To amend the Internal Revenue Code of 1986 to assist individuals who have lost their 401(k) savings to make additional retirement savings through individual retirement account contributions, and for other purposes.

March 17, 2003

Mr. WYDEN introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to assist individuals who have lost their 401(k) savings to make additional retirement savings through individual retirement account contributions, 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.

This Act may be cited as the `Catch-Up Lost Retirement Savings Act'.

SEC. 2. ALLOWANCE OF CATCH-UP PAYMENTS.

(a) IN GENERAL- Section 219(b)(5) of the Internal Revenue Code of 1986 (relating to deductible amount) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (A) the following new subparagraph:

`(C) CATCH-UP CONTRIBUTIONS FOR CERTAIN INDIVIDUALS-

`(i) IN GENERAL- In the case of an eligible individual who elects to make a qualified retirement contribution in addition to the deductible amount determined under subparagraph (A)--

`(I) the deductible amount for any taxable year shall be increased by an amount equal to 3 times the applicable amount determined under subparagraph (B) for such taxable year, and

`(II) subparagraph (B) shall not apply.

`(ii) ELIGIBLE INDIVIDUAL- For purposes of this subparagraph, the term `eligible individual' means, with respect to any taxable year, any individual who was a qualified participant in a qualified cash or deferred arrangement (as defined in section 401(k)) of an employer described in clause (ii) under which the employer matched at least 50 percent of the employee's contributions to such arrangement with stock of such employer.

`(iii) EMPLOYER DESCRIBED- An employer is described in this clause if, in any taxable year preceding the taxable year described in clause (ii)--

`(I) such employer (or any controlling corporation of such employer) was a debtor in a case under title 11 of the United States Code, or similar Federal or State law, and

`(II) such employer (or any other person) was subject to an indictment or conviction resulting from business transactions related to such case.

`(iv) QUALIFIED PARTICIPANT- For purposes of clause (ii), the term `qualified participant' means any eligible individual who was a participant in the cash or deferred arrangement described in clause (i) at least 6 months before the filing of the case described in clause (iii).

`(v) TERMINATION- This subparagraph shall not apply to taxable years beginning after December 31, 2007.'.

(b) CREDIT ALLOWED FOR CATCH-UP CONTRIBUTIONS- Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following new section:

`SEC. 25C. CERTAIN CATCH-UP IRA CONTRIBUTIONS.

`(a) ALLOWANCE OF CREDIT- In the case of an eligible individual who makes an election under section 219(b)(5)(C) for the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to 50 percent of so much of the qualified retirement savings contributions of the eligible individual for the taxable year as do not exceed the increase in the deductible amount determined under section 219(b)(5)(C) .

`(b) DENIAL OF DOUBLE BENEFIT- No deduction or other credit shall be allowed with respect to any contribution to which a credit is allowed under subsection (a).

`(c) INVESTMENT IN THE CONTRACT- Notwithstanding any other provision of law, a qualified retirement savings contribution shall not fail to be included in determining the investment in the contract for purposes of section 72 by reason of the credit under this section.

`(d) TERMINATION- This section shall not apply to taxable years beginning after December 31, 2007.'.

(c) CONFORMING AMENDMENT- The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25B the following new item:

`Sec. 25C. Certain catch-up IRA contributions.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2002.

END