[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3788 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3788

         To provide for pension reform, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 4, 1998

Mr. Portman (for himself and Mr. Cardin) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
  to the Committee on Education and the Workforce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
         To provide for pension reform, and for other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Retirement 
Security for the 21st Century Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
                      TITLE I--EXPANDING COVERAGE

Sec. 101. Restoration of limits formerly in effect.
Sec. 102. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 103. Salary reduction only simple plans.
Sec. 104. Modification of top-heavy rules.
Sec. 105. Qualified staffing firms.
Sec  106. Elective deferrals not taken into account for purposes of 
                            limits.
Sec. 107. Phase-in of additional PBGC premium for new plans.
Sec. 108. Repeal of coordination requirements for deferred compensation 
                            plans of State and local governments and 
                            tax-exempt organizations.
          TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

Sec. 201. Additional salary reduction catch-up contributions.
Sec. 202. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 203. Faster vesting of certain employer matching contributions.
Sec. 204. Deferred annuities for surviving spouses of Federal 
                            employees.
Sec. 205. Simplify and update the minimum distribution rules.
Sec. 206. Clarification of tax treatment of division of section 457 
                            plan benefits upon divorce.
           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 301. Rollovers allowed among various types of plans.
Sec. 302. Rollovers of IRAs into workplace retirement plans.
Sec. 303. Rollovers of after-tax contributions.
Sec. 304. Treatment of forms of distribution.
Sec. 305. Rationalization of restrictions on distributions.
Sec. 306. Purchase of service credit in governmental defined benefit 
                            plans.
        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

Sec. 401. Repeal of 150 percent of current liability funding limit.
Sec. 402. Missing participants.
Sec. 403. Periodic pension benefits statements.
Sec. 404. Civil penalties for breach of fiduciary responsibility.
Sec. 405. Penalty tax relief for sound pension funding.
                  TITLE V--REDUCING REGULATORY BURDENS

Sec. 501. Intermediate sanctions for inadvertent failures.
Sec. 502. Repeal of the multiple use test.
Sec. 503. Safety valve from mechanical rules.
Sec. 504. Reform of the line of business rules.
Sec. 505. Coverage test flexibility.
Sec. 506. Increase in retirement plan cash-out amount.
Sec. 507. Simplification of cash-out rule.
Sec. 508. Modification of timing of plan valuations.
Sec. 509. Section 457 inapplicable to certain mirror plans.
Sec. 510. Rules for substantial owners relating to plan terminations.
Sec. 511. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
Sec. 512. Modification of 403(b) exclusion allowance to conform to 415 
                            modification.
Sec. 513. Treatment of multiemployer plans under section 415.
Sec. 514. Elimination of partial termination rules for multiemployer 
                            plans.
Sec. 515. Notice and consent period regarding distributions.
Sec. 516. Conforming amendments relating to election to receive taxable 
                            cash compensation in lieu of nontaxable 
                            parking benefits.
Sec. 517. Extension to international organizations of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 518. Employees of tax-exempt entities.
Sec. 519. Permissive aggregation of collective bargaining units.
Sec. 520. Repeal of transition rule relating to certain highly 
                            compensated employees.
Sec. 521. Provisions relating to plan amendments.

                      TITLE I--EXPANDING COVERAGE

SEC. 101. RESTORATION OF LIMITS FORMERLY IN EFFECT.

    (a) Defined Benefit Plans.--
            (1) Dollar limit.--(A) Subparagraph (A) of section 
        415(b)(1) (relating to limitation for defined benefit plans) is 
        amended by striking ``$90,000'' and inserting ``$140,000''.
            (B) Subparagraphs (C) and (D) of section 415(b)(2) are each 
        amended by striking ``$90,000'' each place it appears in the 
        headings and the text and inserting ``$140,000''.
            (C) Paragraph (7) of section 415(b) (relating to benefits 
        under certain collectively bargained plans) is amended by 
        striking ``the greater of $68,212 or one-half the amount 
        otherwise applicable for such year under paragraph (1)(A) for 
        `$90,000''' and inserting ``one-half the amount otherwise 
        applicable for such year under paragraph (1)(A) for 
        `$140,000'''.
            (2) Limit reduced when benefit begins before age 62.--
        Subparagraph (C) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 62''.
            (3) Limit increased when benefit begins after age 65.--
        Subparagraph (D) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 65''.
            (4) Plans maintained by governments and tax exempt 
        organizations.--Subparagraph (F) of section 415(b)(2) is 
        amended to read as follows:
                    ``(F) Plans maintained by governments and tax-
                exempt organizations.--
                            ``(i) In general.--In the case of a 
                        governmental plan (within the meaning of 
                        section 414(d)), a plan maintained by an 
                        organization (other than a governmental unit) 
                        exempt from tax under this subtitle, or a 
                        qualified merchant marine plan, subparagraph 
                        (C) shall be applied as if the last sentence 
                        thereof read as follows: `The reduction under 
                        this subparagraph shall not reduce the 
                        limitation of paragraph (1)(A) below (i) 
                        $100,000 if the benefit begins at or after age 
                        55, or (ii) if the benefit begins before age 
                        55, the equivalent of the $100,000 limitation 
                        for age 55.'
                            ``(ii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Qualified merchant marine 
                                plan.--The term `qualified merchant 
                                marine plan' means a plan in existence 
                                on January 1, 1986, the participants in 
                                which are merchant marine officers 
                                holding licenses issued by the 
                                Secretary of Transportation under title 
                                46, United States Code.
                                    ``(II) Exempt organization plan 
                                covering 50 percent of its employees.--
                                A plan shall be treated as a plan 
                                maintained by an organization (other 
                                than a governmental unit) exempt from 
                                tax under this subtitle if at least 50 
                                percent of the employees benefiting 
under the plan are employees of an organization (other than a 
governmental unit) exempt from tax under this subtitle.''
            (5) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) in paragraph (1)(A) by striking ``$90,000'' and 
                inserting ``$140,000'', and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``$90,000'' in the heading 
                        and inserting ``$140,000'', and
                            (ii) by striking ``October 1, 1986'' and 
                        inserting ``July 1, 1998''.
    (b) Defined Contribution Plans.--
            (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``$30,000'' and inserting ``$45,000''.
            (2) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) in paragraph (1)(C) by striking ``$30,000'' and 
                inserting ``$45,000'', and
                    (B) in paragraph (3)(D)--
                            (i) by striking ``$30,000'' in the heading 
                        and inserting ``$45,000'', and
                            (ii) by striking ``October 1, 1993'' and 
                        inserting ``July 1, 1998''.
    (c) Qualified Trusts.--
            (1) Compensation limit.--Sections 401(a)(17), 404(l), 
        408(k), and 505(b)(7) are each amended by striking ``$150,000'' 
        each place it appears and inserting ``$235,000''.
            (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--
                    (A) by striking ``October 1, 1993'' and inserting 
                ``July 1, 1998'', and
                    (B) by striking ``$10,000'' both places it appears 
                and inserting ``$5,000''.
    (d) Elective Deferrals.--
            (1) In general.--Paragraphs (1) and (5) of section 402(g) 
        (relating to limitation on exclusion for elective deferrals) 
        are each amended by striking ``$7,000'' and inserting 
        ``$15,000''.
            (2) Conforming amendments.--
                    (A) Section 402(g) (relating to limitation on 
                exclusion for elective deferrals), as amended by 
                paragraph (1), is further amended by striking paragraph 
                (4) and redesignating paragraphs (5), (6), (7), (8), 
                and (9) as paragraphs (4), (5), (6), (7), and (8), 
                respectively.
                    (B) Paragraph (2) of section 457(c) is amended by 
                striking ``402(g)(8)(A)(iii)'' and inserting 
                ``402(g)(7)(A)(iii)''.
                    (C) Clause (iii) of section 501(c)(18)(D) is 
                amended by striking ``(other than paragraph (4) 
                thereof)''.
    (e) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--Section 457 (relating to deferred 
compensation plans of State and local governments and tax-exempt 
organizations) is amended--
            (1) in subsections (b)(2)(A), (c)(1), and (e)(15) by 
        striking ``$7,500'' each place it appears and inserting 
        ``$15,000'',
            (2) in subsection (b)(3)(A) by striking ``$15,000'' and 
        inserting ``$30,000'', and
            (3) in subsection (e)(15)--
                    (A) by inserting ``and the $30,000 amount specified 
                in subsection (b)(3)(A)'' after ``(c)(1)'', and
                    (B) by striking ``September 30, 1994'' and 
                inserting ``September 30, 1998''.
    (f) Simple Retirement Accounts.--
            (1) Limitation.--Sections 408(p)(2)(A)(ii), 
        401(k)(11)(B)(i)(I), and 401(k)(11)(E) are each amended by 
        striking ``$6,000'' and inserting ``$10,000''.
            (2) Base period for cost-of-living adjustment.--
        Subparagraph (E) of section 408(p)(2) is amended by striking 
        ``September 30, 1996'' and inserting ``September 30, 1998''.
    (g) Cost-of-Living Adjustments.--
            (1) Plans maintained by governments and tax exempt 
        organizations.--Paragraph (1) of section 415(d) (as amended by 
        subsection (b)) is amended by striking ``and'' at the end of 
        subparagraph (B), by redesignating subparagraph (C) as 
        subparagraph (D), and by inserting after subparagraph (B) the 
        following new subparagraph:
                    ``(C) the $100,000 amount in subsection (b)(2)(F), 
                and''.
            (2) Base period.--Paragraph (3) of section 415(d) (as 
        amended by subsection (b)) is further amended by redesignating 
        subparagraph (D) as subparagraph (E) and by inserting after 
        subparagraph (C) the following new subparagraph:
                    ``(D) $100,000 amount.--The base period taken into 
                account for purposes of paragraph (1)(C) is the 
                calendar quarter beginning July 1, 1998.''
            (3) Rounding rule relating to defined benefit plans and 
        defined contribution plans.--Paragraph (4) of section 415(d) is 
        amended to read as follows:
            ``(4) Rounding.--
                    ``(A) $140,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.
                    ``(B) $100,000 and $45,000 amounts.--Any increase 
                under subparagraph (C) or (D) of paragraph (1) which is 
                not a multiple of $1,000 shall be rounded to the next 
                lowest multiple of $1,000.''
            (4) Conforming amendment.--Subparagraph (D) of section 
        415(d)(3) (as amended by paragraph (1)) is amended by striking 
        ``paragraph (1)(C)'' and inserting ``paragraph (1)(D)''.
    (h) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to years beginning after December 31, 1998.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified by the date of enactment of this Act, the 
        amendments made by this section shall not apply to 
        contributions or benefits pursuant to any such agreement for 
        years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 1999, or
                    (B) January 1, 2003.

SEC. 102. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND SOLE 
              PROPRIETORS.

    (a) Amendment to 1986 Code.--Subsection (f) of section 4975 
(relating to other definitions and special rules) is amended by 
striking paragraph (6).
    (b) Amendments to ERISA.--
            (1) Section 408 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1108) is amended--
                    (A) by striking subsection (d); and
                    (B) by redesignating subsections (e) and (f) as 
                subsections (d) and (e), respectively.
            (2) Section 407(b)(3)(B) of such Act (29 U.S.C. 
        1107(b)(3)(B)) is amended by striking ``section 408(e)'' and 
        inserting ``section 408(d)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 103. SALARY REDUCTION ONLY SIMPLE PLANS.

    (a) Simple Retirement Accounts.--
            (1) In general.--Paragraph (2) of section 408(p) (as 
        amended by section 101(f)) is further amended--
                    (A) by redesignating subparagraphs (C), (D), and 
                (E) as subparagraphs (D), (E), and (F), respectively; 
                and
                    (B) by inserting after subparagraph (B) the 
                following:
                    ``(C) Employer may elect salary reduction only 
                arrangement.--
                            ``(i) In general.--An employer shall be 
                        treated as meeting the requirements of 
                        subparagraph (A)(iii) for any year if, in lieu 
                        of the contributions described in such 
                        subparagraph, the employer elects to limit the 
                        amount which an employee may elect under 
                        subparagraph (A)(i) to a total of $5,000 for 
                        the year. If an employer makes an election 
                        under this subparagraph for any year, the 
                        employer shall notify employees of such 
                        election within a reasonable period of time 
                        before the 60-day period for such year under 
                        paragraph (5)(C).
                            ``(ii) Exception.--This subparagraph shall 
                        not apply to an employer if such employer (or 
                        any predecessor employer) maintained another 
                        qualified plan (as defined in subparagraph 
                        (D)(ii)) with respect to which contributions 
                        were made, or benefits were accrued, for 
                        service during the year in which the 
                        arrangement described in clause (i) became 
                        effective or either of the 2 preceding years. 
                        If only individuals other than employees 
                        described in subparagraph (A) or (B) of section 
                        410(b)(3) are eligible to participate in the 
                        arrangement described in clause (i), then the 
                        preceding sentence shall be applied without 
                        regard to any qualified plan in which only 
                        employees so described are eligible to 
                        participate.
                            ``(iii) Applicable rules.--For purposes of 
                        this subparagraph, rules similar to the rules 
                        of subparagraph (D)(iii) shall apply.''
            (2) Cost-of-living adjustment.--Subparagraph (F) of section 
        408(p)(2) (as so redesignated) is amended by inserting ``and 
        the $5,000 amount under subparagraph (C)'' after ``subparagraph 
        (A)(ii)''.
            (3) Coordination with maximum limitation.--Paragraph (8) of 
        section 408(p) (relating to coordination with maximum 
        limitation under subsection (a)) is amended by striking 
        ``paragraph (2)(A)(ii) of this subsection'' and inserting 
        ``subparagraph (A)(ii) or (C) of paragraph (2) of this 
        subsection, whichever is applicable,''.
    (b) Adoption of Simple Plan To Meet Nondiscrimination Tests.--
            (1) Simple plan.--Subparagraph (B) of section 401(k)(11) is 
        amended by redesignating clause (iii) as clause (iv) and by 
        inserting after clause (ii) the following new clause:
                            ``(iii) Employer may elect salary reduction 
                        only arrangement.--
                                    ``(I) In general.--An employer 
                                shall be treated as meeting the 
                                requirements of clause (i)(II) for any 
                                year if, in lieu of the contributions 
                                described in such clause, the employer 
                                elects to limit the amount which an 
                                employee may elect under clause (i) to 
                                a total of $5,000 for the year. If an 
                                employer makes an election under this 
                                clause for any year, the employer shall 
                                notify employees of such election 
                                within a reasonable period of time 
                                before the 60-day period for such year 
                                under clause (iv)(II).
                                    ``(II) Exception.--This clause 
                                shall not apply to an employer if such 
                                employer (or any predecessor employer) 
                                maintained another qualified plan (as 
                                defined in section 408(p)(2)(D)(ii)) 
                                with respect to which contributions 
                                were made, or benefits were accrued, 
                                for service during the year in which 
                                the arrangement described in subclause 
                                (I) became effective or either of the 2 
                                preceding years. This subclause shall 
                                not apply if such contributions or 
                                benefits were solely on behalf of 
                                employees who are not eligible to 
                                participate in the arrangement 
                                described in subclause (I).''
            (2) Cost-of-living adjustment.--Subparagraph (E) of section 
        401(k)(11) is amended by inserting ``and the $5,000 amount 
        under subparagraph (B)(iii)'' after ``subparagraph (B)(i)(I)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 104. MODIFICATION OF TOP-HEAVY RULES.

    (a) Repeal of Family Aggregation Rules.--Section 416(i)(1)(B)(i)(I) 
(defining 5-percent owner) is amended by inserting ``(without regard to 
subsection (a)(1) thereof)'' after ``section 318''.
    (b) Simplification of Definition of Key Employee.--
            (1) In general.--Section 416(i)(1)(A) (defining key 
        employee) is amended--
                    (A) by striking ``or any of the 4 preceding plan 
                years'' in the matter preceding clause (i),
                    (B) by striking clause (i) and inserting the 
                following:
                            ``(i) an officer of the employer who has 
                        compensation from the employer of more than 
                        $150,000,'',
                    (C) by striking clause (ii) and redesignating 
                clauses (iii) and (iv) as clauses (ii) and (iii), 
                respectively, and
                    (D) by striking the second sentence in the matter 
                following clause (iii), as redesignated by subparagraph 
                (C).
            (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
        amended by striking ``and subparagraph (A)(ii)''.
    (c) Employee Elective Contributions to Plan Not Taken Into 
Account.--
            (1) Definition of top-heavy plan.--Section 416(g)(4) 
        (relating to other special rules) is amended by adding at the 
        end the following:
                    ``(H) Employee elective contributions to plan not 
                taken into account.--At the election of the employer, 
                any employee elective contribution described in section 
                415(c)(3)(D) to a plan (and earnings allocable thereto) 
                shall not be taken into account for purposes of 
                determining whether a plan is a top-heavy plan (or 
                whether any aggregation group which includes such plan 
                is a top-heavy group).''
            (2) Definition of compensation.--Section 416(i)(1)(D) 
        (defining compensation) is amended to read as follows:
                    ``(D) Compensation.--
                            ``(i) In general.--For purposes of this 
                        paragraph, except as provided in clause (ii), 
                        the term `compensation' has the meaning given 
                        such term by section 414(q)(4).
                            ``(ii) Employee elective contributions to 
                        plan not taken into account.--At the election 
                        of the employer, any employee elective 
                        contribution described in section 415(c)(3)(D) 
                        to a plan shall not be taken into account for 
                        purposes of determining compensation.''
    (d) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this subparagraph.''
    (e) Requirements for Qualifications.--Clause (ii) of section 
401(a)(10)(B) (relating to requirements for qualifications for top-
heavy plans) is amended by adding at the end the following new flush 
sentence:
                        ``The preceding sentence shall not apply to a 
                        plan if the plan is not top-heavy and if it is 
                        not reasonable to expect that the plan will 
                        become top-heavy.''
    (f) Distributions During Last Year Before Determination Date Taken 
Into Account.--Section 416(g) is amended--
            (1) in paragraph (3)--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date'', and
                    (B) in the matter following subparagraph (B), by 
                striking ``5-year period'' and inserting ``1-year 
                period'', and
            (2) in paragraph (4)(E)--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date'', and
                    (B) by striking ``5-year period'' and inserting 
                ``1-year period''.
    (g) Definition of Top-Heavy Plans.--
            (1) Exclusion of certain plans from definition of top-heavy 
        plan.--Paragraph (4) of section 416(d) (relating to other 
        special rules for top-heavy plans) is amended by adding at the 
        end the following new subparagraphs:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a cash or deferred arrangement to the extent 
                that such arrangement meets the requirements of section 
                401(k)(12). This subparagraph shall also apply to 
                contributions that are not required to satisfy the 
                requirements of section 401(k)(12) but are consistent 
                with the purposes of such section, as permitted under 
                regulations which the Secretary shall prescribe.
                    ``(I) Defined contribution plans using alternative 
                methods of meeting nondiscrimination requirements.--The 
                term `top-heavy plan' shall not include a defined 
                contribution plan to the extent that such plan meets 
                the requirements of section 401(m)(11). This 
                subparagraph shall also apply to contributions that are 
                not required to satisfy the requirements of section 
                401(m)(11) but are consistent with the purposes of such 
                section, as permitted under regulations which the 
                Secretary shall prescribe.''
            (2) Aggregation group not required to include certain 
        plans.--Clause (i) of section 416(g)(2)(A) of such Code 
        (relating to required aggregation) is amended by adding at the 
        end the following new flush sentence:
                        ``Such term shall not include a plan or 
                        arrangement described in subparagraph (H) or 
                        (I) of paragraph (4).''
    (h) Effective Deferrals Not Taken Into Account.--Clause (i) of 
section 416(c)(2)(B) (relating to special rule where maximum 
contribution less than 3 percent) is amended by inserting ``(other than 
elective deferrals (as defined in section 402(g)(3))'' after 
``contributions''.
    (i) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 105. QUALIFIED STAFFING FIRMS.

    (a) Codification of Employer Status of Qualified Staffing Firm for 
Employment Tax Purposes.--
            (1) Income tax withholding.--Section 3401(d) is amended--
                    (A) in paragraph (1), by striking ``and'' at the 
                end;
                    (B) in paragraph (2), by striking the period and 
                inserting ``, and''; and
                    (C) by adding at the end the following:
            ``(3) notwithstanding any provision in this subtitle to the 
        contrary, in the case of a qualified staffing firm, described 
        in section 7701(a)(47), paying wages to an individual 
        performing services for a customer of such qualified staffing 
        firm, the term `employer' means such qualified staffing firm 
        (and not the customer).''.
            (2) FICA tax.--Section 3121 is amended by adding at the end 
        the following:
    ``(z) Application to Qualified Staffing Firms.--In the case of a 
qualified staffing firm, described in section 7701(a)(47), paying wages 
to an individual performing services for a customer of such qualified 
staffing firm, the term `employer' means such qualified staffing firm 
(and not the customer), notwithstanding any provision in this subtitle 
to the contrary.''.
            (3) FUTA tax.--Subsection (a) of section 3306 is amended by 
        adding at the end the following: ``In the case of a qualified 
        staffing firm, described in section 7701(a)(47), paying wages 
        to an individual performing services for a customer of such 
        qualified staffing firm, the term `employer' means such 
        qualified staffing firm (and not the customer), notwithstanding 
        any provision in this subtitle to the contrary.''.
            (4) Definition--Subsection (a) of section 7701 is amended 
        by adding at the end the following paragraph--
    ``(47) Qualified Staffing Firm.--The term `qualified staffing firm' 
means any person that is engaged in providing staffing services to a 
customer pursuant to a service contract, and that with respect to a 
worker performing services for the customer who is covered by the 
contract--
            ``(A) Assumes responsibility for payment of wages to the 
        worker, without regard to the receipt or adequacy of payment 
        from the customer for such services,
            ``(B) Assumes responsibility for reporting, withholding, 
        and paying any applicable taxes under Chapters 21, 23, and 24, 
        with respect to the worker's wages, without regard to the 
        receipt of adequacy of payment from the customer for such 
        services,
            ``(C) Assumes responsibility for any worker benefits that 
        may be required by the service contract, without regard to the 
        receipt or adequacy of payment from the customer for such 
        services,
            ``(D) Assumes authority to hire, reassign, and dismiss the 
        worker and has the contractual right to exercise this authority 
        independent of the customer,
            ``(E) Maintains employee records relating to the worker, 
        and
            ``(F) Assumes responsibility for addressing the worker's 
        complaints, claims, filings, or requests relating to 
        employment, except as otherwise provided by applicable 
        collective bargaining agreements, if any, notwithstanding that 
        some or all of the actions described in this subparagraph may 
be shared by the customer.''.
    (b) Codification of Employer Status of Qualified Staffing Firm for 
Purposes of Providing Employee Benefits.--
            (1) Paragraph (20) of section 7701(a) is amended--
                    (A) by redesignating the text of such paragraph as 
                subparagraph (A);
                    (B) by adding the heading ``(A) Full-time life 
                insurance salesman.--'' at the start of new 
                subparagraph (A); and
                    (C) by adding at the end of paragraph (20) the 
                following:
                    ``(B) Individual covered by qualified staffing firm 
                contract.--For the purpose of applying the provisions 
                of section 79 with respect to group-term insurance 
                purchased for employees, for the purpose of applying 
                the provisions of sections 104, 105, and 106 with 
                respect to accident and health insurance or accident 
                and health plans, for the purpose of applying the 
                provisions of this title with respect to contributions 
                to or under a trust which is a part of a plan described 
                in section 401(a) (other than a defined benefit plan), 
                or to or under a plan described in section 403(a) 
                (other than a defined benefit plan), including for this 
                purpose elective contributions under section 401(k) and 
                employee contributions and matching contributions under 
                section 401(m), with respect to a tax-exempt status of 
                a trust forming a part of such plan, and with respect 
                to the tax-exempt status of a trust forming a part of 
                such plan, and with respect to distributions under such 
                a plan, or by a trust forming part of such a plan, for 
                the purpose of applying section 125 with respect to 
                cafeteria plans, for the purpose of applying section 
                127 with respect to educational assistance programs, 
                for the purpose of applying section 129 with respect to 
                dependent care assistance programs, for the purpose of 
                applying the provisions of section 414(n), and for the 
                purpose of applying the provisions listed in section 
                414(n)(3), with respect to such other benefits, plans, 
                or programs as are described in section 414(n)(3), the 
                term `employee' shall include, with respect to a 
                qualified staffing firm, any individual whose employer 
                is considered to be the qualified staffing firm for the 
                purpose of Chapters 21, 23, and 24. For these purposes, 
                a change in the employment relationship between an 
                individual and a qualified staffing firm or between the 
                individual and a customer or former customer of the 
                qualified staffing firm, as the cause may be, whereby 
                the individual becomes or ceases to be an employee of 
                the qualified staffing firm under this subparagraph, 
                shall be treated as the termination of employment and 
                separation from service by the individual from the 
                employment or service of the qualified staffing firm's 
                customer or the qualified staffing firm, as the case 
                may be.''.
    (c) Coverage of Leased Employees in Employment Benefit Plans.--
            (1) Application of requirements concerning cash or deferred 
        arrangements, matching contributions, and employee 
        contributions to leased employees.--Section 414(n)(3)(B) is 
        amended by inserting ``401(k), 401(m)'' before ``408(k)''.
            (2) Special Rules for Leasing Organization's Plan.--Section 
        414(n) is amended--
                    (A) by renumbering paragraph (6) as paragraph (7); 
                and
                    (B) by inserting the following as paragraph (6):
            ``(6) Leasing organization's plan.--
                    ``(A) Elective disaggregation.--
                            ``(i) General rule.--A leasing organization 
                        that is a qualified staffing firm may elect, 
                        for any year, to have a plan that it sponsors 
                        and that is described in section 401(a) or 
                        403(a) treated as maintained by more than one 
                        employer for purposes of applying sections 
                        410(b) and 401(a)(4). For these purposes, (I) 
                        all the employees who perform services directly 
                        for a recipient and related persons and who 
                        would be treated as leased employees of the 
                        recipient but for the requirements of paragraph 
                        (2)(B), shall be treated as employed by that 
                        recipient, and (II) all employees who do not 
                        meet the requirements of subclause (I) shall be 
                        treated as employed by the leasing 
                        organization. Such leasing organization may 
                        also elect, for any year, to have a plan that 
                        is subject to section 105(h)(3) and (4), or to 
section 125(c), tested on a comparable basis under section 105(h)(3) 
and (4), or under section 125(c), as the case may be.
                            ``(ii) Special rules.--A leasing 
                        organization electing under this paragraph 
                        (6)(A) may, under regulations prescribed by the 
                        Secretary, elect in the alternative to have 
                        subclause (I) of paragraph (6)(A)(i) applied 
                        (I) to all employees who perform services 
                        directly for the recipient and the related 
                        persons, whether or not they would be treated 
                        as leased employees of the recipient, or (ii) 
                        only with respect to selected recipients and 
                        related persons. Notwithstanding the foregoing, 
                        in the event that a five-percent owner (as 
                        defined in section 416(i)) of a recipient is 
                        covered by a plan described in paragraph 
                        (6)(A)(i), then such leasing organization shall 
                        be deemed to have elected disaggregation in 
                        accordance with subclause (ii) of this clause 
                        with respect to such recipient and related 
                        persons.
                            ``(iii) Effect of disqualification.--If the 
                        plan of a leasing organization electing under 
                        this paragraph (6)(A) fails to satisfy the 
                        requirements of section 410(b) or section 
                        401(a)(4) with respect to the person deemed to 
                        be the employer under paragraph (6)(A), only 
                        that portion of the plan that is treated under 
                        paragraph (6)(A) as maintained by such person 
                        shall be disqualified.
                            ``(iv) Treatment of related persons.--For 
                        purposes of this subparagraph (A), the term 
                        ``recipient'' shall not include any person that 
                        is a related person with respect to the leasing 
                        organization.
                    ``(B) Highly compensated employees.--Whether or not 
                the leasing organization makes an election under 
                subparagraph (A), section 414(q) shall be applied to 
                employees of a leasing organization that is a qualified 
                staffing firm by treating the employees who perform 
                services for a recipient or related persons and who 
                would be leased employees of the recipient but for the 
                requirements of paragraph (2)(B) as employed by, and 
                receiving compensation from, the recipient or the 
                related person for purposes of determining whether the 
                employees are highly compensated employees of the 
                leasing organization.''.
    (d) Revisions to Safe Harbor Provision.--
            (1) Revisions to safe harbor plan requirements.--
        Subparagraph (B) of section 414(n)(5) is amended to read as 
        follows:
    ``(B) Plan requirements.--A plan meets the requirements of this 
subparagraph if--
            ``(i) such plan is a money purchase pension plan or a 
        profit-sharing plan, with a nonintegrated employer contribution 
        rate for each participant which is at least 7.5 percent of that 
        portion of the participant's compensation attributable to 
        services performed for the recipient, and which is not 
        dependent on the current or accumulated points of the leasing 
        organization or on whether the participant makes an elective 
        contribution or employee contribution to such plan.
            ``(ii) such plan provides for full and immediate vesting,
            ``(iii) if the plan is a profit-sharing plan, such plan 
        meets the distribution requirements of section 401(k)(2)(B) 
        with respect to all employer contributions, and
            ``(iv) each employee of the leasing organization who 
        performs services for the recipient immediately participates in 
        such plan.''.
            (2) Extension of safe harbor rule to additional employee 
        benefits.--Paragraph (5) of Section 414(n) is amended by adding 
        at the end the following:
            ``(D) Special rule for additional employee benefits.--To 
        the extent provided for in regulations issued by the Secretary, 
        in the case of a requirement described in subparagraph (C) of 
        paragraph (3), this subsection shall not apply to any leased 
        employee with respect to service performed for a recipient if--
                    ``(i) such employee is covered by a plan for an 
                arrangement that is maintained by the leasing 
                organization and that meets such requirements as the 
                Secretary shall prescribe in regulations, and
                    ``(ii) leased employees (determined without regard 
                to this paragraph) do not constitute more than 20 
                percent of the recipient's nonhighly compensated work 
                force.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act. In the case of a plan 
that covers employees of a qualified staffing firm who are providing 
services for a customer pursuant to a service contract and that was 
adopted and in effect before the date of enactment of this Act, such 
amendments shall not take effect until the first day of the first plan 
year that begins after the date of enactment of this Act, and the plan 
shall not be required to be amended to reflect this Act until the end 
of such plan year.

SEC. 106. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              LIMITS.

    (a) In General.--Section 404 is amended by adding at the end the 
following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Limits.--Elective deferrals (as defined in section 402(g)(3)) shall not 
be subject to any limitations described in this section (other than 
subsection (a)), and such elective deferrals shall not be taken into 
account in applying such limitations to any other contributions.''
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1998.

SEC. 107. PHASE-IN OF ADDITIONAL PBGC PREMIUM FOR NEW PLANS.

    (a) Amendments to ERISA.--Subparagraph (E) of section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(A)) is amended by adding at the end the following new 
clause:
    ``(v) In the case of a new defined benefit plan, the amount 
determined under clause (ii) for any plan year shall be an amount equal 
to the product derived by multiplying the amount determined under 
clause (ii) by the applicable percentage. For purposes of this clause, 
the term `applicable percentage' means--
            ``(I) 0 percent, for the first plan year.
            ``(II) 20 percent, for the second plan year.
            ``(III) 40 percent, for the third plan year.
            ``(IV) 60 percent, for the fourth plan year.
            ``(V) 80 percent, for the fifth plan year.
            ``(VI) 100 percent, for the sixth plan year, and for each 
        succeeding plan year.
    ``For purposes of this clause, the term `new defined benefit plan' 
means a defined benefit plan (as defined in section 3(35) maintained by 
an employer if such employer (including any predecessor employer) has 
not established or maintained a plan to which this title applies with 
respect to which contributions were made, or benefits were accrued, for 
service in the 3 preceding taxable years.''
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1998.

SEC. 108. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION 
              PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations) is amended to read as follows:
    ``(c) Limitation.--The maximum amount of the compensation of any 
one individual which may be deferred under subsection (a) during any 
taxable year shall not exceed $15,000 (as modified by any adjustment 
provided under subsection (b)(3)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 1998.

          TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

SEC. 201. ADDITIONAL SALARY REDUCTION CATCH-UP CONTRIBUTIONS.

    (a) Limitation on Exclusion for Elective Deferrals.--
            (1) In general.--Subsection (g) of section 402 (as amended 
        by section 101(d)) is further amended by adding at the end the 
        following:
            ``(9) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (1) for 
        such year, after the application of paragraph (8), shall be 
        increased by $5,000.''
            (2) Cost-of-living adjustment.--Paragraph (4) of section 
        402(g) (relating to cost-of-living adjustment), as amended by 
        section 101(d), is further amended by inserting ``and the 
        $5,000 amount under paragraph (10)'' after ``paragraph (1)''.
    (b) Simple Retirement Accounts.--
            (1) In general.--Paragraph (2) of section 408(p) (relating 
        to qualified salary reduction arrangement) (as amended by 
        sections 101(f) and 103(a)) is further amended by redesignating 
        subparagraph (F) as subparagraph (G) and by inserting after 
        subparagraph (E) the following new subparagraph:
                    ``(F) Catch-up contributions for those approaching 
                retirement.--In the case of an individual who has 
                attained age 50 during any taxable year, the limitation 
                of subparagraph (A)(ii) for such year shall be 
                increased by $5,000.''
            (2) Cost-of-living adjustment.--Subparagraph (G) of section 
        408(p)(2) (as so redesignated) is amended by inserting ``and 
        the $5,000 amount under subparagraph (F)'' after ``subparagraph 
        (A)(ii)''.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subsection (b) of section 457 (relating to 
        definition of eligible deferred compensation plan) is amended 
        by adding at the end the following new paragraph:
            ``(7) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (2)(A) 
        for such year shall be increased by $5,000.''
            (2) Cost-of-living adjustment.--Paragraph (15) of section 
        457(e) (relating to cost-of-living adjustment) is amended by 
        inserting ``, and the $5,000 amount specified in subsection 
        (b)(7),'' after ``(c)(1)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 202. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) In General.--
            (1) Subparagraph (B) of section 415(c)(1) (relating to 
        limitation for defined contribution plans) is amended to read 
        as follows:
                    ``(B) the participant's compensation.''
            (2) Conforming amendments.--
                    (A) Subsection (f) of section 72 is amended by 
                striking ``section 403(b)(2)(D)(iii))'' and inserting 
                ``section 403(b)(2)(D)(iii), as in effect on December 
                31, 1998)''.
                    (B)(i) Section 403(b) is amended--
                            (I) by striking ``the exclusion allowance 
                        for such taxable year'' in paragraph (1) and 
                        inserting ``the applicable limit under section 
                        415'', and
                            (II) by striking paragraph (2).
                    (C) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (D) Section 415(a)(2) is amended by striking ``, 
                and the amount of the contribution for such portion 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2)''.
                    (E) Section 415(c)(3) is amended by adding at the 
                end the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' shall mean the 
                participant's includible compensation as determined 
                under regulations prescribed by the Secretary.''
                    (F) Section 415(c) is amended by striking paragraph 
                (4).
                    (G) Section 415(c)(7) is amended to read as 
                follows:
            ``(7) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church, a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''
                    (H) Section 415(e)(5) is amended--
                            (i) by striking ``(except in the case of a 
                        participant who has elected under subsection 
                        (c)(4)(D) to have the provisions of subsection 
                        (c)(4)(C) apply)'', and
                            (ii) by striking the last sentence.
                    (I) Section 415(n)(2)(B) is amended by striking 
                ``percentage''.
                    (J) Subparagraph (A) of section 457(c)(2) is 
                amended by striking ``or 403(b)(2)(A)(ii)'' and by 
                striking ``or 403(b)(2)(A)(ii), respectively''.
                    (K) Subparagraph (B) of section 402(g)(7) (as 
                amended by section 101(d)) is amended by inserting 
                before the period at the end the following: ``(as in 
                effect on the date of the enactment of the Retirement 
                Security for the 21st Century Act)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 1998.
    (b) Special Rules for Sections 403(b) and 408.--
            (1) In general.--Subsection (k) of section 415 is amended 
        by adding at the end the following new paragraph:
            ``(4) Special rules for sections 403(b) and 408.--For 
        purposes of this section, any annuity contract described in 
        section 403(b) for the benefit of a participant shall be 
        treated as a defined contribution plan maintained by each 
        employer with respect to which the participant has the control 
        required under subsection (b) or (c) of section 414 (as 
        modified by subsection (h)). For purposes of this section, any 
        contribution by an employer to a simplified employee pension 
        plan for an individual for a taxable year shall be treated as 
        an employer contribution to a defined contribution plan for 
        such individual for such year.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to limitation years beginning after December 31, 
        1999.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--Subparagraph (B) of section 457(b)(2) 
(relating to salary limitation on eligible deferred compensation 
plans'' is amended by striking ``33\1/3\ percent'' and inserting ``100 
percent''.
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 203. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CONTRIBUTIONS.

    (a) Amendments to 1986 Code.--Section 411(a) (relating to minimum 
vesting standards) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (12), a plan'', and
            (2) by adding at the end the following:
            ``(12) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A)), paragraph (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    1.............................................                  20 
    2.............................................                  40 
    3.............................................                  60 
    4.............................................                  80 
    5.............................................               100.''
    (b) Amendments to ERISA.--Section 203(a) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (4), a plan'', and
            (2) by adding at the end the following:
            ``(4) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph 
        (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    1.............................................                  20 
    2.............................................                  40 
    3.............................................                  60 
    4.............................................                  80 
    5.............................................               100.''
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        for plan years beginning after December 31, 1998.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified by the date of enactment of this Act, the 
        amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 1999, or
                    (B) January 1, 2003.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.

SEC. 204. DEFERRED ANNUITIES FOR SURVIVING SPOUSES OF FEDERAL 
              EMPLOYEES.

    (a) In General.--Section 8341 of title 5, United States Code, is 
amended--
            (1) in subsection (h)(1), by striking ``section 8338(b) of 
        this title'' and inserting ``section 8338(b), and a former 
        spouse of a deceased former employee who separated from the 
        service with title to a deferred annuity under section 8338 (if 
        they were married to one another prior to the date of 
        separation),''; and
            (2) by adding at the end the following:
    ``(j)(1) If a former employee dies after having separated from the 
service with title to a deferred annuity under section 8338 but before 
having established a valid claim for annuity, and is survived by a 
spouse to whom married on the date of separation, the surviving spouse 
may elect to receive--
            ``(A) an annuity, commencing on what would have been the 
        former employee's 62d birthday, equal to 55 percent of the 
        former employee's deferred annuity;
            ``(B) an annuity, commencing on the day after the date of 
        death of the former employee, such that, to the extent 
        practicable, the present value of the future payments of the 
        annuity would be actuarially equivalent to the present value of 
        the future payments under subparagraph (A) as of the day after 
        the former employee's death; or
            ``(C) the lump-sum credit, if the surviving spouse is the 
        individual who would be entitled to the lump-sum credit and if 
        such surviving spouse files application therefor.
    ``(2) An annuity under this subsection and the right thereto 
terminate on the last day of the month before the surviving spouse 
remarries before becoming 55 years of age, or dies.''
    (b) Corresponding Amendment for FERS.--Section 8445(a) of title 5, 
United States Code, is amended--
            (1) by striking ``(or of a former employee or'' and 
        inserting ``(or of a former''; and
            (2) by striking ``annuity)'' and inserting ``annuity, or of 
        a former employee who dies after having separated from the 
        service with title to a deferred annuity under section 8413 but 
        before having established a valid claim for annuity (if such 
        former spouse was married to such former employee prior to the 
        date of separation))''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to surviving spouses and former spouses (whose 
marriage, in the case of the amendments made by subsection (a), 
terminated after May 6, 1985) of former employees who die after the 
date of the enactment of this Act.

SEC. 205. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

    (a) Required Distributions.--
            (1) In general.--Subparagraphs (C)(i)(I) and (C)(ii)(I) of 
        section 401(a)(9) are each amended by striking ``70\1/2\'' and 
        inserting ``75''.
            (2) Actuarial adjustment of benefit under defined benefit 
        plan.--Clause (iii) of section 401(a)(9)(C) is amended to read 
        as follows:
                            ``(iii) Actuarial adjustment.--
                                    ``(I) In general.--In the case of a 
                                defined benefit plan, an employee's 
                                accrued benefit shall be actuarially 
                                increased to take into account the 
                                period after the applicable date during 
                                which the employee was not eligible to 
                                receive any benefits under the plan.
                                    ``(II) Applicable date.--For 
                                purposes of clause (I), the term 
                                `applicable date' means the 1st April 
                                following the calendar year in which 
                                the employee attains age 70\1/2\.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Simplification and Finalization of Minimum Distribution 
Requirements.--
            (1) In general.--The Secretary of the Treasury shall--
                    (A) simplify and finalize the regulations relating 
                to minimum distribution requirements under sections 
                401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 
                457(d)(2) of the Internal Revenue Code of 1986, and
                    (B) modify such regulations to--
                            (i) reflect increases in life expectancy, 
                        and
                            (ii) revise the required distribution 
                        methods so that, under reasonable assumptions, 
                        the amount of the required minimum distribution 
                        does not decrease over a participant's life 
                        expectancy.
            (2) Fresh start.--Notwithstanding subparagraph (D) of 
        section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life expectancy.
            (3) Effective date for regulations.--Regulations referred 
        to in paragraph (1) shall be effective for years beginning 
        after December 31, 2000, and shall apply in such years without 
        regard to whether an individual had previously begun receiving 
        minimum distributions.
    (c) Amount Not Subject to Minimum Distribution Requirements.--
Paragraph (9) of section 401(a) is amended--
            (1) in subparagraph (A), by inserting ``(minus the 
        exclusion amount)'' after ``the entire interest''; and
            (2) by adding at the end the following:
                    ``(H) Exclusion amount.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `exclusion amount' means--
                                    ``(I) $300,000 in the case of a 
                                defined contribution plan;
                                    ``(II) $300,000 in the case of an 
                                individual retirement plan; and
                                    ``(III) $0 in the case of a defined 
                                benefit plan.
                            ``(ii) Aggregation of plans.--For purposes 
                        of determining the exclusion amount under 
                        clause (i)--
                                    ``(I) all defined contribution 
                                plans maintained by the same employer 
                                shall be treated as a single plan; and
                                    ``(II) all individual retirement 
                                plans (other than Roth IRAs) of the 
                                individual shall be treated as a single 
                                plan.
                            ``(iii) Cost-of-living adjustment.--The 
                        Secretary shall adjust the $300,000 exclusion 
                        amount specified in clause (i) at the same time 
                        and in the same manner as under section 415(d), 
                        except that the base period shall be the 
                        calendar quarter ending September 30, 1999.''
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (d) Repeal of Rule Where Distributions Had Begun Before Death 
Occurs.--
            (1) In general.--Subparagraph (B) of section 401(a)(9) is 
        amended by striking clause (i) and redesignating clauses (ii), 
        (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
            (2) Conforming changes.--
                    (A) Clause (i) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``for other cases'' in the 
                        heading, and
                            (ii) by striking ``the distribution of the 
                        employee's interest has begun in accordance 
                        with subparagraph (A)(ii)'' and inserting ``his 
                        entire interest has been distributed to him,''.
                    (B) Clause (ii) of section 401(a)(9)(B) (as so 
                redesignated) is amended by striking ``clause (ii)'' 
                and inserting ``clause (i)''.
                    (C) Clause (iii) of section 401(a)(9)(B)(iii) (as 
                so redesignated) is amended--
                            (i) by striking ``clause (iii)(I)'' and 
                        inserting ``clause (ii)(I)'',
                            (ii) in subclause (I) by striking ``clause 
                        (iii)(III)'' and inserting ``clause 
                        (ii)(III)'',
                            (iii) in subclause (I) by striking ``the 
                        date on which the employee would have attained 
                        the age 70\1/2\,'' and inserting ``April 1 of 
                        the calendar year following the calendar year 
                        in which the spouse attains 75, and clause (ii) 
                        shall not apply to the exclusion amount,'', and
                            (iv) in subclause (II) by striking ``the 
                        distributions to such spouse begin,'' and 
                        inserting ``his entire interest has been 
                        distributed to him,''.
            (3) Reduction in excise tax.--Subsection (a) of section 
        4974 is amended by striking ``50 percent'' and inserting ``10 
        percent''.
            (4) Effective date.--
                    (A) In general.--Except as provided by subparagraph 
                (B), the amendments made by this subsection shall apply 
                to years beginning after December 31, 2000.
                    (B) Excise tax.--The amendment made by paragraph 
                (3) shall apply to years beginning after December 31, 
                1998.

SEC. 206. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 
              PLAN BENEFITS UPON DIVORCE.

    (a) In General.--Section 414(p)(11) (relating to application of 
rules to governmental and church plans) is amended--
            (1) by inserting ``or an eligible deferred compensation 
        plan (within the meaning of section 457(b))'' after 
        ``subsection (e))'', and
            (2) in the heading, by striking ``governmental and church 
        plans'' and inserting ``certain other plans''.
    (b) Waiver of Certain Distribution Requirements.--Paragraph (10) of 
section 414(p) is amended by striking ``and section 409(d)'' and 
inserting ``section 409(d), and section 457(d)''.
    (c) Tax Treatment of Payments From a Section 457 Plan.--Subsection 
(p) of section 414 is amended by redesignating paragraph (12) as 
paragraph (13) and inserting after paragraph (11) the following new 
paragraph:
            ``(12) Tax Treatment of Payments From a Section 457 Plan.--
        If a distribution or payment from an eligible deferred 
        compensation plan described in section 457(b) is made pursuant 
        to a qualified domestic relations order, rules similar to the 
        rules of section 402(e)(1)(A) shall apply to such distribution 
        or payment.''
    (d) Effective Date.--The amendments made by this section shall 
apply to transfers, distributions, and payments made after the date of 
enactment of this Act.

           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

SEC. 301. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

    (a) Rollovers From and To Section 457 Plans.--
            (1) Rollovers from section 457 plans.--
                    (A) In general.--Section 457(e) (relating to other 
                definitions and special rules) is amended by adding at 
                the end the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan, if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4)),
                            ``(ii) the employee transfers any portion 
                        of the property such employee receives in such 
                        distribution to an eligible retirement plan 
                        described in section 402(c)(8)(B), and
                            ``(iii) in the case of a distribution of 
                        property other than money, the amount so 
                        transferred consists of the property 
                        distributed,
                then such distribution (to the extent so transferred) 
                shall not be includible in gross income for the taxable 
                year in which paid.
                    ``(B) Certain rules made applicable.--Rules similar 
                to the rules of paragraphs (2) through (7) and (9) of 
                section 402(c) and section 402(f) shall apply for 
                purposes of subparagraph (A).
                    ``(C) Reporting.--Rollovers under this paragraph 
                shall be reported to the Secretary in the same manner 
                as rollovers from qualified retirement plans (as 
                defined in section 4974(c)).''
                    (B) Deferral limit determined without regard to 
                rollover amounts.--Section 457(b)(2) (defining eligible 
                deferred compensation plan) is amended by inserting 
                ``(other than rollover amounts)'' after ``taxable 
                year''.
            (2) Rollovers to section 457 plans.--
                    (A) Section 402(c)(8)(B) (defining eligible 
                retirement plan) is amended by striking ``and'' at the 
                end of clause (iii), by striking the period at the end 
                of clause (iv) and inserting ``, and'', and by adding 
                at the end the following:
                            ``(v) an eligible deferred compensation 
                        plan described in section 457(b) of an eligible 
                        employer described in section 457(e)(1)(A).''
                    (B) Paragraph (9) of section 402(c) is amended by 
                striking ``except that'' and all that follows and 
                inserting ``except that only an account or annuity 
                described in clause (i) or (ii) of paragraph (8)(B) 
                shall be treated as an eligible retirement plan with 
                respect to such distribution.''
                    (C) Subsection (t) of section 72 (relating to 10-
                percent additional tax on early distributions from 
                qualified retirement plans) is amended by adding at the 
                end the following new paragraph:
            ``(9) Special rule for rollovers to section 457 plans.--For 
        purposes of this subsection, a distribution from an eligible 
        deferred compensation plan (as defined in section 457(b)) of an 
        employer described in section 457(e)(1)(A) shall be treated as 
        a distribution from a qualified retirement plan to the extent 
        that such distribution is attributable to an amount transferred 
        to an eligible deferred compensation plan from a qualified 
        retirement plan (as defined in section 4974(c)). For purposes 
        of this subsection, any such distribution shall be treated as 
        if made from a qualified retirement plan described in section 
        4974(c)(1). This paragraph shall only apply to a transfer that 
        is in excess of $50,000 and that is permitted by reason of 
        section 402(c)(8)(B)(v) or section 408(d)(3)(A)(iv).''
                    (D) Subsection (a) of section 457 (relating to year 
                of inclusion in gross income) is amended--
                            (i) by striking ``or otherwise made 
                        available'', and
                            (ii) by adding at the end the following: 
                        ``To the extent provided in section 72(t)(9), 
                        section 72(t) shall apply to any amount 
                        includible in gross income under this 
                        subsection.''.
    (b) Allowance of Rollovers From and To 403(b) Plans.--
            (1) Rollovers from section 403(b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.
            (2) Rollovers to section 403(b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting ``, and'', and by adding at the end the 
        following:
                            ``(vi) an annuity contract described in 
                        section 403(b).''
    (c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to 
recipients of distributions eligible for rollover treatment) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(E) of the provisions under which distributions 
                from the eligible retirement plan receiving the 
                distribution may be subject to restrictions and tax 
                consequences which are different from those applicable 
                to distributions from the plan making such 
                distribution.''
    (d) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.
            (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
            (3) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.
            (4) Subparagraph (B) of section 403(b)(8) is amended by 
        inserting ``and (9)'' after ``through (7)''.
            (5) Section 408(a)(1) is amended by striking ``or 
        403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
            (6) Subparagraphs (A) and (B) of section 415(b)(2) are each 
        amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.
            (7) Section 415(c)(2) is amended by striking ``and 
        408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
            (8) Section 4973(b)(1)(A) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
    (e) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 1998.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986, and section 402(d) of the Internal Revenue 
        Code of 1986 (as in effect for taxable years beginning before 
        January 1, 2000), shall not apply to any distribution from an 
        eligible retirement plan on behalf of an individual if there 
        was a rollover to such plan on behalf of such individual which 
        is permitted solely by reason of any amendment made by this 
        section.

SEC. 302. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by striking ``or'' at the end of clause 
(ii), by striking the period at the end of clause (iii) and inserting 
``; or'', and by adding at the end the following:
                            ``(iv)(I) the entire amount received 
                        (including money and other property) represents 
                        the entire interest in the account or the 
                        entire value of the annuity,
                            ``(II) no amount in the account and no part 
                        of the value of the annuity is attributable to 
                        any source other than a rollover contribution 
                        from a defined contribution plan or a defined 
                        benefit plan and any earnings on such rollover, 
                        and
                            ``(III) such entire amount received is paid 
                        into a defined contribution plan or a defined 
                        benefit plan (for the benefit of such 
                        individual) not later than the 60th day after 
                        he receives the payment or distribution.
                If a payment or distribution from an individual 
                retirement plan is described in more than one clause of 
                this subparagraph, such payment or distribution shall 
                be treated as described only in the clause specified by 
                the payee or distributee. For purposes of this 
                subparagraph, the term `defined contribution plan' 
                means a defined contribution plan (as defined in 
                section 414(i)) which includes a trust exempt from tax 
                under section 501(a), an annuity plan described in 
                section 403(a), an annuity contract described in 
                section 403(b), and an eligible deferred compensation 
                plan described in section 457(b) of an eligible 
                employer described in section 457(e)(1)(A). For 
                purposes of clause (iv)(II), the term `defined 
                contribution plan' shall also include an eligible 
                deferred compensation plan described in section 457(b) 
                of an eligible employer described in section 
                457(e)(1)(B). For purposes of this subparagraph, the 
term `defined benefit plan' means a defined benefit plan (as defined in 
section 414(j)) which includes a trust exempt from tax under section 
501(a).''
    (b) Conforming Amendment.--Paragraph (1) of section 403(b) is 
amended by striking ``section 408(d)(3)(A)(iii)'' and inserting 
``clause (iii) or (iv) of section 408(d)(3)(A)''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 1998.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986, and section 402(d) of the Internal Revenue 
        Code of 1986 (as in effect for taxable years beginning before 
        January 1, 2000), shall not apply to any distribution from a 
        defined contribution plan (as defined in section 408(d)(3)(A) 
        of the Internal Revenue Code of 1986 (as added by this 
        section)) or a defined benefit plan (as defined in section 
        408(d)(3)(A) of the Internal Revenue Code of 1986 (as added by 
        this section)) on behalf of an individual if there was a 
        rollover to such plan on behalf of such individual which is 
        permitted solely by reason of the amendments made by this 
        section.

SEC. 303. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) In General.--
            (1) Subsection (c) of section 402 (relating to rules 
        applicable to rollovers from exempt trusts) (as amended by 
        section 301) is amended by striking paragraph (2) and 
        redesignating paragraphs (3) through (10) as paragraphs (2) 
        through (9), respectively.
            (2) Paragraph (31) of section 401(a) (relating to optional 
        direct transfer of eligible rollover distributions) is amended 
        by striking subparagraph (B) and redesignating subparagraphs 
        (C) and (D) as subparagraphs (B) and (C), respectively.
            (3) Subparagraph (B) of section 408(d)(3) (relating to 
        rollover contributions) is amended by striking ``which was not 
        includible in his gross income because of the application of 
        this paragraph'' and inserting ``to which this paragraph 
        applied''.
    (b) Hardship Exception to 60-Day Rule.--
            (1) Paragraph (2) of section 402(c) (as so redesignated) is 
        amended to read as follows:
            ``(2) Transfer must be made within 60 days of receipt.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.
                    ``(B) Hardship exception.--The Secretary may waive 
                the 60-day requirement under subparagraph (A) where the 
                failure to waive such requirement would be against 
                equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such requirement.''
            (2) Paragraph (3) of section 408(d) (relating to rollover 
        contributions) is amended by adding at the end the following 
        new subparagraph:
                    ``(H) Waiver of 60-day requirement.--The Secretary 
                may waive the 60-day requirement under subparagraphs 
                (A) and (D) where the failure to waive such requirement 
                would be against equity or good conscience, including 
                casualty, disaster, or other events beyond the 
                reasonable control of the individual subject to such 
                requirement.''
    (c) Conforming Amendments.--
            (1) Subparagraph (B) of section 403(a)(4) is amended by 
        striking ``(2) through (7)'' and inserting ``(2) through (6)''.
            (2) Section 403(b)(8)(A)(ii) (as amended by section 301) is 
        amended by striking ``section 402(c)(8)(B)'' and inserting 
        ``section 402(c)(7)(B)''.
            (3) Paragraph (16) of section 457(e) (as added by section 
        301) is amended--
                    (A) in subparagraph (A)(i) by striking 
                ``402(c)(4)'' and inserting ``402(c)(3)'',
                    (B) in subparagraph (A)(ii) by striking 
                ``402(c)(8)(B)'' and inserting ``402(c)(7)(B)'', and
                    (C) in subparagraph (B) by striking ``paragraphs 
                (2) through (7) and (9) of section 402(c)'' and 
                inserting ``paragraphs (2) through (6) and (8) of 
                section 402(c)''.
    (d) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to distributions 
        made after December 31, 1998.
            (2) Hardship exception.--The amendments made by subsection 
        (b) shall apply to 60-day periods ending after the date of the 
        enactment of this Act.

SEC. 304. TREATMENT OF FORMS OF DISTRIBUTION.

    (a) In General.--Paragraph (6) of section 411(d) (relating to 
accrued benefit not to be decreased by amendment) is amended by adding 
at the end the following:
                    ``(D) Plan transfers.--
                            ``(i) A defined contribution plan (in this 
                        subparagraph referred to as the `transferee 
                        plan') shall not be treated as failing to meet 
                        the requirements of this subsection merely 
                        because the transferee plan does not provide 
                        some or all of the forms of distribution 
                        previously available under another defined 
                        contribution plan (in this paragraph referred 
                        to as the `transferor plan') to the extent 
                        that--
                                    ``(I) the forms of distribution 
                                previously available under the 
                                transferor plan applied to the account 
                                of a participant or beneficiary under 
                                the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan;
                                    ``(II) the terms of both the 
                                transferor plan and the transferee plan 
                                authorize the transfer described in 
                                subclause (I);
                                    ``(III) the transfer described in 
                                subclause (I) was made pursuant to a 
                                voluntary election by the participant 
                                or beneficiary whose account was 
                                transferred to the transferee plan;
                                    ``(IV) the election described in 
                                subclause (III) was made after the 
                                participant or beneficiary received a 
                                notice describing the consequences of 
                                making the election;
                                    ``(V) if the transferor plan 
                                provides for an annuity as the normal 
                                form of distribution under the plan in 
                                accordance with section 417, the 
                                transfer is made with the consent of 
                                the participant's spouse (if any), and 
                                such consent meets requirements similar 
                                to the requirements imposed by section 
                                417(a)(2); and
                                    ``(VI) the transferee plan allows 
                                the participant or beneficiary 
                                described in subclause (III) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.
                            ``(ii) Clause (i) shall apply to a direct 
                        transfer received by a defined benefit plan 
                        (`transferee plan') from another defined 
                        benefit plan (`transferor plan') except that 
                        for this purpose--
                                    ``(I) Subclause (VI) of clause (i) 
                                shall not apply; and
                                    ``(II) Clause (i) shall not apply 
                                with respect to the elimination of any 
                                form of distribution with respect to a 
                                participant or beneficiary unless the 
                                transferee plan contains a form of 
                                distribution with respect to such 
                                participant or beneficiary that (a) has 
                                an equal or greater value based on 
                                reasonable actuarial assumptions and 
                                (b) is available at the same times and 
                                under the same conditions as the form 
                                of distribution being eliminated.
                                    ``(III) Clause (i) shall be applied 
                                by substituting `accrued benefit' for 
                                `account' wherever it appears.
                            ``(iii) Clauses (i) and (ii) shall apply to 
                        plan mergers and other transactions having the 
                        effect of a direct transfer, including 
                        consolidations of benefits attributable to 
                        different employers within a multiple employer 
                        plan.
                    ``(E) Elimination of form of distribution.--Except 
                to the extent provided in regulations, a defined 
                contribution plan shall not be treated as failing to 
                meet the requirements of this section merely because of 
                the elimination of a form of distribution previously 
                available thereunder. This subparagraph shall not apply 
                to the elimination of a form of distribution with 
                respect to any participant unless--
                            ``(i) a single sum payment is available to 
                        such participant at the same time or times as 
                        the form of distribution being eliminated; and
                            ``(ii) such single sum payment is based on 
                        the same or greater portion of the 
                        participant's account as the form of 
                        distribution being eliminated.''
    (b) Conforming Amendment.--
            (1) Subsection (g) of section 204 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054) is 
        amended by adding at the end the following:
    ``(4)(A) A defined contribution plan (in this subparagraph referred 
to as the `transferee plan') shall not be treated as failing to meet 
the requirements of this subsection merely because the transferee plan 
does not provide some or all of the forms of distribution previously 
available under another defined contribution plan (in this paragraph 
referred to as the `transferor plan') to the extent that--
            ``(i) the forms of distribution previously available under 
        the transferor plan applied to the account of a participant or 
        beneficiary under the transferor plan that was transferred from 
        the transferor plan to the transferee plan pursuant to a direct 
        transfer rather than pursuant to a distribution from the 
        transferor plan;
            ``(ii) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in clause (i);
            ``(iii) the transfer described in clause (i) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan;
            ``(iv) the election described in clause (iii) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election;
            ``(v) if the transferor plan provides for an annuity as the 
        normal form of distribution under the plan in accordance with 
        section 205, the transfer is made with the consent of the 
        participant's spouse (if any), and such consent meets 
        requirements similar to the requirements imposed by section 
        205(c)(2); and
            ``(vi) the transferee plan allows the participant or 
        beneficiary described in clause (iii) to receive any 
        distribution which the participant or beneficiary is entitled 
        under transferee plan in the form of a single sum distribution.
    ``(B) Subparagraph (A) shall apply to a direct transfer received by 
a defined benefit plan (`transferee plan') from another defined benefit 
plan (`transferor plan') except that for this purpose--
            ``(i) Clause (vi) of subparagraph (A) shall not apply;
            ``(ii) Subparagraph (A) shall not apply with respect to the 
        elimination of any form of distribution with respect to a 
        participant or beneficiary unless the transferee plan contains 
        a form of distribution with respect to such participant or 
        beneficiary that (I) has an equal or greater value based on 
        reasonable actuarial assumptions and (II) is available at the 
        same times and under the same conditions as the form of 
        distribution being eliminated; and
            ``(iii) Subparagraph (A) shall be applied by substituting 
        `accrued benefit' for `account'' wherever it appears.
    ``(C) Subparagraphs (A) and (B) shall apply to plan mergers and 
other transactions having the effect of a direct transfer, including 
consolidations of benefits attributable to different employers within a 
multiple employer plan.
    ``(5) Except to the extent provided in regulations, a defined 
contribution plan shall not be treated as failing to meet the 
requirements of this section merely because of the elimination of a 
form of distribution previously available thereunder. This paragraph 
shall not apply to the elimination of a form of distribution with 
respect to any participant unless--
            ``(A) a single sum payment is available to such participant 
        at the same time or times as the form of distribution being 
        eliminated; and
            ``(B) such single sum payment is based on the same or 
        greater portion of the participant's account as the form of 
        distribution being eliminated.''
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 305. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

    (a) Modification of Same Desk Exception.--
            (1) Section 401(k).--Section 401(k)(2)(B)(i)(I) (relating 
        to qualified cash or deferred arrangements) is amended by 
        striking ``separation from service'' and inserting ``severance 
        from employment''.
            (2) Section 403(b).--
                    (A) Paragraphs (7)(A)(ii) and (11)(A) of section 
                403(b) are each amended by striking ``separates from 
                service'' and inserting ``has a severance from 
                employment''.
                    (B) The heading for paragraph (11) of section 
                403(b) is amended by striking ``separation from 
                service'' and inserting ``severance from employment''.
            (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
        amended by striking ``is separated from service'' and inserting 
        ``has a severance from employment''.
    (b) Business Sale Requirements Repealed.--
            (1) In general.--Section 401(k)(2)(B)(i)(II) (relating to 
        qualified cash or deferred arrangements) is amended by striking 
        ``an event'' and inserting ``a plan termination''.
            (2) Conforming amendments.--Section 401(k)(10) is amended--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) In general.--A plan termination is described 
                in this paragraph if the termination of the plan does 
                not involve the establishment or maintenance of another 
                defined contribution plan (other than an employee stock 
                ownership plan as defined in section 4975(e)(7)).'',
                    (B) in subparagraph (B)--
                            (i) by striking ``An event'' and inserting 
                        ``A termination'', and
                            (ii) by striking ``the event'' and 
                        inserting ``the termination'',
                    (C) by striking subparagraph (C), and
                    (D) by striking ``or disposition of assets or 
                subsidiary'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 1998.

SEC. 306. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT 
              PLANS.

    (a) 403(b) Plans.--Subsection (b) of section 403 is amended by 
adding at the end the following new paragraph:
            ``(13) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''
    (b) 457 Plans.--
            (1) Subsection (e) of section 457 (as amended by section 
        509) is amended by adding at the end the following new 
        paragraph:
            ``(18) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''
            (2) Section 457(b)(2), as amended by sections 101 and 202, 
        is amended by striking ``(other than rollover amounts)'' and 
        inserting ``(other than rollover amounts and amounts received 
        in a transfer referred to in subsection (e)(16))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 1998.

        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

SEC. 401. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.

    (a) In General.--
            (1) Code amendment.--Section 412(c)(7) (relating to full-
        funding limitation) is amended--
                    (A) by striking ``the applicable percentage'' in 
                subparagraph (A)(i)(I) and inserting ``in the case of 
                plan years beginning before January 1, 2003, the 
                applicable percentage'', and
                    (B) by amending subparagraph (F) to read as 
                follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

``In the case of any plan year      The applicable percentage is--
        beginning in--
    1999..........................................                 155 
    2000..........................................                 160 
    2001..........................................                 165 
    2002..........................................               170.''
            (2) ERISA amendment.--Section 302(c)(7) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
        is amended--
                    (A) by striking ``the applicable percentage'' in 
                subparagraph (A)(i)(I) and inserting ``in the case of 
                plan years beginning before January 1, 2003, the 
                applicable percentage'', and
                    (B) by amending subparagraph (F) to read as 
                follows:
            ``(F) Applicable percentage.--For purposes of subparagraph 
        (A)(i)(I), the applicable percentage shall be determined in 
        accordance with the following table:

``In the case of any plan year      The applicable percentage is--
        beginning in--
    1999..........................................                 155 
    2000..........................................                 160 
    2001..........................................                 165 
    2002..........................................               170.''
            (3) Effective dates.--The amendments made by this 
        subsection shall apply to plan years beginning after December 
        31, 1998.
    (b) Maximum Contribution Deduction Rules Modified and Applied to 
All Defined Benefit Plans.--
            (1) In general.--Section 404(a)(1)(D) (relating to special 
        rule in case of certain plans) is amended--
                    (A) by striking ``which has more than 100 
                participants for the plan year'',
                    (B) by striking ``unfunded current liability 
                determined under section 414(l)'' and inserting 
                ``unfunded termination liability (determined as if the 
                proposed termination date referred to in section 
                4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
                Security Act of 1974 were the last day of the plan 
                year)'',
                    (C) by inserting after the first sentence the 
                following: ``For purposes of this subparagraph, in the 
                case of a plan which has less than 100 participants for 
                the plan year, termination liability shall not include 
                the liability attributable to benefit increases for 
                highly compensated employees (as defined in section 
                414(q)) brought about by plan amendment within the last 
                2 years before the termination date.'', and
                    (D) by striking ``(other than a multiemployer 
                plan)''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date of enactment 
        of this Act.

SEC. 402. MISSING PARTICIPANTS.

    (a) In General.--Section 4050 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating 
subsection (c) as subsection (e) and by inserting after subsection (b) 
the following:
    ``(c) Multiemployer Plans.--The corporation shall prescribe rules 
similar to the rules in subsection (a) for multiemployer plans covered 
by this title that terminate under section 4041A.
    ``(d) Plans Not Otherwise Subject to Title.--
            ``(1) Transfer to corporation.--The plan administrator of a 
        plan described in paragraph (4) may elect to transfer a missing 
        participant's benefits to the corporation upon termination of 
        the plan.
            ``(2) Information to the corporation.--To the extent 
        provided in regulations, the plan administrator of a plan 
        described in paragraph (4) shall, upon termination of the plan, 
        provide the corporation information with respect to benefits of 
        a missing participant if the plan transfers such benefits--
                    ``(A) to the corporation, or
                    ``(B) to an entity other than the corporation or a 
                plan described in paragraph (4)(B)(ii).
            ``(3) Payment by the corporation.--If benefits of a missing 
        participant were transferred to the corporation under paragraph 
        (1), the corporation shall, upon location of the participant or 
        beneficiary, pay to the participant or beneficiary the amount 
        transferred (or the appropriate survivor benefit) either--
                    ``(A) in a single sum (plus interest), or
                    ``(B) in such other form as is specified in 
                regulations of the corporation.
            ``(4) Plans described.--A plan is described in this 
        paragraph if--
                    ``(A) the plan is a pension plan (within the 
                meaning of section 3(2))--
                            ``(i) to which the provisions of this 
                        section do not apply (without regard to this 
                        subsection), and
                            ``(ii) which is not a plan described in 
                        paragraphs (2) through (11) of section 4021(b), 
                        and
                    ``(B) at the time the assets are to be distributed 
                upon termination, the plan--
                            ``(i) has missing participants, and
                            ``(ii) has not provided for the transfer of 
                        assets to pay the benefits of all missing 
                        participants to another pension plan (within 
                        the meaning of section 3(2)).
            ``(5) Certain provisions not to apply.--Subsections (a)(1) 
        and (a)(3) shall not apply to a plan described in paragraph 
        (4).''
    (b) Conforming Amendments.--
            (1) Section 206(f) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1056(f)) is amended--
                    (A) by striking ``title IV'' and inserting 
                ``section 4050'', and
                    (B) by striking ``the plan shall provide that''.
            (2) Section 401(a)(34) (relating to benefits of missing 
        participants on plan termination) is amended by striking 
        ``title IV'' and inserting ``section 4050''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after final regulations implementing 
subsections (c) and (d) of section 4050 of the Employee Retirement 
Income Security Act of 1974 (as added by subsection (a)), respectively, 
are prescribed.

SEC. 403. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) In General.--Section 105(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1025(a)) is amended by striking ``shall 
furnish to any plan participant or beneficiary who so requests in 
writing, a statement'' and inserting ``shall furnish to each plan 
participant at least once each year (in the case of a 
defined contribution plan) and upon written request of a plan 
participant or beneficiary (in the case of a defined benefit plan), a 
statement in written or electronic form''.
    (b) Required Periodic Statements for Plans With More Than One 
Unaffiliated Employer.--Section 105(d) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1025(d)) is repealed.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1998.

SEC. 404. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RESPONSIBILITY.

    (a) Imposition and Amount of Penalty Made Discretionary.--Section 
502(l)(1) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1132(l)(1)) is amended--
            (1) by striking ``shall'' and inserting ``may'', and
            (2) by striking ``equal to'' and inserting ``not greater 
        than''.
    (b) Applicable Recovery Amount.--Section 502(l)(2) of such Act (29 
U.S.C. 1132(l)(2)) is amended to read as follows:
    ``(2) For purposes of paragraph (1), the term `applicable recovery 
amount' means any amount which is recovered from any fiduciary or other 
person (or from any other person on behalf of any such fiduciary or 
other person) with respect to a breach or violation described in 
paragraph (1) on or after the 30th day following receipt by such 
fiduciary or other person of written notice from the Secretary of the 
violation, whether paid voluntarily or by order of a court in a 
judicial proceeding instituted by the Secretary under subsection (a)(2) 
or (a)(5). The Secretary may, in the Secretary's sole discretion, 
extend the 30-day period described in the preceding sentence.''
    (c) Other Rules.--Section 502(l) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(l)) is amended by adding at the 
end the following:
    ``(5) A person shall be jointly and severally liable for the 
penalty described in paragraph (1) to the same extent that such person 
is jointly and severally liable for the applicable recovery amount on 
which the penalty is based.
    ``(6) No penalty shall be assessed under this subsection unless the 
person against whom the penalty is assessed is given notice and 
opportunity for a hearing with respect to the violation and applicable 
recovery amount.''
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to any breach of fiduciary responsibility or other 
        violation of part 4 of subtitle B of title I of the Employee 
        Retirement Income Security Act of 1974 occurring on or after 
        the date of enactment of this Act.
            (2) Transition rule.--In applying the amendment made by 
        subsection (b) (relating to applicable recovery amount), a 
        breach or other violation occurring before the date of 
        enactment of this Act which continues after the 180th day after 
        such date (and which may have been discontinued at any time 
        during its existence) shall be treated as having occurred after 
        such date of enactment.

SEC. 405. PENALTY TAX RELIEF FOR SOUND PENSION FUNDING.

    (a) In General.--Subsection (c) of section 4972 (relating to 
nondeductible contributions) is amended by adding at the end the 
following new paragraph:
            ``(7) Defined benefit plan exception.--In determining the 
        amount of nondeductible contributions for any taxable year, an 
        employer may elect for such year not to take into account any 
        contributions to a defined benefit plan except to the extent 
        that such contributions exceed the full-funding limitation (as 
        defined in section 412(c)(7), determined without regard to 
        subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

                  TITLE V--REDUCING REGULATORY BURDENS

SEC. 501. INTERMEDIATE SANCTIONS FOR INADVERTENT FAILURES.

    (a) In General.--Section 401(a) (relating to qualified pension, 
profit-sharing, and stock bonus plans) is amended by inserting after 
paragraph (34) the following:
            ``(35) Protection from disqualification upon timely 
        correction or payment of fine.--A trust shall not fail to 
        constitute a qualified trust under this section if the plan of 
        which such trust is a part has made good faith efforts to meet 
        the requirements of this section, has inadvertently failed to 
        satisfy 1 or more of such requirements, and either--
                    ``(A) substantially corrects (to the extent 
                possible) such failure before the date the plan becomes 
                subject to a plan examination for the applicable year 
                (as determined under rules prescribed by the 
                Secretary), or
                    ``(B) substantially corrects (to the extent 
                possible) such failure on or after such date.
        If the plan satisfies the requirement under subparagraph (B), 
        the Secretary may require the sponsoring employer to make a 
        payment to the Secretary in an amount that does not exceed an 
        amount that bears a reasonable relationship to the severity of 
        the plan's failure to satisfy the requirements of this 
        section.''
    (b) Application to Cash or Deferred Arrangements.--Section 401(k) 
is amended by inserting after paragraph (12) the following new 
paragraph:
            ``(13) Protection from disqualification.--Rules similar to 
        the rules set forth in section 401(a)(35) shall apply for 
        purposes of determining whether a cash or deferred arrangement 
        is a qualified cash or deferred arrangement.''
    (c) Application to Section 403(b) Annuity Contracts.--Section 
403(b) is amended by inserting after paragraph (12) the following:
            ``(13) Correction of errors.--
                    ``(A) In general.--Under distribution and reporting 
                procedures conforming to those applicable under section 
                415, the Secretary shall allow for the correction of 
                elective deferrals (within the meaning of section 
                402(g)(3)(C)) which, as a result of reasonable error, 
                would cause the limitation of section 403(b)(2) to be 
                exceeded.
                    ``(B) Protection from disqualification.--For 
                purposes of determining whether the exclusion from 
                gross income under paragraph (1) is applicable to an 
                employee for any taxable year, rules similar to the 
                rules set forth in section 401(a)(35) shall apply to 
                any annuity contract purchased under this subsection or 
                any plan established to meet the requirements of this 
                subsection.''
    (d) Income Inclusion for Disqualification Not Applicable to 
Nonhighly Compensated Employees.--Section 402(b) (relating to 
taxability of beneficiary of nonexempt trust) is amended by striking 
paragraph (4) and inserting the following:
            ``(4) Income inclusion for disqualification not applicable 
        to nonhighly compensated employees.--Paragraphs (1) and (2) 
        shall not apply to employees who are not highly compensated 
        employees.
            ``(5) Failure to meet requirements of section 401(a)(26) or 
        410(b).--If 1 of the reasons a trust is not exempt from tax 
        under section 501(a) is the failure of the plan to meet the 
        requirements of section 401(a)(26) or 410(b), then a highly 
        compensated employee shall, in lieu of the amount determined 
        under paragraph (1) or (2), include in gross income for the 
        taxable year with or within which the taxable year of the trust 
        ends an amount equal to the vested accrued benefit of such 
        employee (other than the employee's investment in the contract) 
        as of the close of such taxable year of the trust.
            ``(6) Highly compensated employee.--For purposes of this 
        subsection, the term `highly compensated employee' has the 
        meaning given such term by section 414(q).''
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 502. REPEAL OF THE MULTIPLE USE TEST.

    (a) In General.--Paragraph (9) of section 401(m) is amended to read 
as follows:
            ``(9) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''
    (b) Effective Date.--The amendment made by this section shall apply 
to years after December 31, 1998.

SEC. 503. SAFETY VALVE FROM MECHANICAL RULES.

    (a) In General.--The Secretary of the Treasury, by regulation, 
shall provide that the plan shall be deemed to satisfy the requirements 
of section 401(a)(4) of the Internal Revenue Code of 1986 if such plan 
satisfies the facts and circumstances test under section 401(a)(4) of 
such Code, as in effect before January 1, 1994, if--
            (1) the plan satisfies conditions prescribed by the 
        Secretary to appropriately limit the availability of such test, 
        and
            (2) the plan is submitted to the Secretary for a 
        determination of whether it satisfies such test.
Paragraph (2) shall only apply to the extent provided by the Secretary.
    (b) Effective Dates.--
            (1) Regulations.--The regulation required by subsection (a) 
        shall apply to years beginning after December 31, 1999.
            (2) Conditions of availability.--Any condition of 
        availability prescribed by the Secretary under subsection 
        (a)(1) shall not apply before the first year beginning not less 
        than 120 days after the date on which such condition is 
        prescribed.

SEC. 504. REFORM OF THE LINE OF BUSINESS RULES.

    (a) Repeal of Gateway Test.--Paragraph (5) of section 410(b) is 
amended to read as follows:
            ``(5) Line of business exception.--If, under section 
        414(r), an employer is treated as operating separate lines of 
        business for a year, the employer may apply the requirements of 
        this subsection for such year separately with respect to 
        employees in each separate line of business.''
    (b) Regulations.--The Secretary of the Treasury shall modify the 
regulations issued under section 414(r) of the Internal Revenue Code of 
1986 (relating to special rules for separate line of business) to--
            (1) simplify the administrability of the rules for both the 
        Secretary and plans, and
            (2) permit employees to be allocated among lines of 
        business based on all the facts and circumstances.
    (c) Effective Dates.--
            (1) Repeal.--The repeal made by subsection (a) shall apply 
        to years beginning after December 31, 1999.
            (2) Regulations.--The regulations modified under subsection 
        (b) shall apply to years beginning after December 31, 1999.

SEC. 505. COVERAGE TEST FLEXIBILITY.

    (a) In General.--Paragraph (1) of section 410(b) is amended by 
adding at the end the following:
                    ``(D) In the case that the plan fails to meet the 
                requirements of subparagraphs (A), (B) and (C), the 
                plan--
                            ``(i) satisfies subparagraph (B), as in 
                        effect immediately before the enactment of the 
                        Tax Reform Act of 1986,
                            ``(ii) is submitted to the Secretary for a 
                        determination of whether it satisfies the 
                        requirement described in clause (i), and
                            ``(iii) satisfies conditions prescribed by 
                        the Secretary by regulation that appropriately 
                        limit the availability of this subparagraph.
                Clause (ii) shall apply only to the extent provided by 
                the Secretary.''
    (b) Effective Dates.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to years beginning after December 31, 1999.
            (2) Conditions of availability.--Any condition of 
        availability prescribed by the Secretary under regulations 
        prescribed by the Secretary under section 410(a)(1)(D) of the 
        Internal Revenue Code of 1986 shall not apply before the first 
        year beginning not less than 120 days after the date on which 
        such condition is prescribed.

SEC. 506. INCREASE IN RETIREMENT PLAN CASH-OUT AMOUNT.

    (a) Amendments to 1986 Code.--Section 411(a)(11) (relating to 
restrictions on certain mandatory distributions) is amended by adding 
at the end the following:
                    ``(D) Inflation adjustment.--In the case of any 
                plan year beginning in a calendar year after 1998, the 
                Secretary shall adjust annually the $5,000 amount 
                contained in subparagraph (A) for increases in the cost 
                of living at the same time and in the same manner as 
                adjustments under section 415(d); except that the base 
                period shall be the calendar quarter ending September 
                30, 1997, and any increase which is not a multiple of 
                $500 shall be rounded to the next lowest multiple of 
                $500.''
    (b) Amendments to ERISA.--Section 203(e) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(e)) is amended by adding at 
the end the following:
    ``(4) Inflation adjustment.--In the case of any plan year beginning 
in a calendar year after 1998, the Secretary shall adjust annually the 
$5,000 amount contained in paragraph (1) for increases in the cost of 
living at the same time and in the same manner as adjustments under 
section 415(d) of the Internal Revenue Code of 1986; except that the 
base period shall be the calendar quarter ending September 30, 1997, 
and any increase which is not a multiple of $500 shall be rounded to 
the next lowest multiple of $500.''
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the date of enactment of this 
Act.

SEC. 507. SIMPLIFICATION OF CASH-OUT RULE.

    (a) Modification of Regulations.--The Secretary of the Treasury 
shall modify the regulations issued under sections 411(a)(11) and 
417(e) of the Internal Revenue Code of 1986 to delete the rule set 
forth in the last sentence of Treasury Regulation section 1.411(a)-
11(c)(3) and in the last sentence of Treasury Regulation section 
1.417(e)-1(b)(2)(i).
    (b) Effective Date.--The modifications made under subsection (a) 
shall apply to years beginning after December 31, 1998.

SEC. 508. MODIFICATION OF TIMING OF PLAN VALUATIONS.

    (a) In General.--Section 412(c)(9) (relating to annual valuation) 
is amended--
            (1) by striking ``For purposes'' and inserting the 
        following:
                    ``(A) In general.--For purposes'', and
            (2) by adding at the end the following:
                    ``(B) Election to use prior year valuation.--
                            ``(i) In general.--If, for any plan year--
                                    ``(I) an election is in effect 
                                under this subparagraph with respect to 
                                a plan, and
                                    ``(II) the assets of the plan are 
                                not less than 125 percent of the plan's 
                                current liability (as defined in 
                                paragraph (7)(B)), determined as of the 
                                valuation date for the preceding plan 
                                year, then this section shall be 
applied using the information available as of such valuation date.
                            ``(ii) Adjustments.--Information under 
                        clause (i) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iii) Election.--An election under this 
                        subparagraph, once made, shall be irrevocable 
                        without the consent of the Secretary.''
    (b) Amendments to ERISA.--Paragraph (9) of section 302(c) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
amended--
            (1) by inserting ``(A)'' after ``(9)'', and
            (2) by adding at the end the following:
    ``(B)(i) If, for any plan year--
            ``(I) an election is in effect under this subparagraph with 
        respect to a plan, and
            ``(II) the assets of the plan are not less than 125 percent 
        of the plan's current liability (as defined in paragraph 
        (7)(B)), determined as of the valuation date for the preceding 
        plan year,
then this section shall be applied using the information available as 
of such valuation date.
    ``(ii) Information under clause (i) shall, in accordance with 
regulations, be actuarially adjusted to reflect significant differences 
in participants.
    ``(iii) An election under this subparagraph, once made, shall be 
irrevocable without the consent of the Secretary of the Treasury.''
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the date of enactment of this 
Act.

SEC. 509. SECTION 457 INAPPLICABLE TO CERTAIN MIRROR PLANS.

    (a) In General.--Subsection (e) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations) is amended by adding at the end the following new 
paragraph:
            ``(17) This section shall not apply to a plan, program, or 
        arrangement maintained solely for the purposes of providing 
        retirement benefits for employees in excess of the limitations 
        imposed by sections 401(a)(17) or 415.''
    (b) Certain Deferred Compensation Not Taken Into Account.--
Subsection (c) of section 457 (relating to individuals who are 
participants in more than 1 plan) is amended by adding at the end the 
following new paragraph:
            ``(3) This section shall be applied without regard to a 
        plan, program, or arrangement described in subsection 
        (e)(17).''
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 510. RULES FOR SUBSTANTIAL OWNERS RELATING TO PLAN TERMINATIONS.

    (a) Modification of Phase-in of Guarantee.--Section 4022(b)(5) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)(5)) is amended to read as follows:
    ``(5)(A) For purposes of this paragraph, the term `majority owner' 
means an individual who, at any time during the 60-month period ending 
on the date the determination is being made--
            ``(i) owns the entire interest in an unincorporated trade 
        or business,
            ``(ii) in the case of a partnership, is a partner who owns, 
        directly or indirectly, 50 percent or more of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(iii) in the case of a corporation, owns, directly or 
        indirectly, 50 percent or more in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).
    ``(B) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall not exceed the 
product of--
            ``(i) a fraction (not to exceed 1) the numerator of which 
        is the number of years from the later of the effective date or 
        the adoption date of the plan to the termination date, and the 
        denominator of which is 30, and
            ``(ii) the amount of the majority owner's monthly benefits 
        guaranteed under subsection (a) (as limited by paragraph (3) of 
        this subsection).''
    (b) Modification of Allocation of Assets.--
            (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
        striking ``section 4022(b)(5)'' and inserting ``section 
        4022(b)(5)(B)''.
            (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
        amended--
                    (A) by striking ``(5)'' in paragraph (2) and 
                inserting ``(4), (5),'', and
                    (B) by redesignating paragraphs (3) through (6) as 
                paragraphs (4) through (7), respectively, and by 
                inserting after paragraph (2) the following:
            ``(3) If assets available for allocation under paragraph 
        (4) of subsection (a) are insufficient to satisfy in full the 
        benefits of all individuals who are described in that 
        paragraph, the assets shall be allocated first to benefits 
        described in subparagraph (A) of that paragraph. Any remaining 
        assets shall then be allocated to benefits described in 
        subparagraph (B) of that paragraph. If assets allocated to such 
        subparagraph (B) are insufficient to satisfy in full the 
        benefits described in that subparagraph, the assets shall be 
        allocated pro rata among individuals on the basis of the 
        present value (as of the termination date) of their respective 
        benefits described in that subparagraph.''
    (c) Conforming Amendments.--
            (1) Section 4021 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1321) is amended--
                    (A) in subsection (b)(9), by striking ``as defined 
                in section 4022(b)(6)'', and
                    (B) by adding at the end the following:
    ``(d) For purposes of subsection (b)(9), the term `substantial 
owner' means an individual who, at any time during the 60-month period 
ending on the date the determination is being made--
            ``(1) owns the entire interest in an unincorporated trade 
        or business,
            ``(2) in the case of a partnership, is a partner who owns, 
        directly or indirectly, more than 10 percent of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(3) in the case of a corporation, owns, directly or 
        indirectly, more than 10 percent in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).''
            (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
        is amended by striking ``section 4022(b)(6)'' and inserting 
        ``section 4021(d)''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan 
        terminations--
                    (A) under section 4041(c) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1341(c)) with respect to which notices of intent to 
                terminate are provided under section 4041(a)(2) of such 
                Act (29 U.S.C. 1341(a)(2)) on or after the date of 
                enactment of this Act, or
                    (B) under section 4042 of such Act (29 U.S.C. 1342) 
                with respect to which proceedings are instituted by the 
                corporation on or after such date.
            (2) Conforming amendments.--The amendments made by 
        subsection (c) shall take effect on the date of enactment of 
        this Act.

SEC. 511. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND 
              DEDUCTION.

    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:
                            ``(iii) is, at the election of such 
                        participants or their beneficiaries--
                                    ``(I) payable as provided in clause 
                                (i) or (ii), or
                                    ``(II) paid to the plan and 
                                reinvested in qualifying employer 
                                securities, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 512. MODIFICATION OF 403(B) EXCLUSION ALLOWANCE TO CONFORM TO 415 
              MODIFICATION.

    The Secretary of the Treasury shall modify the regulations 
regarding the exclusion allowance under section 403(b)(2) of the 
Internal Revenue Code of 1986 to render void the requirement that 
contributions to a defined benefit pension plan be treated as 
previously excluded amounts for purposes of the exclusion allowance. 
For taxable years beginning after December 31, 1999, such regulations 
shall be applied as if such requirement were void.

SEC. 513. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--Paragraph (11) of section 415(b) (relating 
to limitation for defined benefit plans) is amended to read as follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''
    (b) Exemption for Survivor and Disability Benefits.--Subparagraph 
(I) of section 415(b)(2) (relating to limitation for defined benefit 
plans) is amended--
            (1) by inserting ``or a multiemployer plan (as defined in 
        section 414(f))'' after ``section 414(d))'' in clause (i),
            (2) by inserting ``or multiemployer plan'' after 
        ``governmental plan'' in clause (ii), and
            (3) by inserting ``and multiemployer'' after 
        ``governmental'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 514. ELIMINATION OF PARTIAL TERMINATION RULES FOR MULTIEMPLOYER 
              PLANS.

    (a) Partial Termination Rules for Multiemployer Plans.--Section 
411(d)(3) (relating to termination or partial termination; 
discontinuance of contributions) is amended by adding at the end the 
following new sentence: ``This paragraph shall not apply in the case of 
a partial termination of a multiemployer plan.''
    (b) Effective Date.--The amendment made by this section shall apply 
to partial terminations beginning after December 31, 1998.

SEC. 515. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) In general.--Subparagraph (A) of section 417(a)(6) is 
        amended by striking ``90-day'' and inserting ``one-year''.
            (2) Modification of regulations.--The Secretary of the 
        Treasury shall modify the regulations under sections 402(f), 
        411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
        substitute ``one year'' for ``90 days'' each place it appears 
        in Treasury Regulations sections 1.402(f)-1 Q/A-2, 1.411(a)-
        11T(c)(2), and 1.417(e)-1T(b)(3).
            (3) Effective date.--The amendment made by paragraph (1) 
        and the modifications required by paragraph (2) shall apply to 
        years beginning after December 31, 1998.
    (b) Consent Regulation Inapplicable to Certain Distributions.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 411(a)(11) of the Internal 
        Revenue Code of 1986 to provide that the description of a 
        participant's right, if any, to defer receipt of a distribution 
        shall also describe the consequences of failing to defer such 
        receipt.
            (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        1998.

SEC. 516. CONFORMING AMENDMENTS RELATING TO ELECTION TO RECEIVE TAXABLE 
              CASH COMPENSATION IN LIEU OF NONTAXABLE PARKING BENEFITS.

    (a) In General.--
            (1) Clause (ii) of section 415(c)(3)(D) and subparagraph 
        (B) of section 403(b)(3) are each amended by striking ``section 
        125 or'' and inserting ``section 125, 132(f)(4), or''.
            (2) Paragraph (2) of section 414(s) is amended by striking 
        ``section 125, 402(e)(3)'' and inserting ``section 125, 
        132(f)(4), 402(e)(3)''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the amendment made by section 1072 of the 
Taxpayer Relief Act of 1997.

SEC. 517. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

    (a) In General.--Subparagraph (g) of section 401(a)(5), 
subparagraph (h) of section 401(a)(26), subparagraph (G) of section 
401(k)(3), and paragraph (2) of section 1505(d) of the Taxpayer Relief 
Act of 1997 are each amended by inserting ``or by an international 
organization which is described in section 414(d)'' after ``or 
instrumentality thereof)''.
    (b) Conforming Amendments.--
            (1) The headings for subparagraph (G) of section 401(a)(5) 
        and subparagraph (H) of section 401(a)(26) are each amended by 
        inserting ``and international organization'' after 
        ``governmental''.
            (2) Subparagraph (G) of section 401(k)(3) is amended by 
        inserting ``State and local governmental and international 
        organization plans.--'' after ``(G)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendment made by section 1505 of the 
Taxpayer Relief Act of 1997.

SEC. 518. EMPLOYEES OF TAX-EXEMPT ENTITIES.

    (a) In General.--The Secretary of the Treasury shall modify 
Treasury Regulations section 1.410(b)-6(g) to provide that employees of 
an organization described in section 403(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 who are eligible to make contributions under 
section 403(b) pursuant to a salary reduction agreement may be treated 
as excludable with respect to a plan under section 401(k), or section 
401(m) of such Code that is provided under the same general arrangement 
as a plan under such section 401(k), if--
            (1) no employee of an organization described in section 
        403(b)(1)(A)(i) of such Code is eligible to participate in such 
        section 401(k) plan or section 401(m) plan, and
            (2) 95 percent of the employees who are not employees of an 
        organization described in section 403(b)(1)(A)(i) of such Code 
        are eligible to participate in such section 401(k) plan or 
        section 401(m) plan.
    (b) Effective Date.--The modification required by subsection (a) 
shall apply as of the same date set forth in section 1426(b) of the 
Small Business Job Protection Act of 1996.

SEC. 519. PERMISSIVE AGGREGATION OF COLLECTIVE BARGAINING UNITS.

    (a) In General.--Paragraph (3) of section 410(b) is amended by 
inserting the following immediately before the last sentence thereof: 
``Solely for purposes of applying this subsection to employees who are 
not described in subparagraph (A), an employer may elect to have 
subparagraph (A) not apply to one or more units of employees who are 
described in subparagraph (A).''
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1998.

SEC. 520. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.

    (a) In General.--Paragraph (4) of section 1114(c)(4) of the Tax 
Reform Act of 1986 is hereby repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to plan years beginning on or after January 1, 1999.

SEC. 521. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment--
            (1) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A), and
            (2) such plan shall not fail to meet the requirements of 
        section 411(d)(6) of the Internal Revenue Code of 1986 or 
        section 204(g) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1054(g)) by reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this Act, or 
                pursuant to any regulation issued under this Act, and
                    (B) before the last day of the first plan year 
                beginning on or after January 1, 2001.
        In the case of a government plan (as defined in section 414(d) 
        of the Internal Revenue Code of 1986 and section 3(32) of the 
        Employee Retirement Income Security Act of 1974), this 
        paragraph shall be applied by substituting ``2003'' for 
        ``2001''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect, and
                    (B) such plan or contract amendment applies 
                retroactively for such period.
                                 <all>