Long-Term Care Act of 2005

Long-Term Care Act of 2005 - Amends the Internal Revenue Code to exclude from gross income distributions from certain tax-exempt retirement plans used to pay long-term care insurance premiums.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1706 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
                                S. 1706

      To amend the Internal Revenue Code of 1986 to provide that 
 distributions from a section 401(k) plan or a section 403(b) contract 
shall not be includible in gross income to the extent used to pay long-
                      term care insurance premiums


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 15, 2005

Mr. Allen (for himself and Mr. Martinez) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
      To amend the Internal Revenue Code of 1986 to provide that 
 distributions from a section 401(k) plan or a section 403(b) contract 
shall not be includible in gross income to the extent used to pay long-
                      term care insurance premiums

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long-Term Care Act of 2005''.

SEC. 2. EXCLUSION FROM GROSS INCOME FOR DISTRIBUTIONS FROM SECTION 
              401(K) PLANS AND SECTION 403(B) CONTRACTS WHICH ARE USED 
              TO PAY LONG-TERM CARE INSURANCE PREMIUMS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by inserting after section 139A the 
following new item:

``SEC. 139B. DISTRIBUTIONS FROM SECTION 401(K) PLANS AND SECTION 403(B) 
              CONTRACTS WHICH ARE USED TO PAY LONG-TERM CARE INSURANCE 
              PREMIUMS.

    ``(a) In General.--Gross income shall not include any distribution 
to an individual from amounts attributable to employer contributions 
made pursuant to elective deferrals described in subparagraph (A) or 
(C) of section 402(g)(3), to the extent that such distributions do not 
exceed the long-term care insurance premiums paid during the taxable 
year for insurance covering the individual or the individual's spouse.
    ``(b) Denial of Double Benefit.--The limitation in section 
213(d)(10) shall be reduced by the amount which would (but for 
subsection (a)) be includible in the taxpayer's gross income for the 
taxable year.
    ``(c) No Effect on Qualification.--An arrangement shall not fail to 
be treated as a qualified cash or deferred arrangement (as defined in 
section 401(k)) or a contract described in section 403(b) by reason of 
permitting distributions for the payment of long-term care insurance 
premiums.''.
    (b) Clerical Amendment.--The table of sections for such part III is 
amended by inserting after the item relating to section 139A the 
following new item:

``Sec. 139B. Distributions from section 401(k) plans and section 403(b) 
                            contracts which are used to pay long-term 
                            care insurance premiums.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after the date of the enactment of this Act.
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