of the eligible basis of the
qualified low-income housing project of which
it is a part. For purposes of the preceding
sentence, all community service facilities
which are part of the same qualified low-income
housing project shall be treated as one
facility.
``(iii) Community service facility.--For
purposes of this subparagraph, the term
`community service facility' means any facility
designed to serve primarily individuals whose
income is 60 percent or less of area median
income (within the meaning of subsection
(g)(1)(B)).''.
(b) Certain Native American Housing Assistance Disregarded in
Determining Whether Building Is Federally Subsidized for Purposes of
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2)
(relating to determination of whether building is federally subsidized)
is amended--
(1) in clause (i), by inserting ``or the Native American
Housing Assistance and Self-Determination Act of 1996 (25
U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' after
``this subparagraph)'', and
(2) in the subparagraph heading, by inserting ``or native
american housing assistance'' after ``home assistance''.
SEC. 705. OTHER MODIFICATIONS.
(a) Allocation of Credit Limit to Certain Buildings.--
(1) The first sentence of section 42(h)(1)(E)(ii) is
amended by striking ``(as of'' the first place it appears and
inserting ``(as of the later of the date which is 6 months
after the date that the allocation was made or''.
(2) The last sentence of section 42(h)(3)(C) is amended by
striking ``project which'' and inserting ``project which fails
to meet the 10 percent test under paragraph (1)(E)(ii) on a
date after the close of the calendar year in which the
allocation was made or which''.
(b) Determination of Whether Buildings Are Located in High Cost
Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is amended--
(1) by inserting ``either'' before ``in which 50 percent'',
and
(2) by inserting before the period ``or which has a poverty
rate of at least 25 percent''.
SEC. 706. CARRYFORWARD RULES.
(a) In General.--Clause (ii) of section 42(h)(3)(D) (relating to
unused housing credit carryovers allocated among certain States) is
amended by striking ``the excess'' and all that follows and inserting
``the excess (if any) of--
``(I) the unused State housing
credit ceiling for the year preceding
such year, over
``(II) the aggregate housing credit
dollar amount allocated for such
year.''.
(b) Conforming Amendment.--The second sentence of section
42(h)(3)(C) (relating to State housing credit ceiling) is amended by
striking ``clauses (i) and (iii)'' and inserting ``clauses (i) through
(iv)''.
SEC. 707. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the amendments made
by this subtitle shall apply to--
(1) housing credit dollar amounts allocated after December
31, 2000, and
(2) buildings placed in service after such date to the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to any building by reason of
paragraph (4) thereof, but only with respect to bonds issued
after such date.
Subtitle B--Provisions Relating to Real Estate Investment Trusts
PART I--TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT
SUBSIDIARIES
SEC. 711. MODIFICATIONS TO ASSET DIVERSIFICATION TEST.
(a) In General.--Subparagraph (B) of section 856(c)(4) is amended
to read as follows:
``(B)(i) not more than 25 percent of the value of
its total assets is represented by securities (other
than those includible under subparagraph (A)), and
``(ii) except with respect to a taxable REIT
subsidiary and securities includible under subparagraph
(A)--
``(I) not more than 5 percent of the value
of its total assets is represented by
securities of any one issuer,
``(II) the trust does not hold securities
possessing more than 10 percent of the total
voting power of the outstanding securities of
any one issuer, and
``(III) the trust does not hold securities
having a value of more than 10 percent of the
total value of the outstanding securities of
any one issuer.''.
(b) Exception for Straight Debt Securities.--Subsection (c) of
section 856 is amended by adding at the end the following new
paragraph:
``(7) Straight debt safe harbor in applying paragraph
(4).--Securities of an issuer which are straight debt (as
defined in section 1361(c)(5) without regard to subparagraph
(B)(iii) thereof) shall not be taken into account in applying
paragraph (4)(B)(ii)(III) if--
``(A) the issuer is an individual, or
``(B) the only securities of such issuer which are
held by the trust or a taxable REIT subsidiary of the
trust are straight debt (as so defined), or
``(C) the issuer is a partnership and the trust
holds at least a 20 percent profits interest in the
partnership.''.
SEC. 712. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT
SUBSIDIARIES.
(a) Income From Taxable REIT Subsidiaries Not Treated as
Impermissible Tenant Service Income.--Clause (i) of section
856(d)(7)(C) (relating to exceptions to impermissible tenant service
income) is amended by inserting ``or through a taxable REIT subsidiary
of such trust'' after ``income''.
(b) Certain Income From Taxable REIT Subsidiaries Not Excluded From
Rents From Real Property.--
(1) In general.--Subsection (d) of section 856 (relating to
rents from real property defined) is amended by adding at the
end the following new paragraphs:
``(8) Special rule for taxable reit subsidiaries.--For
purposes of this subsection, amounts paid to a real estate
investment trust by a taxable REIT subsidiary of such trust
shall not be excluded from rents from real property by reason
of paragraph (2)(B) if the requirements of either of the
following subparagraphs are met:
``(A) Limited rental exception.--The requirements
of this subparagraph are met with respect to any
property if at least 90 percent of the leased space of
the property is rented to persons other than taxable
REIT subsidiaries of such trust and other than persons
described in section 856(d)(2)(B). The preceding
sentence shall apply only to the extent that the
amounts paid to the trust as rents from real property
(as defined in paragraph (1) without regard to
paragraph (2)(B)) from such property are substantially
comparable to such rents made by the other tenants of
the trust's property for comparable space.
``(B) Exception for certain lodging facilities.--
The requirements of this subparagraph are met with
respect to an interest in real property which is a
qualified lodging facility leased by the trust to a
taxable REIT subsidiary of the trust if the property is
operated on behalf of such subsidiary by a person who
is an eligible independent contractor.
``(9) Eligible independent contractor.--For purposes of
paragraph (8)(B)--
``(A) In general.--The term `eligible independent
contractor' means, with respect to any qualified
lodging facility, any independent contractor if, at the
time such contractor enters into a management agreement
or other similar service contract with the taxable REIT
subsidiary to operate the facility, such contractor (or
any related person) is actively engaged in the trade or
business of operating qualified lodging facilities for
any person who is not a related person with respect to
the real estate investment trust or the taxable REIT
subsidiary.
``(B) Special rules.--Solely for purposes of this
paragraph and paragraph (8)(B), a person shall not fail
to be treated as an independent contractor with respect
to any qualified lodging facility by reason of any of
the following:
``(i) The taxable REIT subsidiary bears the
expenses for the operation of the facility
pursuant to the management agreement or other
similar service contract.
``(ii) The taxable REIT subsidiary receives
the revenues from the operation of such
facility, net of expenses for such operation
and fees payable to the operator pursuant to
such agreement or contract.
``(iii) The real estate investment trust
receives income from such person with respect
to another property that is attributable to a
lease of such other property to such person
that was in effect as of the later of--
``(I) January 1, 1999, or
``(II) the earliest date that any
taxable REIT subsidiary of such trust
entered into a management agreement or
other similar service contract with
such person with respect to such
qualified lodging facility.
``(C) Renewals, etc., of existing leases.--For
purposes of subparagraph (B)(iii)--
``(i) a lease shall be treated as in effect
on January 1, 1999, without regard to its
renewal after such date, so long as such
renewal is pursuant to the terms of such lease
as in effect on whichever of the dates under
subparagraph (B)(iii) is the latest, and
``(ii) a lease of a property entered into
after whichever of the dates under subparagraph
(B)(iii) is the latest shall be treated as in
effect on such date if--
``(I) on such date, a lease of such
property from the trust was in effect,
and
``(II) under the terms of the new
lease, such trust receives a
substantially similar or lesser benefit
in comparison to the lease referred to
in subclause (I).
``(D) Qualified lodging facility.--For purposes of
this paragraph--
``(i) In general.--The term `qualified
lodging facility' means any lodging facility
unless wagering activities are conducted at or
in connection with such facility by any person
who is engaged in the business of accepting
wagers and who is legally authorized to engage
in such business at or in connection with such
facility.
``(ii) Lodging facility.--The term `lodging
facility' means a hotel, motel, or other
establishment more than one-half of the
dwelling units in which are used on a transient
basis.
``(iii) Customary amenities and
facilities.--The term `lodging facility'
includes customary amenities and facilities
operated as part of, or associated with, the
lodging facility so long as such amenities and
facilities are customary for other properties
of a comparable size and class owned by other
owners unrelated to such real estate investment
trust.
``(E) Operate includes manage.--References in this
paragraph to operating a property shall be treated as
including a reference to managing the property.
``(F) Related person.--Persons shall be treated as
related to each other if such persons are treated as a
single employer under subsection (a) or (b) of section
52.''.
(2) Conforming amendment.--Subparagraph (B) of section
856(d)(2) is amended by inserting ``except as provided in
paragraph (8),'' after ``(B)''.
(3) Determining rents from real property.--
(A)(i) Paragraph (1) of section 856(d) is amended
by striking ``adjusted bases'' each place it occurs and
inserting ``fair market values''.
(ii) The amendment made by this subparagraph shall
apply to taxable years beginning after December 31,
2000.
(B)(i) Clause (i) of section 856(d)(2)(B) is
amended by striking ``number'' and inserting ``value''.
(ii) The amendment made by this subparagraph shall
apply to amounts received or accrued in taxable years
beginning after December 31, 2000, except for amounts
paid pursuant to leases in effect on July 12, 1999, or
pursuant to a binding contract in effect on such date
and at all times thereafter.
SEC. 713. TAXABLE REIT SUBSIDIARY.
(a) In General.--Section 856 is amended by adding at the end the
following new subsection:
``(l) Taxable REIT Subsidiary.--For purposes of this part--
``(1) In general.--The term `taxable REIT subsidiary'
means, with respect to a real estate investment trust, a
corporation (other than a real estate investment trust) if--
``(A) such trust directly or indirectly owns stock
in such corporation, and
``(B) such trust and such corporation jointly elect
that such corporation shall be treated as a taxable
REIT subsidiary of such trust for purposes of this
part.
Such an election, once made, shall be irrevocable unless both
such trust and corporation consent to its revocation. Such
election, and any revocation thereof, may be made without the
consent of the Secretary.
``(2) 35 percent ownership in another taxable reit
subsidiary.--The term `taxable REIT subsidiary' includes, with
respect to any real estate investment trust, any corporation
(other than a real estate investment trust) with respect to
which a taxable REIT subsidiary of such trust owns directly or
indirectly--
``(A) securities possessing more than 35 percent of
the total voting power of the outstanding securities of
such corporation, or
``(B) securities having a value of more than 35
percent of the total value of the outstanding
securities of such corporation.
The preceding sentence shall not apply to a qualified REIT
subsidiary (as defined in subsection (i)(2)). The rule of
section 856(c)(7) shall apply for purposes of subparagraph (B).
``(3) Exceptions.--The term `taxable REIT subsidiary' shall
not include--
``(A) any corporation which directly or indirectly
operates or manages a lodging facility or a health care
facility, and
``(B) any corporation which directly or indirectly
provides to any other person (under a franchise,
license, or otherwise) rights to any brand name under
which any lodging facility or health care facility is
operated.
Subparagraph (B) shall not apply to rights provided to an
eligible independent contractor to operate or manage a lodging
facility if such rights are held by such corporation as a
franchisee, licensee, or in a similar capacity and such lodging
facility is either owned by such corporation or is leased to
such corporation from the real estate investment trust.
``(4) Definitions.--For purposes of paragraph (3)--
``(A) Lodging facility.--The term `lodging
facility' has the meaning given to such term by
paragraph (9)(D)(ii).
``(B) Health care facility.--The term `health care
facility' has the meaning given to such term by
subsection (e)(6)(D)(ii).''.
(b) Conforming Amendment.--Paragraph (2) of section 856(i) is
amended by adding at the end the following new sentence: ``Such term
shall not include a taxable REIT subsidiary.''.
SEC. 714. LIMITATION ON EARNINGS STRIPPING.
Paragraph (3) of section 163(j) (relating to limitation on
deduction for interest on certain indebtedness) is amended by striking
``and'' at the end of subparagraph (A), by striking the period at the
end of subparagraph (B) and inserting ``, and'', and by adding at the
end the following new subparagraph:
``(C) any interest paid or accrued (directly or
indirectly) by a taxable REIT subsidiary (as defined in
section 856(l)) of a real estate investment trust to
such trust.''.
SEC. 715. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS.
(a) In General.--Subsection (b) of section 857 (relating to method
of taxation of real estate investment trusts and holders of shares or
certificates of beneficial interest) is amended by redesignating
paragraphs (7) and (8) as paragraphs (8) and (9), respectively, and by
inserting after paragraph (6) the following new paragraph:
``(7) Income from redetermined rents, redetermined
deductions, and excess interest.--
``(A) Imposition of tax.--There is hereby imposed
for each taxable year of the real estate investment
trust a tax equal to 100 percent of redetermined rents,
redetermined deductions, and excess interest.
``(B) Redetermined rents.--
``(i) In general.--The term `redetermined
rents' means rents from real property (as
defined in subsection 856(d)) the amount of
which would (but for subparagraph (E)) be
reduced on distribution, apportionment, or
allocation under section 482 to clearly reflect
income as a result of services furnished or
rendered by a taxable REIT subsidiary of the
real estate investment trust to a tenant of
such trust.
``(ii) Exception for certain services.--
Clause (i) shall not apply to amounts received
directly or indirectly by a real estate
investment trust for services described in
paragraph (1)(B) or (7)(C)(i) of section
856(d).
``(iii) Exception for de minimis amounts.--
Clause (i) shall not apply to amounts described
in section 856(d)(7)(A) with respect to a
property to the extent such amounts do not
exceed the one percent threshold described in
section 856(d)(7)(B) with respect to such
property.
``(iv) Exception for comparably priced
services.--Clause (i) shall not apply to any
service rendered by a taxable REIT subsidiary
of a real estate investment trust to a tenant
of such trust if--
``(I) such subsidiary renders a
significant amount of similar services
to persons other than such trust and
tenants of such trust who are unrelated
(within the meaning of section
856(d)(8)(F)) to such subsidiary,
trust, and tenants, but
``(II) only to the extent the
charge for such service so rendered is
substantially comparable to the charge
for the similar services rendered to
persons referred to in subclause (I).
``(v) Exception for certain separately
charged services.--Clause (i) shall not apply
to any service rendered by a taxable REIT
subsidiary of a real estate investment trust to
a tenant of such trust if--
``(I) the rents paid to the trust
by tenants (leasing at least 25 percent
of the net leasable space in the
trust's property) who are not receiving
such service from such subsidiary are
substantially comparable to the rents
paid by tenants leasing comparable
space who are receiving such service
from such subsidiary, and
``(II) the charge for such service
from such subsidiary is separately
stated.
``(vi) Exception for certain services based
on subsidiary's income from the services.--
Clause (i) shall not apply to any service
rendered by a taxable REIT subsidiary of a real
estate investment trust to a tenant of such
trust if the gross income of such subsidiary
from such service is not less than 150 percent
of such subsidiary's direct cost in furnishing
or rendering the service.
``(vii) Exceptions granted by secretary.--
The Secretary may waive the tax otherwise
imposed by subparagraph (A) if the trust
establishes to the satisfaction of the
Secretary that rents charged to tenants were
established on an arms' length basis even
though a taxable REIT subsidiary of the trust
provided services to such tenants.
``(C) Redetermined deductions.--The term
`redetermined deductions' means deductions (other than
redetermined rents) of a taxable REIT subsidiary of a
real estate investment trust if the amount of such
deductions would (but for subparagraph (E)) be
decreased on distribution, apportionment, or allocation
under section 482 to clearly reflect income as between
such subsidiary and such trust.
``(D) Excess interest.--The term `excess interest'
means any deductions for interest payments by a taxable
REIT subsidiary of a real estate investment trust to
such trust to the extent that the interest payments are
in excess of a rate that is commercially reasonable.
``(E) Coordination with section 482.--The
imposition of tax under subparagraph (A) shall be in
lieu of any distribution, apportionment, or allocation
under section 482.
``(F) Regulatory authority.--The Secretary shall
prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this
paragraph. Until the Secretary prescribes such
regulations, real estate investment trusts and their
taxable REIT subsidiaries may base their allocations on
any reasonable method.''.
(b) Amount Subject to Tax Not Required To Be Distributed.--
Subparagraph (E) of section 857(b)(2) (relating to real estate
investment trust taxable income) is amended by striking ``paragraph
(5)'' and inserting ``paragraphs (5) and (7)''.
SEC. 716. EFFECTIVE DATE.
(a) In General.--The amendments made by this part shall apply to
taxable years beginning after December 31, 2000.
(b) Transitional Rules Related to Section 711.--
(1) Existing arrangements.--
(A) In general.--Except as otherwise provided in
this paragraph, the amendment made by section 711 shall
not apply to a real estate investment trust with
respect to--
(i) securities of a corporation held
directly or indirectly by such trust on July
12, 1999,
(ii) securities of a corporation held by an
entity on July 12, 1999, if such trust acquires
control of such entity pursuant to a written
binding contract in effect on such date and at
all times thereafter before such acquisition,
(iii) securities received by such trust (or
a successor) in exchange for, or with respect
to, securities described in clause (i) or (ii)
in a transaction in which gain or loss is not
recognized, and
(iv) securities acquired directly or
indirectly by such trust as part of a
reorganization (as defined in section 368(a)(1)
of the Internal Revenue Code of 1986) with
respect to such trust if such securities are
described in clause (i), (ii), or (iii) with
respect to any other real estate investment
trust.
(B) New trade or business or substantial new
assets.--Subparagraph (A) shall cease to apply to
securities of a corporation as of the first day after
July 12, 1999, on which such corporation engages in a
substantial new line of business, or acquires any
substantial asset, other than--
(i) pursuant to a binding contract in
effect on such date and at all times thereafter
before the acquisition of such asset,
(ii) in a transaction in which gain or loss
is not recognized by reason of section 1031 or
1033 of the Internal Revenue Code of 1986, or
(iii) in a reorganization (as so defined)
with another corporation the securities of
which are described in paragraph (1)(A) of this
subsection.
(C) Limitation on transition rules.--Subparagraph
(A) shall cease to apply to securities of a corporation
held, acquired, or received, directly or indirectly, by
a real estate investment trust as of the first day
after July 12, 1999, on which such trust acquires any
additional securities of such corporation other than--
(i) pursuant to a binding contract in
effect on July 12, 1999, and at all times
thereafter, or
(ii) in a reorganization (as so defined)
with another corporation the securities of
which are described in paragraph (1)(A) of this
subsection.
(2) Tax-free conversion.--If--
(A) at the time of an election for a corporation to
become a taxable REIT subsidiary, the amendment made by
section 711 does not apply to such corporation by
reason of paragraph (1), and
(B) such election first takes effect before January
1, 2004,
such election shall be treated as a reorganization qualifying
under section 368(a)(1)(A) of such Code.
PART II--HEALTH CARE REITS
SEC. 721. HEALTH CARE REITS.
(a) Special Foreclosure Rule for Health Care Properties.--
Subsection (e) of section 856 (relating to special rules for
foreclosure property) is amended by adding at the end the following new
paragraph:
``(6) Special rule for qualified health care properties.--
For purposes of this subsection--
``(A) Acquisition at expiration of lease.--The term
`foreclosure property' shall include any qualified
health care property acquired by a real estate
investment trust as the result of the termination of a
lease of such property (other than a termination by
reason of a default, or the imminence of a default, on
the lease).
``(B) Grace period.--In the case of a qualified
health care property which is foreclosure property
solely by reason of subparagraph (A), in lieu of
applying paragraphs (2) and (3)--
``(i) the qualified health care property
shall cease to be foreclosure property as of
the close of the second taxable year after the
taxable year in which such trust acquired such
property, and
``(ii) if the real estate investment trust
establishes to the satisfaction of the
Secretary that an extension of the grace period
in clause (i) is necessary to the orderly
leasing or liquidation of the trust's interest
in such qualified health care property, the
Secretary may grant one or more extensions of
the grace period for such qualified health care
property.
Any such extension shall not extend the grace period
beyond the close of the 6th year after the taxable year
in which such trust acquired such qualified health care
property.
``(C) Income from independent contractors.--For
purposes of applying paragraph (4)(C) with respect to
qualified health care property which is foreclosure
property by reason of subparagraph (A) or paragraph
(1), income derived or received by the trust from an
independent contractor shall be disregarded to the
extent such income is attributable to--
``(i) any lease of property in effect on
the date the real estate investment trust
acquired the qualified health care property
(without regard to its renewal after such date
so long as such renewal is pursuant to the
terms of such lease as in effect on such date),
or
``(ii) any lease of property entered into
after such date if--
``(I) on such date, a lease of such
property from the trust was in effect,
and
``(II) under the terms of the new
lease, such trust receives a
substantially similar or lesser benefit
in comparison to the lease referred to
in subclause (I).
``(D) Qualified health care property.--
``(i) In general.--The term `qualified
health care property' means any real property
(including interests therein), and any personal
property incident to such real property,
which--
``(I) is a health care facility, or
``(II) is necessary or incidental
to the use of a health care facility.
``(ii) Health care facility.--For purposes
of clause (i), the term `health care facility'
means a hospital, nursing facility, assisted
living facility, congregate care facility,
qualified continuing care facility (as defined
in section 7872(g)(4)), or other licensed
facility which extends medical or nursing or
ancillary services to patients and which,
immediately before the termination, expiration,
default, or breach of the lease of or mortgage
secured by such facility, was operated by a
provider of such services which was eligible
for participation in the medicare program under
title XVIII of the Social Security Act with
respect to such facility.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
PART III--CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES
SEC. 731. CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES.
(a) Distribution Requirement.--Clauses (i) and (ii) of section
857(a)(1)(A) (relating to requirements applicable to real estate
investment trusts) are each amended by striking ``95 percent (90
percent for taxable years beginning before January 1, 1980)'' and
inserting ``90 percent''.
(b) Imposition of Tax.--Clause (i) of section 857(b)(5)(A)
(relating to imposition of tax in case of failure to meet certain
requirements) is amended by striking ``95 percent (90 percent in the
case of taxable years beginning before January 1, 1980)'' and inserting
``90 percent''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
PART IV--CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT SERVICE
INCOME
SEC. 741. CLARIFICATION OF EXCEPTION FOR INDEPENDENT OPERATORS.
(a) In General.--Paragraph (3) of section 856(d) (relating to
independent contractor defined) is amended by adding at the end the
following flush sentence:
``In the event that any class of stock of either the real
estate investment trust or such person is regularly traded on
an established securities market, only persons who own,
directly or indirectly, more than 5 percent of such class of
stock shall be taken into account as owning any of the stock of
such class for purposes of applying the 35 percent limitation
set forth in subparagraph (B) (but all of the outstanding stock
of such class shall be considered outstanding in order to
compute the denominator for purpose of determining the
applicable percentage of ownership).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2000.
PART V--MODIFICATION OF EARNINGS AND PROFITS RULES
SEC. 751. MODIFICATION OF EARNINGS AND PROFITS RULES.
(a) Rules for Determining Whether Regulated Investment Company Has
Earnings and Profits From Non-RIC Year.--
(1) In general.--Subsection (c) of section 852 is amended
by adding at the end the following new paragraph:
``(3) Distributions to meet requirements of subsection
(a)(2)(B).--Any distribution which is made in order to comply
with the requirements of subsection (a)(2)(B)--
``(A) shall be treated for purposes of this
subsection and subsection (a)(2)(B) as made from
earnings and profits which, but for the distribution,
would result in a failure to meet such requirements
(and allocated to such earnings on a first-in, first-
out basis), and
``(B) to the extent treated under subparagraph (A)
as made from accumulated earnings and profits, shall
not be treated as a distribution for purposes of
subsection (b)(2)(D) and section 855.''.
(2) Conforming amendment.--Subparagraph (A) of section
857(d)(3) is amended to read as follows:
``(A) shall be treated for purposes of this
subsection and subsection (a)(2)(B) as made from
earnings and profits which, but for the distribution,
would result in a failure to meet such requirements
(and allocated to such earnings on a first-in, first-
out basis), and''.
(b) Clarification of Application of REIT Spillover Dividend Rules
to Distributions To Meet Qualification Requirement.--Subparagraph (B)
of section 857(d)(3) is amended by inserting before the period ``and
section 858''.
(c) Application of Deficiency Dividend Procedures.--Paragraph (1)
of section 852(e) is amended by adding at the end the following new
sentence: ``If the determination under subparagraph (A) is solely as a
result of the failure to meet the requirements of subsection (a)(2),
the preceding sentence shall also apply for purposes of applying
subsection (a)(2) to the non-RIC year and the amount referred to in
paragraph (2)(A)(i) shall be the portion of the accumulated earnings
and profits which resulted in such failure.''.
(d) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2000.
Subtitle C--Private Activity Bond Volume Cap
SEC. 761. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP ON PRIVATE
ACTIVITY BONDS.
(a) In General.--The table contained in section 146(d)(2) (relating
to per capita limit; aggregate limit) is amended to read as follows:
``Calendar Year Per Capita Limit Aggregate Limit
------------------------------------------------------------------------
2001....................... $55.00 $165,000,000
2002....................... 60.00 180,000,000
2003....................... 65.00 195,000,000
2004, 2005, and 2006....... 70.00 210,000,000
2007 and thereafter........ 75.00 225,000,000.''.
(b) Effective Date.--The amendment made by this section shall apply
to calendar years beginning after 2000.
Subtitle D--Exclusion From Gross Income for Certain Forgiven Mortgage
Obligations
SEC. 771. EXCLUSION FROM GROSS INCOME FOR CERTAIN FORGIVEN MORTGAGE
OBLIGATIONS.
(a) In General.--Paragraph (1) of section 108(a) (relating to
exclusion from gross income) is amended by striking ``or'' at the end
of both subparagraphs (A) and (C), by striking the period at the end of
subparagraph (D) and inserting ``, or'', and by inserting after
subparagraph (D) the following new subparagraph:
``(E) in the case of an individual, the
indebtedness discharged is qualified residential
indebtedness.''.
(b) Qualified Residential Indebtedness Shortfall.--Section 108
(relating to discharge of indebtedness) is amended by adding at the end
the following new subsection:
``(h) Qualified Residential Indebtedness.--
``(1) Limitations.--The amount excluded under subparagraph
(E) of subsection (a)(1) with respect to any qualified
residential indebtedness shall not exceed the excess (if any)
of--
``(A) the outstanding principal amount of such
indebtedness (immediately before the discharge), over
``(B) the sum of--
``(i) the amount realized from the sale of
the real property securing such indebtedness
reduced by the cost of such sale, and
``(ii) the outstanding principal amount of
any other indebtedness secured by such
property.
``(2) Qualified residential indebtedness.--
``(A) In general.--The term `qualified residential
indebtedness' means indebtedness which--
``(i) was incurred or assumed by the
taxpayer in connection with real property used
as the principal residence (within the meaning
of section 121) of the taxpayer and is secured
by such real property,
``(ii) is incurred or assumed to acquire,
construct, reconstruct, or substantially
improve such real property, and
``(iii) with respect to which such taxpayer
makes an election to have this paragraph apply.
``(B) Refinanced indebtedness.--Such term shall
include indebtedness resulting from the refinancing of
indebtedness under subparagraph (A)(ii), but only to
the extent the amount of the indebtedness resulting
from such refinancing does not exceed the amount of the
refinanced indebtedness.
``(C) Exceptions.--Such term shall not include
qualified farm indebtedness or qualified real property
business indebtedness.''.
(c) Conforming Amendments.--
(1) Paragraph (2) of section 108(a) is amended--
(A) in subparagraph (A) by striking ``and (D)'' and
inserting ``(D), and (E)'', and
(B) by amending subparagraph (B) to read as
follows:
``(B) Insolvency exclusion takes precedence over
qualified farm exclusion; qualified real property
business exclusion; and qualified residential shortfall
exclusion.--Subparagraphs (C), (D), and (E) of
paragraph (1) shall not apply to a discharge to the
extent the taxpayer is insolvent.''.
(2) Paragraph (1) of section 108(b) is amended by striking
``or (C)'' and inserting ``(C), or (E)''.
(3) Subsection (c) of section 121 of such Code is amended
by adding at the end the following new paragraph:
``(4) Special rule relating to discharge of indebtedness.--
The amount of gain which (but for this paragraph) would be
excluded from gross income under subsection (a) with respect to
a principal residence shall be reduced by the amount excluded
from gross income under section 108(a)(1)(E) with respect to
such residence.''.
(d) Effective Date.--The amendments made by this section shall
apply to discharges after December 31, 2000.