[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1102 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1102

         To provide for pension reform, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 11, 1999

Mr. Portman (for himself, Mr. Cardin, Mrs. Johnson of Connecticut, Mr. 
Houghton, Mr. Lewis of Georgia, Mr. Weller, Mr. Tanner, Mr. Blunt, Mr. 
Boehner, Mr. Pomeroy, Mr. Bentsen, Mr. Kolbe, Mrs. Morella, Mr. Nussle, 
Mr. McCrery, and Mr. Ramstad) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
Committees on Education and the Workforce, and Government Reform, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
         To provide for pension reform, and for other purposes.

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

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

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

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

Sec. 101. Restoration of limits formerly in effect.
Sec. 102. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 103. Salary reduction only simple plans.
Sec. 104. Modification of top-heavy rules.
Sec. 105. Elective deferrals not taken into account for purposes of 
                            limits.
Sec. 106. Reduced PBGC premium for new plans of small employers.
Sec. 107. Phase-in of additional premium for new plans.
Sec. 108. Repeal of coordination requirements for deferred compensation 
                            plans of State and local governments and 
                            tax-exempt organizations.
Sec. 109. Elimination of user fee for requests to IRS regarding pension 
                            plans.
Sec. 110. Alternative method of meeting nondiscrimination requirements 
                            for automatic contribution trust.
Sec. 111. Deduction limits.
Sec. 112. Option to treat elective deferrals as after-tax 
                            contributions.
Sec. 113. Credit for pension plan startup costs of small employers.
          TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

Sec. 201. Additional salary reduction catch-up contributions.
Sec. 202. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 203. Faster vesting of certain employer matching contributions.
Sec. 204. Deferred annuities for surviving spouses of Federal 
                            employees.
Sec. 205. Simplify and update the minimum distribution rules.
Sec. 206. Clarification of tax treatment of division of section 457 
                            plan benefits upon divorce.
Sec. 207. Percentage limitations on contributions.
Sec. 208. Eligible rollover distributions.
Sec. 209. Immediate participation in the Thrift Savings Plan.
           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 301. Rollovers allowed among various types of plans.
Sec. 302. Rollovers of IRAs into workplace retirement plans.
Sec. 303. Rollovers of after-tax contributions.
Sec. 304. Treatment of forms of distribution.
Sec. 305. Rationalization of restrictions on distributions.
Sec. 306. Purchase of service credit in governmental defined benefit 
                            plans.
Sec. 307. Employers may disregard rollovers for purposes of cash-out 
                            amounts.
        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

Sec. 401. Repeal of 150 percent of current liability funding limit.
Sec. 402. Missing participants.
Sec. 403. Periodic pension benefits statements.
Sec. 404. Civil penalties for breach of fiduciary responsibility.
Sec. 405. Penalty tax relief for sound pension funding.
Sec. 406. Protection of investment of employee contributions to 401(k) 
                            plans.
Sec. 407. Notice of significant reduction in benefit accruals.
                  TITLE V--REDUCING REGULATORY BURDENS

Sec. 501. Intermediate sanctions for inadvertent failures.
Sec. 502. Repeal of the multiple use test.
Sec. 503. Safety valve from mechanical rules.
Sec. 504. Reform of the line of business rules.
Sec. 505. Coverage test flexibility.
Sec. 506. Increase in retirement plan cash-out amount.
Sec. 507. Modification of timing of plan valuations.
Sec. 508. Section 457 inapplicable to certain mirror plans.
Sec. 509. Substantial owner benefits in terminated plans.
Sec. 510. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
Sec. 511. Modification of 403(b) exclusion allowance to conform to 415 
                            modification.
Sec. 512. Treatment of multiemployer plans under section 415.
Sec. 513. Elimination of partial termination rules for multiemployer 
                            plans.
Sec. 514. Notice and consent period regarding distributions.
Sec. 515. Conforming amendments relating to election to receive taxable 
                            cash compensation in lieu of nontaxable 
                            parking benefits.
Sec. 516. Extension to international organizations of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 517. Employees of tax-exempt entities.
Sec. 518. Permissive aggregation of collective bargaining units.
Sec. 519. Repeal of transition rule relating to certain highly 
                            compensated employees.
Sec. 520. Clarification of treatment of employer-provided retirement 
                            advice.
Sec. 521. Annual report dissemination.
Sec. 522. Excess benefit plans.
Sec. 523. Benefit suspension notice.
Sec. 524. Provisions relating to plan amendments.
Sec. 525. Reporting simplification.
Sec. 526. Model plans for small businesses.

                      TITLE I--EXPANDING COVERAGE

SEC. 101. RESTORATION OF LIMITS FORMERLY IN EFFECT.

    (a) Defined Benefit Plans.--
            (1) Dollar limit.--(A) Subparagraph (A) of section 
        415(b)(1) (relating to limitation for defined benefit plans) is 
amended by striking ``$90,000'' and inserting ``$180,000''.
            (B) Subparagraphs (C) and (D) of section 415(b)(2) are each 
        amended by striking ``$90,000'' each place it appears in the 
        headings and the text and inserting ``$180,000''.
            (C) Paragraph (7) of section 415(b) (relating to benefits 
        under certain collectively bargained plans) is amended by 
        striking ``the greater of $68,212 or one-half the amount 
        otherwise applicable for such year under paragraph (1)(A) for 
        `$90,000''' and inserting ``one-half the amount otherwise 
        applicable for such year under paragraph (1)(A) for 
        `$180,000'''.
            (2) Limit reduced when benefit begins before age 62.--
        Subparagraph (C) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 62''.
            (3) Limit increased when benefit begins after age 65.--
        Subparagraph (D) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 65''.
            (4) Multiemployer plans and plans maintained by governments 
        and tax exempt organizations.--Subparagraph (F) of section 
        415(b)(2) is amended to read as follows:
                    ``(F) Multiemployer plans and plans maintained by 
                governments and tax exempt organizations.--
                            ``(i) In general.--In the case of a 
                        governmental plan (within the meaning of 
                        section 414(d)), a plan maintained by an 
                        organization (other than a governmental unit) 
                        exempt from tax under this subtitle, a 
                        multiemployer plan (as defined in section 
                        414(f)), or a qualified merchant marine plan, 
                        subparagraph (C) shall be applied as if the 
                        last sentence thereof read as follows: `The 
                        reduction under this subparagraph shall not 
                        reduce the limitation of paragraph (1)(A) below 
                        (i) $130,000 if the benefit begins at or after 
                        age 55, or (ii) if the benefit begins before 
                        age 55, the equivalent of the $130,000 
                        limitation for age 55.'
                            ``(ii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Qualified merchant marine 
                                plan.--The term `qualified merchant 
                                marine plan' means a plan in existence 
                                on January 1, 1986, the participants in 
                                which are merchant marine officers 
                                holding licenses issued by the 
                                Secretary of Transportation under title 
                                46, United States Code.
                                    ``(II) Exempt organization plan 
                                covering 50 percent of its employees.--
                                A plan shall be treated as a plan 
                                maintained by an organization (other 
                                than a governmental unit) exempt from 
                                tax under this subtitle if at least 50 
                                percent of the employees benefiting 
                                under the plan are employees of an 
                                organization (other than a governmental 
                                unit) exempt from tax under this 
                                subtitle. If less than 50 percent of 
                                the employees benefiting under a plan 
                                are employees of an organization (other 
                                than a governmental unit) exempt from 
                                tax under this subtitle, the plan shall 
                                be treated as a plan maintained by an 
                                organization (other than a governmental 
                                unit) exempt from tax under this 
                                subtitle only with respect to employees 
                                of such an organization.''.
            (5) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) in paragraph (1)(A) by striking ``$90,000'' and 
                inserting ``$180,000'', and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``$90,000'' in the heading 
                        and inserting ``$180,000'', and
                            (ii) by striking ``October 1, 1986'' and 
                        inserting ``July 1, 1999''.
    (b) Defined Contribution Plans.--
            (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``$30,000'' and inserting ``$45,000''.
            (2) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) in paragraph (1)(C) by striking ``$30,000'' and 
                inserting ``$45,000'', and
                    (B) in paragraph (3)(D)--
                            (i) by striking ``$30,000'' in the heading 
                        and inserting ``$45,000'', and
                            (ii) by striking ``October 1, 1993'' and 
                        inserting ``July 1, 1999''.
    (c) Qualified Trusts.--
            (1) Compensation limit.--Sections 401(a)(17), 404(l), 
        408(k), and 505(b)(7) are each amended by striking ``$150,000'' 
        each place it appears and inserting ``$235,000''.
            (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--
                    (A) by striking ``October 1, 1993'' and inserting 
                ``July 1, 1999'', and
                    (B) by striking ``$10,000'' both places it appears 
                and inserting ``$5,000''.
    (d) Elective Deferrals.--
            (1) In general.--Paragraphs (1) and (5) of section 402(g) 
        (relating to limitation on exclusion for elective deferrals) 
        are each amended by striking ``$7,000'' and inserting 
        ``$15,000''.
            (2) Conforming amendments.--
                    (A) Section 402(g) (relating to limitation on 
                exclusion for elective deferrals), as amended by 
                paragraph (1), is further amended by striking paragraph 
                (4) and redesignating paragraphs (5), (6), (7), (8), 
                and (9) as paragraphs (4), (5), (6), (7), and (8), 
                respectively.
                    (B) Clause (iii) of section 501(c)(18)(D) is 
                amended by striking ``(other than paragraph (4) 
                thereof)''.
    (e) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--Section 457 (relating to deferred 
compensation plans of State and local governments and tax-exempt 
organizations) is amended--
            (1) in subsections (b)(2)(A), (c)(1), and (e)(15) by 
        striking ``$7,500'' each place it appears and inserting 
        ``$15,000'',
            (2) in subsection (b)(3)(A) by striking ``$15,000'' and 
        inserting ``$30,000'', and
            (3) in subsection (e)(15)--
                    (A) by inserting ``and the $30,000 amount specified 
                in subsection (b)(3)(A)'' after ``(c)(1)'', and
                    (B) by striking ``September 30, 1994'' and 
                inserting ``September 30, 1999''.
    (f) Simple Retirement Accounts.--
            (1) Limitation.--Sections 408(p)(2)(A)(ii), 408(p)(2)(E), 
        401(k)(11)(B)(i)(I), and 401(k)(11)(E) are each amended by 
        striking ``$6,000'' and inserting ``$10,000''.
            (2) Base period for cost-of-living adjustment.--
        Subparagraph (E) of section 408(p)(2) is amended by striking 
        ``September 30, 1996'' and inserting ``September 30, 1999''.
    (g) Cost-of-Living Adjustments.--
            (1) Plans maintained by governments and tax exempt 
        organizations.--Paragraph (1) of section 415(d) (as amended by 
        subsection (b)) is amended by striking ``and'' at the end of 
        subparagraph (B), by redesignating subparagraph (C) as 
        subparagraph (D), and by inserting after subparagraph (B) the 
        following new subparagraph:
                    ``(C) the $130,000 amount in subsection (b)(2)(F), 
                and''.
            (2) Base period.--Paragraph (3) of section 415(d) (as 
        amended by subsection (b)) is further amended by redesignating 
        subparagraph (D) as subparagraph (E) and by inserting after 
        subparagraph (C) the following new subparagraph:
                    ``(D) $130,000 amount.--The base period taken into 
                account for purposes of paragraph (1)(C) is the 
                calendar quarter beginning July 1, 1999.''.
            (3) Rounding rule relating to defined benefit plans and 
        defined contribution plans.--Paragraph (4) of section 415(d) is 
        amended to read as follows:
            ``(4) Rounding.--
                    ``(A) $180,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.
                    ``(B) $130,000 and $45,000 amounts.--Any increase 
                under subparagraph (C) or (D) of paragraph (1) which is 
                not a multiple of $1,000 shall be rounded to the next 
                lowest multiple of $1,000.''.
            (4) Conforming amendment.--Subparagraph (D) of section 
        415(d)(3) (as amended by paragraph (2)) is amended by striking 
        ``paragraph (1)(C)'' and inserting ``paragraph (1)(D)''.
    (h) Increase in Amount of Deductible IRA Contributions.--
            (1) Increase in maximum amount of deduction.--Subparagraph 
        (A) of section 219(b)(1) (relating to maximum amount of 
        deduction) is amended by striking ``$2,000'' and inserting 
        ``$5,000''.
            (2) Conforming amendments.--
                    (A) Subsections (a)(1), (b)(2), (j), and (p)(8) of 
                section 408 are each amended by striking ``$2,000'' 
                each place it appears and inserting ``$5,000''.
                    (B) Clause (i) of section 408(o)(2)(B) is amended 
                by inserting ``the lesser of $2,000, or'' after 
                ``means''.
                    (C) Paragraph (2) of section 408A(c) is amended by 
                inserting ``the lesser of $2,000, or'' after ``shall 
                not exceed''.
                    (D) Subparagraph (B) of section 4973(b)(1) is 
                amended by inserting ``(or in the case of a 
                nondeductible individual retirement plan, the amount 
                allowable as a contribution under section 408(o))'' 
                after ``contributions,''.
    (i) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to years beginning after December 31, 1999.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified by the date of enactment of this Act, the 
        amendments made by this section shall not apply to 
        contributions or benefits pursuant to any such agreement for 
        years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 2000, or
                    (B) January 1, 2004.

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

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

SEC. 103. SALARY REDUCTION ONLY SIMPLE PLANS.

    (a) Simple Retirement Accounts.--
            (1) In general.--Paragraph (2) of section 408(p) (as 
        amended by section 101(f)) is further amended--
                    (A) by redesignating subparagraphs (C), (D), and 
                (E) as subparagraphs (D), (E), and (F), respectively; 
                and
                    (B) by inserting after subparagraph (B) the 
                following:
                    ``(C) Employer may elect salary reduction only 
                arrangement.--
                            ``(i) In general.--An employer shall be 
                        treated as meeting the requirements of 
                        subparagraph (A)(iii) for any year if, in lieu 
                        of the contributions described in such 
                        subparagraph, the employer elects to limit the 
                        amount which an employee may elect under 
                        subparagraph (A)(i) to a total of $5,000 for 
                        the year. If an employer makes an election 
                        under this subparagraph for any year, the 
                        employer shall notify employees of such 
                        election within a reasonable period of time 
                        before the 60-day period for such year under 
                        paragraph (5)(C).
                            ``(ii) Exception.--This subparagraph shall 
                        not apply to an employer if such employer (or 
                        any predecessor employer) maintained another 
                        qualified plan (as defined in subparagraph 
                        (D)(ii)) with respect to which contributions 
                        were made, or benefits were accrued, for 
                        service during the year in which the 
                        arrangement described in clause (i) became 
                        effective or either of the 2 preceding years. 
                        If only individuals other than employees 
                        described in subparagraph (A) of section 
                        410(b)(3) are eligible to participate in the 
                        arrangement described in clause (i), then the 
                        preceding sentence shall be applied without 
                        regard to any qualified plan in which only 
                        employees so described are eligible to 
                        participate.''.
            (2) Special rule for acquisitions, dispositions, and 
        similar transactions.--Subparagraph (B) of section 408(p)(10) 
        is amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``; and'', and by inserting after clause (iii) the following:
                            ``(iv) the requirement under paragraph 
                        (2)(C) that the employer not have maintained 
                        another qualified plan described therein.''.
            (3) Cost-of-living adjustment.--Subparagraph (F) of section 
        408(p)(2) (as so redesignated) is amended by inserting ``and 
        the $5,000 amount under subparagraph (C)'' after ``subparagraph 
        (A)(ii)''.
            (4) Coordination with maximum limitation.--Paragraph (8) of 
        section 408(p) (relating to coordination with maximum 
        limitation under subsection (a)) is amended by striking 
        ``paragraph (2)(A)(ii) of this subsection'' and inserting 
        ``subparagraph (A)(ii) or (C) of paragraph (2) of this 
        subsection, whichever is applicable,''.
            (5) Conforming amendment.--Clause (ii) of section 
        408(p)(10)(B) is amended by striking ``paragraph (2)(D)'' and 
        inserting ``paragraph (2)(E)''.
    (b) Adoption of Simple Plan To Meet Nondiscrimination Tests.--
            (1) Simple plan.--Subparagraph (B) of section 401(k)(11) is 
        amended by redesignating clause (iii) as clause (iv) and by 
        inserting after clause (ii) the following new clause:
                            ``(iii) Employer may elect salary reduction 
                        only arrangement.--
                                    ``(I) In general.--An employer 
                                shall be treated as meeting the 
                                requirements of clause (i)(II) for any 
                                year if, in lieu of the contributions 
                                described in such clause, the employer 
                                elects to limit the amount which an 
                                employee may elect under clause (i) to 
                                a total of $5,000 for the year. If an 
                                employer makes an election under this 
                                clause for any year, the employer shall 
                                notify employees of such election 
                                within a reasonable period of time 
                                before the 60-day period for such year 
                                under clause (iv)(II).
                                    ``(II) Exception.--This clause 
                                shall not apply to an employer if such 
                                employer (or any predecessor employer) 
                                maintained another qualified plan (as 
                                defined in section 408(p)(2)(D)(ii)) 
                                with respect to which contributions 
                                were made, or benefits were accrued, 
                                for service during the year in which 
                                the arrangement described in subclause 
                                (I) became effective or either of the 2 
                                preceding years. This subclause shall 
                                not apply if such contributions or 
                                benefits were solely on behalf of 
                                employees who are not eligible to 
                                participate in the arrangement 
                                described in subclause (I).''.
            (2) Cost-of-living adjustment.--Subparagraph (E) of section 
        401(k)(11) is amended by inserting ``and the $5,000 amount 
        under subparagraph (B)(iii)'' after ``subparagraph (B)(i)(I)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 104. MODIFICATION OF TOP-HEAVY RULES.

    (a) Repeal of Family Aggregation Rules.--Section 416(i)(1)(B)(i)(I) 
(defining 5-percent owner) is amended by inserting ``(without regard to 
subsection (a)(1) thereof)'' after ``section 318''.
    (b) Simplification of Definition of Key Employee.--
            (1) In general.--Section 416(i)(1)(A) (defining key 
        employee) is amended--
                    (A) by striking ``or any of the 4 preceding plan 
                years'' in the matter preceding clause (i),
                    (B) by striking clause (i) and inserting the 
                following:
                            ``(i) an officer of the employer who has 
                        compensation from the employer of more than 
                        $150,000,'',
                    (C) by striking clause (ii) and redesignating 
                clauses (iii) and (iv) as clauses (ii) and (iii), 
                respectively, and
                    (D) by striking the second sentence in the matter 
                following clause (iii), as redesignated by subparagraph 
                (C).
            (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
        amended by striking ``and subparagraph (A)(ii)''.
    (c) Employee Elective Contributions to Plan Not Taken Into 
Account.--
            (1) Definition of top-heavy plan.--Section 416(g)(4) 
        (relating to other special rules) is amended by adding at the 
        end the following:
                    ``(H) Employee elective contributions to plan not 
                taken into account.--At the election of the employer, 
                any employee elective contribution described in section 
                415(c)(3)(D) to a plan (and earnings allocable thereto) 
                shall not be taken into account for purposes of 
                determining whether a plan is a top-heavy plan (or 
                whether any aggregation group which includes such plan 
                is a top-heavy group).''.
            (2) Definition of compensation.--Section 416(i)(1)(D) 
        (defining compensation) is amended to read as follows:
                    ``(D) Compensation.--
                            ``(i) In general.--For purposes of this 
                        paragraph, except as provided in clause (ii), 
                        the term `compensation' has the meaning given 
                        such term by section 414(q)(4).
                            ``(ii) Employee elective contributions to 
                        plan not taken into account.--At the election 
                        of the employer, any employee elective 
                        contribution described in section 415(c)(3)(D) 
                        to a plan shall not be taken into account for 
                        purposes of determining compensation.''.
    (d) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this subparagraph.''.
    (e) Requirements for Qualifications.--Clause (ii) of section 
401(a)(10)(B) (relating to requirements for qualifications for top-
heavy plans) is amended by adding at the end the following new flush 
sentence:
                        ``The preceding sentence shall not apply to a 
                        plan if the plan is not top-heavy and if it is 
                        not reasonable to expect that the plan will 
                        become top-heavy.''.
    (f) Distributions During Last Year Before Determination Date Taken 
Into Account.--Section 416(g) is amended--
            (1) in paragraph (3)--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date'', and
                    (B) in the matter following subparagraph (B), by 
                striking ``5-year period'' and inserting ``1-year 
                period'', and
            (2) in paragraph (4)(E)--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date'', and
                    (B) by striking ``5-year period'' and inserting 
                ``1-year period''.
    (g) Definition of Top-Heavy Plans.--
            (1) Exclusion of certain plans from definition of top-heavy 
        plan.--Paragraph (4) of section 416(d) (relating to other 
        special rules for top-heavy plans) is amended by adding at the 
        end the following new subparagraphs:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a cash or deferred arrangement to the extent 
                that such arrangement meets the requirements of section 
                401(k)(12). This subparagraph shall also apply to 
                contributions that are not required to satisfy the 
                requirements of section 401(k)(12) but are consistent 
                with the purposes of such section, as permitted under 
                regulations which the Secretary shall prescribe. 
                Nothing in this subparagraph shall preclude an employer 
                from taking into account contributions made under the 
                cash or deferred arrangement when determining whether 
                any plan of such employer satisfies the requirements of 
                this section.
                    ``(I) Defined contribution plans using alternative 
                methods of meeting nondiscrimination requirements.--The 
                term `top-heavy plan' shall not include a defined 
                contribution plan to the extent that such plan meets 
                the requirements of section 401(m)(11). This 
                subparagraph shall also apply to contributions that are 
                not required to satisfy the requirements of section 
                401(m)(11) but are consistent with the purposes of such 
                section, as permitted under regulations which the 
                Secretary shall prescribe. Nothing in this subparagraph 
                shall preclude an employer from taking into account 
                contributions made under the defined contribution plan 
                when determining whether any plan of such employer 
                satisfies the requirements of this section.''.
            (2) Aggregation group not required to include certain 
        plans.--Clause (i) of section 416(g)(2)(A) of such Code 
        (relating to required aggregation) is amended by adding at the 
        end the following new flush sentence:
                        ``Such term shall not include a plan or 
                        arrangement described in subparagraph (H) or 
                        (I) of paragraph (4).''.
    (h) Elective Deferrals Not Taken Into Account.--Clause (i) of 
section 416(c)(2)(B) (relating to special rule where maximum 
contribution less than 3 percent) is amended by inserting ``(other than 
elective deferrals (as defined in section 402(g)(3))'' after 
``contributions''.
    (i) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit 
plans) is amended--
            (1) in clause (i) by striking ``clause (ii)'' and inserting 
        ``clause (ii) or (iii)'', and
            (2) by adding at the end the following:
                            ``(iii) For purposes of determining an 
                        employee's years of service with the employer, 
                        any service with the employer shall be 
                        disregarded to the extent that such service 
                        occurs during a plan year when no employee or 
                        former employee benefits under the plan within 
                        the meaning of section 410(b).''.
    (j) Alternative 60 Percent.--Subsection (g) of section 416 
(relating to top heavy plan defined) is amended by adding at the end 
the following:
            ``(5) Alternative 60 percent test.--
                    ``(A) In general.--For any plan year, an employer 
                may elect for this paragraph to apply to all plans 
                maintained by such employer. If this paragraph applies 
                to a plan, the term `top-heavy plan' shall have the 
                meaning set forth in subparagraph (B) and the term 
                `top-heavy group' shall have the meaning set forth in 
                subparagraph (C).
                    ``(B) Top-heavy plan defined.--In the case of any 
                plan to which this paragraph applies, the term `top-
                heavy plan' means, with respect to any plan year--
                            ``(i) any defined benefit plan if, for the 
                        plan year ending on the determination date, the 
                        present value of the accruals for key employees 
                        exceeds 60 percent of the present value of the 
accruals for all employees, and
                            ``(ii) any defined contribution plan if, 
                        for the plan year ending on the determination 
                        date, the annual additions for key employees 
                        exceed 60 percent of the annual additions for 
                        all employees.
                    ``(C) Top-heavy group.--In the case of any plan to 
                which this paragraph applies, the term `top-heavy 
                group' means any aggregation group if--
                            ``(i) the sum, for the plan year ending on 
                        the determination date, of--
                                    ``(I) the present value of the 
                                accruals for key employees under all 
                                defined benefit plans included in such 
                                group, and
                                    ``(II) the aggregate of the annual 
                                additions of key employees under all 
                                defined contribution plans included in 
                                such group,
                            ``(ii) exceeds 60 percent of a similar sum 
                        determined for all employees.
                    ``(D) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' shall have the 
                same meaning as when used in section 415(c)(2) (without 
                regard to section 415(l) or section 419A(d)(2)).
                    ``(E) Certain rules not to apply.--Paragraphs (3) 
                and (4) (other than subparagraphs (B), (C), (D), (E), 
                and (G) of paragraph (4)) shall not apply for purposes 
                of this paragraph.''.
    (k) Conforming Amendments.--
            (1) Subparagraph (A) of section 416(g)(1) is amended by 
        striking ``subparagraph (B)'' and inserting ``subparagraph (B) 
        and paragraph (5)''.
            (2) Subparagraph (B) of section 416(g)(2) is amended by 
        striking ``The term'' and inserting ``Except as provided in 
        paragraph (5), the term''.
            (3) Subparagraph (A) of section 415(b)(5) is amended by 
        adding at the end the following: ``An employee shall not be 
        credited with a year of participation in a defined benefit plan 
        for any year in which such employee does not benefit under the 
        plan within the meaning of section 410(b).''.
    (l) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 105. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              LIMITS.

    (a) In General.--Section 404 is amended by adding at the end the 
following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Limits.--Elective deferrals (as defined in section 402(g)(3)) shall not 
be subject to any limitations described in this section (other than 
subsection (a)), and such elective deferrals shall not be taken into 
account in applying such limitations to any other contributions.''.
    (b) Conforming Amendments.--Paragraph (3) of section 4972(c) is 
amended to read as follows:
            ``(3) Contributions not taken into account.--In determining 
        the amount of nondeductible contributions for any taxable year, 
        there shall not be taken into account--
                    ``(A) any elective deferral (as defined in section 
                402(g)(3)), or
                    ``(B) any contribution for such taxable year which 
                is distributed to the employer in a distribution 
                described in section 4980(c)(2)(B)(ii) if such 
                distribution is made on or before the last day on which 
                a contribution may be made for such taxable year under 
                section 404(a)(6).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1999.

SEC. 106. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.

    (a) In General.--Subparagraph (A) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(A)) is amended--
            (1) by inserting ``other than a new single-employer plan of 
        a small employer (as defined in clause (iv)),'' after ``in the 
        case of a single-employer plan,'' in clause (i),
            (2) by striking the period at the end of clause (iii) and 
        inserting ``; and'', and
            (3) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in the case of a new single-employer plan of a small 
        employer, $5 for each individual who is a participant in such 
        plan during the plan year. For purposes of this clause (iv):
                    ``(I) The term `new single-employer plan' means a 
                single-employer plan during its first five plan years; 
                provided, however, that a single-employer plan is not a 
                new single-employer plan if any contributing sponsor or 
                any member of its controlled group (including any 
                predecessor of a contributing sponsor or member of such 
                predecessor's controlled group) had established or 
                maintained a plan to which this title applied that 
                included substantially the same employees as such new 
                plan, at any time within the 36-month period preceding 
                the adoption of such new plan.
                    ``(II) The term `small employer` means a 
                contributing sponsor that on the first day of the plan 
                year has, in combination with all members of its 
                controlled group, 100 or fewer employees.
                    ``(III) In the case of a plan maintained by two or 
                more contributing sponsors that are not part of the 
                same controlled group, the employees of all 
                contributing sponsors and their controlled groups shall 
                be aggregated for purposes of determining whether the 
                plan shall be considered to be a plan of a small 
                employer.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1999.

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

    (a) In General.--Subparagraph (E) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended--
            (1) by inserting ``(or, in the case of a new single-
        employer plan described in clause (vi), the amount determined 
        under clause (v))'' after ``determined under clause (ii)'' in 
        clause (i), and
            (2) by inserting after clause (iv) the following new 
        clauses:
    ``(v) The amount determined under this clause for any plan year of 
a new single-employer plan (as described in clause (vi)) shall be an 
amount equal to the product derived by multiplying the amount 
determined under clause (ii) by the applicable percentage. For purposes 
of this clause (v), the term `applicable percentage' means--
            ``(I) 0 percent, for the first plan year,
            ``(II) 20 percent, for the second plan year,
            ``(III) 40 percent, for the third plan year,
            ``(IV) 60 percent, for the fourth plan year, and
            ``(V) 80 percent, for the fifth plan year.
    ``(vi) For purposes of clause (v), the term `new single-employer 
plan' means a single-employer plan during its first five plan years; 
provided, however, that a single-employer plan is not a new single-
employer plan if any contributing sponsor or any member of its 
controlled group (including any predecessor of a contributing sponsor 
or member of such predecessor's controlled group) had established or 
maintained a plan to which this title applied that included 
substantially the same employees as such new plan, at any time within 
the 36-month period preceding the adoption of such new plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1999.

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

    (a) In General.--Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations) is amended to read as follows:
    ``(c) Limitation.--The maximum amount of the compensation of any 
one individual which may be deferred under subsection (a) during any 
taxable year shall not exceed $15,000 (as modified by any adjustment 
provided under subsection (b)(3)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 1999.

SEC. 109. ELIMINATION OF USER FEE FOR REQUESTS TO IRS REGARDING PENSION 
              PLANS.

    (a) Elimination of Certain User Fees.--The Secretary of the 
Treasury or the Secretary's delegate shall not require payment of user 
fees under the program established under section 10511 of the Revenue 
Act of 1987 for requests to the Internal Revenue Service for ruling 
letters, opinion letters, and determination letters or similar requests 
with respect to the qualified status of a pension benefit plan 
maintained solely by one or more eligible employers or any trust which 
is part of the plan.
    (b) Pension Benefit Plan.--For purposes of this section, the term 
`pension benefit plan' means a pension, profit-sharing, stock bonus, 
annuity, or employee stock ownership plan.
    (c) Eligible Employer.--For purposes of this section, the term 
``eligible employer'' has the same meaning given such term in section 
408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The 
determination of whether an employer is an eligible employer under this 
section shall be made as of the date of the request described in 
subsection (a).
    (d) Effective Date.--The provisions of this section shall apply 
with respect to requests made after December 31, 1999.

SEC. 110. ALTERNATIVE METHOD OF MEETING NONDISCRIMINATION REQUIREMENTS 
              FOR AUTOMATIC CONTRIBUTION TRUST.

    (a) In General.--Section 401(k) (relating to cash or deferred 
arrangement) is amended by adding at the end the following new 
paragraph:
            ``(13) Nondiscrimination requirements for automatic 
        contribution trusts.--
                    ``(A) In general.--A cash or deferred arrangement 
                shall be treated as meeting the requirements of 
                paragraph (3)(A)(ii) if such arrangement constitutes an 
                automatic contribution trust.
                    ``(B) Automatic contribution trust.--For purposes 
                of this paragraph, the term `automatic contribution 
                trust' means an arrangement--
                            ``(i) under which each employee eligible to 
                        participate in the arrangement is treated as 
                        having elected to have the employer make 
                        elective contributions in an amount equal to 
                        the uniform percentage (not less than 3 
                        percent) of compensation provided under the 
                        arrangement until the employee specifically 
                        elects not to have such contributions made, and
                            ``(ii) which meets the other requirements 
                        of this paragraph.
                Clause (i) of this subparagraph shall not apply to any 
                employee who was eligible to participate in the 
                arrangement (or a predecessor arrangement) immediately 
                before the first date on which the arrangement is an 
                automatic contribution trust. The election treated as 
                having been made under clause (i) shall cease to apply 
                to compensation paid after the specific election by the 
                employee.
                    ``(C) Participation.--
                            ``(i) Except as provided in clause (ii), an 
                        arrangement meets the requirements of this 
                        subparagraph for any year if, during the plan 
                        year or the preceding plan year, elective 
                        contributions are made on behalf of at least 70 
                        percent of employees other than highly 
                        compensated employees eligible to participate 
                        in the arrangement.
                            ``(ii) An arrangement (other than a 
                        successor arrangement) shall be treated as 
                        meeting the requirements of this subparagraph 
                        with respect to the first plan year in which 
                        the arrangement is effective.
                    ``(D) Matching or nonelective contributions.--The 
                requirements of this subparagraph are met if, under the 
                arrangement, the employer--
                            ``(i) makes matching contributions on 
                        behalf of each employee who is not a highly 
                        compensated employee in an amount equal to 50 
                        percent of the elective contributions of the 
                        employee to the extent such elective 
                        contributions do not exceed 5 percent of 
                        compensation, or
                            ``(ii) is required, without regard to 
                        whether the employee makes an elective 
                        contribution or employee contribution, to make 
                        a contribution to a defined contribution plan 
                        on behalf of each employee who is not a highly 
                        compensated employee and who is eligible to 
                        participate in the arrangement in an amount 
                        equal to at least 2 percent of the employee's 
                        compensation.
                The rules of clauses (ii), (iii), and (iv) of paragraph 
                (12)(B) shall apply for purposes of clause (i).
                    ``(E) Vesting.--The requirements of this 
                subparagraph are met if the requirements of 
                subparagraph (C) of paragraph (2) are met with respect 
                to all employer contributions (including matching 
                contributions) taken into account in determining 
                whether the requirements of subparagraph (B) or (C) are 
                met.
                    ``(F) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Reasonable period to make 
                        election.--The requirements of this clause are 
                        met if each employee to whom subparagraph 
                        (B)(i) applies--
                                    ``(I) receives a notice explaining 
                                the employee's right under the 
                                arrangement to elect not to have 
                                elective contributions made on the 
                                employee's behalf, and
                                    ``(II) has a reasonable period of 
                                time after receipt of such notice and 
                                before the first elective contribution 
                                is made to make such election.
                            ``(iii) Annual notice of rights and 
                        obligations.--The requirements of this clause 
                        are met if each employee eligible to 
                        participate in the arrangement is, within a 
                        reasonable period before any year, given notice 
                        of the employee's rights and obligations under 
                        the arrangement.
                The requirements of clauses (i) and (ii) of paragraph 
                (12)(D) shall be met with respect to the notices 
                described in clauses (ii) and (iii) of this 
                subparagraph.''.
    (b) Matching Contributions.--Section 401(m) (relating to 
nondiscrimination test for matching contributions and employee 
contributions) is amended by redesignating paragraph (12) as paragraph 
(13) and by inserting after paragraph (11) the following new paragraph:
            ``(12) Alternative method for automatic contribution 
        trusts.--
                    ``(A) In general.--A defined contribution plan 
                shall be treated as meeting the requirements of 
                paragraph (2) with respect to matching contributions if 
                the plan--
                            ``(i) meets the contribution requirements 
                        of subparagraphs (B)(i) and (D) of subsection 
                        (k)(13),
                            ``(ii) meets the participation requirements 
                        of subsection (k)(13)(C),
                            ``(iii) meets the vesting and notice 
                        requirements of subparagraphs (E) and (F) of 
                        subsection (k)(13), and
                            ``(iv) meets the requirements of paragraph 
                        (11)(B).
                    ``(B) Matching contributions.--An annuity contract 
                under section 403(b) shall be treated as meeting the 
                requirements of paragraph (2) with respect to matching 
                contributions if such contract meets requirements 
                similar to the requirements under subparagraph (A).''.
    (c) Exclusion From Definition of Top-Heavy Plans.--Paragraph (4) of 
section 416(d) (relating to other special rules for top-heavy plans), 
as amended by section 104(g), is amended by adding at the end the 
following new subparagraph:
                    ``(J) Automatic contribution trust.--The term `top-
                heavy plan' shall not include an automatic contribution 
                trust under section 401(k)(13). Nothing in this 
subparagraph shall preclude an employer from taking into account 
contributions made under the automatic contribution trust when 
determining whether any plan of such employer satisfies the 
requirements of this section.''.
    (d) Definition of Compensation.--
            (1) In general.--Paragraph (9) of section 401(k) is amended 
        to read as follows:
            ``(9) Compensation.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), for purposes of this section, the 
                term `compensation' has the meaning given such term by 
                section 414(s).
                    ``(B) Use of base pay.--For purposes of paragraph 
                (12)(B), the term `compensation' means the definition 
                of compensation used by the cash or deferred 
                arrangement if such compensation--
                            ``(i) meets the requirements of section 
                        414(s), or
                            ``(ii) constitutes base pay.
                    ``(C) Base pay.--For purposes of subparagraph (B), 
                the term `base pay' means a reasonable definition of 
                compensation that does not by design favor highly 
                compensated employees and that excludes on a consistent 
                basis all irregular or additional compensation.''.
            (2) Automatic contribution trusts.--Paragraph (9)(B) of 
        section 401(k) (as amended by paragraph (1)) is amended by 
        striking ``paragraph (12)(B)'' and inserting ``paragraphs 
        (12)(B), (13)(B), and (13)(D)(i)''.
            (3) Matching contributions.--Paragraph (11) of section 
        401(m) is amended by adding at the end the following:
                    ``(C) Definition of compensation.--For purposes of 
                subparagraph (B), the term ``compensation'' has the 
                meaning given such term by subsection (k)(9)(B).''.
    (e) Application by Year or Payroll Period.--
            (1) Cash or deferred arrangements.--Subparagraph (B) of 
        section 401(k)(12) is amended by adding at the end the 
        following:
                            ``(iv) Application by year or payroll 
                        period.--The requirements of this subparagraph 
                        may be met for a plan year by meeting such 
                        requirements either--
                                    ``(I) with respect to the plan year 
                                as a whole, or
                                    ``(II) separately with respect to 
                                each payroll period (or other payment 
                                of compensation) taken into account 
                                under the arrangement for the plan 
                                year.''.
            (2) Defined contribution plans.--Paragraph (11) of section 
        401(m) (as amended by this section) is amended by adding at the 
        end the following:
                    ``(D) Application by year or payroll period.--The 
                requirements of subparagraph (B) may be met for a plan 
                year by meeting such requirements either--
                            ``(i) with respect to the plan year as a 
                        whole, or
                            ``(ii) separately with respect to each 
                        payroll period (or other payment of 
                        compensation) taken into account under the plan 
                        for the plan year.''.
    (f) Section 403(b) Contracts.--Paragraph (11) of section 401(m) (as 
amended by this section) is amended by adding at the end the following:
                    ``(E) Section 403(b) contracts.--An annuity 
                contract under section 403(b) shall be treated as 
                meeting the requirements of paragraph (2) with respect 
                to matching contributions if such contract meets 
                requirements similar to the requirements under 
                subparagraph (A).''.
    (e) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to plan years 
        beginning after December 31, 1999.
            (2) Exception.--The amendments made by subsections (d)(1), 
        (d)(3), (e), and (f) shall apply to years beginning after 
        December 31, 1998.

SEC. 111. DEDUCTION LIMITS.

    (a) In General.--
            (1) Stock bonus and profit sharing trusts.--Subclause (I) 
        of section 404(a)(3)(A)(i) (relating to stock bonus and profit 
        sharing trusts) is amended by striking ``15 percent'' and 
        inserting ``25 percent''.
            (2) Compensation.--Section 404(a) (relating to general 
        rule) is amended by adding at the end the following:
            ``(12) Definition of compensation.--For purposes of 
        paragraphs (3), (7), and (9), the term `compensation otherwise 
        paid or accrued during the taxable year' shall include amounts 
treated as `participant's compensation' under subparagraph (C) or (D) 
of section 415(c)(3).''.
            (3) Defined contribution plans.--Subparagraph (A) of 
        section 404(a)(3) (relating to stock bonus and profit sharing 
        trusts) is amended by adding at the end the following:
                            ``(vi) Defined contribution plans subject 
                        to the funding standards.--Except as provided 
                        by the Secretary, for purposes of this 
                        subparagraph, a defined contribution plan which 
                        is subject to the funding standards of section 
                        412 shall be treated in the same manner as a 
                        stock bonus or profit-sharing plan.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 404(a)(3) is amended by 
        striking clause (v) and by redesignating clause (vi) (as added 
        by subsection (a)(3) of this section) as clause (v).
            (2) Subparagraph (B) of section 404(a)(3) is amended by 
        striking the last sentence thereof.
            (3) Subparagraph (D) of section 404(a)(8) is amended by 
        striking the period at the end and inserting the following: ``, 
        except that such earned income shall be adjusted under rules 
        similar to the rules of paragraph (12).''.
            (4) Subparagraph (C) of section 404(h)(1) is amended by 
        striking ``15 percent'' each place it appears and inserting 
        ``25 percent''.
            (5) Paragraph (2) of section 404(h) is amended by striking 
        ``stock bonus or profit-sharing trust'' and inserting ``trust 
        subject to subsection (a)(3)(A)''.
            (6) Clause (i) of section 4972(c)(6)(B) is amended by 
        striking ``(within the meaning of section 404(a))'' and 
        inserting ``(within the meaning of section 404(a) and as 
        adjusted under section 404(a)(12))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 112. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
              CONTRIBUTIONS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to deferred compensation, etc.) is amended by inserting after 
section 402 the following new section:

``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
              CONTRIBUTIONS.

    ``(a) General Rule.--If an applicable retirement plan includes a 
qualified plus contribution program--
            ``(1) any designated plus contribution made by an employee 
        pursuant to the program shall be treated as an elective 
        deferral for purposes of this chapter, except that such 
        contribution shall not be excludable from gross income, and
            ``(2) such plan (and any arrangement which is part of such 
        plan) shall not be treated as failing to meet any requirement 
        of this chapter solely by reason of including such program.
    ``(b) Qualified Plus Contribution Program.--For purposes of this 
section--
            ``(1) In general.--The term `qualified plus contribution 
        program' means a program under which an employee may elect to 
        make designated plus contributions in lieu of all or a portion 
        of elective deferrals the employee is otherwise eligible to 
        make under the applicable retirement plan.
            ``(2) Separate accounting required.--A program shall not be 
        treated as a qualified plus contribution program unless the 
        applicable retirement plan--
                    ``(A) establishes separate accounts (`designated 
                plus accounts') for the designated plus contributions 
                of each employee and any earnings properly allocable to 
                the contributions, and
                    ``(B) maintains separate recordkeeping with respect 
                to each account.
    ``(c) Definitions and Rules Relating to Designated Plus 
Contributions.--For purposes of this section--
            ``(1) Designated plus contribution.--The term `designated 
        plus contribution' means any elective deferral which--
                    ``(A) is excludable from gross income of an 
                employee without regard to this section, and
                    ``(B) the employee designates (at such time and in 
                such manner as the Secretary may prescribe) as not 
                being so excludable.
            ``(2) Designation limits.--The amount of elective deferrals 
        which an employee may designate under paragraph (1) shall not 
        exceed the excess (if any) of--
                    ``(A) the maximum amount of elective deferrals 
                excludable from gross income of the employee for the 
                taxable year (without regard to this section), over
                    ``(B) the aggregate amount of elective deferrals of 
                the employee for the taxable year which the employee 
                does not designate under paragraph (1).
            ``(3) Rollover contributions.--
                    ``(A) In general.--A rollover contribution of any 
                payment or distribution from a designated plus account 
                which is otherwise allowable under this chapter may be 
                made only if the contribution is to--
                            ``(i) another designated plus account of 
                        the individual from whose account the payment 
                        or distribution was made, or
                            ``(ii) a Roth IRA of such individual.
                    ``(B) Coordination with limit.--Any rollover 
                contribution to a designated plus account under 
                subparagraph (A) shall not be taken into account for 
                purposes of paragraph (1).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) Exclusion.--Any qualified distribution from a 
        designated plus account shall not be includible in gross 
        income.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' has the meaning given such term by 
                section 408A(d)(2)(A).
                    ``(B) Distributions within nonexclusion period.--A 
                payment or distribution from a designated plus account 
                shall not be treated as a qualified distribution if 
                such payment or distribution is made within the 5-
                taxable-year period beginning with the earlier of--
                            ``(i) the earlier of--
                                    ``(I) the 1st taxable year for 
                                which the individual made a designated 
                                plus contribution to any designated 
                                plus account established for such 
                                individual under the same applicable 
                                retirement plan, or
                                    ``(II) if a rollover contribution 
                                was made to such designated plus 
                                account from a designated plus account 
                                previously established for such 
                                individual under another applicable 
                                retirement plan, the 1st taxable year 
                                for which the individual made a 
                                designated plus contribution to such 
                                previously established account), or
                            ``(ii) the 1st taxable year for which the 
                        individual (or the individual's spouse) made a 
                        contribution to a Roth IRA established for such 
                        individual.
                    ``(C) Distributions of excess deferrals and 
                earnings.--The term `qualified distribution' shall not 
                include any distribution of any excess deferral under 
                section 402(g)(2) and any income on the excess 
                deferral.
            ``(3) Aggregation rules.--Section 72 shall be applied 
        separately with respect to distributions and payments from a 
        designated plus account and other distributions and payments 
        from the plan.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Applicable retirement plan.--The term `applicable 
        retirement plan' means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a), 
                and
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b).
            ``(2) Elective deferral.--The term `elective deferral' 
        means any elective deferral described in subparagraph (A) or 
        (C) of section 402(g)(3).''
    (b) Excess Deferrals.--Section 402(g) (relating to limitation on 
exclusion for elective deferrals) is amended--
            (1) by adding at the end of paragraph (1) the following new 
        sentence: ``The preceding sentence shall not apply to so much 
        of such excess as does not exceed the designated plus 
        contributions of the individual for the taxable year.'', and
            (2) by inserting ``(or would be included but for the last 
        sentence thereof)'' after ``paragraph (1)'' in paragraph 
        (2)(A).
    (c) Rollovers.--Subparagraph (B) of section 402(c)(7) (as amended 
by sections 301 and 302) is amended by adding at the end the following:
                ``Without regard to the foregoing provisions of this 
                paragraph, if any portion of an eligible rollover 
                distribution is attributable to payments or 
                distributions from a designated plus account (as 
                defined in section 402A), an eligible retirement plan 
                with respect to such portion shall include only another 
                designated plus account and a Roth IRA.''
    (d) Reporting Requirements.--
            (1) W-2 information.--Section 6051(a)(8) is amended by 
        inserting ``, including the amount of designated plus 
        contributions (as defined in section 402A)'' before the comma 
        at the end.
            (2) Information.--Section 6047 is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Designated Plus Contributions.--The Secretary shall require 
the plan administrator of each applicable retirement plan (as defined 
in section 402A) to make such returns and reports regarding designated 
plus contributions (as so defined) to the Secretary, participants and 
beneficiaries of the plan, and such other persons as the Secretary may 
prescribe.''
    (e) Conforming Amendments.--
            (1) Section 408A(e) is amended by adding after the first 
        sentence the following new sentence: ``Such term includes a 
        rollover contribution described in section 402A(c)(3)(A).''
            (2) 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 402 the following new item:

``Sec. 402A. Optional treatment of elective deferrals as plus 
                            contributions.''
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 113. CREDIT FOR PENSION PLAN STARTUP COSTS OF SMALL EMPLOYERS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP COSTS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan startup cost credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the qualified startup costs paid or incurred by the 
taxpayer during the taxable year.
    ``(b) Dollar Limitation.--The amount of the credit determined under 
this section for any taxable year shall not exceed--
            ``(1) $1,000 for the first credit year,
            ``(2) $500 for each of the 2 taxable years immediately 
        following the first credit year, and
            ``(3) zero for any other taxable year.
    ``(c) Eligible Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible employer' has the 
        meaning given such term by section 408(p)(2)(C)(i).
            ``(2) Employers maintaining qualified plans during 1998 not 
        eligible.--Such term shall not include an employer if such 
        employer (or any predecessor employer) maintained a qualified 
        plan (as defined in section 408(p)(2)(D)(ii)) with respect to 
        which contributions were made, or benefits were accrued, for 
        service in 1998. If only individuals other than employees 
        described in subparagraph (A) of section 410(b)(3) are eligible 
        to participate in the qualified employer plan referred to in 
        subsection (d)(1), then the preceding sentence shall be applied 
        without regard to any qualified plan in which only employees so 
        described are eligible to participate.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualified startup costs.--
                    ``(A) In general.--The term `qualified startup 
                costs' means any ordinary and necessary expenses of an 
                eligible employer which are paid or incurred in 
                connection with--
                            ``(i) the establishment or administration 
                        of an eligible employer plan, or
                            ``(ii) the retirement-related education of 
                        employees with respect to such plan.
                    ``(B) Plan must have at least 2 participants.--Such 
                term shall not include any expense in connection with a 
                plan that does not have at least 2 individuals who are 
                eligible to participate.
                    ``(C) Plan must be established before january 1, 
                2002.--Such term shall not include any expense in 
                connection with a plan established after December 31, 
                2001.
            ``(2) Eligible employer plan.--The term `eligible employer 
        plan' means a qualified employer plan within the meaning of 
        section 4972(d).
            ``(3) First credit year.--The term `first credit year' 
        means--
                    ``(A) the taxable year which includes the date that 
                the eligible employer plan to which such costs relate 
                becomes effective, or
                    ``(B) at the election of the eligible employer, the 
                taxable year preceding the taxable year referred to in 
                subparagraph (A).
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (n) or (o) of section 414, shall be treated as one 
        person. All eligible employer plans shall be treated as 1 
        eligible employer plan.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowed for that portion of the qualified startup costs paid or 
        incurred for the taxable year which is equal to the credit 
        determined under subsection (a).
            ``(3) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.''
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) (defining current year business credit) is amended by striking 
``plus'' at the end of paragraph (11), by striking the period at the 
end of paragraph (12) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(13) in the case of an eligible employer (as defined in 
        section 45D(c)), the small employer pension plan startup cost 
        credit determined under section 45D(a).''
    (c) Conforming Amendments.--
            (1) Section 39(d) is amended by adding at the end the 
        following new paragraph:
            ``(8) No carryback of small employer pension plan startup 
        cost credit before effective date.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the small employer pension plan startup cost credit determined 
        under section 45D may be carried back to a taxable year ending 
        on or before the date of the enactment of section 45D.''
            (2) Subsection (c) of section 196 is amended by striking 
        ``and'' at the end of paragraph (7), by striking the period at 
        the end of paragraph (8) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(9) the small employer pension plan startup cost credit 
        determined under section 45D(a).''
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

                              ``Sec. 45D. Small employer pension plan 
                                        startup costs.''
    (d) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years ending after the date 
of the enactment of this Act.

          TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

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

    (a) Limitation on Exclusion for Elective Deferrals.--
            (1) In general.--Subsection (g) of section 402 (as amended 
        by section 101(d)) is further amended by adding at the end the 
        following:
            ``(9) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (1) for 
        such year, after the application of paragraph (8), shall be 
        increased by $5,000.''.
            (2) Cost-of-living adjustment.--Paragraph (4) of section 
        402(g) (relating to cost-of-living adjustment), as amended by 
        section 101(d), is further amended by inserting ``and the 
        $5,000 amount under paragraph (9)'' after ``paragraph (1)''.
    (b) Simple Retirement Accounts.--
            (1) In general.--Paragraph (2) of section 408(p) (relating 
        to qualified salary reduction arrangement) (as amended by 
        sections 101(f) and 103(a)) is further amended by redesignating 
        subparagraph (F) as subparagraph (G) and by inserting after 
        subparagraph (E) the following new subparagraph:
                    ``(F) Catch-up contributions for those approaching 
                retirement.--In the case of an individual who has 
                attained age 50 during any taxable year, the limitation 
                of subparagraph (A)(ii) for such year shall be 
                increased by $5,000.''.
            (2) Cost-of-living adjustment.--Subparagraph (G) of section 
        408(p)(2) (as so redesignated) is amended by inserting ``and 
        the $5,000 amount under subparagraph (F)'' after ``subparagraph 
        (A)(ii)''.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subsection (b) of section 457 (relating to 
        definition of eligible deferred compensation plan) is amended 
        by adding at the end the following new paragraph:
            ``(7) Catch-up contributions for those approaching 
        retirement.--In the case of an individual who has attained age 
        50 during any taxable year, the limitation of paragraph (2)(A) 
        for such year shall be increased by $5,000.''.
            (2) Cost-of-living adjustment.--Paragraph (15) of section 
        457(e) (relating to cost-of-living adjustment) is amended by 
        inserting ``, and the $5,000 amount specified in subsection 
        (b)(7),'' after ``(c)(1)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

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

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

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

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

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

                  
                                                     The nonforfeitable
                ``Years of service:
                                                       percentage is:  
                        1..................................         20 
                        2..................................         40 
                        3..................................         60 
                        4..................................         80 
                        5..................................     100.''.
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        for plan years beginning after December 31, 1999.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified by the date of enactment of this Act, the 
        amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 2000, or
                    (B) January 1, 2004.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.

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

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

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

    (a) Simplification and Finalization of Minimum Distribution 
Requirements.--
            (1) In general.--The Secretary of the Treasury shall--
                    (A) simplify and finalize the regulations relating 
                to minimum distribution requirements under sections 
                401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 
                457(d)(2) of the Internal Revenue Code of 1986, and
                    (B) modify such regulations to--
                            (i) reflect increases in life expectancy, 
                        and
                            (ii) revise the required distribution 
                        methods so that, under reasonable assumptions, 
                        the amount of the required minimum distribution 
                        does not decrease over a participant's life 
                        expectancy.
            (2) Fresh start.--Notwithstanding subparagraph (D) of 
        section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life expectancy.
            (3) Effective date for regulations.--Regulations referred 
        to in paragraph (1) shall be effective for years beginning 
        after December 31, 2000, and shall apply in such years without 
        regard to whether an individual had previously begun receiving 
        minimum distributions.
    (b) Amount Not Subject to Minimum Distribution Requirements.--
Paragraph (9) of section 401(a) is amended--
            (1) in subparagraph (A), by inserting ``(minus the 
        exclusion amount)'' after ``the entire interest''; and
            (2) by adding at the end the following:
                    ``(H) Exclusion amount.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `exclusion amount' means--
                                    ``(I) $100,000 in the case of a 
                                defined contribution plan;
                                    ``(II) $100,000 in the case of an 
                                individual retirement plan; and
                                    ``(III) $0 in the case of a defined 
                                benefit plan.
                            ``(ii) Aggregation of plans.--For purposes 
                        of determining the exclusion amount under 
                        clause (i)--
                                    ``(I) all defined contribution 
                                plans maintained by the same employer 
                                shall be treated as a single plan; and
                                    ``(II) all individual retirement 
                                plans (other than Roth IRAs) of the 
                                individual shall be treated as a single 
                                plan.
                            ``(iii) Cost-of-living adjustment.--The 
                        Secretary shall adjust the $100,000 exclusion 
                        amount specified in clause (i) at the same time 
                        and in the same manner as under section 415(d), 
                        except that the base period shall be the 
                        calendar quarter ending September 30, 1999.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (c) Repeal of Rule Where Distributions Had Begun Before Death 
Occurs.--
            (1) In general.--Subparagraph (B) of section 401(a)(9) is 
        amended by striking clause (i) and redesignating clauses (ii), 
        (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
            (2) Conforming changes.--
                    (A) Clause (i) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``for other cases'' in the 
                        heading, and
                            (ii) by striking ``the distribution of the 
                        employee's interest has begun in accordance 
                        with subparagraph (A)(ii)'' and inserting ``his 
                        entire interest has been distributed to him,''.
                    (B) Clause (ii) of section 401(a)(9)(B) (as so 
                redesignated) is amended by striking ``clause (ii)'' 
                and inserting ``clause (i)''.
                    (C) Clause (iii) of section 401(a)(9)(B)(iii) (as 
                so redesignated) is amended--
                            (i) by striking ``clause (iii)(I)'' and 
                        inserting ``clause (ii)(I)'',
                            (ii) in subclause (I) by striking ``clause 
                        (iii)(III)'' and inserting ``clause 
                        (ii)(III)'',
                            (iii) in subclause (I) by striking ``the 
                        date on which the employee would have attained 
                        the age 70\1/2\,'' and inserting ``April 1 of 
                        the calendar year following the calendar year 
                        in which the spouse attains 70\1/2\, and clause 
                        (ii) shall not apply to the exclusion 
                        amount,'', and
                            (iv) in subclause (II) by striking ``the 
                        distributions to such spouse begin,'' and 
                        inserting ``his entire interest has been 
                        distributed to him,''.
            (3) Reduction in excise tax.--Subsection (a) of section 
        4974 is amended by striking ``50 percent'' and inserting ``10 
        percent''.
            (4) Effective date.--
                    (A) In general.--Except as provided by subparagraph 
                (B), the amendments made by this subsection shall apply 
                to years beginning after December 31, 2000.
                    (B) Excise tax.--The amendment made by paragraph 
                (3) shall apply to years beginning after December 31, 
                1999.

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

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

SEC. 207. PERCENTAGE LIMITATIONS ON CONTRIBUTIONS.

    (a) Amendments Relating to FERS.--
            (1) In general.--
                    (A) Subsection (a) of section 8432 of title 5, 
                United States Code, is amended by striking ``10 percent 
                of''.
                    (B) Subsection (d) of section 8432 of title 5, 
                United States Code, is amended by striking ``section 
                415'' and inserting ``section 401(a)(30) or 415''.
            (2) Justices and judges.--Subsection (b) of section 8440a 
        of title 5, United States Code, is amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (7) as paragraphs (2) through 
                (6), respectively; and
                    (B) in paragraph (6) (as so redesignated by 
                subparagraph (A)) by striking ``paragraphs (4) and 
                (5)'' and inserting ``paragraphs (3) and (4)''.
            (3) Bankruptcy judges and magistrates.--Subsection (b) of 
        section 8440b of title 5, United States Code, is amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (8) as paragraphs (2) through 
                (7), respectively;
                    (B) in paragraph (4) (as so redesignated by 
                subparagraph (A)) by striking ``paragraph (4)(A), (B), 
                or (C)'' and inserting ``paragraph (3)(A), (B), or 
                (C)''; and
                    (C) in paragraph (7) (as so redesignated by 
                subparagraph (A)) by striking ``Notwithstanding 
                paragraph (4),'' and inserting ``Notwithstanding 
                paragraph (3),''.
            (4) Court of federal claims judges.--Subsection (b) of 
        section 8440c of title 5, United States Code, is amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (8) as paragraphs (2) through 
                (7), respectively;
                    (B) in paragraph (4) (as so redesignated by 
                subparagraph (A)) by striking ``paragraph (4)(A) or 
                (B)'' and inserting ``paragraph (3)(A) or (B)''; and
                    (C) in paragraph (7) (as so redesignated by 
                subparagraph (A)) by striking ``Notwithstanding 
                paragraph (4),'' and inserting ``Notwithstanding 
                paragraph (3),''.
            (5) Judges of the united states court of veterans 
        appeals.--Paragraph (2) of section 8440d(b) of title 5, United 
        States Code, is amended to read as follows:
    ``(2) For purposes of contributions made to the Thrift Savings 
Fund, basic pay does not include any retired pay paid pursuant to 
section 7296 of title 38.''.
    (b) Amendments Relating to CSRS.--Paragraph (2) of section 8351(b) 
of title 5, United States Code, is amended by striking ``5 percent 
of''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect on the date of enactment of this Act.
            (2) Coordination with election periods.--The Executive 
        Director shall by regulation determine the first election 
        period in which elections may be made consistent with the 
        amendments made by this section.
            (3) Definitions.--For purposes of this section--
                    (A) the term ``election period'' means a period 
                afforded under section 8432(b) of title 5, United 
                States Code; and
                    (B) the term ``Executive Director'' has the meaning 
                given such term by section 8401(13) of title 5, United 
                States Code.

SEC. 208. ELIGIBLE ROLLOVER DISTRIBUTIONS.

    Section 8432 of title 5, United States Code, is amended by adding 
at the end the following:
    ``(j)(1) For the purpose of this subsection--
            ``(A) the term `eligible rollover distribution' has the 
        meaning given such term by section 402(c)(3) of the Internal 
        Revenue Code of 1986; and
            ``(B) the term `eligible retirement plan' has the meaning 
        given such term by section 402(c)(7) of the Internal Revenue 
        Code of 1986.
    ``(2) An employee or Member may contribute to the Thrift Savings 
Fund an eligible rollover distribution from an eligible retirement 
plan. A contribution made under this subsection shall be made by means 
of a direct rollover from an eligible retirement plan in a manner that 
is similar to a direct rollover under section 401(a)(31) of the 
Internal Revenue Code of 1986. In the case of an eligible rollover 
distribution, the maximum amount transferred to the Thrift Savings Fund 
shall not exceed the amount which would otherwise have been included in 
the employee's or Member's gross income for Federal income tax 
purposes.
    ``(3) The Executive Director shall prescribe regulations to carry 
out this subsection.''.

SEC. 209. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN.

    (a) Elimination of Certain Waiting Periods for Purposes of Employee 
Contributions.--Paragraph (4) of section 8432(b) of title 5, United 
States Code, is amended to read as follows:
    ``(4) The Executive Director shall prescribe such regulations as 
may be necessary to carry out the following:
            ``(A) Notwithstanding subparagraph (A) of paragraph (2), an 
        employee or Member described in such subparagraph shall be 
        afforded a reasonable opportunity to first make an election 
        under this subsection beginning on the date of commencing 
        service or, if that is not administratively feasible, beginning 
        on the earliest date thereafter that such an election becomes 
        administratively feasible, as determined by the Executive 
        Director.
            ``(B) An employee or Member described in subparagraph (B) 
        of paragraph (2) shall be afforded a reasonable opportunity to 
        first make an election under this subsection (based on the 
        appointment or election described in such subparagraph) 
        beginning on the date of commencing service pursuant to such 
        appointment or election or, if that is not administratively 
        feasible, beginning on the earliest date thereafter that such 
        an election becomes administratively feasible, as determined by 
        the Executive Director.
            ``(C) Notwithstanding the preceding provisions of this 
        paragraph, contributions under paragraphs (1) and (2) of 
        subsection (c) shall not be payable with respect to any pay 
        period before the earliest pay period for which such 
        contributions would otherwise be allowable under this 
        subsection if this paragraph had not been enacted.
            ``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
        8440c(a)(2), and 8440d(a)(2) shall be applied in a manner 
        consistent with the purposes of subparagraphs (A) and (B), to 
        the extent those subparagraphs can be applied with respect 
        thereto.
            ``(E) Nothing in this paragraph shall affect paragraph 
        (3).''.
    (b) Technical and Conforming Amendments.--(1) Section 8432(a) of 
title 5, United States Code, is amended--
            (A) in the first sentence by striking ``(b)(1)'' and 
        inserting ``(b)''; and
            (B) by amending the second sentence to read as follows: 
        ``Contributions under this subsection pursuant to such an 
        election shall, with respect to each pay period for which such 
        election remains in effect, be made in accordance with a 
        program of regular contributions provided in regulations 
        prescribed by the Executive Director.''.
    (2) Section 8432(b)(1)(B) of title 5, United States Code, is 
amended by inserting ``(or any election allowable by virtue of 
paragraph (4))'' after ``subparagraph (A)''.
    (3) Section 8432(b)(3) of title 5, United States Code, is amended 
by striking ``Notwithstanding paragraph (2)(A), an'' and inserting 
``An''.
    (4) Section 8432(i)(1)(B)(ii) of title 5, United States Code, is 
amended by striking ``either elected to terminate individual 
contributions to the Thrift Savings Fund within 2 months before 
commencing military service or''.
    (5) Section 8439(a)(1) of title 5, United States Code, is amended 
by inserting ``who makes contributions or'' after ``for each 
individual'' and by striking ``section 8432(c)(1)'' and inserting 
``section 8432''.
    (6) Section 8439(c)(2) of title 5, United States Code, is amended 
by adding at the end the following: ``Nothing in this paragraph shall 
be considered to limit the dissemination of information only to the 
times required under the preceding sentence.''.
    (7) Sections 8440a(a)(2) and 8440d(a)(2) of title 5, United States 
Code, are amended by striking all after ``subject to'' and inserting 
``this chapter.''.
    (c) Effective Date.--This section shall take effect 6 months after 
the date of enactment of this Act or such earlier date as the Executive 
Director (within the meaning of section 8401(13) of title 5, United 
States Code) may by regulation prescribe.

           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

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

    (a) Rollovers From and to Section 457 Plans.--
            (1) Rollovers from section 457 plans.--
                    (A) In general.--Section 457(e) (relating to other 
                definitions and special rules) is amended by adding at 
                the end the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan, if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4) (other than section 402(c)(4)(C)),
                            ``(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.--The rules of 
                paragraphs (2) through (7) (other than paragraph 
                (4)(C)) and (9) of section 402(c) and section 402(f) 
                shall apply for purposes of subparagraph (A).
                    ``(C) Reporting.--Rollovers under this paragraph 
                shall be reported to the Secretary in the same manner 
                as rollovers from qualified retirement plans (as 
                defined in section 4974(c)).''.
                    (B) Deferral limit determined without regard to 
                rollover amounts.--Section 457(b)(2) (defining eligible 
                deferred compensation plan) is amended by inserting 
                ``(other than rollover amounts)'' after ``taxable 
                year''.
                    (C) Direct rollover.--Paragraph (1) of section 
                457(d) is amended by striking ``and'' at the end of 
                subparagraph (A), by striking the period at the end of 
                subparagraph (B) and inserting ``, and'', and by 
                inserting after subparagraph (B) the following:
                    ``(C) the plan meets requirements similar to the 
                requirements of section 401(a)(31).
        Any amount transferred in a direct trustee-to-trustee transfer 
        in accordance with section 401(a)(31) shall not be includible 
        in gross income for the taxable year of transfer.''.
                    (D) Withholding.--
                            (i) Paragraph (12) of section 3401(a) is 
                        amended by adding at the end the following:
                    ``(E) under or to an eligible deferred compensation 
                plan which, at the time of such payment, is a plan 
                described in section 457(b);''.
                            (ii) Paragraph (5) of section 3405(e) is 
                        amended by adding at the end the following: 
                        ``Such term shall include an eligible deferred 
                        compensation plan described in section 
                        457(b).''.
                            (iii) Paragraph (3) of section 3405(c) is 
                        amended to read as follows:
            ``(3) Eligible rollover distribution.--For purposes of this 
        subsection, the term `eligible rollover distribution' has the 
        meaning given such term by section 402(f)(2)(A).''.
                            (iv) Liability for withholding.--
                        Subparagraph (B) of section 3405(d)(2) is 
                        amended by striking ``or'' at the end of clause 
                        (ii), by striking the period at the end of 
                        clause (iii) and inserting ``, or'', and by 
                        adding at the end the following:
                            `(iv) section 457(b).''.
            (2) Rollovers to section 457 plans.--
                    (A) Section 402(c)(8)(B) (defining eligible 
                retirement plan) is amended by striking ``and'' at the 
                end of clause (iii), by striking the period at the end 
                of clause (iv) and inserting ``, and'', and by adding 
                at the end the following:
                            ``(v) an eligible deferred compensation 
                        plan described in section 457(b) of an eligible 
                        employer described in section 457(e)(1)(A).''.
                    (B) Paragraph (9) of section 402(c) is amended by 
                striking ``except that'' and all that follows and 
                inserting ``except that only an account or annuity 
                described in clause (i) or (ii) of paragraph (8)(B) 
                shall be treated as an eligible retirement plan with 
                respect to such distribution.''.
                    (C) Subsection (t) of section 72 (relating to 10-
                percent additional tax on early distributions from 
                qualified retirement plans) is amended by adding at the 
                end the following new paragraph:
            ``(9) Special rule for rollovers to section 457 plans.--For 
        purposes of this subsection, a distribution from an eligible 
        deferred compensation plan (as defined in section 457(b)) of an 
        employer described in section 457(e)(1)(A) shall be treated as 
        a distribution from a qualified retirement plan to the extent 
        that such distribution is attributable to an amount transferred 
        to an eligible deferred compensation plan from a qualified 
        retirement plan (as defined in section 4974(c)). For purposes 
        of this subsection, any such distribution shall be treated as 
        if made from a qualified retirement plan described in section 
        4974(c)(1). This paragraph shall only apply to a transfer that 
        is in excess of $50,000 and that is permitted by reason of 
        section 402(c)(8)(B)(v) or section 408(d)(3)(A)(ii).''.
                    (D) Subsection (a) of section 457 (relating to year 
                of inclusion in gross income) is amended--
                            (i) by striking ``or otherwise made 
                        available'', and
                            (ii) by adding at the end the following: 
                        ``To the extent provided in section 72(t)(9), 
                        section 72(t) shall apply to any amount 
                        includible in gross income under this 
                        subsection.''.
            (3) Minimum distributions.--Paragraph (2) of section 457(d) 
        is amended to read as follows:
            ``(2) Minimum distribution requirements.--A plan meets the 
        distribution requirements of this paragraph if the plan meets 
        the requirements of section 401(a)(9).''.
            (4) Conforming amendment.--Paragraph (9) of section 457(e) 
        is amended to read as follows:
            ``(9) Benefits not treated as failing to meet distribution 
        requirements of subsection (d).--A plan shall not be treated as 
        failing to meet the distribution requirements of subsection (d) 
        by reason of a distribution of the total amount payable to a 
        participant under the plan if--
                    ``(A) such amount does not exceed the dollar limit 
                under section 411(a)(11)(A), and
                    ``(B) such amount may be distributed only if--
                            ``(i) no amount has been deferred under the 
                        plan with respect to such participant during 
                        the 2-year period ending on the date of the 
                        distribution, and
                            ``(ii) there has been no prior distribution 
                        under the plan to such participant to which 
                        this paragraph applied.''.
    (b) Allowance of Rollovers From and to 403(b) Plans.--
            (1) Rollovers from section 403(b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.
            (2) Rollovers to section 403(b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting 
        ``, and'', and by adding at the end the following:
                            ``(vi) an annuity contract described in 
                        section 403(b).''
            (3) Conforming amendment.--Subparagraph (B) of section 
        403(b)(8) is amended by striking ``Rules similar to the'' and 
        inserting ``The''.
    (c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to 
recipients of distributions eligible for rollover treatment) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(E) of the provisions under which distributions 
                from the eligible retirement plan receiving the 
                distribution may be subject to restrictions and tax 
                consequences which are different from those applicable 
                to distributions from the plan making such 
                distribution.''.
    (d) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.
            (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
            (3) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.
            (4) Subparagraph (A) of section 402(f)(2) is amended by 
        striking ``or paragraph (4) of section 403(a)'' and inserting 
        ``, paragraph (4) of section 403(a), subparagraph (A) of 
        section 403(b)(8), or subparagraph (A) of section 457(e)(16)''.
            (5) Paragraph (1) of section 402(f) is amended by striking 
        ``from an eligible retirement plan''.
            (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
        amended by striking ``another eligible retirement plan'' and 
        inserting ``an eligible retirement plan''.
            (7) Subparagraph (B) of section 403(b)(8) is amended by 
        striking ``shall apply for purposes of subparagraph (A)'' and 
        inserting ``and section 402(f) shall apply for purposes of 
        subparagraph (A), except that section 402(f) shall be applied 
        to the payor in lieu of the plan administrator''.
            (8) Subparagraph (B) of section 403(b)(8) is amended by 
        inserting ``and (9)'' after ``through (7)''.
            (9) Section 408(a)(1) is amended by striking ``or 
        403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
            (10) Subparagraphs (A) and (B) of section 415(b)(2) are 
        each amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.
            (11) Section 415(c)(2) is amended by striking ``and 
        408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
            (12) Section 4973(b)(1)(A) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
    (e) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 1999.
            (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 any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of any amendment made by this section.

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

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by adding ``or'' at the end of clause (i), 
by striking clauses (ii) and (iii), and by adding at the end the 
following:
                            ``(ii) the entire amount received 
                        (including money and any other property) is 
                        paid into an eligible retirement plan for the 
                        benefit of such individual not later than the 
                        60th day after the date on which he receives 
                        the payment or distribution.
                For purposes of clause (ii), the term `eligible 
                retirement plan' has the meaning given such term by 
                clauses (iii), (iv), (v), and (vi) of section 
                402(c)(8)(B).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 403(b) is amended by striking 
        ``section 408(d)(3)(A)(iii)'' and inserting ``section 
        408(d)(3)(A)(ii)''.
            (2) Clause (i) of section 408(d)(3)(D) is amended by 
        striking ``(i), (ii), or (iii)'' and inserting ``(i) or (ii)''.
            (3) Subparagraph (G) of section 408(d)(3) is amended to 
        read as follows:
                    ``(G) Simple retirement accounts.--In the case of 
                any payment or distribution out of a simple retirement 
                account (as defined in subsection (p)) to which section 
                72(t)(6) applies, this paragraph shall not apply unless 
                such payment or distribution is paid into another 
                simple retirement account.''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 1999.
            (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 any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of the amendments made by this section.

SEC. 303. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) In General.--
            (1) Subsection (c) of section 402 (relating to rules 
        applicable to rollovers from exempt trusts) (as amended by 
        section 2) is amended by striking paragraph (2) and 
        redesignating paragraphs (3) through (10) as paragraphs (2) 
        through (9), respectively.
            (2) Paragraph (31) of section 401(a) (relating to optional 
        direct transfer of eligible rollover distributions) is amended 
        by striking subparagraph (B) and redesignating subparagraphs 
        (C) and (D) as subparagraphs (B) and (C), respectively.
            (3) Subparagraph (B) of section 408(d)(3) (relating to 
        rollover contributions) is amended by striking ``which was not 
        includible in his gross income because of the application of 
        this paragraph'' and inserting ``to which this paragraph 
        applied''.
            (4) Paragraph (7)(B) of section 402(c) (as redesignated by 
        subsection (a)(1) and as amended by section 301) is amended--
                    (A) by striking ``The term'' and inserting ``Except 
                as provided in this subparagraph, the term'', and
                    (B) by adding at the end the following:
                ``Arrangements described in clauses (iii), (iv) (v), 
                and (vi) shall not be treated as eligible retirement 
                plans for purposes of receiving a rollover contribution 
                of an eligible rollover distribution to the extent that 
                such eligible rollover distribution is not includible 
                in gross income (determined without regard to paragraph 
                (1)).''.
            (5) Paragraph (2) of section 408(d) is amended--
                    (A) by striking ``For purposes'' and inserting the 
                following:
                    ``(A) In general.--Except as provided in this 
                paragraph, for purposes'',
                    (B) by striking ``(A) all'' and inserting ``(i) 
                all'';
                    (C) by striking ``(B) all'' and inserting ``(ii) 
                all'';
                    (D) by striking ``(C) the'' and inserting ``(iii) 
                the'',
                    (E) by striking ``subparagraph (C)'' and inserting 
                ``clause (iii)'', and
                    (F) by inserting at the end the following:
                    ``(B) Application of section 72.--For purposes of 
                applying section 72, if--
                            ``(i) a distribution is made from an 
                        individual retirement plan, and
                            ``(ii) a rollover contribution described in 
                        paragraph (3) is made to an eligible retirement 
                        plan described in section 402(c)(7)(B)(iii), 
                        (iv), (v), or (vi) with respect to all or part 
                        of such distribution,
                the includible amount in the individual's individual 
                retirement plans shall be reduced by the amount 
                described in subparagraph (C). As of the close of the 
                calendar year in which the taxable year begins, the 
                reduction of all amounts described in subparagraph 
                (C)(i) shall be applied prior to the computations 
                described in subparagraph (A)(iii). The amount of any 
                distribution with respect to which there is a rollover 
                contribution described in clause (ii) shall not be 
                treated as a distribution for purposes of subparagraph 
                (A).
                    ``(C) Amount described.--The amount described in 
                this subparagraph is the sum of--
                            ``(i) the amount of the rollover 
                        contribution described in subparagraph (B)(ii), 
                        and
                            ``(ii) in the case of any portion of the 
                        distribution with respect to which there is not 
                        a rollover contribution described in paragraph 
                        (3), the amount of such portion that is 
                        included in gross income under section 72.
                    ``(D) Includible amount.--For purposes of this 
                paragraph, the term `includible amount' shall mean the 
                amount that is not investment in the contract (as 
                defined in section 72).''.
            (6) Subparagraph (C) of section 402(c)(5) (as redesignated 
        by subsection (a)(1)) is amended by inserting after ``other 
        than money'' the following: ``or where the amount of the 
        distribution exceeds the amount of the rollover contribution''.
    (b) Hardship Exception to 60-Day Rule.--
            (1) Paragraph (2) of section 402(c) (as so redesignated) is 
        amended to read as follows:
            ``(2) Transfer must be made within 60 days of receipt.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.
                    ``(B) Hardship exception.--The Secretary may waive 
                the 60-day requirement under subparagraph (A) where the 
                failure to waive such requirement would be against 
                equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such requirement.''.
            (2) Paragraph (3) of section 408(d) (relating to rollover 
        contributions) is amended by adding at the end the following 
        new subparagraph:
                    ``(H) Waiver of 60-day requirement.--The Secretary 
                may waive the 60-day requirement under subparagraphs 
                (A) and (D) where the failure to waive such requirement 
                would be against equity or good conscience, including 
                casualty, disaster, or other events beyond the 
                reasonable control of the individual subject to such 
                requirement.''.
    (c) Conforming Amendments.--
            (1) Paragraph (4) of section 402(c) (as redesignated by 
        subsection (a)(1)) is amended by striking ``(8)(B)'' and 
        inserting ``(7)(B)''.
            (2) Subparagraph (B) of section 403(a)(4) is amended by 
        striking ``(2) through (7)'' and inserting ``(2) through (6)''.
            (3) Section 403(b)(8)(A)(ii) (as amended by section 301) is 
        amended by striking ``section 402(c)(8)(B)'' and inserting 
        ``section 402(c)(7)(B)''.
            (4) Subparagraph (B) of section 403(b)(8) (as amended by 
        section 301) is amended by striking ``(2) through (7) and (9) 
        of section 402(c) (including paragraph (4)(C) thereof)'' and 
        inserting ``(2) through (6) and (8) of section 402(c) 
        (including paragraph (3)(C) thereof)''.
            (5) Subparagraph (A) of section 408(d)(3) (as amended by 
        section 302) is amended by striking ``402(c)(8)'' and inserting 
        ``402(c)(7)''.
            (6) Paragraph (16) of section 457(e) (as added by section 
        301) is amended--
                    (A) in subparagraph (A)(i) by striking ``402(c)(4) 
                (other than section 402(c)(4)(C))'' and inserting 
                ``section 402(c)(3) (other than section 
                402(c)(3)(C))'',
                    (B) in subparagraph (A)(ii) by striking 
                ``402(c)(8)(B)'' and inserting ``402(c)(7)(B)'', and
                    (C) in subparagraph (B) by striking ``paragraphs 
                (2) through (7) (other than paragraph (4)(C)) and (9) 
                of section 402(c)'' and inserting ``paragraphs (2) 
                through (6) (other than paragraph (3)(C)) and (8) of 
                section 402(c)''.
    (d) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to distributions 
        made after December 31, 1999.
            (2) Hardship exception.--The amendments made by subsection 
        (b) shall apply to 60-day periods ending after the date of the 
        enactment of this Act.

SEC. 304. TREATMENT OF FORMS OF DISTRIBUTION.

    (a) In General.--
            (1) Plan transfers.--Paragraph (6) of section 411(d) 
        (relating to accrued benefit not to be decreased by amendment) 
        is amended by adding at the end the following:
                    ``(D) Plan transfers.--
                            ``(i) A defined contribution plan (in this 
                        subparagraph referred to as the `transferee 
                        plan') shall not be treated as failing to meet 
                        the requirements of this subsection merely 
                        because the transferee plan does not provide 
                        some or all of the forms of distribution 
                        previously available under another defined 
                        contribution plan (in this paragraph referred 
                        to as the `transferor plan') to the extent 
                        that--
                                    ``(I) the forms of distribution 
                                previously available under the 
                                transferor plan applied to the account 
                                of a participant or beneficiary under 
                                the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan;
                                    ``(II) the terms of both the 
                                transferor plan and the transferee plan 
                                authorize the transfer described in 
                                subclause (I);
                                    ``(III) the transfer described in 
                                subclause (I) was made pursuant to a 
                                voluntary election by the participant 
                                or beneficiary whose account was 
                                transferred to the transferee plan;
                                    ``(IV) the election described in 
                                subclause (III) was made after the 
                                participant or beneficiary received a 
                                notice describing the consequences of 
                                making the election;
                                    ``(V) if the transferor plan 
                                provides for an annuity as the normal 
                                form of distribution under the plan in 
                                accordance with section 417, the 
                                transfer is made with the consent of 
                                the participant's spouse (if any), and 
                                such consent meets requirements similar 
                                to the requirements imposed by section 
                                417(a)(2); and
                                    ``(VI) the transferee plan allows 
                                the participant or beneficiary 
                                described in subclause (III) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.
                            ``(ii) Clause (i) shall apply to plan 
                        mergers and other transactions having the 
                        effect of a direct transfer, including 
                        consolidations of benefits attributable to 
                        different employers within a multiple employer 
                        plan.
                    ``(E) Elimination of form of distribution.--Except 
                to the extent provided in regulations, a defined 
                contribution plan shall not be treated as failing to 
                meet the requirements of this section merely because of 
                the elimination of a form of distribution previously 
                available thereunder. This subparagraph shall not apply 
                to the elimination of a form of distribution with 
                respect to any participant unless--
                            ``(i) a single sum payment is available to 
                        such participant at the same time or times as 
                        the form of distribution being eliminated; and
                            ``(ii) such single sum payment is based on 
                        the same or greater portion of the 
                        participant's account as the form of 
                        distribution being eliminated.''.
            (2) Regulations.--The last sentence of paragraph (6)(B) of 
        section 411(d) (relating to accrued benefit not to be decreased 
        by amendment) is amended to read as follows: ``The Secretary 
        may by regulations provide that this subparagraph shall not 
        apply to any plan amendment that does not adversely affect the 
        rights of participants in a material manner.
            (3) Secretary directed.--Not later than December 31, 2001, 
        the Secretary of the Treasury is directed to issue final 
        regulations under section 411(d)(6) of the Internal Revenue 
        Code of 1986. Such regulations shall apply to plan years 
        beginning after December 31, 2001 or such earlier date as is 
        specified by the Secretary of the Treasury. Under such 
        regulations, section 411(d)(6) of such Code shall not apply to 
        plan amendments that do not adversely affect the rights of 
        participants in a material manner. In determining whether a 
        plan amendment has such a materially adverse effect on a 
        participant, the factors taken into account shall include--
                    (A) all of the participant's early retirement 
                benefits, retirement-type subsidies, and optional forms 
                of benefit that are reduced or eliminated by the plan 
                amendment,
                    (B) the extent to which early retirement benefits, 
                retirement-type subsidies, and optional forms of 
                benefit in effect with respect to a participant after 
                the effective date of the plan amendment provide rights 
                that are comparable to the rights that are reduced or 
                eliminated by the plan amendment,
                    (C) the number of years before the participant 
                attains normal retirement age under the plan (or early 
                retirement age, as applicable),
                    (D) the size of the participant's benefit that is 
                affected by the plan amendment, in relation to the 
                amount of the participant's compensation, and
                    (E) the number of years before the plan amendment 
                is effective.
        The regulations described in this paragraph are intended to 
        permit the elimination or reduction of early retirement 
        benefits, retirement-type subsidies, and optional forms of 
        benefit that do not have a material value for a plan's 
        participants but create significant burdens and complexities 
        for the plan and its participants.
    (b) Conforming Amendment.--(1) Subsection (g) of section 204 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054) is 
amended by adding at the end the following:
    ``(4)(A) A defined contribution plan (in this subparagraph referred 
to as the `transferee plan') shall not be treated as failing to meet 
the requirements of this subsection merely because the transferee plan 
does not provide some or all of the forms of distribution previously 
available under another defined contribution plan (in this paragraph 
referred to as the `transferor plan') to the extent that--
            ``(i) the forms of distribution previously available under 
        the transferor plan applied to the account of a participant or 
        beneficiary under the transferor plan that was transferred from 
        the transferor plan to the transferee plan pursuant to a direct 
        transfer rather than pursuant to a distribution from the 
        transferor plan;
            ``(ii) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in clause (i);
            ``(iii) the transfer described in clause (i) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan;
            ``(iv) the election described in clause (iii) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election;
            ``(v) if the transferor plan provides for an annuity as the 
        normal form of distribution under the plan in accordance with 
        section 205, the transfer is made with the consent of the 
        participant's spouse (if any), and such consent meets 
        requirements similar to the requirements imposed by section 
        205(c)(2); and
            ``(vi) the transferee plan allows the participant or 
        beneficiary described in clause (iii) to receive any 
        distribution which the participant or beneficiary is entitled 
        under transferee plan in the form of a single sum distribution.
    ``(B) Subparagraph (A) shall apply to plan mergers and other 
transactions having the effect of a direct transfer, including 
consolidations of benefits attributable to different employers within a 
multiple employer plan.
    ``(5) Except to the extent provided in regulations, a defined 
contribution plan shall not be treated as failing to meet the 
requirements of this section merely because of the elimination of a 
form of distribution previously available thereunder. This paragraph 
shall not apply to the elimination of a form of distribution with 
respect to any participant unless--
            ``(A) a single sum payment is available to such participant 
        at the same time or times as the form of distribution being 
        eliminated; and
            ``(B) such single sum payment is based on the same or 
        greater portion of the participant's account as the form of 
        distribution being eliminated.''.
    (2) Paragraph (2) of section 204(g) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054) is amended by striking the 
last sentence and inserting the following: ``The Secretary of the 
Treasury may by regulations provide that this paragraph shall not apply 
to any plan amendment that does not adversely affect the rights of 
participants in a material manner.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 305. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

    (a) Modification of Same Desk Exception.--
            (1) Section 401(k).--Section 401(k)(2)(B)(i)(I) (relating 
        to qualified cash or deferred arrangements) is amended by 
        striking ``separation from service'' and inserting ``severance 
        from employment''.
            (2) Section 403(b).--
                    (A) Paragraphs (7)(A)(ii) and (11)(A) of section 
                403(b) are each amended by striking ``separates from 
                service'' and inserting ``has a severance from 
                employment''.
                    (B) The heading for paragraph (11) of section 
                403(b) is amended by striking ``separation from 
                service'' and inserting ``severance from employment''.
            (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
        amended by striking ``is separated from service'' and inserting 
        ``has a severance from employment''.
    (b) Business Sale Requirements Repealed.--
            (1) In general.--Section 401(k)(2)(B)(i)(II) (relating to 
        qualified cash or deferred arrangements) is amended by striking 
        ``an event'' and inserting ``a plan termination''.
            (2) Conforming amendments.--Section 401(k)(10) is amended--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) In general.--A plan termination is described 
                in this paragraph if the termination of the plan does 
                not involve the establishment or maintenance of another 
                defined contribution plan (other than an employee stock 
                ownership plan as defined in section 4975(e)(7)).'',
                    (B) in subparagraph (B)--
                            (i) by striking ``An event'' and inserting 
                        ``A termination'', and
                            (ii) by striking ``the event'' and 
                        inserting ``the termination'',
                    (C) by striking subparagraph (C), and
                    (D) by striking ``or disposition of assets or 
                subsidiary'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 1999.

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

    (a) 403(b) Plans.--Subsection (b) of section 403 (as amended by 
section 501) is amended by adding at the end the following new 
paragraph:
            ``(14) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (b) 457 Plans.--
            (1) Subsection (e) of section 457 (as amended by section 
        509) is amended by adding at the end the following new 
        paragraph:
            ``(18) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
            (2) Section 457(b)(2), as amended by sections 101, 202, and 
        301, is amended by striking ``(other than rollover amounts)'' 
        and inserting ``(other than rollover amounts and amounts 
        received in a transfer referred to in subsection (e)(16))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 1999.

SEC. 307. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF CASH-OUT 
              AMOUNTS.

    (a) Amendments to 1986 Code.--
            (1) 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), 
                403(a)(4), 403(b)(8), clause (ii), (iii), or (iv) of 
                408(d)(3)(A), and 457(e)(16).''.
            (2) Clause (i) of section 457(e)(9)(A) is amended by 
        striking ``such amount'' and inserting ``the portion of such 
        amount which is not attributable to rollover contributions (as 
        defined in section 411(a)(11)(D))''.
    (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), 403(a)(4), 403(b)(8), clause (ii), (iii), or (iv) of 
408(d)(3)(A), 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, 1999.

        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

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

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

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

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                        2000...............................        160 
                        2001...............................        165 
                        2002...............................     170.''.
            (3) Effective dates.--The amendments made by this 
        subsection shall apply to plan years beginning after December 
        31, 1999.
    (b) Maximum Contribution Deduction Rules Modified and Applied to 
All Defined Benefit Plans.--
            (1) In general.--Section 404(a)(1)(D) (relating to special 
        rule in case of certain plans) is amended--
                    (A) by striking ``which has more than 100 
                participants for the plan year'',
                    (B) by striking ``unfunded current liability 
                determined under section 414(l)'' and inserting 
                ``unfunded termination liability (determined as if the 
                proposed termination date referred to in section 
                4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
                Security Act of 1974 were the last day of the plan 
                year)'',
                    (C) by inserting after the first sentence the 
                following: ``For purposes of this subparagraph, in the 
                case of a plan which has less than 100 participants for 
                the plan year, termination liability shall not include 
                the liability attributable to benefit increases for 
                highly compensated employees (as defined in section 
                414(q)) brought about by plan amendment within the last 
                2 years before the termination date.'', and
                    (D) by striking ``(other than a multiemployer 
                plan)''.
            (2) Conforming amendment.--Paragraph (6) of section 4972(c) 
        is amended by striking the sentence preceding the last sentence 
        thereof.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date of enactment 
        of this Act.

SEC. 402. MISSING PARTICIPANTS.

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

SEC. 403. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) In General.--Section 105(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1025(a)) is amended by striking ``shall 
furnish to any plan participant or beneficiary who so requests in 
writing, a statement'' and inserting ``shall furnish to each plan 
participant at least once each year (in the case of a defined 
contribution plan) and upon written request of a plan participant or 
beneficiary (in the case of a defined benefit plan), a statement in 
written or electronic form''.
    (b) Required Periodic Statements for Plans With More Than One 
Unaffiliated Employer.--Section 105(d) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1025(d)) is repealed.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1999.

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

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

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

    (a) In General.--Subsection (c) of section 4972 (relating to 
nondeductible contributions) is amended by adding at the end the 
following new paragraph:
            ``(7) Defined benefit plan exception.--In determining the 
        amount of nondeductible contributions for any taxable year, an 
        employer may elect for such year not to take into account any 
        contributions to a defined benefit plan except to the extent 
        that such contributions exceed the full-funding limitation (as 
        defined in section 412(c)(7), determined without regard to 
        subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 406. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS TO 401(K) 
              PLANS.

    (a) In General.--Section 1524(b) of the Taxpayer Relief Act of 1997 
is amended to read as follows:
    ``(b) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to elective 
        deferrals for plan years beginning after December 31, 1998.
            ``(2) Nonapplication to previously acquired property.--The 
        amendments made by this section shall not apply to any elective 
        deferral if such deferral is used for the payment of 
        indebtedness incurred before January 1, 1999 (or any 
        refinancing thereof) on the acquisition by the plan of employer 
        securities or employer real property--
                    ``(A) before January 1, 1999, or
                    ``(B) after such date pursuant to a written 
                contract which was binding on such date and at all 
                times thereafter on such plan.''.
    (b) Effective Date.--The amendment made by this section shall apply 
as if included in the provision of the Taxpayer Relief Act of 1997 to 
which it relates.

SEC. 407. NOTICE OF SIGNIFICANT REDUCTION IN BENEFIT ACCRUALS.

    (a) In General.--Subsection (h) of section 204 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1054) is amended to 
read as follows:
    ``(h) Notice of Significant Reduction in Benefit Accruals.--
            ``(1) If a plan described in paragraph (4) is amended to 
        provide for a significant reduction in the rate of future 
        benefit accrual, the plan administrator shall provide a notice 
        to--
                    ``(A) each affected participant in the plan,
                    ``(B) each affected beneficiary who is an alternate 
                payee (within the meaning of section 206(d)(3)(K)) 
                under an applicable qualified domestic relations order 
                (within the meaning of section 206(d)(3)(B)(i)), and
                    ``(C) each employee organization representing 
                affected participants in the plan, except that such 
                notice shall instead be provided to a person designated 
                to receive such notice on behalf of any person referred 
                to in paragraph (A), (B), or (C). For purposes of this 
                paragraph, an affected participant or beneficiary is a 
                participant or beneficiary to whom the significant 
                reduction described in this paragraph is reasonably 
                expected to apply.
            ``(2) The notice required by paragraph (1) shall--
                    ``(A) include the plan amendment, or a summary of 
                such plan amendment, and its effective date, and
                    ``(B) provide a notification and description of the 
                reduction described in paragraph (1).
        A notification and description shall not fail to satisfy 
        paragraph (2)(B) by reason of a failure to provide the specific 
        amount of the reduction with respect to any participant or 
        beneficiary.
            ``(3) The notice required by paragraph (1) shall be 
        provided no less than 30 days prior to the effective date of 
        the plan amendment.
            ``(4) A plan is described in this paragraph if such plan 
        is--
                    ``(A) a defined benefit plan, or
                    ``(B) an individual account plan which is subject 
                to the funding standards of section 302.
            ``(5) In the case of a material failure to comply with 
        requirements of this subsection with respect to more than a de 
        minimis number of persons described in paragraph (1), the plan 
        amendment to which the failure relates shall not be effective 
        with respect to such persons for any period prior to the 
        expiration of 30 days following the date on which a notice is 
        provided in accordance with this subsection. For purposes of 
        this paragraph, the term `material failure' includes any 
        failure that results in materially less information being 
        provided to the persons described in paragraph (1).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan amendments that are adopted more than 120 days after the 
date of enactment of this Act.

                  TITLE V--REDUCING REGULATORY BURDENS

SEC. 501. INTERMEDIATE SANCTIONS FOR INADVERTENT FAILURES.

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

SEC. 502. REPEAL OF THE MULTIPLE USE TEST.

    (a) In General.--Paragraph (9) of section 401(m) is amended to read 
as follows:
            ``(9) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1999.

SEC. 503. SAFETY VALVE FROM MECHANICAL RULES.

    (a) In General.--The Secretary of the Treasury, by regulation, 
shall provide that the plan shall be deemed to satisfy the requirements 
of section 401(a)(4) of the Internal Revenue Code of 1986 if such plan 
satisfies the facts and circumstances test under section 401(a)(4) of 
such Code, as in effect before January 1, 1994, if--
            (1) the plan satisfies conditions prescribed by the 
        Secretary to appropriately limit the availability of such test, 
        and
            (2) the plan is submitted to the Secretary for a 
        determination of whether it satisfies such test.
Paragraph (2) shall only apply to the extent provided by the Secretary.
    (b) Effective Dates.--
            (1) Regulations.--The regulation required by subsection (a) 
        shall apply to years beginning after December 31, 2000.
            (2) Conditions of availability.--Any condition of 
        availability prescribed by the Secretary under subsection 
        (a)(1) shall not apply before the first year beginning not less 
        than 120 days after the date on which such condition is 
        prescribed.

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

    (a) Repeal of Gateway Test.--Paragraph (5) of section 410(b) is 
amended to read as follows:
            ``(5) Line of business exception.--If, under section 
        414(r), an employer is treated as operating separate lines of 
        business for a year, the employer may apply the requirements of 
        this subsection for such year separately with respect to 
        employees in each separate line of business.''.
    (b) Regulations.--The Secretary of the Treasury shall modify the 
regulations issued under section 414(r) of the Internal Revenue Code of 
1986 (relating to special rules for separate line of business) to--
            (1) simplify the administrability of the rules for both the 
        Secretary and plans, and
            (2) permit employees to be allocated among lines of 
        business based on all the facts and circumstances.
    (c) Effective Dates.--
            (1) Repeal.--The repeal made by subsection (a) shall apply 
        to years beginning after December 31, 2000.
            (2) Regulations.--The regulations modified under subsection 
        (b) shall apply to years beginning after December 31, 2000.

SEC. 505. COVERAGE TEST FLEXIBILITY.

    (a) In General.--Paragraph (1) of section 410(b) is amended by 
adding at the end the following:
                    ``(D) In the case that the plan fails to meet the 
                requirements of subparagraphs (A), (B) and (C), the 
                plan--
                            ``(i) satisfies subparagraph (B), as in 
                        effect immediately before the enactment of the 
                        Tax Reform Act of 1986,
                            ``(ii) is submitted to the Secretary for a 
                        determination of whether it satisfies the 
                        requirement described in clause (i), and
                            ``(iii) satisfies conditions prescribed by 
                        the Secretary by regulation that appropriately 
                        limit the availability of this subparagraph.
                Clause (ii) shall apply only to the extent provided by 
                the Secretary.''.
    (b) Effective Dates.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to years beginning after December 31, 2000.
            (2) Conditions of availability.--Any condition of 
        availability prescribed by the Secretary under regulations 
        prescribed by the Secretary under section 410(a)(1)(D) of the 
        Internal Revenue Code of 1986 shall not apply before the first 
        year beginning not less than 120 days after the date on which 
        such condition is prescribed.

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

    (a) Amendments to 1986 Code.--Section 411(a)(11) (relating to 
restrictions on certain mandatory distributions) is amended by adding 
at the end the following:
                    ``(D) Inflation adjustment.--In the case of any 
                plan year beginning in a calendar year after 1999, the 
                Secretary shall adjust annually the $5,000 amount 
                contained in subparagraph (A) for increases in the cost 
                of living at the same time and in the same manner as 
                adjustments under section 415(d); except that the base 
                period shall be the calendar quarter ending September 
                30, 1999, and any increase which is not a multiple of 
                $500 shall be rounded to the next lowest multiple of 
                $500.''.
    (b) Amendments to ERISA.--Section 203(e) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(e)) is amended by adding at 
the end the following:
    ``(4) Inflation adjustment.--In the case of any plan year beginning 
in a calendar year after 1999, the Secretary shall adjust annually the 
$5,000 amount contained in paragraph (1) for increases in the cost of 
living at the same time and in the same manner as adjustments under 
section 415(d) of the Internal Revenue Code of 1986; except that the 
base period shall be the calendar quarter ending September 30, 1999, 
and any increase which is not a multiple of $500 shall be rounded to 
the next lowest multiple of $500.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the date of enactment of this 
Act.

SEC. 507. MODIFICATION OF TIMING OF PLAN VALUATIONS.

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

SEC. 508. SECTION 457 INAPPLICABLE TO CERTAIN MIRROR PLANS.

    (a) In General.--Subsection (e) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations) is amended by adding at the end the following new 
paragraph:
            ``(17) This section shall not apply to a plan, program, or 
        arrangement maintained solely for the purposes of providing 
        retirement benefits for employees in excess of the limitations 
        imposed by sections 401(a)(17) or 415.''.
    (b) Certain Deferred Compensation Not Taken Into Account.--
Subsection (c) of section 457 (relating to individuals who are 
participants in more than 1 plan) (as amended by section 108(a)) is 
amended by adding at the end the following: ``This section shall be 
applied without regard to a plan, program, or arrangement described in 
subsection (e)(17).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 509. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

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

SEC. 510. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND 
              DEDUCTION.

    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:
                            ``(iii) is, at the election of such 
                        participants or their beneficiaries--
                                    ``(I) payable as provided in clause 
                                (i) or (ii), or
                                    ``(II) paid to the plan and 
                                reinvested in qualifying employer 
                                securities, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 511. MODIFICATION OF 403(B) EXCLUSION ALLOWANCE TO CONFORM TO 415 
              MODIFICATION.

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

SEC. 512. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--Paragraph (11) of section 415(b) (relating 
to limitation for defined benefit plans) is amended to read as follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''.
    (b) Exemption for Survivor and Disability Benefits.--Subparagraph 
(I) of section 415(b)(2) (relating to limitation for defined benefit 
plans) is amended--
            (1) by inserting ``or a multiemployer plan (as defined in 
        section 414(f))'' after ``section 414(d))'' in clause (i),
            (2) by inserting ``or multiemployer plan'' after 
        ``governmental plan'' in clause (ii), and
            (3) by inserting ``and multiemployer'' after 
        ``governmental'' in the heading.
    (c) Combining and Aggregation of Plans.--
            (1) Combining of plans.--Subsection (f) of section 415 
        (relating to combining of plans) is amended by adding at the 
        end the following:
            ``(3) Exception for multiemployer plans.--Notwithstanding 
        paragraph (1) and subsection (g), a multiemployer plan (as 
        defined in section 414(f)) shall not be combined or aggregated 
        with any other plan maintained by an employer for purposes of 
        applying the limitations established in this section.''.
            (2) Conforming amendment for aggregation of plans.--
        Subsection (g) of section 415 (relating to aggregation of 
        plans) is amended by striking ``The Secretary'' and inserting 
        ``Except as provided in subsection (f)(3), the Secretary''.
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 513. ELIMINATION OF PARTIAL TERMINATION RULES FOR MULTIEMPLOYER 
              PLANS.

    (a) Partial Termination Rules for Multiemployer Plans.--Section 
411(d)(3) (relating to termination or partial termination; 
discontinuance of contributions) is amended by adding at the end the 
following new sentence: ``This paragraph shall not apply in the case of 
a partial termination of a multiemployer plan.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to partial terminations beginning after December 31, 1999.

SEC. 514. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) In general.--
                    (A) Subparagraph (A) of section 417(a)(6) is 
                amended by striking ``90-day'' and inserting ``one-
                year''.
                    (B) Subparagraph (A) of section 205(c)(7) of the 
                Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1055) is amended by striking ``90-day'' and inserting ``one-
year''.
            (2) Modification of regulations.--The Secretary of the 
        Treasury shall modify the regulations under sections 402(f), 
        411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
        substitute ``one year'' for ``90 days'' each place it appears 
        in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
        and 1.417(e)-1(b).
            (3) Effective date.--The amendments made by paragraph (1) 
        and the modifications required by paragraph (2) shall apply to 
        years beginning after December 31, 1999.
    (b) Consent Regulation Inapplicable to Certain Distributions.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 411(a)(11) of the Internal 
        Revenue Code of 1986 to provide that the description of a 
        participant's right, if any, to defer receipt of a distribution 
        shall also describe the consequences of failing to defer such 
        receipt.
            (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        1999.

SEC. 515. CONFORMING AMENDMENTS RELATING TO ELECTION TO RECEIVE TAXABLE 
              CASH COMPENSATION IN LIEU OF NONTAXABLE PARKING BENEFITS.

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

SEC. 516. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

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

SEC. 517. EMPLOYEES OF TAX-EXEMPT ENTITIES.

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

SEC. 518. PERMISSIVE AGGREGATION OF COLLECTIVE BARGAINING UNITS.

    (a) In General.--Paragraph (3) of section 410(b) is amended by 
inserting the following immediately before the last sentence thereof: 
``Solely for purposes of applying this subsection to employees who are 
not described in subparagraph (A), an employer may elect to have 
subparagraph (A) not apply to one or more units of employees who are 
described in subparagraph (A).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 1999.

SEC. 519. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.

    (a) In General.--Paragraph (4) of section 1114(c)(4) of the Tax 
Reform Act of 1986 is hereby repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to plan years beginning on or after January 1, 2000.

SEC. 520. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED RETIREMENT 
              ADVICE.

    (a) In General.--Section 132(e) (defining de minimis fringe) is 
amended by adding at the end the following:
            ``(3) Treatment of certain retirement planning services.--
        The provision of retirement planning services by an employer to 
        employees, to the extent not described in subsection (d), shall 
        be treated as a de minimis fringe.''.
    (b) No Constructive Receipt.--Section 132 is amended by 
redesignating subsection (m) as subsection (n) and by inserting after 
subsection (l) the following:
    ``(m) Retirement Planning.--
            ``(1) In general.--No amount shall be included in the gross 
        income of an employee solely because the employee may choose 
        between any retirement planning fringe and compensation which 
        would otherwise be includible in the gross income of such 
        employee.
            ``(2) Nondiscrimination requirement.--Paragraph (1) shall 
        apply to a highly compensated employee only if the choice 
        described in such paragraph is available on substantially the 
        same terms to each member of a group of employees which is 
        defined under a reasonable classification set up by the 
        employer which does not discriminate in favor of highly 
        compensated employees.
            ``(3) Retirement planning fringe.--For purposes of this 
        subsection, the term `retirement planning fringe' means any 
        retirement planning services provided by an employer to an 
        employee which are not included in the gross income of the 
        employee by reason of subsection (d) or (e).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 521. ANNUAL REPORT DISSEMINATION.

    (a) In General.--Section 104(b)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is amended by 
striking ``shall furnish'' and inserting ``shall make available for 
examination (and, upon request, shall furnish)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to reports for years beginning after December 31, 1998.

SEC. 522. EXCESS BENEFIT PLANS.

    (a) In General.--Section 3(36) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(36)) is amended to read as 
follows:
            ``(36) The term `excess benefit plan' means a plan, without 
        regard to whether such plan is funded, maintained by an 
        employer solely for the purpose of providing benefits to 
        employees in excess of the limitations imposed by 1 or more of 
        sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k), 
        408(p), or 415 of the Internal Revenue Code of 1986 or any 
        other limitation on contributions or benefits in such Code on 
        plans to which any of such sections apply. To the extent that a 
        separable part of a plan (as determined by the Secretary of 
        Labor) maintained by an employer is maintained for such 
        purpose, that part shall be treated as a separate plan which is 
        an excess benefit plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 523. BENEFIT SUSPENSION NOTICE.

    (a) Modification of Regulation.--The Secretary of Labor shall 
modify the regulation under section 203(a)(3)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to 
provide that the notification required by such regulation--
            (1) may be included in the summary plan description for the 
        plan furnished in accordance with section 104(b) of such Act 
        (29 U.S.C. 1024(b)), rather than in a separate notice, and
            (2) need not include a copy of the relevant plan 
        provisions.
    (b) Effective Date.--The modification made under subsection (a) 
shall apply to plan years beginning after December 31, 1999.

SEC. 524. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment--
            (1) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A), and
            (2) such plan shall not fail to meet the requirements of 
        section 411(d)(6) of the Internal Revenue Code of 1986 or 
        section 204(g) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1054(g)) by reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this Act, or 
                pursuant to any regulation issued under this Act, and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2002.
        In the case of a government plan (as defined in section 414(d) 
        of the Internal Revenue Code of 1986 and section 3(32) of the 
        Employee Retirement Income Security Act of 1974), this 
        paragraph shall be applied by substituting ``2004'' for 
        ``2002''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect, and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

SEC. 525. REPORTING SIMPLIFICATION.

    (a) Simplified Annual Filing Requirement for Owners and Their 
Spouses.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the requirements for filing annual returns with respect to one-
        participant retirement plans to ensure that such plans with 
        assets of $500,000 or less as of the close of the plan year 
        need not file a return for that year.
            (2) One-participant retirement plan defined.--For purposes 
        of this subsection, the term ``one-participant retirement 
        plan'' means a retirement plan that--
                    (A) on the first day of the plan year--
                            (i) covered only the employer (and the 
                        employer's spouse) and the employer owned the 
                        entire business (whether or not incorporated), 
                        or
                            (ii) covered only one or more partners (and 
                        their spouses) in a business partnership 
                        (including partners in an S or C corporation),
                    (B) meets the minimum coverage requirements of 
                section 410(b) of the Internal Revenue Code of 1986 
                without being combined with any other plan of the 
                business that covers the employees of the business,
                    (C) does not provide benefits to anyone except the 
                employer (and the employer's spouse) or the partners 
                (and their spouses),
                    (D) does not cover a business that is a member of 
                an affiliated service group, a controlled group of 
                corporations, or a group of businesses under common 
                control, and
                    (E) does not cover a business that leases 
                employees.
            (3) Other definitions.--Terms used in paragraph (2) which 
        are also used in section 414 of the Internal Revenue Code of 
        1986 shall have the respective meanings given such terms by 
        such section.
    (b) Simplified Annual Filing Requirement for Plans With Fewer Than 
25 Employees.--In the case of a retirement plan which covers less than 
25 employees on the 1st day of the plan year and meets the requirements 
described in subparagraphs (B), (D), and (E) of subsection (a)(2), the 
Secretary of the Treasury shall provide for the filing of a simplified 
annual return that is substantially similar to the annual return 
required to be filed by a one-participant retirement plan.

SEC. 526. MODEL PLANS FOR SMALL BUSINESSES.

    (a) In General.--Not later than December 31, 2000, the Secretary of 
the Treasury is directed to issue at least one model defined 
contribution plan and at least one model defined benefit plan that fit 
the needs of small businesses and that shall be treated as meeting the 
requirements of section 401(a) of the Internal Revenue Code of 1986 
with respect to the form of the plan. To the extent that the 
requirements of section 401(a) of such Code are modified after the 
issuance of such plans, the Secretary of the Treasury shall, in a 
timely manner, issue model amendments that, if adopted in a timely 
manner by an employer that has a model plan in effect, shall cause such 
model plan to be treated as meeting the requirements of section 401(a) 
of such Code, as modified, with respect to the form of the plan.
    (b) Master and Prototype Plan Alternative.--The Secretary of the 
Treasury may, in its discretion, satisfy the requirements of subsection 
(a) through the enhancement and simplification of the Secretary's 
programs for master and prototype plans in such a manner as to achieve 
the purposes of subsection (a).
                                 <all>