[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 883 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 883

  To amend the Internal Revenue Code of 1986 to encourage savings and 
 investment through individual retirement accounts, to provide pension 
   security, portability, and simplification, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 11, 1997

 Mr. Gregg (for himself, Mr. Roth, Mr. Faircloth, Mrs. Hutchison, Mr. 
  Murkowski, Mr. Santorum, and Ms. Collins) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to encourage savings and 
 investment through individual retirement accounts, to provide pension 
   security, portability, and simplification, 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; TABLE OF CONTENTS; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Retirement Income, 
Security, and Savings Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents; amendment of 1986 Code.
                 TITLE I--RETIREMENT SAVINGS INCENTIVES

                Subtitle A--Restoration of IRA Deduction

Sec. 101. Restoration of IRA deduction.
Sec. 102. Inflation adjustment for deductible amount.
                Subtitle B--Nondeductible Tax-Free IRAs

Sec. 111. Establishment of nondeductible tax-free individual retirement 
                            accounts.
                 TITLE II--WOMEN'S RETIREMENT SECURITY

Sec. 201. Individual's eligibility for deductible IRA not determined by 
                            reference to spouse's participation in 
                            pension plan.
Sec. 202. Individuals may make contributions for periods of maternity 
                            or paternity leave.
Sec. 203. Catchup contributions for families with children.
      TITLE III--EXPANSION OF PENSION COVERAGE FOR SMALL BUSINESS

Sec. 301. SAFE annuities and trusts.
Sec. 302. Matching contributions of self-employed individuals not 
                            treated as elective deferrals.
Sec. 303. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 304. Contributions to individual retirement plans through payroll 
                            deductions.
                         TITLE IV--PORTABILITY

Sec. 401. Allowance of rollovers with respect to section 457 plans.
Sec. 402. Allowance of rollovers from 403(b) plans to eligible 
                            retirement plans.
Sec. 403. Protection of plans which accept rollover contributions from 
                            disqualification.
Sec. 404. Allowance of employers to disregard rollovers for purposes of 
                            cash-out amounts.
Sec. 405. Waiver of 60-day rollover period.
Sec. 406. Treatment of transfers between defined contribution plans.
                       TITLE V--PENSION SECURITY

             Subtitle A--Economically Targeted Investments

Sec. 501. Sense of Congress.
Sec. 502. Prohibitions on Department of Labor regarding economically 
                            targeted investments.
Sec. 503. Prohibition on establishing or maintaining any clearinghouse 
                            or other database relating to economically 
                            targeted investments.
Sec. 504. Termination of contracts.
Sec. 505. Effective date.
                      Subtitle B--Other Provisions

Sec. 511. Modification of prohibition of assignment or alienation.
Sec. 512. Increase in current liability funding limit.
Sec. 513. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
             TITLE VI--SIMPLIFICATION OF PLAN REQUIREMENTS

Sec. 601. New technologies in retirement plans.
Sec. 602. Modifications to nondiscrimination and minimum participation 
                            rules with respect to governmental plans.
Sec. 603. Elimination of requirement for plan descriptions and the 
                            filing requirement for summary plan 
                            descriptions and descriptions of material 
                            modifications to a plan; technical 
                            corrections.
Sec. 604. Modification of 403(b) exclusion allowance to conform to 415 
                            modifications.
Sec. 605. Modification of 10 percent tax for nondeductible 
                            contributions.
            TITLE VII--DATE FOR ADOPTION OF PLAN AMENDMENTS

Sec. 701. Date for adoption of plan amendments.
    (c) 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.

                 TITLE I--RETIREMENT SAVINGS INCENTIVES

                Subtitle A--Restoration of IRA Deduction

SEC. 101. RESTORATION OF IRA DEDUCTION.

    (a) Increase in Income Limits Applicable To Active Participants.--
Section 219(g)(3)(B) (relating to applicable dollar amount) is amended 
to read as follows:
                    ``(B) Applicable dollar amount.--The term 
                `applicable dollar amount' means the following:
                            ``(i) In the case of a taxpayer filing a 
                        joint return:

                                                         The applicable
``For taxable years beginning in:                     dollar amount is:
    1997..........................................             $65,000 
    1998..........................................             $90,000 
    1999..........................................            $115,000 
    2000..........................................            $140,000.
                            ``(ii) In the case of any other taxpayer 
                        (other than a married individual filing a 
                        separate return):

                                                         The applicable
``For taxable years beginning in:                     dollar amount is:
    1997..........................................             $50,000 
    1998..........................................             $75,000 
    1999..........................................            $100,000 
    2000..........................................            $125,000.
                            ``(iii) In the case of a married individual 
                        filing a separate return, zero.''.
    (b) Repeal of Restrictions on Active Participants.--
            (1) In general.--Section 219 (relating to deduction for 
        retirement savings), as amended by section 102, is amended by 
        striking subsection (g) and by redesignating subsections (h) 
        and (i) as subsection (g) and (h), respectively.
            (2) Conforming amendments.--
                    (A) Section 219(f) is amended by striking paragraph 
                (7).
                    (B) Section 408(d)(5) is amended by striking the 
                last sentence.
                    (C) Section 408(o) is amended by adding at the end 
                the following:
            ``(5) Termination.--This subsection shall not apply to any 
        designated nondeductible contribution for any taxable year 
        beginning after December 31, 2000.''.
                    (D) Sections 408A(c)(2)(A) and 4973(b)(2)(B)(ii), 
                as added by section 111, are each amended by striking 
                ``(computed without regard to subsection (g) of such 
                section)''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to taxable years beginning after December 31, 1996.
            (2) Termination.--The amendments made by subsection (b) 
        shall apply to taxable years beginning after December 31, 2000.

SEC. 102. INFLATION ADJUSTMENT FOR DEDUCTIBLE AMOUNT.

    (a) In General.--Section 219 is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) the 
following:
    ``(h) Cost-of-Living Adjustments.--In the case of any taxable year 
beginning in a calendar year after 1997, the $2,000 amount under 
subsection (b)(1)(A) shall be increased by an amount equal to the 
product of $2,000 and the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which the taxable year begins, 
except that subparagraph (B) thereof shall be applied by substituting 
`1996' for `1992'. If the amount to which $2,000 would be increased 
under the preceding sentence is not a multiple of $500, such amount 
shall be rounded to the next lower multiple of $500.''.
    (b) Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the amount in effect for such 
        taxable year under section 219(b)(1)(A)''.
            (2) Section 408(b) is amended by striking ``$2,000'' both 
        places it appears and inserting ``the dollar amount in effect 
        under section 219(b)(1)(A)''.
            (3) Section 408(j) is amended by striking ``$2,000''.

                Subtitle B--Nondeductible Tax-Free IRAs

SEC. 111. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT 
              ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to pension, profit-sharing, stock bonus plans, etc.) is 
amended by inserting after section 408 the following:

``SEC. 408A. IRA PLUS ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, an IRA 
Plus account shall be treated for purposes of this title in the same 
manner as an individual retirement plan.
    ``(b) IRA Plus Account.--For purposes of this title, the term `IRA 
Plus account' means an individual retirement plan (as defined in 
section 7701(a)(37)) which is designated (in such manner as the 
Secretary may prescribe) at the time of establishment of the plan as an 
IRA Plus account.
    ``(c) Treatment of Contributions.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to an IRA Plus account.
            ``(2) Contribution limit.--The aggregate amount of 
        contributions for any taxable year to all IRA Plus accounts 
        maintained for the benefit of an individual shall not exceed 
        the excess (if any) of--
                    ``(A) the maximum amount allowable as a deduction 
                under section 219 with respect to such individual for 
                such taxable year (computed without regard to 
                subsection (g) of such section), over
                    ``(B) the amount so allowed.
            ``(3) Contributions permitted after age 70\1/2\.--
        Contributions to an IRA Plus account may be made even after the 
        individual for whom the account is maintained has attained age 
        70\1/2\.
            ``(4) Mandatory distribution rules not to apply, etc.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), subsections (a)(6) and (b)(3) of 
                section 408 (relating to required distributions) and 
                section 4974 (relating to excise tax on certain 
                accumulations in qualified retirement plans) shall not 
                apply to any IRA Plus account.
                    ``(B) Post-death distributions.--Rules similar to 
                the rules of section 401(a)(9) (other than subparagraph 
                (A) thereof) shall apply for purposes of this section.
            ``(5) Rollover contributions.--
                    ``(A) In general.--No rollover contribution may be 
                made to an IRA Plus account unless it is a qualified 
                rollover contribution.
                    ``(B) Coordination with limit.--A qualified 
                rollover contribution shall not be taken into account 
                for purposes of paragraph (2).
            ``(6) Time when contributions made.--For purposes of this 
        section, the rule of section 219(f)(3) shall apply.
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) General rules.--
                    ``(A) Exclusions from gross income.--Any qualified 
                distribution from an IRA Plus account shall not be 
                includible in gross income.
                    ``(B) Nonqualified distributions.--In applying 
                section 72 to any distribution from an IRA Plus account 
                which is not a qualified distribution, such 
                distribution shall be treated as made from 
                contributions to the IRA Plus account to the extent 
                that such distribution, when added to all previous 
                distributions from the IRA Plus account, does not 
                exceed the aggregate amount of contributions to the IRA 
                Plus account. For purposes of the preceding sentence, 
                all IRA Plus accounts maintained for the benefit of an 
                individual shall be treated as 1 account.
                    ``(C) Exception from penalty tax.--Section 72(t) 
                shall not apply to any qualified distribution from an 
                IRA Plus account.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' means any payment or distribution--
                            ``(i) made on or after the date on which 
                        the individual attains age 59\1/2\,
                            ``(ii) made to a beneficiary (or to the 
                        estate of the individual) on or after the death 
                        of the individual,
                            ``(iii) attributable to the individual's 
                        being disabled (within the meaning of section 
                        72(m)(7)), or
                            ``(iv) which is a qualified special purpose 
                        distribution.
                    ``(B) Certain distributions within 5 years.--A 
                payment or distribution shall not be treated as a 
                qualified distribution under clause (i) of subparagraph 
                (A) if--
                            ``(i) it is made within the 5-taxable year 
                        period beginning with the 1st taxable year for 
                        which the individual made a contribution to an 
                        IRA Plus account (or such individual's spouse 
                        made a contribution to an IRA Plus account) 
                        established for such individual, or
                            ``(ii) in the case of a payment or 
                        distribution properly allocable (as determined 
                        in the manner prescribed by the Secretary) to a 
                        qualified rollover contribution (or income 
                        allocable thereto), it is made within the 5-
                        taxable year period beginning with the taxable 
                        year in which the rollover contribution was 
                        made.
                Clause (ii) shall not apply to a qualified rollover 
                contribution from an IRA plus account.
            ``(3) Rollovers.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any distribution which is transferred in a qualified 
                rollover contribution to an IRA Plus account.
                    ``(B) Income inclusion for rollovers from non-plus 
                iras.--In the case of any qualified rollover 
                contribution from an individual retirement plan (other 
                than an IRA Plus account) to an IRA Plus account 
                established for the benefit of the payee or 
                distributee, as the case may be--
                            ``(i) sections 72(t) and 408(d)(3) shall 
                        not apply, and
                            ``(ii) in any case where such contribution 
                        is made before January 1, 1999, any amount 
                        required to be included in gross income by 
                        reason of this paragraph shall be so included 
                        ratably over the 4-taxable year period 
                        beginning with the taxable year in which the 
                        payment or distribution is made.
                    ``(C) Additional reporting requirements.--The 
                Secretary shall require that trustees of IRA Plus 
                accounts, trustees of individual retirement plans, or 
                both, whichever is appropriate, shall include such 
                additional information in reports required under 
                section 408(i) as is necessary to ensure that amounts 
                required to be included in gross income under 
                subparagraph (B) are so included.
            ``(4) Qualified special purpose distribution.--For purposes 
        of this section, the term `qualified special purpose 
        distribution' means any distribution to which subparagraph (B), 
        (D), or (E) of section 72(t)(2) applies.
    ``(e) Qualified Rollover Contribution.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rollover 
        contribution' means a rollover contribution to an IRA Plus 
        account from another such account, or from an individual 
        retirement plan, but only if such rollover contribution meets 
        the requirements of section 408(d)(3). For purposes of section 
        408(d)(3)(B), there shall be disregarded any qualified rollover 
        contribution from an individual retirement plan to an IRA Plus 
        account.
            ``(2) Conversions.--The conversion of an individual 
        retirement plan to an IRA Plus account shall be treated as if 
        it were a qualified rollover contribution.''.
    (b) Excess Distributions Tax Not To Apply.--
            (1) Section 4980A(d)(3)(A) (defining excess retirement 
        accumulation) is amended by inserting ``(other than IRA Plus 
        accounts described in section 408A(b))'' after ``retirement 
        plans''.
            (2) Section 4980A(e)(1) (relating to retirement 
        distributions) is amended by adding at the end the following 
        flush sentence:
        ``Such term shall not include any amount distributed from an 
        IRA Plus account or any qualified rollover contribution (as 
        defined in section 408A(e)) from an individual retirement plan 
        to an IRA Plus account.''.
    (c) Excess Contributions.--Section 4973(b) (defining excess 
contributions) is amended to read as follows:
    ``(b) Excess Contributions.--For purposes of this section--
            ``(1) In general.--In the case of individual retirement 
        accounts or individual retirement annuities, the term `excess 
        contributions' means the sum of--
                    ``(A) the amount determined under paragraph (2) for 
                the taxable year, plus
                    ``(B) the carryover amount determined under 
                paragraph (3) for the taxable year.
            ``(2) Current year.--The amount determined under this 
        paragraph for any taxable year is an amount equal to the sum 
        of--
                    ``(A) the excess (if any) of--
                            ``(i) the amount contributed for the 
                        taxable year to the accounts or for the 
                        annuities or bonds (other than IRA Plus 
                        accounts), over
                            ``(ii) the amount allowable as a deduction 
                        under section 219 for the taxable year, plus
                    ``(B) the excess (if any) of--
                            ``(i) the amount described in clause (i) 
                        (taking into account contributions to IRA Plus 
                        accounts) contributed for the taxable year, 
                        over
                            ``(ii) the amount allowable as a deduction 
                        under section 219 for the taxable year 
                        (computed without regard to subsection (g) of 
                        such section).
            ``(3) Carryover amount.--The carryover amount determined 
        under this paragraph for any taxable year is the amount 
        determined under paragraph (2) for the preceding taxable year, 
        reduced by the sum of--
                    ``(A) the distributions out of the account for the 
                taxable year which were included in the gross income of 
                the payee under section 408(d)(1),
                    ``(B) the distributions out of the account for the 
                taxable year to which section 408(d)(5) applies, and
                    ``(C) the excess (if any) of the amount determined 
                under paragraph (2)(B)(ii) over the amount determined 
                under paragraph (2)(B)(i).
            ``(4) Special rules.--For purposes of this subsection--
                    ``(A) Rollover contributions.--Rollover 
                distributions described in sections 402(c), 403(a)(4), 
                403(b)(8), 408(d)(3), and 408A(e) shall not be taken 
                into account.
                    ``(B) Contributions returned before due date.--Any 
                contribution which is distributed from an individual 
                retirement plan in a distribution to which section 
                408(d)(4) applies shall not be taken into account.
                    ``(C) Excess contributions treated as 
                contributions.--In applying paragraph (3)(C), the 
                determination as to amounts contributed for a taxable 
                year shall be made without regard to section 
                219(f)(6).''.
    (d) Spousal IRA.--Section 219(c)(1)(B)(ii) (relating to special 
rules for certain married individuals) is amended to read as follows:
                            ``(ii) the compensation includible in the 
                        gross income of such individual's spouse for 
                        the taxable year reduced by--
                                    ``(I) the amount allowed as a 
                                deduction under subsection (a) to such 
                                spouse for such taxable year, and
                                    ``(II) the amount of any 
                                contribution on behalf of such spouse 
                                to an IRA Plus account under section 
                                408A for such taxable year.''.
    (e) Conforming Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 is amended by inserting after the 
item relating to section 408 the following:

                              ``Sec. 408A. IRA Plus accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

                 TITLE II--WOMEN'S RETIREMENT SECURITY

SEC. 201. INDIVIDUAL'S ELIGIBILITY FOR DEDUCTIBLE IRA NOT DETERMINED BY 
              REFERENCE TO SPOUSE'S PARTICIPATION IN PENSION PLAN.

    (a) In General.--Section 219(g)(1) (relating to limitation on 
deduction for active participants in certain pension plans) is amended 
by striking ``or the individual's spouse''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1996.

SEC. 202. INDIVIDUALS MAY MAKE CONTRIBUTIONS FOR PERIODS OF MATERNITY 
              OR PATERNITY LEAVE.

    (a) In General.--Section 414 (relating to definitions and special 
rules) is amended by adding at the end the following:
    ``(v) Right To Make Contributions With Respect to Periods of 
Maternity and Paternity Leave.--
            ``(1) In general.--For purposes of this title--
                    ``(A) a trust which forms part of a plan shall not 
                constitute a qualified trust under section 401(a),
                    ``(B) a plan shall not be treated as described in 
                section 403(b),
                    ``(C) a plan shall not be treated as an eligible 
                deferred compensation plan under section 457, and
                    ``(D) an arrangement shall not be treated as 
                meeting the requirements of section 408 (k) or (p),
        unless such plan or arrangement which provides for the making 
        of elective deferrals permits participants who were on eligible 
        maternity or paternity leave to make additional elective 
        deferrals under the plan or arrangement with respect to periods 
        of such leave.
            ``(2) Treatment of contributions.--
                    ``(A) In general.--In the case of any contribution 
                to a plan under paragraph (1) (and any employer 
                matching contribution with respect thereto)--
                            ``(i) such contribution shall not, with 
                        respect to the year in which the contribution 
                        is made--
                                    ``(I) be subject to any otherwise 
                                applicable limitation contained in 
                                section 402(g), 402(h), 403(b), 404(a), 
                                404(h), 408, 415, or 457, or
                                    ``(II) be taken into account in 
                                applying such limitations to other 
                                contributions or benefits under such 
                                plan or any other such plan,
                            ``(ii) such contribution shall be subject 
                        to the limitations referred to in clause (i) 
                        with respect to the year to which the 
                        contribution relates (in accordance with rules 
                        prescribed by the Secretary), and
                            ``(iii) except as provided in subparagraph 
                        (B)(i), such plan shall not be treated as 
                        failing to meet the requirements of section 
                        401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 
                        401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
                        410(b), or 416 by reason of the making of (or 
                        the right to make) such contribution.
                    ``(B) Matching contributions.--Nothing in 
                subparagraph (A) shall require an employer to make any 
                matching contribution with respect to any additional 
                elective deferrals under paragraph (1), but if the 
                employer elects to make any such matching 
                contribution--
                            ``(i) the requirements of section 401(a)(4) 
                        shall be applied separately to all such 
                        matching contributions made during a year, and
                            ``(ii) the amount of any such matching 
                        contribution may not exceed the maximum amount 
                        which would have been required had such 
                        deferral actually been made during the period 
                        of eligible maternity and paternity leave.
            ``(3) Amount and timing of elective deferrals.--A plan 
        shall not be treated as meeting the requirements of paragraph 
        (1) unless the plan provides the following:
                    ``(A) Amount.--The amount of any elective deferral 
                under paragraph (1) which any employee is permitted to 
                make with respect to any period of eligible maternity 
                and paternity leave shall not exceed the maximum amount 
                of the elective deferrals that the employee would have 
                been permitted to make during such period in accordance 
                with the limitations referred to in paragraph (2)(A)(i) 
                if the individual--
                            ``(i) had not been on eligible maternity 
                        and paternity leave during such period, and
                            ``(ii) had received compensation in an 
                        amount determined under rules similar to the 
                        rules under subsection (u)(7).
                Proper adjustment shall be made to the amount 
                determined under the preceding sentence for any 
                elective deferrals actually made during such period.
                    ``(B) Timing.--An employee may make an elective 
                deferral to which paragraph (1) applies at any time 
                during the 3-year period beginning on the date on which 
                the eligible maternity or paternity leave ends. Any 
                matching contribution with respect to any such elective 
                deferral shall be made not later than the due date 
                (including extensions) for the filing of the employer's 
                return for the taxable year in which such elective 
                deferral is made.
            ``(4) Eligible maternity and paternity leave.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `eligible maternity or 
                paternity leave' means any absence of an individual 
                from work for any period--
                            ``(i) by reason of the pregnancy of the 
                        individual,
                            ``(ii) by reason of the birth of a child of 
                        the individual,
                            ``(iii) by reason of the placement of a 
                        child with the individual in connection with 
                        the adoption of the child by the individual, or
                            ``(iv) for purposes of caring for such 
                        child for a period beginning immediately 
                        following such birth or placement.
                    ``(B) Limitation.--Such period may not exceed 12 
                months with respect to any child.
            ``(5) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C). Such term shall also include any after-tax 
                employee contributions described in subsection 
                (u)(2)(D).
                    ``(B) Plan.--The term `plan' includes any 
                arrangement under section 408 (k) or (p).
                    ``(C) Certain retroactive adjustments not 
                required.--For purposes of this subchapter and 
                subchapter E, the rules of subsection (u)(3) shall 
                apply.
                    ``(D) Loan repayment suspensions permitted.--In the 
                case of any plan or arrangement to which paragraph (1) 
                applies, the rules of subsection (u)(4) shall apply to 
                any loan repayment suspension during any period of 
                eligible maternity and paternity leave.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to periods of eligible maternity and paternity leave beginning after 
December 31, 1997.

SEC. 203. CATCHUP CONTRIBUTIONS FOR FAMILIES WITH CHILDREN.

    (a) In General.--Section 414 (relating to definitions and special 
rules), as amended by section 202, is amended by adding at the end the 
following:
    ``(w) Catchup Contributions for Families With Children Not Covered 
by a Pension Plan.--
            ``(1) In general.--For purposes of this title--
                    ``(A) a trust which forms part of a plan shall not 
                constitute a qualified trust under section 401(a),
                    ``(B) a plan shall not be treated as described in 
                section 403(b),
                    ``(C) a plan shall not be treated as an eligible 
                deferred compensation plan under section 457, and
                    ``(D) an arrangement shall not be treated as 
                meeting requirements of section 408 (k) or (p),
        unless such plan or arrangement which provides for the making 
        of elective deferrals permits eligible catchup participants to 
        make additional elective deferrals under the plan or 
        arrangement in accordance with paragraph (2).
            ``(2) Catchup contributions.--
                    ``(A) In general.--A plan shall permit an eligible 
                catchup participant to make the additional elective 
                deferrals under paragraph (1) in any year which is 
                certified as a catchup year by the participant under 
                subparagraph (E).
                    ``(B) Limitation on amount of additional 
                deferrals.--A plan shall not permit additional elective 
                deferrals under paragraph (1) for any year in an amount 
                greater than the lesser of--
                            ``(i) the amount of the elective deferrals 
                        the participant may otherwise make under the 
                        plan for such year (determined without regard 
                        to this subsection, subsection (u), or any 
                        limitation described in subparagraph (C)(i)), 
                        or
                            ``(ii) the excess (if any) of--
                                    ``(I) 120 percent of the dollar 
                                limitation in effect under section 
                                402(g), 408(p), or 457(b)(2)(A), 
                                whichever is applicable, for taxable 
                                years beginning in the calendar year in 
                                which the plan year begins, over
                                    ``(II) any other elective deferrals 
                                of the participant for such year which 
                                are made without regard to this 
                                subsection.
                    ``(C) Treatment of contributions.--In the case of 
                any contribution to a plan under paragraph (1) (and any 
                employer matching contribution with respect thereto)--
                            ``(i) such contribution shall not, with 
                        respect to the year in which the contribution 
                        is made--
                                    ``(I) be subject to any otherwise 
                                applicable limitation contained in 
                                section 402(g), 402(h), 403(b), 404(a), 
                                404(h), 408, 415, or 457, or
                                    ``(II) be taken into account in 
                                applying such limitations to other 
                                contributions or benefits under such 
                                plan or any other such plan, and
                            ``(ii) except as provided in subparagraph 
                        (D)(i), such plan shall not be treated as 
                        failing to meet the requirements of section 
                        401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 
                        401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
                        410(b), or 416 by reason of the making of (or 
                        the right to make) such contribution.
                    ``(D) Matching contributions.--Nothing in 
                subparagraph (A) shall require an employer to make any 
                matching contribution with respect to any additional 
                elective deferrals under paragraph (1) for any year, 
but if the employer elects to make any such matching contribution--
                            ``(i) the requirements of section 401(a)(4) 
                        shall be applied separately to all such 
                        matching contributions made during a year, and
                            ``(ii) the amount of any such matching 
                        contribution may not exceed the maximum amount 
                        which would have been required under the terms 
                        of the plan in effect for elective deferrals 
                        made for such year without regard to this 
                        subsection.
                    ``(E) Certification of catchup years.--
                            ``(i) In general.--A participant making 
                        additional elective deferrals under paragraph 
                        (1) for any year shall certify to the plan 
                        administrator that--
                                    ``(I) the participant is an 
                                eligible catchup participant, and
                                    ``(II) the year is a catchup year.
                            ``(ii) Catchup year.--An eligible catchup 
                        participant may certify 1 or more years as 
                        catchup years, except that the total number of 
                        years which may be certified shall not exceed 
                        the excess (if any) of--
                                    ``(I) the number of years (not in 
                                excess of 18) described in paragraph 
                                (3) occurring before the year in 
                                question, over
                                    ``(II) the number of years 
                                previously certified by the participant 
                                under this subsection.
                            ``(iii) Plans not responsible for 
                        certification failures.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        this subsection by reason of reliance on an 
                        incorrect certification under this subparagraph 
                        unless the plan administrator knew, or 
                        reasonably should have known, that the 
                        certification was incorrect.
            ``(3) Eligible catchup participant.--For purposes of this 
        subsection, the term `eligible catchup participant' means, with 
        respect to any year, a participant in a plan who, for any 
        calendar year before the calendar year in which the year 
        begins--
                    ``(A) was not an active participant (within the 
                meaning of section 219(g)(5), as in effect on the 
                effective date of this subsection) for any plan year 
                beginning in the calendar year, and
                    ``(B) had a child or stepchild who had not attained 
                age 18 with respect to whom a deduction was allowed 
                under section 151 to the participant (or the 
                participant's spouse) for a taxable year beginning in 
                the calendar year.
            ``(4) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C). Such term shall also include after-tax 
                employee contributions described in subsection 
                (u)(2)(D).
                    ``(B) Plan.--The term `plan' includes any 
                arrangement under section 408 (k) or (p).
                    ``(C) Certain retroactive adjustments not 
                required.--For purposes of this subchapter and 
                subchapter E, the rules of subsection (u)(3) shall 
                apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 1997.

      TITLE III--EXPANSION OF PENSION COVERAGE FOR SMALL BUSINESS

SEC. 301. SAFE ANNUITIES AND TRUSTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to deferred compensation, etc.), as amended by section 
111(a), is amended by inserting after section 408 the following:

``SEC. 408B. SAFE ANNUITIES AND TRUSTS.

    ``(a) Employer Eligibility.--
            ``(1) In general.--An employer may establish and maintain a 
        SAFE annuity or a SAFE trust for any year only if--
                    ``(A) the employer is an eligible employer (as 
                defined in section 408(p)(2)(C)), and
                    ``(B) the employer does not maintain (and no 
                predecessor of the employer maintains) a qualified plan 
                (other than a permissible plan) with respect to which 
                contributions were made, or benefits were accrued, for 
                service in any year in the period beginning with the 
                year such annuity or trust became effective and ending 
                with the year for which the determination is being 
                made.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Qualified plan.--The term `qualified plan' 
                has the meaning given such term by section 
                408(p)(2)(D)(ii).
                    ``(B) Permissible plan.--The term `permissible 
                plan' means--
                            ``(i) a plan under which only elective 
                        deferrals described in section 402(g)(3), 
                        deferred compensation described in section 457, 
                        or employer matching contributions may be made, 
                        and
                            ``(ii) any collectively bargained plan.
    ``(b) SAFE Annuity.--
            ``(1) In general.--For purposes of this title, the term 
        `SAFE annuity' means an individual retirement annuity (as 
        defined in section 408(b) without regard to paragraph (2) 
        thereof and without regard to the limitation on aggregate 
        annual premiums contained in the flush language of section 
        408(b)) if--
                    ``(A) such annuity meets the requirements of 
                paragraphs (2) through (6), and
                    ``(B) the only contributions to such annuity are 
                employer contributions.
        Nothing in this section shall be construed as preventing an 
        employer from using a group annuity contract which is divisible 
        into individual retirement annuities for purposes of providing 
        SAFE annuities.
            ``(2) Participation requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any year only if all employees of 
                the employer who--
                            ``(i) received at least $5,000 in 
                        compensation from the employer during any 2 
                        consecutive preceding years, and
                            ``(ii) received at least $5,000 in 
                        compensation during the year,
                are entitled to the benefit described in paragraph (5) 
                for such year.
                    ``(B) Excludable employees.--An employer may elect 
                to exclude from the requirements under subparagraph (A) 
                employees described in section 410(b)(3).
            ``(3) Vesting.--The requirements of this paragraph are met 
        if the employee's rights to any benefits are nonforfeitable.
            ``(4) Benefit form.--The requirements of this paragraph are 
        met if the only form of benefit is--
                    ``(A) a benefit payable annually in the form of a 
                single life annuity with monthly payments (with no 
                ancillary benefits) beginning at age 65, or
                    ``(B) any other form of benefit which is the 
                actuarial equivalent (based on the assumptions 
                specified in the SAFE annuity) of the benefit described 
                in subparagraph (A).
            ``(5) Amount of annual accrued benefit.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any plan year if the accrued 
                benefit of each participant derived from employer 
                contributions for such year, when expressed as a 
                benefit described in paragraph (4)(A), equals the 
                applicable percentage of the participant's compensation 
                for such year.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `applicable 
                        percentage' means 3 percent.
                            ``(ii) Election of lower percentage.--An 
                        employer may elect to apply an applicable 
                        percentage of 1 percent, 2 percent or zero 
                        percent for any year for all employees eligible 
                        to participate in the plan for such year if the 
                        employer notifies the employees of such 
                        percentage within a reasonable period before 
                        the beginning of such year.
                    ``(C) Compensation limit.--The compensation taken 
                into account under this paragraph for any year shall 
                not exceed the limitation in effect for such year under 
                section 401(a)(17).
                    ``(D) Credit for service before plan adopted.--
                            ``(i) In general.--An employer may elect to 
                        take into account a specified number of years 
                        of service (not greater than 10) performed 
                        before the adoption of the plan (each 
                        hereinafter referred to as a `prior service 
                        year') as service under the plan if the same 
                        specified number of years is available to all 
                        employees eligible to participate in the plan 
                        for the first plan year.
                            ``(ii) Accrual of prior service benefit.--
                        Such an election shall be effective for a prior 
                        service year only if the requirements of this 
                        paragraph are met for an eligible plan year 
(with respect to employees entitled to credit for such prior service 
year) by doubling the applicable percentage (if any) for such plan 
year. For purposes of the preceding sentence, an eligible plan year is 
a plan year in the period of consecutive plan years (but not more than 
the number specified under clause (i)) beginning with the first plan 
year that the plan is in effect.
                            ``(iii) Election may not apply to certain 
                        prior service years.--This subparagraph shall 
                        not apply with respect to any prior service 
                        year of an employee if--
                                    ``(I) for any part of such prior 
                                service year such employee was an 
                                active participant (within the meaning 
                                of section 219(g)(5), as in effect on 
                                the effective date of this section) 
                                under any defined benefit plan of the 
                                employer (or any predecessor thereof), 
                                or
                                    ``(II) such employee received 
                                during such prior service year less 
                                than $5,000 in compensation from the 
                                employer.
            ``(6) Funding.--
                    ``(A) In general.--The requirements of this 
                paragraph are met only if the employer is required to 
                contribute to the annuity for each plan year the amount 
                necessary (determined in accordance with subparagraph 
                (B)) to fund the accrued benefit for each participant 
                entitled to such benefit for such year.
                    ``(B) Actuarial assumptions.--In determining the 
                amount required to be contributed under subparagraph 
                (A)--
                            ``(i) the assumed interest rate shall be 5 
                        percent per year,
                            ``(ii) the assumed mortality shall be 
                        determined under the applicable mortality table 
                        (as defined in section 417(e)(3), as modified 
                        by the Secretary so that it does not include 
                        any assumption for preretirement mortality),
                            ``(iii) the assumed retirement age shall be 
                        65, and
                            ``(iv) an assumption for reasonable 
                        expenses shall be permitted consistent with 
                        State law.
                    ``(C) Time when contributions deemed made.--For 
                purposes of this paragraph, an employer shall be deemed 
                to have made a contribution on the last day of the 
                preceding taxable year if the payment is on account of 
                such taxable year and is made not later than the time 
                prescribed by law for filing the return for such 
                taxable year (including extensions thereof).
                    ``(D) Penalty for failure to make required 
                contribution.--The taxes imposed by section 4971 shall 
                apply to a failure to make the contribution required by 
                this paragraph in the same manner as if the amount of 
                the failure were an accumulated funding deficiency to 
                which such section applies.
            ``(7) Definitions and special rule.--
                    ``(A) Definitions.--The definitions in section 
                408(p)(6) shall apply for purposes of this subsection.
                    ``(B) Use of designated financial institutions.--A 
                rule similar to the rule of section 408(p)(7) (without 
                regard to the last sentence thereof) shall apply for 
                purposes of this subsection.
    ``(c) SAFE Trust.--
            ``(1) In general.--For purposes of this title, the term 
        `SAFE trust' means a trust forming part of a defined benefit 
        plan if--
                    ``(A) such trust meets the requirements of section 
                401(a) as modified by subsection (d),
                    ``(B) a participant's benefits under the plan are 
                based solely on the balance of a separate account in 
                such plan of such participant,
                    ``(C) such plan meets the requirements of 
                paragraphs (2) through (8), and
                    ``(D) the only contributions to such trust are 
                employer contributions.
            ``(2) Participation requirements.--A plan meets the 
        requirements of this paragraph for any year only if the 
        requirements of subsection (b)(2) are met for such year.
            ``(3) Vesting.--A plan meets the requirements of this 
        paragraph for any year only if the requirements of subsection 
        (b)(3) are met for such year.
            ``(4) Benefit form.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a plan meets the requirements of this 
                paragraph only if the requirements of subsection (b)(4) 
                are met For purposes of this subparagraph, a plan may 
                satisfy the requirements of subsection (b)(4) by 
                purchasing an annuity contract which meets the 
                requirements of subsection (b)(4).
                    ``(B) Direct transfers to individual retirement 
                plan or safe annuity.--A plan shall not fail to meet 
                the requirements of this paragraph by reason of 
                permitting, at the election of the employee, a trustee-
                to-trustee transfer of the entire balance to the credit 
                of the employee to an individual retirement account 
                described in section 408(a), an individual retirement 
                annuity described in section 408(b) (other than an 
                endowment contract), or a SAFE annuity.
            ``(5) Amount of annual accrued benefit.--A plan meets the 
        requirements of this paragraph for any year only if the 
        requirements of subsection (b)(5) are met for such year.
            ``(6) Funding.--
                    ``(A) In general.--A plan meets the requirements of 
                this paragraph for any year only if--
                            ``(i) the requirements of subsection (b)(6) 
                        are met for such year, and
                            ``(ii) in the case of a plan which has an 
                        unfunded prior year liability as of the close 
                        of such plan year, the plan requires that the 
                        employer make an additional contribution to 
                        such plan for such year equal to the amount of 
                        such unfunded prior year liability.
                    ``(B) Unfunded prior year liability.--For purposes 
                of this paragraph, the term `unfunded prior year 
                liability' means, with respect to any plan year, the 
                excess (if any) of--
                            ``(i) the aggregate of the accrued 
                        liabilities under the plan as of the close of 
                        the prior plan year, over
                            ``(ii) the value of the plan's assets 
                        determined under section 412(c)(2) as of the 
                        close of the plan year (determined without 
                        regard to any contributions for such plan 
                        year).
                Such accrued liabilities shall be determined using the 
                assumptions specified in subsection (b)(6)(B).
                    ``(C) Changes in mortality table.--If the 
                applicable mortality table under section 417(e)(3) for 
                any plan year is not the same as such table for the 
                prior plan year, the Secretary shall prescribe 
                regulations which phase in the effect of the changes 
                over a reasonable period of plan years determined by 
                the Secretary.
                    ``(D) Disregard assumptions for expenses.--For 
                purposes of this paragraph, the assumption specified in 
                subsection (b)(6)(B)(iv) shall be disregarded.
            ``(7) Separate accounts for participants.--A plan meets the 
        requirements of this paragraph for any year only if the plan 
        provides--
                    ``(A) for an individual account for each 
                participant, and
                    ``(B) for benefits based solely on--
                            ``(i) the amount contributed to the 
                        participant's account, and
                            ``(ii) any income, expenses, gains and 
                        losses, and any forfeitures of accounts of 
                        other participants which may be allocated to 
                        such participant's account.
            ``(8) Trust may not hold securities which are not readily 
        tradable.--A plan meets the requirements of this paragraph only 
        if the plan prohibits the trust from holding directly or 
        indirectly securities which are not readily tradable on an 
        established securities market or otherwise. Nothing in this 
        paragraph shall prohibit the trust from holding insurance 
        company products regulated by State law.
            ``(9) Definitions and special rule.--The definitions and 
        special rule applicable under subsection (b)(7) shall apply for 
        purposes of this subsection.
    ``(d) Special Rules for SAFE Annuities and Trusts.--
            ``(1) Certain requirements treated as met.--For purposes of 
        section 401(a), a SAFE annuity and a SAFE trust shall be 
        treated as meeting the requirements of the following 
        provisions:
                    ``(A) Section 401(a)(4) (relating to 
                nondiscrimination rules).
                    ``(B) Section 401(a)(26) (relating to minimum 
                participation).
                    ``(C) Section 410 (relating to minimum 
                participation and coverage requirements).
                    ``(D) Section 411(b) (relating to accrued benefit 
                requirements).
                    ``(E) Paragraphs (6) and (7) of section 412(c) 
                (relating to full funding limitation).
                    ``(F) Section 415 (relating to limitations on 
                benefits and contributions under qualified plans).
                    ``(G) Section 416 (relating to special rules for 
                top-heavy plans).
            ``(2) Contributions not taken into account in applying 
        limits to other plans.--Contributions to a SAFE annuity or a 
        SAFE trust shall not be taken into account in applying sections 
        404 and 415 to other plans maintained by the employer.
            ``(3) Coordination with maximum limitation under subsection 
        (a).--In the case of any SAFE annuity or SAFE trust, 
        subsections (a)(1) and (b) of section 408 shall be applied by 
        substituting `the dollar amount in effect under section 
        408B(b)(5)(C)' for `the dollar amount in effect under section 
        219(b)(1)(A)'.''.
    (b) Deduction Limits Not To Apply to Employer Contributions.--
            (1) In general.--Section 404 (relating to deductions for 
        contributions of an employer to pension, etc., plans) is 
        amended by adding at the end the following:
    ``(n) Special Rules for SAFE Annuities and Trusts.--
            ``(1) In general.--Employer contributions to a SAFE annuity 
        or SAFE trust shall be treated as if they are made to a plan 
        subject to the requirements of this section.
            ``(2) Timing.--
                    ``(A) Deduction.--Contributions described in 
                paragraph (1) shall be deductible in the taxable year 
                of the employer with or within which the calendar year 
                for which the contributions were made ends.
                    ``(B) Contributions after end of year.--For 
                purposes of this subsection, contributions shall be 
                treated as made for a taxable year if they are made on 
                account of the taxable year and are made not later than 
                the time prescribed by law for filing the return for 
                the taxable year (including extensions thereof).''.
            (2) Coordination with deduction under section 219.--
                    (A) Section 219(b) (relating to maximum amount of 
                deduction) is amended by adding at the end the 
                following:
            ``(5) Special rule for safe annuities.--This section shall 
        not apply with respect to any amount contributed to a SAFE 
        annuity established under section 408B(b).''.
                    (B) Section 219(g)(5)(A) (defining active 
                participant) is amended by striking ``or'' at the end 
                of clause (v) and by adding at the end the following:
                            ``(vii) any SAFE annuity (within the 
                        meaning of section 408B), or''.
    (c) Contributions and Distributions.--
            (1) Section 402 (relating to taxability of beneficiary of 
        employees' trust) is amended by adding at the end the 
        following:
    ``(l) Treatment of SAFE Annuities.--Rules similar to the rules of 
paragraphs (1) and (3) of subsection (h) shall apply to contributions 
and distributions with respect to a SAFE annuities under section 
408B.''.
            (2) Section 408(d)(3) is amended by adding at the end the 
        following:
                    ``(H) SAFE annuities.--This paragraph shall not 
                apply to any amount paid or distributed out of a SAFE 
                annuity (as defined in section 408B) unless it is paid 
                in a trustee-to-trustee transfer into another SAFE 
                annuity.''.
    (d) Increased Penalty on Early Withdrawals.--Section 72(t) 
(relating to additional tax on early distributions) is amended by 
adding at the end the following:
            ``(7) Special rules for safe annuities and trusts.--In the 
        case of any amount received from a SAFE annuity or a SAFE trust 
        (within the meaning of section 408B), paragraph (1) shall be 
        applied by substituting `20 percent' for `10 percent'.''.
    (e) Simplified Employer Reports.--
            (1) SAFE annuities.--Section 408(l) (relating to simplified 
        employer reports) is amended by adding at the end the 
        following:
            ``(3) SAFE annuities.--
                    ``(A) Simplified report.--The employer maintaining 
                any SAFE annuity (within the meaning of section 408B) 
                shall file a simplified annual return with the 
                Secretary containing only the information described in 
                subparagraph (B).
                    ``(B) Contents.--The return required by 
                subparagraph (A) shall set forth--
                            ``(i) the name and address of the employer,
                            ``(ii) the date the plan was adopted,
                            ``(iii) the number of employees of the 
                        employer,
                            ``(iv) the number of such employees who are 
                        eligible to participate in the plan,
                            ``(v) the total amount contributed by the 
                        employer to each such annuity for such year and 
                        the minimum amount required under section 408B 
                        to be so contributed,
                            ``(vi) the percentage elected under section 
                        408B(b)(5)(B), and
                            ``(vii) the number of employees which 
                        respect to whom contributions are required to 
                        be made for such year under section 
                        408B(b)(5)(D).
                    ``(C) Reporting by issuer of safe annuity.--
                            ``(i) In general.--The issuer of each SAFE 
                        annuity shall provide to the owner of the 
                        annuity for each year a statement setting forth 
                        as of the close of such year--
                                    ``(I) the benefits guaranteed at 
                                age 65 under the annuity, and
                                    ``(II) the cash surrender value of 
                                the annuity.
                            ``(ii) Summary description.--The issuer of 
                        any SAFE annuity shall provide to the employer 
                        maintaining the annuity for each year a 
                        description containing the following 
                        information:
                                    ``(I) The name and address of the 
                                employer and the issuer.
                                    ``(II) The requirements for 
                                eligibility for participation.
                                    ``(III) The benefits provided with 
                                respect to the annuity.
                                    ``(IV) The procedures for, and 
                                effects of, withdrawals (including 
                                rollovers) from the annuity.
                    ``(D) Time and manner of reporting.--Any return, 
                report, or statement required under this paragraph 
                shall be made in such form and at such time as the 
                Secretary shall prescribe.''.
            (2) SAFE trusts.--Section 6059 (relating to actuarial 
        reports) is amended by redesignating subsections (c) and (d) as 
        subsections (d) and (e), respectively, and by inserting after 
        subsection (b) the following:
    ``(c) SAFE Trusts.--In the case of a SAFE Trust (within the meaning 
of section 408B), the Secretary shall require a simplified actuarial 
report which contains information similar to the information required 
in section 408(l)(3)(B).''.
    (f) Conforming Amendments.--
            (1) Section 280G(b)(6) is amended by striking ``or'' at the 
        end of subparagraph (C), by striking the period at the end of 
        subparagraph (D) and inserting ``, or'' and by adding after 
        subparagraph (D) the following:
                    ``(E) a SAFE annuity described in section 408B.''.
            (2) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of 
        section 414 are each amended by inserting ``408B,'' after 
        ``408(p),''.
            (3) Section 4972(d)(1)(A) 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 after clause 
        (iv) the following:
                            ``(v) any SAFE annuity (within the meaning 
                        of section 408B).''.
            (4) The table of sections for subpart A of part I of 
        subchapter D of chapter 1, as amended by section 111(e), is 
        amended by inserting after the item relating to section 408 the 
        following:

                              ``Sec. 408B. SAFE annuities and 
                                        trusts.''.
    (g) Modifications of ERISA.--
            (1) Exemption from insurance coverage.--Subsection (b) of 
        section 4021 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1321) is amended by striking ``or'' at the end 
        of paragraph (12), by striking the period at the end of 
        paragraph (13) and inserting ``; or'', and by adding at the end 
        the following:
            ``(14) which is established and maintained as part of a 
        SAFE trust (as defined in section 408B of the Internal Revenue 
        Code of 1986).''.
            (2) Reporting requirements.--Section 101 of such Act (29 
        U.S.C. 1021) is amended by redesignating subsection (h) as 
        subsection (i) and by inserting after subsection (g) the 
        following:
    ``(h) SAFE Annuities.--
            ``(1) No employer reports.--Except as provided in this 
        subsection, no report shall be required under this section by 
        an employer maintaining a SAFE annuity under section 408B(b) of 
        the Internal Revenue Code of 1986.
            ``(2) Summary description.--The issuer of any SAFE annuity 
        shall provide to the employer maintaining the annuity for each 
        year a description containing the following information:
                    ``(A) The name and address of the employer and the 
                issuer.
                    ``(B) The requirements for eligibility for 
                participation.
                    ``(C) The benefits provided with respect to the 
                annuity.
                    ``(D) The procedures for, and effects of, 
                withdrawals (including rollovers) from the annuity.
            ``(3) Employee notification.--The employer shall provide 
        each employee eligible to participate in the SAFE annuity with 
        the description described in paragraph (2) at the same time as 
        the notification required under section 408B(b)(5)(B) of the 
        Internal Revenue Code of 1986.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1997.

SEC. 302. MATCHING CONTRIBUTIONS OF SELF-EMPLOYED INDIVIDUALS NOT 
              TREATED AS ELECTIVE DEFERRALS.

    (a) In General.--Section 402(g) (relating to limitation on 
exclusion for elective deferrals) is amended by adding at the end the 
following:
            ``(9) Matching contributions on behalf self-employed 
        individuals not treated as elective deferrals.--Any matching 
        contribution described in section 401(m)(4)(A)(ii)) which is 
        made on behalf of a self-employed individual (as defined in 
        section 401(c)) shall not be treated as an elective deferral 
        for purposes of this subsection.''.
    (b) Conforming Amendment for Simple Retirement Accounts.--Section 
408(p) (relating to simple retirement accounts) is amended by adding at 
the end the following:
            ``(8) Matching contributions on behalf self-employed 
        individuals not treated as elective deferrals.--Any matching 
        contribution described in paragraph (2)(A)(iii) which is made 
        on behalf of a self-employed individual (as defined in section 
        401(c)) shall not be treated as an elective deferral for 
        purposes of this subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1996.

SEC. 303. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND SOLE 
              PROPRIETORS.

    (a) Amendment to 1986 Code.--Section 4975(d) (relating to 
exemptions) is amended by striking the last 2 sentences.
    (b) Amendments to ERISA.--
            (1) Section 408 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1108(d)) 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)(2)(B) of such Act (29 U.S.C. 
        1107(b)(2)(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. 304. CONTRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS THROUGH PAYROLL 
              DEDUCTIONS.

    Section 408 (relating to individual retirement accounts) is amended 
by redesignating subsection (q) as subsection (r) and by inserting 
after subsection (p) the following:
    ``(q) Contributions to individual retirement plans through payroll 
deductions.--
            ``(1) Definitions.--For purposes of this subsection:
                    ``(A) Contribution certificate.--The term 
                ``contribution certificate'' means a certificate 
                submitted by an eligible employee to the employee's 
                employer who has elected to establish a payroll 
                deduction system under paragraph (2) which--
                            ``(i) identifies the employee by name, 
                        address, and social security number,
                            ``(ii) includes a certification by the 
                        employee that the employee is an eligible 
                        employee,
                            ``(iii) identifies the individual 
                        retirement plan to which the employee wishes to 
                        make contributions through payroll deductions,
                            ``(iv) identifies the amount of such 
                        contributions, not to exceed the amount allowed 
                        under this section to an individual retirement 
                        plan for such year.
                    ``(B) Eligible employee.--
                            ``(i) In general.--The term `eligible 
                        employee' means, with respect to any taxable 
                        year, an employee whose employer does not 
                        sponsor a qualified plan (as defined in 
                        subsection (p)(2)(D)(ii).
                            ``(ii) Employee.--The term `employee' shall 
                        include an employee as defined in section 
                        401(c)(1).
                    ``(C) Individual retirement plans.--The term 
                `individual retirement plan' has the meaning given such 
                term by section 7701(a)(37).
            ``(2) Establishment of payroll deduction system.--An 
        employer may elect to establish a system under which eligible 
        employees, through employer payroll deductions, may make 
        contributions to individual retirement plans.
            ``(3) Contributions to individual retirement plans.--
                    ``(A) In general.--The system established under 
                paragraph (2) shall provide that contributions made to 
                an individual retirement plan for any taxable year 
                are--
                            ``(i) contributions through employer 
                        payroll deductions, and
                            ``(ii) if the employer so elects, 
                        additional contributions by the employee which, 
                        when added to contributions under clause (i), 
                        do not exceed the amount allowed under this 
                        section 408 for the taxable year.
                    ``(B) Employer payroll deductions.--
                            ``(i) In general.--The system established 
                        under paragraph (2) shall provide that an 
                        eligible employee may establish and maintain an 
                        individual retirement plan simply by--
                                    ``(I) completing a contribution 
                                certificate, and
                                    ``(II) submitting such certificate 
                                to the eligible employee's employer in 
                                the manner provided under clause (iv).
                            ``(ii) Ease of administration.--An eligible 
                        employee establishing and maintaining an 
                        individual retirement plan under clause (i) may 
                        change the amount of an employer payroll 
                        deduction in the same manner as under clause 
                        (i).
                            ``(iii) Simplified forms.--The Secretary 
                        shall develop a model contribution certificate 
                        for purposes of this subparagraph which is 
                        written in a clear and easily understandable 
                        manner.
                            ``(iv) Use of certificate.--Each employer 
                        electing to adopt a system under paragraph (2) 
                        shall, upon receipt of a contribution 
                        certificate from an eligible employee, deduct 
                        the appropriate contribution as determined by 
                        such certificate from the employee's wages in 
                        equal amounts during the remaining payroll 
                        periods for the taxable year and shall remit 
                        such amounts for investment in the employee's 
                        individual retirement plan not later than the 
                        close of the 30-day period following the last 
                        day of the month in which such payroll period 
                        occurs.
                            ``(v) Failure to remit payroll 
                        deductions.--For purposes of this title, any 
                        amount which an employer fails to remit on 
                        behalf of an eligible employee pursuant to a 
                        contribution certificate of such employee shall 
                        not be allowed as a deduction to the 
                        employer.''.

                         TITLE IV--PORTABILITY

SEC. 401. ALLOWANCE OF ROLLOVERS WITH RESPECT TO SECTION 457 PLANS.

    (a) Allowance of Rollovers From Section 457 Plans.--
            (1) 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.--If--
                            ``(i) any portion of the balance to the 
                        credit of an employee in an eligible deferred 
                        compensation 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), (3), (5), (6), (7), and 
                (9) of section 402(c) and section 402(f) shall apply 
                for purposes of subparagraph (A).''.
            (2) 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''.
            (3) Conforming amendments.--
                    (A) Section 72(o)(4) is amended by striking ``and 
                408(d)(3)'' and inserting ``408(d)(3), and 
                457(e)(16)''.
                    (B) Section 219(d)(2) is amended by striking ``or 
                408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
                    (C) Section 401(a)(31)(B) is amended by striking 
                ``and 403(a)(4)'' and inserting ``, 403(a)(4), and 
                457(e)(16)''.
                    (D) Section 408(a)(1) is amended by striking ``or 
                403(b)(8)'' and inserting ``, 403(b)(8), or 
                457(e)(16)''.
                    (E) Section 408(d)(3)(A)(ii) is amended--
                            (i) by inserting ``or from an eligible 
                        deferred compensation plan described in section 
                        457(b)'' after ``section 403(a)'', and
                            (ii) by striking ``or annuity plan'' and 
                        inserting ``or plan''.
                    (F) Subparagraphs (A) and (B) of section 415(b)(2) 
                are amended by striking ``and 408(d)(3)'' and inserting 
                ``408(d)(3), and 457(e)(16)''.
                    (G) Section 415(c)(2) is amended by striking ``and 
                408(d)(3)'' and inserting ``408(d)(3), and 
                457(e)(16)''.
                    (H) Section 4973(b)(4)(A), as amended by section 
                111(c), is amended by striking ``and 408A(e)'' and 
                inserting ``408A(e), and 457(e)(16)''.
    (b) Allowance of Rollovers to Section 457 Plans.--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).''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 1997.
            (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 shall not apply to the portion of any 
        distribution which is attributable to any rollover amount (and 
        earnings allocable thereto) described in section 457(e)(16) of 
        the Internal Revenue Code of 1986 (as added by subsection (a)).

SEC. 402. ALLOWANCE OF ROLLOVERS FROM 403(B) PLANS TO ELIGIBLE 
              RETIREMENT PLANS.

    (a) In General.--Section 403(b)(8)(A)(ii) (relating to rollover 
amounts) is amended by striking ``individual retirement plan'' and 
inserting ``eligible retirement plan described in section 
402(c)(8)(B)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions after December 31, 1997.

SEC. 403. PROTECTION OF PLANS WHICH ACCEPT ROLLOVER CONTRIBUTIONS FROM 
              DISQUALIFICATION.

    (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) Plans not disqualified merely by accepting rollover 
        contributions.--A trust which is part of a plan shall not fail 
        to be a qualified trust under this section solely because the 
        plan accepts a rollover contribution from another plan without 
        such a qualified trust if, at the time of the transfer, the 
        trustee of the other plan provided notice of the other plan's 
        intention to have such a qualified trust.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to rollover contributions made after December 31, 1997.

SEC. 404. ALLOWANCE OF EMPLOYERS TO DISREGARD ROLLOVERS FOR PURPOSES OF 
              CASH-OUT AMOUNTS.

    (a) Amendment to 1986 Code.--Section 411(a)(11) (relating to 
restrictions on certain mandatory distributions) is amended by adding 
at the end the following:
                    ``(D) Special rule for rollover contributions.--A 
                plan shall not fail to meet the requirements of this 
                paragraph if, under the terms of the plan, the present 
                value of the nonforfeitable accrued benefit is 
                determined without regard to that portion of such 
                benefit which is attributable to rollover contributions 
                (and earnings allocable thereto). For purposes of this 
                subparagraph, the term `rollover contributions' means 
                any rollover contribution under sections 402(c), 
                408(d)(3)(A)(i), and 457(e)(16).''.
    (b) Amendment 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) A plan shall not fail to meet the requirements of this 
subsection if, under the terms of the plan, the present value of the 
nonforfeitable accrued benefit is determined without regard to that 
portion of such benefit which is attributable to rollover contributions 
(and earnings allocable thereto). For purposes of this paragraph, the 
term `rollover contributions' means any rollover contribution under 
sections 402(c), 408(d)(3)(A)(i), and 457(e)(16) of the Internal 
Revenue Code of 1986.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 1997.

SEC. 405. WAIVER OF 60-DAY ROLLOVER PERIOD.

    (a) In General.--Section 402(c)(3) (relating to rules applicable to 
rollovers from exempt trusts) is amended to read as follows:
            ``(3) 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 shall 
                waive the 60-day requirement under subparagraph (A) 
                under circumstances similar to the circumstances 
                described in section 6654(e)(3).''.
    (b) Conforming Amendment.--Section 408(d)(3) (relating to rollover 
contribution) is amended by adding at the end the following:
                    ``(H) Hardship exception.--The Secretary shall 
                waive the 60-day requirement under subparagraph (A) 
                under rules similar to the rules described in section 
                6654(e)(3).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to rollover contributions made after December 31, 1997.

SEC. 406. TREATMENT OF TRANSFERS BETWEEN DEFINED CONTRIBUTION PLANS.

    (a) Amendment to 1986 Code.--Section 411(d)(6) (relating to accrued 
benefit not to be decreased by amendment) is amended by adding at the 
end the following:
                    ``(D) Plan transfers.--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 paragraph 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 subparagraph 
                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 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 clause 
                        (iii) to receive any distribution to which the 
                        participant or beneficiary is entitled under 
                        transferee plan in the form of a single sum 
                        distribution.''.
    (b) Amendment to ERISA.--Section 204(g) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054(g)) is amended by adding at 
the end the following:
    ``(4) A defined contribution plan (in this paragraph 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--
            ``(A) 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,
            ``(B) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in 
        subparagraph (A),
            ``(C) the transfer described in subparagraph (A) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan,
            ``(D) the election described in subparagraph (C) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election,
            ``(E) 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
            ``(F) the transferee plan allows the participant or 
        beneficiary described in subparagraph (C) to receive any 
        distribution to which the participant or beneficiary is 
        entitled under transferee plan in the form of a single sum 
        distribution.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transfers after December 31, 1997.

                       TITLE V--PENSION SECURITY

             Subtitle A--Economically Targeted Investments

SEC. 501. SENSE OF CONGRESS.

    It is the sense of Congress that economically targeted investments 
(as defined in section 502(c)(1) of this Act) violate sections 403 and 
404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1103 and 1104) because such investments violate the principle of 
undivided loyalty that a fiduciary owes to employee benefit plan 
participants and beneficiaries and are made with the intent to benefit 
persons other than plan participants and beneficiaries and to serve 
interests other than those of plan participants and beneficiaries.

SEC. 502. PROHIBITIONS ON DEPARTMENT OF LABOR REGARDING ECONOMICALLY 
              TARGETED INVESTMENTS.

    (a) In General.--With respect to the investment by employee benefit 
plans of plan assets (and the interpretations and decisions by the 
Department of Labor regarding investment by such plans of plan assets), 
the application of sections 403 and 404 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1103 and 1104) shall be 
determined--
            (1) without regard to Interpretive Bulletin 94-1, issued by 
        the Secretary of Labor on June 23, 1994 (59 Fed. Reg. 32606; 29 
        C.F.R. 2509.94-1), and without regard to any other regulation, 
        interpretive bulletin, advisory opinion, information letter, or 
        other determination reaching the same result as, or a result 
        similar to, the result set forth in such Interpretive Bulletin, 
        and
            (2) with full regard to sections 403 and 404 of such Act.
    (b) Restrictions on Activities of the Department of Labor.--No 
officer or employee of the Department of Labor may travel, lecture, or 
otherwise expend resources available to such Department for the purpose 
of promoting, directly or indirectly, economically targeted 
investments.
    (c) Definitions.--For purposes of this section and section 501:
            (1) Economically targeted investment.--The term 
        ``economically targeted investment'' has the meaning given such 
        term in Interpretive Bulletin 94-1, as issued by the Secretary 
        of Labor on June 23, 1994 (59 Fed. Reg. 32606; 29 C.F.R. 
        2509.94-1).
            (2) Employee benefit plan.--The term ``employee benefit 
        plan'' means an employee benefit plan within the meaning of 
        section 3(3) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002(3)) which is covered under section 4 of 
        such Act (29 U.S.C. 1003).

SEC. 503. PROHIBITION ON ESTABLISHING OR MAINTAINING ANY CLEARINGHOUSE 
              OR OTHER DATABASE RELATING TO ECONOMICALLY TARGETED 
              INVESTMENTS.

    (a) In General.--Part 5 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1131 et seq.) is 
amended by adding at the end the following:

``prohibition on establishing or maintaining any clearinghouse or other 
         database relating to economically targeted investments

    ``Sec. 516. (a) In General.--No agency or instrumentality of the 
Federal Government may establish or maintain, or contract with (or 
otherwise provide assistance to) any other party to establish or 
maintain, any clearinghouse, database, or other listing--
            ``(1) for the purpose of making available to employee 
        benefit plans information on economically targeted investments,
            ``(2) for the purpose of encouraging, or providing 
        assistance to, employee benefit plans or any other party 
        related to an employee benefit plan to undertake or evaluate 
        economically targeted investments, or
            ``(3) for the purpose of identifying economically targeted 
        investments with respect to which such agency or 
        instrumentality will withhold from undertaking enforcement 
        actions relating to employee benefit plans under any otherwise 
        applicable authority of such agency or instrumentality.
    ``(b) Economically Targeted Investment Defined.--For purposes of 
this section, the term `economically targeted investment' has the 
meaning given such term in Interpretive Bulletin 94-1, as issued by the 
Secretary on June 23, 1994 (59 Fed. Reg. 32606; 29 C.F.R. 2509.94-
1).''.
    (b) Conforming Amendment.--The table of contents in section 2 of 
such Act is amended by inserting at the end of the items relating to 
part 5 of subtitle B of title I the following:

``Sec. 516. Prohibition on establishing or maintaining any 
                            clearinghouse or other database relating to 
                            economically targeted investments.''.

SEC. 504. TERMINATION OF CONTRACTS.

    The head of each agency and instrumentality of the Government of 
the United States shall immediately take such actions as are necessary 
and appropriate to terminate any contract or other arrangement entered 
into by such agency or instrumentality which is in violation of the 
requirements of the provisions of this title or the amendments made 
thereby.

SEC. 505. EFFECTIVE DATE.

    The provisions of this subtitle (and the amendments made thereby) 
shall take effect on the date of enactment of this Act.

                      Subtitle B--Other Provisions

SEC. 511. MODIFICATION OF PROHIBITION OF ASSIGNMENT OR ALIENATION.

    (a) Amendment to ERISA.--Section 206(d) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1056(d)) is amended by adding at 
the end the following:
    ``(4) Paragraph (1) shall not apply to any offset of a 
participant's accrued benefit in an employee pension benefit plan 
against an amount that the participant is ordered or required to pay to 
the plan--
            ``(A) under a judgment of conviction for a crime involving 
        such plan, or
            ``(B) under a civil judgment (including a consent order or 
        decree) entered--
                    ``(i) by a court in an action brought under section 
                502(a) of this title, or
                    ``(ii) pursuant to a settlement agreement between 
                the Secretary and the participant in connection with a 
                violation (or alleged violation) of part 4 of this 
                title by a fiduciary or any other person,
        if the judgment, order, decree, or settlement agreement 
        expressly provides for the offset of all or part of the amount 
        ordered or required to be paid to the plan against the 
        participant's accrued benefit in the plan.''.
    (b) Amendment to 1986 Code.--Section 401(a)(13) (relating to 
assignment and alienation) is made by adding at the end the following:
                    ``(C) Special rule for certain judgments and 
                settlements.--Subparagraph (A) shall not apply to any 
                offset of a participant's accrued benefit in an 
                employee pension benefit plan against an amount that 
                the participant is ordered or required to pay to the 
                plan--
                            ``(i) under a judgment of conviction for a 
                        crime involving such plan, or
                            ``(ii) under a civil judgment (including a 
                        consent order or decree) entered--
                                    ``(I) by a court in an action 
                                brought under section 502(a) of the 
                                Employee Retirement Income Security Act 
                                of 1974, or
                                    ``(II) pursuant to a settlement 
                                agreement between the Secretary of 
                                Labor and the participant in connection 
                                with a violation (or alleged violation) 
                                of part 4 of title I of such Act by a 
                                fiduciary or any other person,
                if the judgment, order, decree or settlement agreement 
                expressly provides for the offset of all or part of the 
                amount ordered or required to be paid to the plan 
                against the participant's accrued benefit in the 
                plan.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 512. INCREASE IN CURRENT LIABILITY FUNDING LIMIT.

    (a) In General.--
            (1) Amendment to 1986 code.--Section 412(c)(7) (relating to 
        full-funding limitation) is amended--
                    (A) by striking ``150 percent'' in subparagraph 
                (A)(i)(I) and inserting ``the applicable percentage'', 
                and
                    (B) by adding at the end the following:
                    ``(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 or 2000..................................                 155 
    2001 or 2002..................................                 160 
    2003 or 2004..................................                 165 
    2005 or 2006..................................                 170 
    2007 and succeeding years.....................              175.''.
            (2) Amendment to erisa.--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 ``150 percent'' in subparagraph 
                (A)(i)(I) and inserting ``the applicable percentage'', 
                and
                    (B) by adding at the end the following:
            ``(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 or 2000..................................                 155 
    2001 or 2002..................................                 160 
    2003 or 2004..................................                 165 
    2005 or 2006..................................                 170 
    2007 and succeeding years.....................              175.''.
    (b) Special Amortization Rule.--
            (1) Amendment to 1986 code.--Section 412(b)(2) 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 inserting after subparagraph (D) the following:
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of subsection (c)(7)(A)(i)(I).''.
            (2) Amendment to erisa.--Section 302(b)(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1082(b)(2)) 
        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 inserting after subparagraph (D) 
        the following:
            ``(E) the amount necessary to amortize in equal annual 
        installments (until fully amortized) over a period of 20 years 
        the contributions which would be required to be made under the 
        plan but for the provisions of subsection (c)(7)(A)(i)(I).''.
            (3) Conforming amendments.--
                    (A) Section 412(c)(7)(D) is amended by adding 
                ``and'' at the end of clause (i), by striking ``, and'' 
                at the end of clause (ii) and inserting a period, and 
                by striking clause (iii).
                    (B) Section 302(c)(7)(D) of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1082(c)(7)(D)) 
                is amended by adding ``and'' at the end of clause (i), 
                by striking ``, and'' at the end of clause (ii) and 
                inserting a period, and by striking clause (iii).
            (3) Effective dates.--
                    (A) In general.--The amendments made by this 
                subsection shall apply to plan years beginning after 
                December 31, 1998.
                    (B) Special rule for 1999.--In the case of a plan's 
                first year beginning in 1999, there shall be added to 
                the amount required to be amortized under section 
                412(b)(2)(E) of the Internal Revenue Code of 1986 and 
                section 302(b)(2)(E) of the Employee Retirement Income 
                Security Act of 1974 (as added by paragraph (1)) over 
                the 20-year period beginning with such year, the 
                unamortized balance (as of the close of the preceding 
                plan year) of any amount required to be amortized under 
                section 412(c)(7)(D)(iii) of such Code and section 
                302(c)(7)(D)(iii) of such Act (as repealed by paragraph 
                (2)) for plan years beginning before 1999.
    (c) 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 412(l)'' and inserting 
                ``termination liability (determined under section 
                4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
                Security Act of 1974 as if the proposed termination 
                date were the last day of the plan year)'', and
                    (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.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date of enactment 
        of this Act.

SEC. 513. 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 employee 
                                securities, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1997.

             TITLE VI--SIMPLIFICATION OF PLAN REQUIREMENTS

SEC. 601. NEW TECHNOLOGIES IN RETIREMENT PLANS.

    (a) In General.--Not later than July 1, 1998, the Secretary of the 
Treasury and the Secretary of Labor shall issue coordinated guidance 
which is designed to--
            (1) modify notice, election, consent, recordkeeping, 
        reporting, and other operational and time requirements 
        applicable to retirement plans in order to permit the use of 
        new technologies by plan sponsors and administrators while 
        maintaining the protection of the rights of participants and 
        beneficiaries, and
            (2) clarify the extent to which State laws requiring paper 
        transactions with respect to retirement plans are preempted and 
        the extent to which writing requirements under the Internal 
        Revenue Code of 1986 shall be interpreted to permit paperless 
        transactions.
    (b) Applicability of Final Regulations.--With respect to the 
guidance regarding new technologies described in subsection (a), plan 
sponsors and administrators may operate retirement plans in accordance 
with a reasonable, good faith interpretation of the law until the first 
plan year beginning at least 6 months after the issuance of final 
regulations applicable to such guidance.

SEC. 602. MODIFICATIONS TO NONDISCRIMINATION AND MINIMUM PARTICIPATION 
              RULES WITH RESPECT TO GOVERNMENTAL PLANS.

    (a) General Nondiscrimination and Participation Rules.--
            (1) Nondiscrimination requirements.--Section 401(a)(5) 
        (relating to qualified pension, profit-sharing, and stock bonus 
        plans) is amended by adding at the end the following:
                    ``(G) Governmental plans.--Paragraphs (3) and (4) 
                shall not apply to a governmental plan (within the 
                meaning of section 414(d)).''.
            (2) Additional participation requirements.--Section 
        401(a)(26)(H) (relating to additional participation 
        requirements) is amended to read as follows:
                    ``(H) Exception for governmental plans.--This 
                paragraph shall not apply to a governmental plan 
                (within the meaning of section 414(d)).''.
            (3) Minimum participation standards.--Section 410(c)(2) 
        (relating to application of participation standards to certain 
        plans) is amended to read as follows:
            ``(2) A plan described in paragraph (1) shall be treated as 
        meeting the requirements of this section for purposes of 
        section 401(a), except that in the case of a plan described in 
        subparagraph (B), (C), or (D) of paragraph (1), this paragraph 
        shall only apply if such plan meets the requirements of section 
        401(a)(3) (as in effect on September 1, 1974).''.
    (b) Participation Standards for Qualified Cash or Deferred 
Arrangements.--Section 401(k)(3) (relating to application of 
participation and discrimination standards) is amended by adding at the 
end the following:
                    ``(G)(i) The requirements of subparagraph (A)(i) 
                and (C) shall not apply to a governmental plan (within 
                the meaning of section 414(d)).
                    ``(ii) The requirements of subsection (m)(2) 
                (without regard to subsection (a)(4)) shall apply to 
                any matching contribution of a governmental plan (as so 
                defined).''.
    (c) Nondiscrimination Rules for Section 403(b) Plans.--Section 
403(b)(12) (relating to nondiscrimination requirements) is amended by 
adding at the end the following:
                    ``(C) Governmental plans.--For purposes of 
                paragraph (1)(D), the requirements of subparagraph 
                (A)(i) shall not apply to a governmental plan (within 
                the meaning of section 414(d)).''.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning on or after the date of 
        enactment of this Act.
            (2) Treatment for years beginning before date of 
        enactment.--A governmental plan (within the meaning of section 
        414(d) of the Internal Revenue Code of 1986) shall be treated 
        as satisfying the requirements of sections 401(a)(3), 
        401(a)(4), 401(a)(26), 401(k), 401(m), 403 (b)(1)(D) and 
        (b)(12), and 410 of such Code for all taxable years beginning 
        before the date of enactment of this Act.

SEC. 603. ELIMINATION OF REQUIREMENT FOR PLAN DESCRIPTIONS AND THE 
              FILING REQUIREMENT FOR SUMMARY PLAN DESCRIPTIONS AND 
              DESCRIPTIONS OF MATERIAL MODIFICATIONS TO A PLAN; 
              TECHNICAL CORRECTIONS.

    (a) Filing Requirements.--Section 101(b) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1021(b)) is amended by striking 
paragraphs (1), (2), and (3) and by redesignating paragraphs (4) and 
(5) as paragraphs (1) and (2), respectively.
    (b) Plan Description.--
            (1) In general.--Section 102(a) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1022(a)) is amended--
                    (A) by striking paragraph (2), and
                    (B) by striking ``(a)(1)'' and inserting ``(a)''.
            (2) Conforming amendments.--
                    (A) Section 102(b) of such Act (29 U.S.C. 1022(b)) 
                is amended by striking ``The plan description and 
                summary plan description shall contain'' and inserting 
                ``The summary plan description shall contain''.
                    (B) The heading for section 102 of such Act is 
                amended by striking ``plan description and''.
    (c) Furnishing of Reports.--
            (1) In general.--Section 104(a)(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1024(a)(1)) 
        is amended to read as follows:
    ``Sec. 104. (a)(1) The administrator of any employee benefit plan 
subject to this part shall file with the Secretary the annual report 
for a plan year within 210 days after the close of such year (or within 
such time as may be required by regulations promulgated by the 
Secretary in order to reduce duplicative filing). The Secretary shall 
make copies of such annual reports available for inspection in the 
public document room of the Department of Labor.''.
            (2) Secretary may request documents.--
                    (A) In general.--Section 104(a) of such Act (29 
                U.S.C. 1024(a)) is amended by adding at the end the 
                following:
    ``(6) The administrator of any employee benefit plan subject to 
this part shall furnish to the Secretary, upon request, any documents 
relating to the employee benefit plan, including but not limited to, 
the latest summary plan description (including any summaries of plan 
changes not contained in the summary plan description), and the 
bargaining agreement, trust agreement, contract, or other instrument 
under which the plan is established or operated.''.
                    (B) Penalty.--Section 502(c) of such Act (29 U.S.C. 
                1132(c)) is amended by redesignating paragraph (6) as 
                paragraph (7) and by inserting after paragraph (5) the 
                following:
    ``(6) If, within 30 days of a request by the Secretary to a plan 
administrator for documents under section 104(a)(6), the plan 
administrator fails to furnish the material requested to the Secretary, 
the Secretary may assess a civil penalty against the plan administrator 
of up to $100 a day from the date of such failure (but in no event in 
excess of $1,000 per request). No penalty shall be imposed under this 
paragraph for any failure resulting from matters reasonably beyond the 
control of the plan administrator.''.
    (d) Conforming Amendments.--
            (1) Section 104(b)(1) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1024(b)(1)) is amended by 
        striking ``section 102(a)(1)'' each place it appears and 
        inserting ``section 102(a)''.
            (2) Section 104(b)(2) of such Act (29 U.S.C. 1024(b)(2)) is 
        amended by striking ``the plan description and'' and inserting 
        ``the latest updated summary plan description and''.
            (3) Section 104(b)(4) of such Act (29 U.S.C. 1024(b)(4)) is 
        amended by striking ``plan description''.
            (4) Section 106(a) of such Act (29 U.S.C. 1026(a)) is 
        amended by striking ``descriptions,''.
            (5) Section 107 of such Act (29 U.S.C. 1027) is amended by 
        striking ``description or''.
            (6) Paragraph (2)(B) of section 108 of such Act (29 U.S.C. 
        1028) is amended to read as follows: ``(B) after publishing or 
        filing the annual reports,''.
            (7) Section 502(a)(6) of such Act (29 U.S.C. 1132(a)(6)) is 
        amended by striking ``or (5)'' and inserting ``(5), or (6)''.
    (e) Technical Correction.--Section 1144(c) of the Social Security 
Act (42 U.S.C. 1320b-14(c)) is amended by redesignating paragraph (9) 
as paragraph (8).

SEC. 604. MODIFICATION OF 403(B) EXCLUSION ALLOWANCE TO CONFORM TO 415 
              MODIFICATIONS.

    (a) In General.--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 reflect the amendments made by 
sections 1434 and 1452(a) of the Small Business Job Protection Act of 
1996. Such modifications shall take effect for years beginning after 
December 31, 1997, and for limitation years beginning after December 
31, 1999, respectively.
    (b) Certain Deferrals Included in Compensation.--
            (1) In general.--Section 403(b)(3) (defining compensation) 
        is amended by striking the last sentence and inserting the 
        following: ``Such term includes, at the option of the employer, 
        any elective deferral (as defined in section 402(g)(3).''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 1997.

SEC. 605. MODIFICATION OF 10 PERCENT TAX FOR NONDEDUCTIBLE 
              CONTRIBUTIONS.

    (a) In General.--Section 4972(c)(6)(B) (relating to exceptions) is 
amended to read as follows:
                    ``(B) so much of the contributions to 1 or more 
                defined contribution plans which are not deductible 
                when contributed solely because of section 404(a)(7) as 
                does not exceed the greater of--
                            ``(i) the amount of contributions not in 
                        excess of 6 percent of compensation (within the 
                        meaning of section 404(a)) paid or accrued 
                        (during the taxable year for which the 
                        contributions were made) to beneficiaries under 
                        the plans, or
                            ``(ii) the sum of--
                                    ``(I) the amount of contributions 
                                described in section 401(m)(4)(A), plus
                                    ``(II) the amount of contributions 
                                described in section 402(g)(3)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

            TITLE VII--DATE FOR ADOPTION OF PLAN AMENDMENTS

SEC. 701. DATE FOR ADOPTION OF PLAN AMENDMENTS.

    (a) In General.--Except as otherwise provided in this Act, if any 
provision of this Act requires an amendment of any type to any plan, 
such plan amendment shall not be required to be made before the last 
day of the first plan year beginning on or after January 1, 1999, if--
            (1) during the period after such amendment takes effect and 
        before the last day of such first plan year, the plan is 
        operated in accordance with the requirements of such amendment, 
        and
            (2) such plan amendment applies retroactively to such 
        period.
A plan shall not be treated as failing to provide definitely 
determinable benefits or contributions, or to be operated in accordance 
with the provisions of the plan, merely because it operates in 
accordance with this subsection.
    (b) Governmental Plans.--In the case of a governmental plan (as 
defined in section 414(d) of the Internal Revenue Code of 1986), 
subsection (a) shall be applied by substituting for ``January 1, 1999'' 
the later of--
            (1) January 1, 2000, or
            (2) the date which is 90 days after the opening of the 
        first legislative session beginning after January 1, 2000, of 
        the governing body with authority to amend the plan, but only 
        if such governing body does not meet continuously.
    (c) Special Rule for Collectively Bargained Plans.--Notwithstanding 
any other provision of this Act, in the case of a plan maintained 
pursuant to 1 or more collective bargaining agreements between employee 
representatives and 1 or more employers ratified on or before the date 
of the enactment of this Act, any provision of this Act which requires 
an amendment of any type to such plan shall not be required to be made 
before the last day of the first plan year beginning on or after the 
earlier of--
            (1) the later of--
                    (A) January 1, 1999, or
                    (B) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof after the date of the 
                enactment of this Act), or
            (2) January 1, 2000.
                                 <all>