To amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from IRAs for certain purposes, to increase the amount of tax deductible IRA contributions, and for other purposes.

[AI summary unavailable — showing source text] Amends the Internal Revenue Code to permit penalty-free distributions from an individual retirement account (IRA) for long- term care services and to pay certain medical expenses of certain lineal descendants and ancestors. Excludes from gross income certain distributions which are repaid. Expands penalty-free withdrawals for the unemployed for health insurance premiums. Increases deductible IRA contribution amounts, and provides for inflation indexing. Eliminates the phase-out for individuals who are not active participants in defined contribution plans, and increases applicable dollar amounts for taxpayers other than those married filing separately. Increases 401(k) plan contribution limits. Establishes an alternative method for satisfying nondiscrimination requirements. Excludes inherited IRAs and certain 401(k) plans from a decedent's gross estate. Allows a designated beneficiary of an inherited IRA to hold such IRA free of immediate distribution provisions. Allows inherited 401(k) amounts as nondeductible contributions to a beneficiary's IRA, and excludes such amounts from income if so contributed.…