Sec. 11. Matching payments for elective deferral and IRA contributions by certain individuals
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Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: Any eligible individual who makes qualified retirement savings contributions for the taxable year shall be allowed a credit for such taxable year in an amount equal to the applicable percentage of so much of the qualified retirement savings contributions made by such eligible individual for the taxable year as does not exceed $1,000. The credit under this section shall be paid by the Secretary as a contribution (as soon as practicable after the eligible individual has filed a tax return for the taxable year) to the applicable retirement vehicle of the eligible individual.
For purposes of this section— Except as provided in paragraph (2), the applicable percentage is 50 percent. The percentage under paragraph
(1)shall be reduced (but not below zero) by the number of percentage points which bears the same ratio to 50 percentage points as— the excess of— the taxpayer’s modified adjusted gross income for such taxable year, over the applicable dollar amount, bears to the phaseout range. If any reduction determined under this paragraph is not a whole percentage point, such reduction shall be rounded to the next lowest whole percentage point. Except as provided in subparagraph (B)— the applicable dollar amount is $65,000, and the phaseout range is $20,000. In the case of— a head of a household (as defined in section 2(b)), the applicable dollar amount and the phaseout range shall be ¾ of the amounts applicable under subparagraph
(A)(as adjusted under subsection (g)), and any taxpayer who is not filing a joint return and who is not a head of a household (as so defined), the applicable dollar amount and the phaseout range shall be ½ of the amounts applicable under subparagraph
(A)(as so adjusted). For purposes of this section— The term eligible individual means any individual if such individual has attained the age of 18 as of the close of the taxable year. The term eligible individual shall not include— any individual with respect to whom a deduction under section 151 is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, and any individual who is a student (as defined in section 152(f)(2)). For purposes of this section— The term qualified retirement savings contributions means, with respect to any taxable year, the sum of— the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual, the amount of— any elective deferrals (as defined in section 402(g)(3)) of such individual, and any elective deferral of compensation by such individual under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A), and the amount of voluntary employee contributions by such individual to any qualified retirement plan (as defined in section 4974(c)). Such term shall not include any amount attributable to a payment under subsection (a). The qualified retirement savings contributions determined under paragraph
(1)for a taxable year shall be reduced (but not below zero) by the aggregate distributions received by the individual during the testing period from any entity of a type to which contributions under paragraph
(1)may be made. For purposes of subparagraph (A), the testing period, with respect to a taxable year, is the period which includes— such taxable year, the 2 preceding taxable years, and the period after such taxable year and before the due date (including extensions) for filing the return of tax for such taxable year. There shall not be taken into account under subparagraph (A)— any distribution referred to in section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), any distribution to which section 408(d)(3) or 408A(d)(3) applies, and any portion of a distribution if such portion is transferred or paid in a rollover contribution (as defined in section 402(c), 403(a)(4), 403(b)(8), 408A(e), or 457(e)(16)) to an account or plan to which qualified retirement contributions can be made. For purposes of determining distributions received by an individual under subparagraph
(A)for any taxable year, any distribution received by the spouse of such individual shall be treated as received by such individual if such individual and spouse file a joint return for such taxable year and for the taxable year during which the spouse receives the distribution. The term applicable retirement savings vehicle means— an account or plan elected by the eligible individual under paragraph (2), or if no such election is made, a retirement bond purchased by the Secretary for the benefit of the eligible individual. An eligible individual may elect to have the amount determined under subsection
(a)contributed to an account or plan which— is a Roth IRA (as defined in section 408A), or a designated Roth account (within the meaning of section 402A) of an applicable retirement plan (as defined in section 402A(e)(1)), is for the benefit of the eligible individual, accepts contributions made under this section, and is designated by such individual (in such form and manner as the Secretary may provide) on the return of tax for the taxable year. For purposes of this section, the term retirement bond means a bond issued under chapter 31 of title 31, United States Code, which by its terms, or by regulations prescribed by the Secretary under such chapter— provides for interest to be credited at rates that take into account the expected duration of the funds invested in retirement bonds and at rates determined or adjusted in a manner and with sufficient frequency to provide substantial protection from inflation, is not transferable, and is designed for investment for retirement. The provisions of this title applicable to a Roth IRA, including provisions relating to contributions, holding and distributions, shall apply to a retirement bond, except as determined by the Secretary. The Secretary may issue such regulations as are necessary to carry out the purposes of this section, including— establishment of procedures to communicate to individuals the importance of investment diversification and the transfer option described in clause (ii), simplified procedures under which holders of retirement bonds may periodically choose to have the bonds or their proceeds transferred to available Roth IRAs, and means by which individuals may elect (or be treated as electing) whether to have retirement bonds or their proceeds so transferred. Any such transfer shall be treated as a rollover contribution for purposes of section 408(d)(3) (other than subparagraph
(B)thereof). For purposes of this section, the term modified adjusted gross income means adjusted gross income— determined without regard to sections 911, 931, and 933, and determined without regard to any exclusion or deduction allowed for any qualified retirement savings contribution made during the taxable year. In the case of any contribution under subsection (a)(2)— except as otherwise provided in this section or by the Secretary under regulations, such contribution shall be treated in the same manner as a contribution made by the individual on whose behalf such contribution was made, such contribution shall not be treated as income to the taxpayer, and such contribution shall not be taken into account with respect to any applicable limitation under sections 402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 408A(c)(2), 414(v)(2), 415(c), or 457(b)(2). A plan or arrangement to which a contribution is made under this section shall not be treated as violating any requirement under section 401, 403, 408, or 457 solely by reason of accepting such contribution. If any contribution is erroneously paid under subsection (a)(2), the amount of such erroneous payment shall be treated as an underpayment of tax. In the case of any taxable year beginning in a calendar year after 2018, each of the dollar amounts in subsections (a)(2) and (b)(3)(A)(i) shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2017 for calendar year 1992 in subparagraph
(B)thereof. Any increase determined under paragraph
(1)shall be rounded to the nearest multiple of— $100 in the case of an adjustment of the amount in subsection (a)(2), and $1,000 in the case of an adjustment of the amount in subsection (b)(3)(A)(i). . The Secretary of the Treasury (or the Secretary’s delegate) shall educate taxpayers on the benefits provided under section 6433 of the Internal Revenue Code of 1986. Not later than December 31, 2017, the Secretary of the Treasury (or the Secretary’s delegate) shall issue guidance on the implementation and administration of the amendments made by this section. Section 1324(b)(2) of title 31, United States Code, is amended by striking or 6431 and inserting 6431, or 6433 . Section 6211(b)(4) is amended by striking and 6431 and inserting 6431, and 6433 . Section 25B of the Internal Revenue Code of 1986 is amended by striking subsections
(a)through
(f)and inserting the following: For payment of credit related to qualified retirement savings contributions, see section 6433. . The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item: Sec. 6433. Matching payments for elective deferral and IRA contributions by certain individuals. . The amendments made by this section shall apply to taxable years beginning after December 31, 2017.