Middle-Class Bill of Rights Tax Relief Act of 1995

TABLE OF CONTENTS:

Title I: Middle Class Tax Relief

Title II: Provisions Relating to Individual Retirement Plans

Subtitle A: Retirement Savings Incentives

Subtitle B: Penalty-Free Distributions

Middle-Class Bill of Rights Tax Relief Act of 1995 - Title I: Middle Class Tax Relief - Amends the Internal Revenue Code to allow individuals a tax credit of $300 per eligible child under the age of 13 years. Increases such credit to $500 per eligible child after December 31, 1998. Reduces such credit for incomes of $60,000 or more. Provides an inflation adjustment for such amounts beginning in 1999.

(Sec. 102) Allows individuals a tax deduction for the qualified higher education expenses of the taxpayer and the taxpayer's spouse and dependents. Limits such deduction to $10,000 ($5,000 for years 1996, 1997, and 1998). Reduces such limitation for modified adjusted gross incomes of $70,000 or more ($100,000 for a joint return). Allows such deduction in computing adjusted gross income.

Title II: Provisions Relating to Individual Retirement Plans - Subtitle A: Retirement Savings Incentives - Part I: IRA Deduction - Increases the income limitations on retirement savings deductions and provides a cost-of-living adjustment after 1994 for such limitations.

(Sec. 202) Provides a cost-of-living adjustment for deductible retirement amounts after 1995.

(Sec. 203) Coordinates the limit on such deduction with the elective deferral limit under other pension provisions.

Part II: Nondeductible Tax-Free IRAs - Establishes special individual retirement accounts that are nondeductible. Makes such accounts nontaxable if earnings on contributions are held for at least five years. Applies the early withdrawal penalty to distributions made before the end of the five-year period.

Subtitle B: Penalty-Free Distributions - Allows distributions from certain retirement plans without penalty to purchase first homes, pay higher education expenses and financially devastating medical expenses (including qualified long-term care services), and assist certain unemployed individuals.

(Sec. 222) Requires contributions to such plans to be held for at least five years prior to such distributions.