A bill to amend the Internal Revenue Code of 1954 to allow individuals who are participants in employer pension plans a deduction for their contributions to individual retirement plans, and to increase the amount of the credit for the elderly.

Amends the Internal Revenue Code to permit individuals who are fully vested in a tax-exempt employer pension plan an income tax deduction for cash contributions to an individual retirement account. Limits the amount of such deduction to five percent of the individual's compensation for the taxable year or $500, whichever is less.

Increases the adjusted gross income limitation on the tax credit for the elderly, increases the allowable amount of such credit, and provides an annual cost-of-living adjustment for the credit.