article: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Enhanced Savings Opportunities Act''. (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. SEC. 2. 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 to read as follows: ``(B) the participant's compensation.'' (2) 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 on December 31, 1998)''. (B) Section 403(b) is amended-- (i) by striking ``the exclusion allowance for such taxable year'' in paragraph (I) and inserting ``the applicable limit under section 415'', (ii) by striking paragraph (2), and (iii) 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). (C) Section 404(a)(10)(B) is amended by striking ``, the exclusion allowance under section 403(b)(2),''. (D) 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)''. (E) 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).'' (F) Section 415(c) is amended by striking paragraph (4). (G) 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, 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).'' (H) Section 415(e)(5) is amended-- (i) by striking ``(except in the case of a participant who has elected under subsection (c)(4)(D) to have the provisions of subsection (c)(4)(C) apply)'', and (ii) by striking the last sentence. (I) Section 415(n)(2)(B) is amended by striking ``percentage''. (J) Subparagraph (B) of section 402(g)(7) is amended by inserting before the period at the end the following: ``(as in effect on the date of the enactment of the Enhanced Savings Opportunity Act)''. (b) Special Rules for Sections 403(b) and 408.--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.'' (c) Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations.--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''. (d) Effective Dates.-- (1) In general.--Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1999. (2) Special rules for sections 403(b) and 408.--The amendment made by subsection (b) shall apply to limitation years beginning after December 31, 2000. SEC. 3. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF LIMITS. (a) In General.--Section 404 is amended by adding at the end the following new subsection: ``(n) Elective Deferrals Not Taken Into Account for Purposes of Limits.--Elective deferrals (as defined in section 402(g)(3)) shall not be subject to any limitations described in this section (other than subsection (a)), and such elective deferrals shall not be taken into account in applying such limitations to any other contributions.'' (b) Effective Date.--The amendment made by this section shall apply to years beginning after December 31, 1999.
summary: Enhanced Savings Opportunities Act - Amends the Internal Revenue Code to permit maximum employee contributions to a defined contribution plan to be the lesser of either $30,000 or the participant's compensation, rather than the lesser of $30,000 or 25 percent of the participant's compensation. Makes conforming amendments regarding tax-exempt, educational, and State and local employee annuity plans. Excludes elective deferrals from such limits.