INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

SEC. 611. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS. (a) Defined Benefit Plans.— (1) Dollar limit.— (A) Subparagraph (A) of section 415(b)(1) (relating to limitation for defined benefit plans) is amended by striking “$90,000” and inserting “$160,000”. (B) Subparagraphs (C) and (D) of section 415(b)(2) are each amended in the headings and the text, by striking “$90,000” and inserting “$160,000”, (C) Paragraph (7) of section 415(b) (relating to benefits under certain collectively bargained plans) is amended by striking “the greater of $68,212 or one-half the amount otherwise applicable for such year under paragraph (1)(A) for ‘$90,000’” and inserting “one-half the amount otherwise applicable for such year under paragraph (1)(A) for ‘$160,000’”. (2) Limit reduced when benefit begins before age 62.—Subparagraph (C) of section 415(b)(2) is amended by striking “the social security retirement age” each place it appears in the heading and text and inserting “age 62” and by striking the second sentence. (3) Limit increased when benefit begins after age 65.—Subparagraph (D) of section 415(b)(2) is amended by striking “the social security retirement age” each place it appears in the heading and text and inserting “age 65”. (4) Cost-of-living adjustments.—Subsection (d) of section 415 (related to cost-of-living adjustments) is amended— (A) by striking “$90,000” in paragraph (1)(A) and inserting “$160,000”; and 115 STAT. 97 (B) in paragraph (3)(A)— (i) by striking “$90,000” in the heading and inserting “$160,000”; and (ii) by striking “October 1, 1986” and inserting “July 1, 2001”. (5) Conforming amendments.— (A) Section 415(b)(2) is amended by striking subparagraph (F). (B) Section 415(b)(9) is amended to read as follows; “(9) Special rule for commercial airline pilots.— “(A) In general.—Except as provided in subparagraph (B), in the case of any participant who is a commercial airline pilot, if, as of the time of the participant’s retirement, regulations prescribed by the Federal Aviation Administration require an individual to separate from service as a commercial airline pilot after attaining any age occurring on or after age 60 and before age 62, paragraph (2)(C) shall be applied by substituting such age for age 62. “(B) Individuals who separate from service before age 60.—If a participant described in subparagraph (A) separates from service before age 60, the rules of paragraph (2)(C) shall apply.”. (C) Section 415(b)(10)(C)(i) is amended by striking “applied without regard to paragraph (2)(F)”. (b) Defined Contribution Plans.— (1) Dollar limit.—Subparagraph (A) of section 415(c)(1) (relating to limitation for defined contribution plans) is amended by striking “$30,000” and inserting “$40,000”. (2) Cost-of-living adjustments.—Subsection (d) of section 415 (related to cost-of-living adjustments) is amended— (A) by striking “$30,000” in paragraph (1)(C) and inserting “$40,000”; and (B) in paragraph (3)(D)— (i) by striking “$30,000” in the heading and inserting “$40,000”; and (ii) by striking “October 1, 1993” and inserting “July 1, 2001”. (c) Qualified Trusts.— (1) Compensation limit.—Sections 401(a)(17), 404(1), 408(k), and 505(b)(7) are each amended by striking “$150,000” each place it appears and inserting “$200,000”. (2) Base period and rounding of cost-of-living adjustment.—Subparagraph (B) of section 401(a)(17) is amended— (A) by striking “October 1, 1993” and inserting “July 1, 2001”; and (B) by striking “$10,000” both places it appears and inserting “$5,000”. (d) Elective Deferrals.— (1) In general.—Paragraph (1) of section 402(g) (relating to limitation on exclusion for elective deferrals) is amended to read as follows; “(1) In general.— “(A) Limitation.—Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual’s 115 STAT. 98gross income to the extent the amount of such deferrals for the taxable year exceeds the applicable dollar amount. “(B) Applicable dollar amount.—For purposes of subparagraph (A), the applicable dollar amount shall be the amount determined in accordance with the following table: “For taxable years beginning in calendar year: The applicable dollar amount: 2002 $11,000 2003 $12,000 2004 $13,000 2005 $14,000 2006 or thereafter $15,000.”. (2) Cost-of-living adjustment.—Paragraph (5) of section 402(g) is amended to read as follows: “(5) Cost-of-living adjustment.—In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under paragraph (1)(B) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.”. (3) Conforming amendments.— (A) Section 402(g) (relating to limitation on exclusion for elective deferrals), as amended by paragraphs (1) and (2), is further amended by striking paragraph (4) and redesignating paragraphs (5), (6), (7), (8), and (9) as paragraphs (4), (5), (6), (7), and (8), respectively. (B) Paragraph (2) of section 457(c) is amended by striking “402(g)(8)(A)(iii)” and inserting “402(g)(7)(A)(iii)”. (C) Clause (iii) of section 501(c)(18)(D) is amended by striking “(other than paragraph (4) thereof)”, (e) Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations.— (1) In general.—Section 457 (relating to deferred compensation plans of State and local governments and tax-exempt organizations) is amended— (A) in subsections (b)(2)(A) and (c)(1) by striking “$7,500” each place it appears and inserting “the applicable dollar amount”; and (B) in subsection (b)(3)(A) by striking “$15,000” and inserting “twice the dollar amount in effect under subsection (b)(2)(A)”. (2) Applicable dollar amount; cost-of-living adjustment.—Paragraph (15) of section 457(e) is amended to read as follows: “(15) Applicable dollar amount.— “(A) In general.—The applicable dollar amount shall be the amount determined in accordance with the following table: “For taxable years beginning in calendar year: The applicable dollar amount: 2002 $11,000 2003 $12,000 2004 $13,000 115 STAT. 99 2005 $14,000 2006 or thereafter $15,000. “(B) Cost-of-living adjustments.—In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under subparagraph (A) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.” (f) Simple Retirement Accounts.— (1) Limitation.—Clause (ii) of section 408(p)(2)(A) (relating to general rule for qualified salary reduction arrangement) is amended by striking “$6,000” and inserting “the applicable dollar amount”. (2) Applicable dollar amount.—Subparagraph (E) of 408(p)(2) is amended to read as follows: “(E) Applicable dollar amount; cost-of-living adjustment.— “(i) In general.—For purposes of subparagraph (A)(ii), the applicable dollar amount shall be the amount determined in accordance with the following table: “For years beginning in calendar year: The applicable dollar amount: 2002 $7,000 2003 $8,000 2004 $9,000 2005 or thereafter $10,000. “(ii) Cost-of-living adjustment.—In the case of a year beginning after December 31, 2005, the Secretary shall adjust the $10,000 amount under clause (i) at the same time and in the same manner as under section 415(d), except that the base period taken into account shall be the calendar quarter beginning July 1, 2004, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500.”. (3) Conforming amendments.— (A) Subclause (I) of section 401(k)(11)(B)(i) is amended by striking “$6,000” and inserting “the amount in effect under section 408(p)(2)(A)(ii)”. (B) Section 401(k)(11) is amended by striking subparagraph (E). (g) Certain Compensation Limits.— (1) In general.—Subparagraph (A) of section 401(c)(2) (defining earned income) is amended by adding at the end thereof the following new sentence: “For purposes of this part only (other than sections 419 and 419A), this subparagraph shall be applied as if the term ‘trade or business’ for purposes of section 1402 included service described in section 1402(c)(6).”. (2) Simple retirement accounts.—Clause (ii) of section 408(p)(6)(A) (defining self-employed) is amended by adding at the end the following new sentence: “The preceding sentence shall be applied as if the term ‘trade or business’ for purposes of section 1402 included service described in section 1402(c)(6).”.115 STAT. 100 (h) Rounding Rule Relating to Defined Benefit Plans and Defined Contribution Plans.—Paragraph (4) of section 415(d) is amended to read as follows: “(4) Rounding.— “(A) $160,000 AMOUNT.—Any increase under subparagraph (A) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000. “(B) $40,000 AMOUNT.—Any increase under subparagraph (C) of paragraph (1) which is not a multiple of $1,000 shall be rounded to the next lowest multiple of $1,000.”. (i) Effective Dates.— (1) In general.—The amendments made by this section shall apply to years beginning after December 31, 2001. (2) Defined benefit plans.—The amendments made by subsection (a) shall apply to years ending after December 31, 2001.