,,ii  #aac? ,,congress  #b;d ,session   
,s4 #bhjf  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,septemb] #ae1 #bjad   
,mr4 ,vitt] introduc$ ! foll[+ bill2 :i*
 0 read twice & ref]r$ to ! ,committee  
on ,f9ance  ,a ,,bill  ,to am5d !       
,int]nal ,rev5ue ,code ( #aihf to       
provide = dep5d5t c>e sav+s acc\nts4    
#a4  ,%ort title  ,?is ,act may be cit$ 
z ! ,dep5d5t ,c>e ,sav+s ,acc\nt ,act ( 
#bjad4  #b4  ,dep5d5t c>e sav+s acc\nts 
7a7  ,9 g5]al  ,"p ,,vii ( sub*apt] ,b (
 *apt] #a ( ! ,int]nal ,rev5ue ,code (  
#aihf is am5d$ by r$esignat+ section    
#bbd z section #bbe & ins]t+ aft]       
section #bbc ! foll[+ new section3      
#bbd4  ,dep5d5t c>e sav+s acc\nts  7a7  
,d$uction all[$  ,9 ! case ( an         
individual1 !re %all be all[$ z a       
d$uction = ! taxable ye> an am\nt equal 
to ! aggregate am\nt paid 9 ca% dur+ su*
 taxable ye> by or on behalf ( !        
individual to a dep5d5t c>e sav+s acc\nt
 ( su* individual4  7b7  ,limitation    
7#a7  ,9 g5]al  ,! am\nt all[able z a   

d$uction "u subsection 7a7 to an        
individual = ! taxable ye> %all n exce$ 
! less] (--  7,a7 #e1jjj1 or  7,b7 !    
individual's e>n$ income 7)9 ! mean+ (  
section #ba7 = su* taxable ye>4  7#b7   
,coord9ation ) dep5d5t c>e assi/ance    
b5efits  ,! limitation :i* w\ld 7b = ?is
 p>agraph7 apply "u p>agraph 7#a7 to an 
individual = any taxable ye> %all be    
r$uc$ 7b n bel[ z]o7 by ! aggregate     
am\nt excludable f ! individual's gross 
income = su* taxable ye> "u section     
#abi4  7c7  ,dep5d5t c>e sav+s acc\nt   
,= purposes ( ?is section--  7#a7  ,9   
g5]al  ,! t]m dep5d5t c>e sav+s acc\nt  
means a tru/ creat$ or organiz$ 9 !     
,unit$ ,/ates z a dep5d5t c>e sav+s     
acc\nt exclusively = ! purpose ( pay+ ! 
qualifi$ dep5d5t c>e exp5ses ( ! acc\nt 
b5efici>y1 b only if ! writt5 gov]n+    
in/rum5t creat+ ! tru/ meets ! foll[+   
requirem5ts3  7,a7 ,except 9 ! case ( a 
rollov] contribution describ$ 9         
subsection 7e77#e71 no contribution w be
 accept$ unless x is 9 ca%1 &           

contributions w n be accept$ = ! taxable
 ye> on behalf ( any acc\nt b5efici>y 9 
excess ( #aj1jjj4  7,b7 ,! tru/ee is a  
bank 7z def9$ 9 section #djh7n77 or su* 
o!r p]son :o demon/rates to !           
satisfaction ( ! ,secret>y t ! mann] 9  
:i* su* o!r p]son w adm9i/] ! tru/ w be 
consi/5t ) ! requirem5ts ( ?is section4 
7,c7 ,no "p ( ! tru/ assets w be inve/$ 
9 life insurance contracts4  7,d7 ,!    
assets ( ! tru/ w n be comm+l$ ) o!r    
prop]ty except 9 a common tru/ fund or  
common inve/m5t fund4  7,e7 ,! int]e/ ( 
an individual 9 ! balance 9 8 acc\nt is 
non=feitable4  7#b7  ,qualifi$ dep5d5t  
c>e exp5ses  ,! t]m qualifi$ dep5d5t c>e
 exp5ses means ! employm5t-relat$       
exp5ses 7z def9$ 9 section #ba7;b77#b77 
( ! acc\nt b5efici>y ) respect to any   
qualify+ individual 7z def9$ 9 section  
#ba7;b77#a77 ( ! acc\nt b5efici>y4 ,su* 
t]m includes qualifi$ long-t]m c>e      
s]vices 7z def9$ 9 section #ggjb;,b7c771
 & am\nts paid = qualifi$ long-t]m c>e  
insurance contracts 7z def9$ 9 section  

#ggjb;,b7b771 ) respect to su* qualify+ 
individuals ( ! acc\nt b5efici>y4  7#c7 
,acc\nt b5efici>y  ,! t]m acc\nt        
b5efici>y means ! individual on ^:      
behalf ! dep5d5t c>e sav+s acc\nt 0     
e/abli%$4  7#d7  ,c]ta9 rules to apply  
,rules simil> to ! foll[+ rules %all    
apply = purposes ( ?is section3  7,a7   
,section #bai7;d77#b7 7relat+ to no     
d$uction = rollov]s74  7,b7 ,except z   
provid$ 9 section #abi1 section         
#bai7;f77#c7 7relat+ to "t :5           
contributions deem$ made74  7,c7        
,section #bai7;f77#e7 7relat+ to employ]
 paym5ts74  7,d7 ,section #bbc7;b77#f7  
7relat+ to d5ial ( d$uction to          
dep5d5ts74  7,e7 ,section #djh7;g7      
7relat+ to community prop]ty laws74     
7,f7 ,section #djh7;h7 7relat+ to       
cu/odial acc\nts74  7d7  ,tax treatm5t (
 acc\nts  7#a7  ,9 g5]al  ,a dep5d5t c>e
 sav+s acc\nt is exempt f taxation "u   
?is subtitle unless su* acc\nt has ceas$
 to be a dep5d5t c>e sav+s acc\nt4      
,not)/&+ ! prec$+ s5t5ce1 any su* acc\nt

 is subject to ! taxes impos$ by section
 #eaa4  7#b7  ,acc\nt t]m9ations  ,rules
 simil> to ! rules ( p>agraphs 7#b7 &   
7#d7 ( section #djh7;e7 %all apply to   
dep5d5t c>e sav+s acc\nts1 & any am\nt  
treat$ z di/ribut$ "u su* rules %all be 
treat$ z n us$ to pay qualifi$ dep5d5t  
c>e exp5ses4  7e7  ,tax treatm5t (      
di/ributions  7#a7  ,am\nts us$ =       
qualifi$ dep5d5t c>e exp5ses  ,any am\nt
 paid or di/ribut$ out ( a dep5d5t c>e  
sav+s acc\nt :i* is us$ exclusively to  
pay qualifi$ dep5d5t c>e exp5ses ( any  
acc\nt b5efici>y %all n be includible 9 
gross income4  7#b7  ,inclusion ( am\nts
 n us$ = qualifi$ dep5d5t c>e exp5ses   
,any am\nt paid or di/ribut$ out ( a    
dep5d5t c>e sav+s acc\nt :i* is n us$   
exclusively to pay ! qualifi$ dep5d5t   
c>e exp5ses ( ! acc\nt b5efici>y %all be
 includ$ 9 ! gross income ( su*         
b5efici>y4  7#c7  ,excess contributions 
return$ be=e due date ( return  7,a7  ,9
 g5]al  ,if any excess contribution is  
contribut$ = a taxable ye> to any       

dep5d5t c>e sav+s acc\nt ( an           
individual1 p>agraph 7#b7 %all n apply  
to di/ributions f ! dep5d5t c>e sav+s   
acc\nts ( su* individual 7to ! ext5t su*
 di/ributions d n exce$ ! aggregate     
excess contributions to all su* acc\nts 
( su* individual = su* ye>7 if--  7i7   
su* di/ribution is receiv$ by !         
individual on or be=e ! la/ day         
prescrib$ by law 7includ+ ext5sions (   
"t7 = fil+ su* individual's return = su*
 taxable ye>1 &  7ii7 su* di/ribution is
 accompani$ by ! am\nt ( net income     
attributable to su* excess contribution4
  ,any net income describ$ 9 clause 7ii7
 %all be includ$ 9 ! gross income ( !   
individual = ! taxable ye> 9 :i* x is   
receiv$4  7,b7  ,excess contribution  ,=
 purposes ( subp>agraph 7,a71 ! t]m     
excess contribution means any           
contribution 7o!r ?an a rollov]         
contribution describ$ 9 p>agraph 7#e77  
:i* is nei!r excludable f gross income  
"u section #abi nor d$uctible "u ?is    
section4  7#d7  ,additional tax on      

di/ributions n us$ = qualifi$ dep5d5t   
c>e exp5ses  7,a7  ,9 g5]al  ,! tax     
impos$ by ?is *apt] on ! acc\nt         
b5efici>y = any taxable ye> 9 :i* !re is
 a paym5t or di/ribution f a dep5d5t c>e
 sav+s acc\nt ( su* b5efici>y :i* is    
includible 9 gross income "u p>agraph   
7#b7 %all be increas$ by #bj p]c5t ( !  
am\nt :i* is s includible4  7,b7        
,exception = disability or dea?         
,subp>agraph 7,a7 %all n apply if !     
paym5t or di/ribution is made aft] !    
acc\nt b5efici>y becomes disabl$ )9 !   
mean+ ( section #gb7m77#g7 or dies4     
7#e7  ,rollov] contribution  ,an am\nt  
is describ$ 9 ?is p>agraph z a rollov]  
contribution if x meets ! requirem5ts ( 
subp>agraphs 7,a7 & 7,b74  7,a7  ,9     
g5]al  ,p>agraph 7#b7 %all n apply to   
any am\nt paid or di/ribut$ f a dep5d5t 
c>e sav+s acc\nt to ! acc\nt b5efici>y  
to ! ext5t ! am\nt receiv$ is paid into 
a dep5d5t c>e sav+s acc\nt = ! b5efit ( 
su* b5efici>y n lat] ?an ! #fj? day aft]
 ! day on :i* ! b5efici>y receives !    

paym5t or di/ribution4  7,b7            
,limitation  ,?is p>agraph %all n apply 
to any am\nt describ$ 9 subp>agraph 7,a7
 receiv$ by an individual f a dep5d5t   
c>e sav+s acc\nt if1 at any "t dur+ !   
#a-ye> p]iod end+ on ! day ( su*        
receipt1 su* individual receiv$ any o!r 
am\nt describ$ 9 subp>agraph 7,a7 f a   
dep5d5t c>e sav+s acc\nt :i* 0 n        
includible 9 ! individual's gross income
 because ( ! application ( ?is p>agraph4
  7#f7  ,coord9ation ) dep5d5t c>e cr$it
  ,= purposes ( det]m9+ ! am\nt ( !     
cr$it "u section #ba1 any paym5t or     
di/ribution out ( a dep5d5t c>e sav+s   
acc\nt = qualifi$ dep5d5t c>e exp5ses   
%all n be treat$ z employm5t-relat$     
exp5ses4  7#g7  ,transf] ( acc\nt       
incid5t to divorce2 treatm5t aft] dea?  
,rules simil> to ! rules ( p>agraphs    
7#g7 & 7#h7 ( section #bbc %all apply ) 
respect to dep5d5t c>e sav+s acc\nts4   
7f7  ,reports  ,! ,secret>y may require 
! tru/ee ( a dep5d5t c>e sav+s acc\nt to
 make su* reports reg>d+ su* acc\nt to !

 ,secret>y & to ! acc\nt b5efici>y )    
respect to contributions1 di/ributions1 
! return ( excess contributions1 & su*  
o!r matt]s z ! ,secret>y det]m9es       
appropriate4 ,! reports requir$ by ?is  
subsection %all be fil$ at su* "t & 9   
su* mann] & furni%$ to su* individuals  
at su* "t & 9 su* mann] z may be requir$
 by ! ,secret>y4  4  7b7  ,d$uction     
all[$ 9 comput+ adju/$ gross income     
,subsection 7a7 ( section #fb ( !       
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ be=e ! la/ s5t5ce ! foll[+ new
 p>agraph3  7#bb7  ,dep5d5t c>e sav+s   
acc\nts  ,! d$uction all[$ by section   
#bbd7;a74  4  7c7  ,exclusion ( employ] 
contributions  ,section #abi ( !        
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subsection3  7f7  ,contributions to     
dep5d5t c>e sav+s acc\nts  7#a7  ,9     
g5]al  ,gross income ( an employee does 
n include am\nts contribut$ by an       
employee's employ] to any dep5d5t c>e   
sav+s acc\nt 7z def9$ 9 section #bbd7 ( 

su* employee to ! ext5t su* am\nts d n  
exce$ ! limitation "u section           
#bbd7;b77#a7 :i* is applicable to su*   
employee = su* taxable ye>4  7#b7       
,cross ref]5ce  ,= p5alty on failure by 
employ] to make comp>able contributions 
to ! dep5d5t c>e sav+s acc\nts (        
comp>able employees1 see section        
#dihj;,h4  4  7d7  ,tax on excess       
contributions  ,section #digc ( !       
,int]nal ,rev5ue ,code ( #aihf is       
am5d$--  7#a7 9 subsection 7a71 by /rik+
 or at ! end ( p>agraph 7#d71 by add+ or
 at ! end ( p>agraph 7#e71 & by ins]t+  
aft] p>agraph 7#e7 ! foll[+ new         
p>agraph3  7#f7 a dep5d5t c>e sav+s     
acc\nt 7z def9$ 9 section #bbd71  1 &   
7#b7 by add+ at ! end ! foll[+ new      
subsection3  7h7  ,excess contributions 
to dep5d5t c>e sav+s acc\nts  ,=        
purposes ( ?is section1 9 ! case ( a    
dep5d5t c>e sav+s acc\nt 7z def9$ 9     
section #bbd71 ! t]m excess             
contributions means ! sum (--  7#a7 !   
aggregate am\nt contribut$ = ! taxable  

ye> to ! acc\nt 7o!r ?an a rollov]      
contribution describ$ 9 section         
#bbd7;e77#e77 :i* is nei!r excludable f 
gross income "u section #abi nor        
all[able z a d$uction "u section #bbd = 
su* ye>1 &  7#b7 ! am\nt det]m9$ "u ?is 
subsection = ! prec$+ taxable ye>1 r$uc$
 by ! sum (--  7,a7 ! di/ributions out (
 ! acc\nt :i* 7 includ$ 9 gross income  
"u section #bbd7;e77#b71 &  7,b7 !      
excess 7if any7 (--  7i7 ! maximum am\nt
 all[able z a d$uction "u section       
#bbd7;b77#a7 = ! taxable ye>1 ov]  7ii7 
! am\nt contribut$ to ! acc\nt = !      
taxable ye>4  4  7e7  ,failure ( employ]
 ,to make comp>able dep5d5t c>e sav+s   
acc\nt contributions  ,*apt] #dc ( !    
,int]nal ,rev5ue ,code ( #aihf1 z am5d$ 
by ! ,pati5t ,protection & ,af=dable    
,c>e ,act1 is am5d$ by add+ at ! end !  
foll[+ new section3  #dihj;,j4  ,failure
 ( employ] to make comp>able dep5d5t c>e
 sav+s acc\nt contributions  7a7  ,g5]al
 rule  ,9 ! case ( an employ] :o makes a
 contribution to ! dep5d5t c>e sav+s    

acc\nt ( any employee dur+ a cal5d> ye>1
 !re is h]eby impos$ a tax on ! failure 
( su* employ] to meet ! requirem5ts (   
subsection 7b7 = su* cal5d> ye>4  7b7   
,rules & requirem5ts  ,rules &          
requirem5ts simil> to ! rules &         
requirem5ts ( section #dihj;,e %all     
apply = purposes ( ?is section4  7c7    
,regulations  ,! ,secret>y %all issue   
regulations to c>ry out ! purposes ( ?is
 section4  7d7  ,exception  ,= purposes 
( apply+ section #dihj;,e to a          
contribution to a dep5d5t c>e sav+s     
acc\nt ( an employee :o is n a highly   
comp5sat$ employee 7z def9$ 9 section   
#dad7q771 highly comp5sat$ employees    
%all n be treat$ z comp>able p>ticipat+ 
employees4  4  7f7  ,cl]ical am5dm5ts   
7#a7 ,! table ( sections = "p ,,vii (   
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by       
r$esignat+ ! item relat+ to section #bbd
 z an item relat+ to section #bbe1 & by 
ins]t+ be=e su* item ! foll[+ new item3 
,sec4 #bbd4 ,dep5d5t c>e sav+s acc\nts4 

4  7#b7 ,! table ( sections = *apt] #dc 
( su* ,code1 z am5d$ by ! ,pati5t       
,protection & ,af=dable ,c>e ,act1 is   
am5d$ by add+ at ! end ! foll[+ new     
item3  ,sec4 #dihj;,j4 ,failure (       
employ] to make comp>able dep5d5t c>e   
sav+s acc\nt contributions4  4  7g7     
,effective date  ,! am5dm5ts made by ?is
 section %all apply to taxable ye>s     
beg9n+ aft] ! date ( ! enactm5t ( ?is   
,act4