text: 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.
target: 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.
feat_title: Enhanced Savings Opportunities Act