SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Older Americans' Freedom to Work Act 
of 1994''.

SEC. 2. PHASE OUT OF THE EARNINGS TEST OVER A 10-YEAR PERIOD FOR 
              INDIVIDUALS WHO HAVE ATTAINED RETIREMENT AGE.

    (a) Liberalization of Earnings Test Over the Period 1995-2004 for 
Individuals Who Have Attained Retirement Age.--Effective with respect 
to taxable years ending after 1994, subparagraph (D) of section 
203(f)(8) of the Social Security Act is amended to read as follows:
            ``(D) Notwithstanding any other provision of this 
        subsection, the exempt amount which is applicable to an 
        individual who has attained retirement age (as defined in 
        section 216(l)) before the close of the taxable year involved 
        shall be increased by $12,000 in each taxable year over the 
        exempt amount for the previous taxable year, beginning with any 
        taxable year ending after 1994 and before 2005.''.
    (b) Repeal of Earnings Test in 2005 for Individuals Who Have 
Attained Retirement Age.--Effective with respect to taxable years 
ending after 2004--
            (1) clause (B) in the third sentence of section 203(f)(1) 
        of the Social Security Act is amended by striking out ``age 
        seventy'' and inserting in lieu thereof ``retirement age (as 
        defined in section 216(l))''; and
            (2) section 203(f)(3) of such Act is amended--
                    (A) by striking out ``33\1/2\ percent'' and all 
                that follows through ``other individual'' and inserting 
                in lieu thereof ``50 percent of his earnings for such 
                year in excess of the product of the applicable exempt 
                amount as determined under paragraph (8)'', and
                    (B) by striking out ``age 70'' and inserting in 
                lieu thereof ``retirement age (as defined in section 
                216(l))''.
    (c) Conforming and Related Amendments.--Effective with respect to 
taxable years ending after 2004--
            (1) section 203(c)(1) of the Social Security Act is amended 
        by striking out ``is under the age of seventy'' and inserting 
        in lieu thereof ``is under retirement age (as defined in 
        section 216(l))'';
            (2) the last sentence of subsection (c) of section 203 of 
        such Act is amended by striking out ``nor shall any deduction'' 
        and all that follows and inserting in lieu thereof ``nor shall 
        any deduction be made under this subsection from any widow's or 
        widower's insurance benefit if the widow, surviving divorced 
        wife, widower, or surviving divorced husband involved became 
        entitled to such benefit prior to attaining age 60.'';
            (3) paragraphs (1)(A) and (2) of section 203(d) of such Act 
        are each amended by striking out ``under the age of seventy'' 
        and inserting in lieu thereof ``under retirement age (as 
        defined in section 216(l))'';
            (4) section 203(f)(1) of such Act is amended by striking 
        out clause (D) and inserting in lieu thereof the following: 
        ``(D) for which such individual is entitled to widow's or 
        widower's insurance benefits if such individual became so 
        entitled prior to attaining age 60, or'';
            (5) subparagraph (D) of section 203(f)(5) of such Act is 
        amended--
                    (A) by striking out ``(D) In the case of'' and all 
                that follows down through ``(ii) an individual'' and 
                inserting in lieu thereof the following:
            ``(D) An individual'';
                    (B) by striking out ``became entitled to such 
                benefits'' and all that follows and inserting in lieu 
                thereof ``became entitled to such benefits, there shall 
                be excluded from gross income any such other income.''; 
                and
                    (C) by shifting such subparagraph as so amended to 
                the left to the extent necessary to align its left 
                margin with that of subparagraphs (A) through (C) of 
                such section;
            (6) section 203(f)(8)(A) of such Act is amended by striking 
        out ``the new exempt amounts (separately stated for individuals 
        described in subparagraph (D) and for other individuals) which 
        are to be applicable'' and inserting in lieu thereof ``the new 
        exempt amount which is to be applicable'';
            (7) section 203(f)(8)(B) of such Act is amended--
                    (A) by striking out all that precedes clause (i) 
                and inserting in lieu thereof the following:
            ``(B) The exempt amount which is applicable for each month 
        of a particular taxable year shall be whichever of the 
        following is the larger--'';
                    (B) by striking out ``corresponding'' in clause 
                (i); and
                    (C) by striking out ``an exempt amount'' in the 
                matter following clause (ii) and inserting in lieu 
                thereof ``the exempt amount'';
            (8) section 203(f)(8)(D) of such Act (as amended by 
        subsection (a) of this Act) is repealed;
            (9) section 203(f)(9) of such Act is repealed;
            (10) section 203(h)(1)(A) of such Act is amended by 
        striking out ``age 70'' each place it appears and inserting in 
        lieu thereof ``retirement age (as defined in section 216(l))'';
            (11) section 203(j) of such Act is amended to read as 
        follows:

                     ``Attainment of Retirement Age

    ``(j) For purposes of this section--
            ``(1) an individual shall be considered as having attained 
        retirement age (as defined in section 216(l)) during the entire 
        month in which he attains such age; and
            ``(2) the term `retirement age (as defined in section 
        216(l))', with respect to any individual entitled to monthly 
        insurance benefits under section 202, means the retirement age 
        (as so defined) which is applicable in the case of old-age 
        insurance benefits, regardless of whether or not the particular 
        benefits to which the individual is entitled (or the only such 
        benefits) are old-age insurance benefits.'';
            (12) section 202(w)(2)(B)(ii) of such Act is amended--
                    (A) by striking out ``either''; and
                    (B) by striking out ``or suffered deductions under 
                section 203(b) or 203(c) in amounts equal to the amount 
                of such benefit''; and
            (13) the second sentence of section 223(d)(4) of such Act 
        is amended by inserting ``(or would be applicable to such 
        individuals but for the amendments made by the Older Americans' 
        Freedom to Work Act of 1994)'' after ``subparagraph (D) 
        thereof'' the first place it appears.
Older Americans' Freedom to Work Act of 1994 - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act to increase the amount of outside income which beneficiaries who have attained retirement age may earn during 1995 through 2004 without incurring a reduction in benefits. Repeals such income limitation in the year 2005.
Older Americans' Freedom to Work Act of 1994