,i  #aai? ,,congress  #b;d ,session  ,h4
 ,r4 #idhj  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,june #be1 #bjbf,mr4  
,p]ry introduc$ ! foll[+ bill2 :i* 0    
ref]r$ to ! ,committee on ,ways & ,means
  ,a ,,bill  ,to am5d ! ,int]nal ,rev5ue
 ,code ( #aihf to all[ a d$uction =     
am\nts contribut$ to home sav+s acc\nts1
 & = o!r purposes4  #a4 ,home sav+s     
acc\nts  7a7 ,9 g5]al ,"p ,,vii (       
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] section #bac ! foll[+ new section3
  #bad4 ,home sav+s acc\nts  7a7        
,d$uction all[$ ,9 ! case ( an          
individual1 !re %all be all[$ z a       
d$uction = ! taxable ye> an am\nt equal 
to ! aggregate am\nt paid 9 ca% dur+ su*
 taxable ye> by su* individual to a home
 sav+s acc\nt ( su* individual4  7b7    
,limitations  7#a7 ,9 g5]al ,! am\nt    
all[able z a d$uction "u subsection 7a7 
to an individual = ! taxable ye> %all n 
exce$ #aj1jjj 7#bj1jjj 9 ! case ( a     
m>ri$ individual fil+ a jo9t return74   

7#b7 ,d5ial ( d$uction to dep5d5ts ,no  
d$uction %all be all[$ "u ?is section to
 any individual ) respect to :om a      
d$uction "u section #aea is all[able to 
ano!r taxpay] = a taxable ye> beg9n+ 9 !
 cal5d> ye> 9 :i* su* individual's      
taxable ye> beg9s4  7c7 ,home sav+s     
acc\nts ,= purposes ( ?is section-- 7#a7
 ,9 g5]al ,! t]m home sav+s acc\nt means
 a tru/ creat$ or organiz$ 9 ! ,unit$   
,/ates z a home sav+s acc\nt exclusively
 = ! purpose ( pay+ ! qualifi$ h\s+     
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$-- 
7i7 unless x is 9 ca% & made by ! acc\nt
 b5efici>y1 or  7ii7 to ! ext5t su*     
contribution1 :5 add$ to previ\s        
contributions to ! tru/ = ! cal5d> ye>1 
exce$s ! doll> am\nt 9 effect "u        
subsection 7b77#a74  7,b7 ,! tru/ee is a
 bank 7z def9$ 9 section #djh7n771 an   

insurance company 7z def9$ 9 section    
#haf71 or ano!r p]son :o demon/rates to 
! satisfaction ( ! ,secret>y t ! mann] 9
 :i* su* 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 su*         
individual's acc\nt is non=feitable4    
7#b7 ,qualifi$ h\s+ exp5ses  7,a7 ,9    
g5]al ,! t]m qualifi$ h\s+ exp5ses      
means1 ) respect to an acc\nt b5efici>y1
 am\nts paid by su* b5efici>y--  7i7 = !
 pur*ase ( a pr9cipal resid5ce = su*    
b5efici>y1 or  7ii7 to make excess      
paym5ts on any rema9+ pr9cipal ( ! am\nt
 ( acquisition indebt$ness ) respect to 
su* resid5ce4  7,b7 ,pr9cipal resid5ce2 
pur*ase ,! t]ms pr9cipal resid5ce &     
pur*ase h ! mean+ giv5 su* t]ms 9       
section #cf7;c74  7,c7 ,acquisition     
indebt$ness ,! t]m acquisition          

indebt$ness means any indebt$ness :i* is
 incurr$ ) respect to ! pur*ase ( !     
pr9cipal resid5ce ( ! acc\nt b5efici>y &
 is secur$ by su* resid5ce4 ,su* t]m    
also includes any indebt$ness secur$ by 
su* resid5ce result+ f ! ref9anc+ (     
indebt$ness meet+ ! requirem5ts ( !     
prec$+ s5t5ce 7or ?is s5t5ce72 b only to
 ! ext5t ! am\nt ( ! indebt$ness result+
 f su* ref9anc+ does n exce$ ! am\nt ( !
 ref9anc$ indebt$ness4  7#c7 ,acc\nt    
b5efici>y ,! t]m acc\nt b5efici>y means 
! individual on ^: behalf ! home sav+s  
acc\nt 0 e/abli%$4  7#d7 ,c]ta9 rules   
apply ,rules simil> to ! foll[+ rules   
%all apply = purposes ( ?is section3    
7,a7 ,section #bai7;d77#b7 7relat+ to no
 d$uction = rollov]s74  7,b7 ,section   
#bai7;f77#c7 7relat+ to "t :5           
contributions deem$ made74  7,c7        
,section #djh7;g7 7relat+ to community  
prop]ty laws74  7,d7 ,section #djh7;h7  
7relat+ to cu/odial acc\nts74  7d7 ,tax 
treatm5t ( acc\nts  7#a7 ,9 g5]al ,a    
home sav+s acc\nt is exempt f taxation  

"u ?is subtitle unless su* acc\nt has   
ceas$ to be a home sav+s acc\nt4        
,not)/&+ ! prec$+ s5t5ce1 any su* acc\nt
 is subject to ! taxes impos$ by section
 #eaa 7relat+ to imposition ( tax on    
unrelat$ bus9ess income ( *>itable1 etc4
 organizations74  7#b7 ,acc\nt          
t]m9ations ,rules simil> to ! rules (   
p>agraphs 7#b7 & 7#d7 ( section #djh7;e7
 %all apply to home sav+s acc\nts1 & any
 am\nt treat$ z di/ribut$ "u su* rules  
%all be treat$ z n us$ to pay qualifi$  
h\s+ exp5ses4  7e7 ,tax treatm5t (      
di/ributions  7#a7 ,am\nts us$ =        
qualifi$ h\s+ exp5ses ,any am\nt paid or
 di/ribut$ out ( a home sav+s acc\nt :i*
 is us$ exclusively to pay qualifi$ h\s+
 exp5ses ( any acc\nt b5efici>y %all n  
be includible 9 gross income4  7#b7     
,inclusion ( am\nts n us$ = qualifi$    
h\s+ exp5ses ,any am\nt paid or         
di/ribut$ out ( a home sav+s acc\nt :i* 
is n us$ exclusively to pay ! qualifi$  
h\s+ 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 home  
sav+s acc\nt ( an individual1 p>agraph  
7#b7 %all n apply to di/ributions f !   
home 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 n d$uctible "u ?is section4  7#d7
 ,additional tax on di/ributions n us$ =
 qualifi$ h\s+ 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 home 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
 home sav+s acc\nt to ! acc\nt b5efici>y
 to ! ext5t ! am\nt receiv$ is paid into
 a home 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 home 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 home sav+s acc\nt  
:i* 0 n includible 9 ! individual's     
gross income because ( ! application (  
?is p>agraph4  7#f7 ,transf] ( acc\nt   
incid5t to divorce ,! transf] ( an      
individual's int]e/ 9 a home sav+s      
acc\nt to an individual's sp\se or =m]  
sp\se "u a divorce or sep>ation in/rum5t
 describ$ 9 clause 7i7 ( section        
#aba7;d77#c77;,c7 %all n be consid]$ a  
taxable transf] made by su* individual  
not)/&+ any o!r provision ( ?is         
subtitle1 & su* int]e/ %all1 aft] su*   
transf]1 be treat$ z a home sav+s acc\nt
 ) respect to :i* su* sp\se is ! acc\nt 
b5efici>y4  7#g7 ,treatm5t aft] dea? (  
acc\nt b5efici>y  7,a7 ,treatm5t if     
designat$ b5efici>y is sp\se ,if !      

acc\nt b5efici>y's surviv+ sp\se        
acquires su* b5efici>y's int]e/ 9 a home
 sav+s acc\nt by reason ( be+ !         
designat$ b5efici>y ( su* acc\nt at !   
dea? ( ! acc\nt b5efici>y1 su* home     
sav+s acc\nt %all be treat$ z if ! sp\se
 7 ! acc\nt b5efici>y4  7,b7 ,o!r cases 
7i7 ,9 g5]al ,if1 by reason ( ! dea? ( !
 acc\nt b5efici>y1 any p]son acquires ! 
acc\nt b5efici>y's int]e/ 9 a home sav+s
 acc\nt 9 a case to :i* subp>agraph 7,a7
 does n apply--  7,i7 su* acc\nt %all   
cease to be a home sav+s acc\nt z ( !   
date ( dea?1 &  7,,ii7 an am\nt equal to
 ! fair m>ket value ( ! assets 9 su*    
acc\nt on su* date %all be includible1  
if su* p]son is n ! e/ate ( su*         
b5efici>y1 9 su* p]son's gross income = 
! taxable ye> :i* includes su* date1 or 
if su* p]son is ! e/ate ( su* b5efici>y1
 9 su* b5efici>y's gross income = ! la/ 
taxable ye> ( su* b5efici>y4  7ii7      
,special rules  7,i7 ,r$uction (        
inclusion = pr$ea? exp5ses ,! am\nt     
includible 9 gross income "u clause 7i7 

by any p]son 7o!r ?an ! e/ate7 %all be  
r$uc$ by ! am\nt ( qualifi$ h\s+ exp5ses
 :i* 7 incurr$ by ! dec$5t be=e ! date (
 ! dec$5t's dea? & paid by su* p]son )9 
#a ye> aft] su* date4  7,,ii7 ,d$uction 
= e/ate taxes ,an appropriate d$uction  
%all be all[$ "u section #fia7;c7 to any
 p]son 7o!r ?an ! dec$5t or ! dec$5t's  
sp\se7 ) respect to am\nts includ$ 9    
gross income "u clause 7i7 by su* p]son4
  7f7 ,inflation adju/m5t  7#a7 ,9 g5]al
 ,9 ! case ( any taxable ye> beg9n+ aft]
 ,decemb] #ca1 #bjbg1 ea* doll> am\nt 9 
subsection 7b77#a7 %all be increas$ by  
an am\nt equal to-- 7,a7 su* doll>      
am\nt1 multipli$ by  7,b7 ! co/-(-liv+  
adju/m5t det]m9$ "u section #a7;f77#c7 =
 ! cal5d> ye> 9 :i* su* taxable ye>     
beg9s det]m9$ by sub/itut+ cal5d> ye>   
#bjbf = cal5d> ye> #bjaf 9 subp>agraph  
7,a77ii7 !re(4  7#b7 ,r\nd+ ,if any     
increase "u p>agraph 7#a7 is n a        
multiple ( #ajj1 su* increase %all be   
r\nd$ to ! ne>e/ multiple ( #ajj4  7g7  
,reports ,! ,secret>y may require !     

tru/ee ( a home 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$uction all[$
 :e!r or n individual itemizes o!r      
d$uctions ,section #fb7;a7 ( su* ,code  
is am5d$ by ins]t+ aft] p>agraph 7#ba7 !
 foll[+ new p>agraph3  7#bb7 ,home sav+s
 acc\nts ,! d$uction all[$ by section   
#bad4  4  7c7 ,fund+ di/ributions f     
individual retirem5t plans ,section     
#djh7;d7 ( su* ,code is am5d$ by add+ at
 ! end ! foll[+ new p>agraph3  7#aj7    
,di/ributions = home sav+s acc\nt fund+ 
7,a7 ,9 g5]al ,9 ! case ( an individual 
:o elects ! application ( ?is p>agraph =
 a taxable ye>1 gross income ( !        
individual = ! taxable ye> does n       

include a qualifi$ home sav+s acc\nt    
fund+ di/ribution to ! ext5t su*        
di/ribution is o!rwise includible 9     
gross income4  7,b7 ,qualifi$ home sav+s
 acc\nt fund+ di/ribution ,= purposes ( 
?is p>agraph1 ! t]m qualifi$ home sav+s 
acc\nt fund+ di/ribution means a        
di/ribution f an individual retirem5t   
plan 7o!r ?an a plan describ$ 9         
subsection 7k7 or 7p77 ( ! employee to !
 ext5t t su* di/ribution is contribut$  
to ! home sav+s acc\nt ( ! individual 9 
a direct tru/ee-to-tru/ee transf]4  7,c7
 ,limitations  7i7 ,maximum doll> am\nt 
,! am\nt exclud$ f gross income by      
subp>agraph 7,a7 %all n exce$ ! doll>   
limitation "u section #bad7;b77#a7 :i*  
is applicable at ! "t ( ! qualifi$ home 
sav+s acc\nt fund+ di/ribution4  7ii7   
,"o-"t transf] ,an individual may make  
an election "u subp>agraph 7,a7 only =  
"o qualifi$ home sav+s acc\nt fund+     
di/ribution dur+ ! lifetime ( !         
individual4 ,su* an election1 once made1
 %all be irrevocable4  7,d7 ,application

 ( section #gb ,not)/&+ section #gb1 9  
det]m9+ ! ext5t to :i* an am\nt is      
treat$ z o!rwise includible 9 gross     
income = purposes ( subp>agraph 7,a71 ! 
aggregate am\nt di/ribut$ f an          
individual retirem5t plan %all be treat$
 z includible 9 gross income to ! ext5t 
t su* am\nt does n exce$ ! aggregate    
am\nt :i* w\ld h be5 s includible if all
 am\nts f all individual retirem5t plans
 7 di/ribut$4 ,prop] adju/m5ts %all be  
made 9 apply+ section #gb to o!r        
di/ributions 9 su* taxable ye> &        
subsequ5t taxable ye>s4  4  7d7 ,tax on 
excess contributions ,section #digc (   
su* ,code is am5d$--  7#a7 by /rik+ or  
at ! end ( subsection 7a77#e71 by ins]t+
 or at ! end ( subsection 7a77#f71 & by 
ins]t+ aft] subsection 7a77#f7 ! foll[+ 
new p>agraph3  7#g7 a home sav+s acc\nt 
7)9 ! mean+ ( section #bad7;c771  1 &   
7#b7 by add+ at ! end ! foll[+ new      
subsection3  7i7 ,excess contributions  
to home sav+s acc\nts ,= purposes ( ?is 
section1 9 ! case ( home sav+s acc\nts  

7)9 ! mean+ ( section #bad7;c771 ! t]m  
excess contributions means ! sum (--    
7#a7 ! aggregate am\nt contribut$ = !   
taxable ye> to ! acc\nts 7o!r ?an a     
rollov] contribution describ$ 9 section 
#bad7;e77#e77 :i* is n all[able z a     
d$uction "u section #bad = su* ye>1 &   
7#b7 ! am\nt det]m9$ "u ?is subsection =
 ! prec$+ taxable ye>1 r$uc$ by ! sum   
(--  7,a7 ! di/ributions out ( ! acc\nts
 :i* 7 includ$ 9 gross income "u section
 #bad7;e77#b71 &  7,b7 ! excess 7if any7
 (--  7i7 ! maximum am\nt all[able z a  
d$uction "u section #bad7;b77#a7 = !    
taxable ye>1 ov]  7ii7 ! am\nt          
contribut$ to ! acc\nts = ! taxable ye>4
  ,= purposes ( ?is subsection1 any     
contribution :i* is di/ribut$ out ( !   
home sav+s acc\nt 9 a di/ribution to :i*
 section #bad7;e77#c7 applies %all be   
treat$ z an am\nt n contribut$4  4  7e7 
,tax on prohibit$ transactions  7#a7    
,section #dige7;c7 ( su* ,code is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#h7 ,special rule = home sav+s acc\nts 

,an individual = ^: b5efit a home sav+s 
acc\nt 7)9 ! mean+ ( section #bad7;c77  
is e/abli%$ %all be exempt f ! tax      
impos$ by ?is section ) respect to any  
transaction conc]n+ su* acc\nt 7:i* w\ld
 o!rwise be taxable "u ?is section7 if1 
) respect to su* transaction1 ! acc\nt  
ceases to be a home sav+s acc\nt by     
reason ( ! application ( section        
#bad7;d77#b7 to su* acc\nt4  4  7#b7    
,section #dige7;e77#a7 ( su* ,code is   
am5d$ by r$esignat+ subp>agraphs 7,d7   
?r\gh 7,g7 z subp>agraphs 7,e7 ?r\gh    
7,h71 respectively1 & by ins]t+ aft]    
subp>agraph 7,c7 ! foll[+ new           
subp>agraph3  7,d7 a home sav+s acc\nt  
describ$ 9 section #bad7;c71  4  7f7    
,failure ,to provide reports on home    
sav+s acc\nts ,section #ffic7;a77#b7 (  
su* ,code is am5d$ by r$esignat+        
subp>agraphs 7,b7 ?r\gh 7,g7 z          
subp>agraphs 7,c7 ?r\gh 7,h71           
respectively1 & by ins]t+ aft]          
subp>agraph 7,a7 ! foll[+ new           
subp>agraph3  7,b7 section #bad7;g7     

7relat+ to home sav+s acc\nts71  4  7g7 
,cl]ical am5dm5t ,! table ( sections =  
"p ,,vii ( sub*apt] ,b ( *apt] #a ( su* 
,code is am5d$ by ins]t+ aft] ! item    
relat+ to section #bac ! foll[+ new     
item3  ,sec4 #bad4 ,home sav+s acc\nts4 
4  7h7 ,effective date ,! am5dm5ts made 
by ?is section %all apply to taxable    
ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4