[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1213 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1213

    To amend the Internal Revenue Code of 1986 to promote expanded 
                          retirement savings.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 22, 1999

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

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to promote expanded 
                          retirement savings.

    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.

    (a) Short Title.--This Act may be cited as the ``Employee Pension 
Portability and Accountability Act of 1999''.
    (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.--

Sec. 1. Short title; amendment of 1986 Code.
Sec. 2. Exclusion for payroll deduction contributions to IRAs.
Sec. 3. Credit for pension plan startup costs of small employers.
Sec. 4. Secure money annuity or retirement (SMART) trusts.
Sec. 5. Faster vesting of employer matching contributions.
Sec. 6. Pension right to know proposals.
Sec. 7. Nondiscrimination rules for qualified cash or deferred 
                            arrangements and matching contributions.
Sec. 8. Definition of highly compensated employees.
Sec. 9. Treatment of multiemployer plans under section 415.
Sec. 10. Full funding limitation for multiemployer plans.
Sec. 11. Elimination of partial termination rules for multiemployer 
                            plans.
Sec. 12. Allowance of rollovers from and to 403(b) plans.
Sec. 13. Rollover contributions from deferred compensation plans of 
                            State and local governments.
Sec. 14. Rollovers of IRAs into workplace retirement plans.
Sec. 15. Rollovers of after-tax contributions.
Sec. 16. Purchase of service credit in governmental defined benefit 
                            plans.
Sec. 17. Modifications of joint and survivor annuity requirements.
Sec. 18. Periods of family and medical leave treated as hours of 
                            service for pension participation and 
                            vesting.

SEC. 2. EXCLUSION FOR PAYROLL DEDUCTION CONTRIBUTIONS TO IRAS.

    (a) In General.--Section 408 (relating to individual retirement 
accounts) is amended by redesignating subsection (q) as subsection (r) 
and by inserting after subsection (p) the following new subsection:
    ``(q) Qualified Payroll Deduction Arrangement for IRA 
Contributions.--
            ``(1) In general.--For purposes of this title, the term 
        `qualified payroll deduction arrangement' means a written 
        arrangement of an employer under which--
                    ``(A) an employee eligible to participate in the 
                arrangement may elect to have the employer make 
                payments--
                            ``(i) to the employee directly in cash, or
                            ``(ii) as elective employer contributions 
                        to an individual retirement plan (as defined in 
                        section 7701(a)(37)), other than an individual 
                        retirement plan described in section 408(k), 
                        408(p), or 408A(b), on behalf of the employee 
                        for the taxable year in which the payments 
                        otherwise would have been made to the employee 
                        directly in cash,
                    ``(B) the amount which the employee may elect under 
                subparagraph (A) for any year may not exceed a total of 
                $2,000,
                    ``(C) no other contributions may be made other than 
                contributions described in subparagraph (A),
                    ``(D) the employee's rights to any contributions 
                made to an individual retirement plan are 
                nonforfeitable (for this purpose, rules similar to the 
                rules of subsection (k)(4) shall apply), and
                    ``(E) the employer makes the elective employer 
                contributions under subparagraph (A) not later than the 
                close of the 30-day period following the last day of 
                the month with respect to which the contributions are 
                to be made.
            ``(2) Election not to have subsection apply.--An employer 
        that maintains an arrangement otherwise described in paragraph 
        (1) may elect to have contributions treated as though they were 
        not made under such an arrangement. If an employer does not 
        make an election described in the preceding sentence, an 
        employee may elect, before any contributions are made for the 
        calendar year, to have contributions on behalf of the employee 
        treated as though they were not made under an arrangement 
        described in paragraph (1). An employer shall be deemed to have 
        made an election under this paragraph for a year if the 
        employer maintained a qualified plan with respect to which 
        contributions were made or benefits were accrued for such year. 
        For purposes of the preceding sentence, the term `qualified 
        plan' means a plan, contract, pension, or trust described in 
        subparagraph (A) or (B) of section 219(g)(5).''.
    (b) Tax Treatment of Employer Contributions Made Under a Qualified 
Payroll Deduction Arrangement.--
            (1) Coordination with deduction under section 219.--
                    (A) Section 219(b) (relating to maximum amount of 
                deduction) is amended by adding at the end the 
                following new paragraph:
            ``(5) Special rule for contributions under a qualified 
        payroll deduction arrangement.--This section shall not apply 
        with respect to any amount contributed under a qualified 
        payroll deduction arrangement described in section 408(q)(1) 
        (for which an election has not been made under section 
        408(q)(2)).''.
                    (B) Section 219(g)(1) (relating to the limitation 
                on deduction for active participants) is amended to 
                read as follows:
            ``(1) In general.--If (for any part of any plan year ending 
        with or within a taxable year) an individual is an active 
        participant, each of the dollar limitations contained in 
        subsections (b)(1)(A) and (c)(1)(A) for such taxable year shall 
be reduced (but not below zero) by the sum of--
                    ``(A) the amount determined under paragraph (2), 
                and
                    ``(B) the amount contributed for the taxable year 
                under a qualified payroll deduction arrangement 
                described in section 408(q)(1) (for which an election 
                has not been made under section 408(q)(2)).''.
            (2) Deductibility of employer contributions.--Section 404 
        (relating to deductions for contributions of an employer to 
        pension, etc., plans) is amended by adding at the end the 
        following new subsection:
    ``(n) Special Rules for Contributions Under a Qualified Payroll 
Deduction Arrangement.--Rules similar to the rules of subsection (m) 
shall apply to employer contributions made under a qualified payroll 
deduction arrangement described in section 408(q)(1) (for which an 
election has not been made under section 408(q)(2)).''.
            (3) Contributions and distributions.--Section 402 (relating 
        to taxability of beneficiary of employees' trust) is amended by 
        adding at the end the following new subsection:
    ``(l) Treatment of Contributions and Distributions Under a 
Qualified Payroll Deduction Arrangement.--Rules similar to the rules of 
paragraphs (1) and (3) of subsection (h) shall apply to contributions 
and distributions made with respect to an individual retirement plan 
under a qualified payroll deduction arrangement described in section 
408(q)(1) (for which an election has not been made under section 
408(q)(2)), except that contributions made by an employer on behalf of 
an employee for a taxable year shall be excluded from income only to 
the extent such contributions would have been deductible for such 
taxable year under section 219, if such section applied, without regard 
to section 219(g)(1)(B). Contributions that are not excluded from 
income under the preceding sentence shall be treated as designated 
nondeductible contributions under section 408(o).''.
    (c) Exemption From Withholding.--Subsection (a) of section 3401 
(defining wages) is amended by striking ``or'' at the end of paragraph 
(20), by striking the period at the end of paragraph (21) and inserting 
``; or'', and by inserting after paragraph (21) the following new 
paragraph:
            ``(22) for any payment made for the benefit of the employee 
        to an individual retirement plan if the amount of such payment 
        was deducted and withheld under section 408(q).''.
    (d) Exclusion Shown on W-2.--Subsection (a) of section 6051 
(relating to receipts for employees) is amended by striking ``and'' at 
the end of paragraph (10), by striking the period at the end of 
paragraph (11) and inserting ``, and'', and by inserting after 
paragraph (11) the following new paragraph:
            ``(12) the total amount deducted and withheld pursuant to 
        section 408(q).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 1999.

SEC. 3. 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 1997 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 1997. If only individuals other than employees 
        described in subparagraph (A) or (B) 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), or a qualified payroll deduction arrangement within 
the meaning of section 408(q)(2). A qualified payroll deduction 
arrangement shall be treated as an eligible employer plan only if all 
employees of the employer who--
                    ``(A) have been employed for 90 days, and
                    ``(B) are not described in subparagraph (A) or (C) 
                of section 410(b)(3),
        are eligible to make the election under section 408(q)(1)(A).
            ``(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.

SEC. 4. SECURE MONEY ANNUITY OR RETIREMENT (SMART) TRUSTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
is amended by inserting after section 408A the following new section:

``SEC. 408B. SMART PLANS.

    ``(a) Employer Eligibility.--
            ``(1) In general.--An employer may establish and maintain a 
        SMART annuity or a SMART trust for any year only if--
                    ``(A) the employer is an eligible employer (as 
                defined in section 408(p)(2)(C)), and
                    ``(B) the employer does not maintain (and no 
                predecessor of the employer maintains) a qualified plan 
                (other than a permissible plan) with respect to which 
                contributions were made, or benefits were accrued, for 
                service in any year in the period beginning with the 
                year such annuity or trust became effective and ending 
                with the year for which the determination is being 
                made.
        The period described in subparagraph (B) shall include the 
        period of 5 years before the year such trust or annuity became 
        effective with respect to qualified plans which are defined 
        benefit plans or money purchase pension plans.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Qualified plan.--The term `qualified plan' 
                has the meaning given such term by section 
                408(p)(2)(D)(ii).
                    ``(B) Permissible plan.--The term `permissible 
                plan' means--
                            ``(i) a SIMPLE plan described in section 
                        408(p),
                            ``(ii) a SIMPLE 401(k) plan described in 
                        section 401(k)(11),
                            ``(iii) an eligible deferred compensation 
                        plan described in section 457(b),
                            ``(iv) a collectively bargained plan but 
                        only if the employees eligible to participate 
                        in such plan are not also entitled to a benefit 
                        described in subsection (b)(5) or (c)(5), or
                            ``(v) a plan under which there may be made 
                        only--
                                    ``(I) elective deferrals described 
                                in section 402(g)(3), and
                                    ``(II) employer matching 
                                contributions not in excess of the 
                                amounts described in subclauses (I) and 
                                (II) of section 401(k)(12)(B)(i).
    ``(b) SMART Annuity.--
            ``(1) In general.--For purposes of this title, the term 
        `SMART annuity' means an individual retirement annuity (as 
        defined in section 408(b) without regard to paragraph (2) 
        thereof and without regard to the limitation on aggregate 
        annual premiums contained in the flush language of section 
        408(b)) if--
                    ``(A) such annuity meets the requirements of 
                paragraphs (2) through (7), and
                    ``(B) the only contributions to such annuity are 
                employer contributions.
        Nothing in this section shall be construed as preventing an 
        employer from using a group annuity contract which is divisible 
        into individual retirement annuities for purposes of providing 
        SMART annuities.
            ``(2) Participation requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any year only if all employees of 
                the employer who--
                            ``(i) received at least $5,000 in 
                        compensation from the employer during any 2 
                        consecutive preceding years, and
                            ``(ii) received at least $5,000 in 
                        compensation during the year,
                are entitled to the benefit described in paragraph (5) 
                for such year.
                    ``(B) Excludable employees.--An employer may elect 
                to exclude from the requirements under subparagraph (A) 
                employees described in subparagraph (A) or (C) of 
                section 410(b)(3).
            ``(3) Vesting.--The requirements of this paragraph are met 
        if the employee's rights to any benefits under the annuity are 
        nonforfeitable.
            ``(4) Benefit form.--The requirements of this paragraph are 
        met if the only form of benefit is--
                    ``(A) a benefit payable annually in the form of a 
                single life annuity with monthly payments (with no 
                ancillary benefits) beginning at age 65, or
                    ``(B) any other form of benefit which is the 
                actuarial equivalent (based on the assumptions 
                specified in the SMART annuity) of the benefit 
                described in subparagraph (A).
            ``(5) Amount of annual accrued benefit.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any plan year if the accrued 
                benefit of each participant derived from employer 
                contributions for such year, when expressed as a 
                benefit described in paragraph (4)(A), equals the 
                applicable percentage of the participant's compensation 
                for such year.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `applicable 
                        percentage' means 2 percent.
                            ``(ii) Election of higher percentage.--An 
                        employer may elect to apply an applicable 
                        percentage of 1 percent for any year for all 
                        employees eligible to participate in the plan 
                        for such year, if the employer notifies the 
                        employees of such percentage within a 
                        reasonable period before the beginning of such 
                        year. An employer may also elect to apply an 
                        applicable percentage of 3 percent for any of 
                        the first 5 years that the plan is effective 
                        for all employees eligible to participate in 
                        the plan for such year, if the employer so 
                        notifies the employees.
                    ``(C) Compensation limit.--
                            ``(i) In general.--The compensation taken 
                        into account under this paragraph for any year 
                        shall not exceed $100,000.
                            ``(ii) Cost-of-living adjustment.--The 
                        Secretary shall adjust annually the $100,000 
                        amount in clause (i) 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 beginning October 1, 1999, and 
                        any increase which is not a multiple of $5,000 
                        shall be rounded to the next lowest multiple of 
                        $5,000.
            ``(6) Funding.--
                    ``(A) In general.--The requirements of this 
                paragraph are met only if the employer is required to 
                contribute to the annuity for each plan year the amount 
                necessary to purchase a SMART annuity in the amount of 
                the benefit accrued for such year for each participant 
entitled to such benefit. Such contribution must be made no later than 
8\1/2\ months after the end of the plan year.
                    ``(B) Penalty for failure to make required 
                contribution.--The taxes imposed by section 4971 shall 
                apply to a failure to make the contribution required by 
                this paragraph in the same manner as if the amount of 
                the failure were an accumulated funding deficiency to 
                which such section applies.
            ``(7) Limitation on distributions.--
                    ``(A) In general.--The requirements of this 
                paragraph are met only if distributions may be paid 
                only when the employee attains age 65, separates from 
                service, dies, or becomes disabled (within the meaning 
                of section 72(m)(7)).
                    ``(B) Limitation on distributions on separation 
                from service of employees who have not attained age 
                65.--Subparagraph (A) shall apply to a distribution on 
                separation of service of an employee who has not 
                attained age 65 only if--
                            ``(i) the aggregate cash value of an 
                        employee's SMART annuity does not exceed the 
                        dollar limit in effect under section 
                        411(a)(11)(A), or
                            ``(ii) the distribution is a direct 
                        trustee-to-trustee transfer of the entire 
                        balance to the credit of the employee to a 
                        SMART trust described in subsection (c), a 
                        SMART rollover plan, or a SMART annuity for the 
                        benefit of such employee.
            ``(8) Joint and survivor annuity rules applicable.--The 
        requirements of this paragraph are met only if the annuity 
        satisfies section 401(a)(11).
            ``(9) Definitions and special rule.--
                    ``(A) Definitions.--The definitions in section 
                408(p)(6) shall apply for purposes of this subsection.
                    ``(B) Use of designated financial institutions.--A 
                rule similar to the rule of section 408(p)(7) (without 
                regard to the last sentence thereof) shall apply for 
                purposes of this subsection.
                    ``(C) SMART rollover plan.--For purposes of this 
                section, the term `SMART rollover plan' means an 
                individual retirement plan for the benefit of the 
                employee to which a rollover was made from a SMART 
                Annuity, SMART trust, or another SMART Rollover plan.
    ``(c) SMART Trust.--
            ``(1) In general.--For purposes of this title, the term 
        `SMART trust' means a trust forming part of a defined benefit 
        plan if--
                    ``(A) such trust meets the requirements of section 
                401(a) as modified by subsection (d),
                    ``(B) such plan meets the requirements of 
                paragraphs (2) through (8), and
                    ``(C) the only contributions to such trust are 
                employer contributions.
            ``(2) Participation requirements.--A plan meets the 
        requirements of this paragraph for any year only if the 
        requirements of subsection (b)(2) are met for such year.
            ``(3) Vesting.--A plan meets the requirements of this 
        paragraph for any year only if the requirements of subsection 
        (b)(3) are met for such year.
            ``(4) Benefit form.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a plan meets the requirements of this 
                paragraph only if the trustee distributes a SMART 
                annuity that satisfies subsection (b)(4) where the 
                annual benefit described in subsection (b)(4)(A) is no 
                less than the accrued benefit determined under 
                paragraph (5).
                    ``(B) Direct transfers to individual retirement 
                plan or smart annuity.--A plan shall not fail to meet 
                the requirements of this paragraph by reason of 
                permitting, as an optional form of benefit, the 
                distribution of the entire balance to the credit of the 
                employee. If the employee is under age 65, such 
                distribution must be in the form of a direct trustee-
                to-trustee transfer to a SMART annuity, another SMART 
                trust, or a SMART rollover plan (or, in the case of a 
                distribution that does not exceed the dollar limit in 
                effect under section 411(a)(11)(A), any other 
                individual retirement plan).
            ``(5) Amount of annual accrued benefit.--A plan meets the 
        requirements of this paragraph for any year only if the 
        requirements of subsection (b)(5) are met for such year.
            ``(6) Funding.--
                    ``(A) In general.--A plan meets the requirements of 
                this paragraph for any year only if--
                            ``(i) the requirements of subparagraph (A) 
                        of subsection (b)(6) are met for such year,
                            ``(ii) in the case of a plan which has an 
                        unfunded annuity amount with respect to the 
                        account of any participant, the plan requires 
                        that the employer make an additional 
                        contribution to such plan (at the time the 
                        annuity contract to which such amount relates 
                        is purchased) equal to the unfunded annuity 
                        amount, and
                            ``(iii) in the case of a plan which has an 
                        unfunded prior year liability with respect to 
                        the account of any participant as of the close 
                        of such plan year, the plan requires that the 
                        employer make an additional contribution to 
                        such plan for such year equal to the amount of 
                        such unfunded prior year liability no later 
                        than 8\1/2\ months following the end of the 
                        plan year.
                    ``(B) Unfunded annuity amount.--For purposes of 
                this paragraph, the term `unfunded annuity amount' 
                means, with respect to the account of any participant 
                for whom an annuity is being purchased, the excess (if 
                any) of--
                            ``(i) the amount necessary to purchase an 
                        annuity contract which meets the requirements 
                        of subsection (b)(4) in the amount of the 
                        participant's accrued benefit determined under 
                        paragraph (5), over
                            ``(ii) the balance in such account at the 
                        time such contract is purchased.
                    ``(C) Unfunded prior year liability.--For purposes 
                of this paragraph, the term `unfunded prior year 
                liability' means, with respect to any plan year, the 
                excess (if any) of--
                            ``(i) the aggregate present value of the 
                        participants' accrued benefits under the plan 
                        as of the close of the prior plan year, over
                            ``(ii) the value of the plan's assets 
                        determined under section 412(c)(2) as of the 
                        close of the plan year (determined without 
                        regard to any contributions for such plan 
                        year).
                Such present value shall be determined using the 
                assumptions specified in subparagraph (D).
                    ``(D) Actuarial assumptions.--In determining the 
                amount required to be contributed under subparagraph 
                (A)--
                            ``(i) the assumed interest rate shall be 5 
                        percent per year,
                            ``(ii) the assumed mortality shall be 
                        determined under the applicable mortality table 
                        (as defined in section 417(e)(3), as modified 
                        by the Secretary so that it does not include 
                        any assumption for preretirement mortality), 
                        and
                            ``(iii) the assumed retirement age shall be 
                        65.
                    ``(E) Changes in mortality table.--If the 
                applicable mortality table under section 417(e)(3) for 
                any plan year is not the same as such table for the 
                prior plan year, the Secretary shall prescribe 
                regulations which phase in the effect of the changes 
                over a reasonable period of plan years determined by 
                the Secretary.
                    ``(F) Penalty for failure to make required 
                contribution.--The taxes imposed by section 4971 shall 
                apply to a failure to make the contribution required by 
                this paragraph in the same manner as if the amount of 
                the failure were an accumulated funding deficiency to 
                which such section applies.
            ``(7) Separate accounts for participants.--A plan meets the 
        requirements of this paragraph for any year only if the plan 
        provides--
                    ``(A) for an individual account for each 
                participant, and
                    ``(B) for benefits based solely on--
                            ``(i) the amount contributed to the 
                        participant's account,
                            ``(ii) any income, expenses, gains and 
                        losses, and any forfeitures of accounts of 
                        other participants which may be allocated to 
                        such participant's account, and
                            ``(iii) the amount of any unfunded annuity 
                        amount with respect to the participant.
            ``(8) Trust may not hold securities which are not readily 
        tradable.--A plan meets the requirements of this paragraph only 
        if the plan prohibits the trust from holding directly or 
        indirectly securities which are not readily tradable on an 
        established securities market. Nothing in this paragraph shall 
        prohibit the trust from holding insurance company products 
        regulated by State law.
            ``(9) Definitions.--The definitions applicable under 
        subsection (b)(8) shall apply for purposes of this subsection.
    ``(d) Special Rules for SMART Annuities and Trusts.--For purposes 
of section 401(a), a SMART annuity and a SMART trust shall be treated 
as meeting the requirements of the following provisions:
            ``(1) Section 401(a)(4) (relating to nondiscrimination 
        rules).
            ``(2) Section 401(a)(26) (relating to minimum 
        participation).
            ``(3) Section 410 (relating to minimum participation and 
        coverage requirements).
            ``(4) Section 411(b) (relating to accrued benefit 
        requirements).
            ``(5) Section 416 (relating to special rules for top-heavy 
        plans).''
    (b) Deduction Rules.--
            (1) In general.--Section 404 is further amended by adding 
        at the end the following new subsection:
    ``(o) Special Rules for SMART Annuities and Trusts.--
            ``(1) In general.--Employer contributions to a SMART 
        annuity shall be treated as if they are made to a plan 
        described in paragraph (1) of subsection (a).
            ``(2) Deductible limit.--For purposes of section 
        404(a)(1)(A)(i), the amount necessary to satisfy the minimum 
        funding requirement of section 408B(b)(6) or (c)(6) shall be 
        treated as the amount necessary to satisfy the minimum funding 
        requirement of section 412.''
            (2) Coordination with deduction under section 219.--
                    (A) Section 219(b) is amended by adding at the end 
                the following new paragraph:
            ``(5) Special rule for smart annuities.--This section shall 
        not apply with respect to any amount contributed to a SMART 
        annuity established under section 408B(b).''
                    (B) Section 219(g)(5)(A) (defining active 
                participant) is amended by striking ``or'' at the end 
                of clause (v) and by adding at the end the following 
                new clause:
                            ``(vii) any SMART annuity (within the 
                        meaning of section 408B), or''.
    (c) Contributions and Distributions.--
            (1) Section 402 is further amended by adding at the end the 
        following new subsection:
    ``(m) Treatment of SMART Annuities.--Rules similar to the rules of 
paragraphs (1) and (3) of subsection (h) shall apply to contributions 
and distributions with respect to SMART annuities under section 408B.''
            (2) Section 408(d)(3) is amended by adding at the end the 
        following new subparagraph:
                    ``(H) SMART annuities.--This paragraph shall not 
                apply to any amount paid or distributed out of a SMART 
                annuity (as defined in section 408B) unless it is paid 
                in a trustee-to-trustee transfer into a SMART rollover 
                plan.''
            (3)(A) Section 412(h) is amended by striking ``or'' at the 
        end of paragraph (5), by striking the period at the end of 
        paragraph (6) and inserting ``, or'', and by inserting after 
        paragraph (6) the following new paragraph:
            ``(7) any plan providing for the purchase of any SMART 
        annuity or any SMART plan.''
            (B) Section 301(a) of Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1081) is amended by striking ``or'' at 
        the end of paragraph (9), by striking the period at the end of 
        paragraph (10) and inserting ``; or'', and by adding at the end 
        the following new paragraph:
            ``(11) any plan providing for the purchase of any SMART 
        annuity or any SMART plan (as such terms are defined in section 
        408B of such Code).''
            (4) Section 415(b) is amended by adding at the end the 
        following new paragraph:
            ``(12) Treatment of smart annuities and trusts.--A SMART 
        annuity and a SMART trust shall be treated as meeting the 
        requirements of this section, but distributions from such an 
        annuity or trust shall be taken into account in determining 
        whether any other plan satisfies the requirements of this 
        section.''
    (d) Increased Penalty on Early Withdrawals.--Section 72(t) 
(relating to additional tax on early distributions) is amended by 
adding at the end the following new paragraph:
            ``(9) Special rules for smart annuities and trusts.--In the 
        case of any amount received from a SMART annuity, a SMART 
        trust, or a SMART rollover plan (within the meaning of section 
        408B), paragraph (1) shall be applied by substituting `20 
        percent' for `10 percent' and paragraph (2) shall be applied by 
        substituting `age 65' for `age 59\1/2\'.''
    (e) Simplified Employer Reports.--
            (1) SMART annuities.--Section 408(l) (relating to 
        simplified employer reports) is amended by adding at the end 
        the following new paragraph:
            ``(3) SMART annuities.--
                    ``(A) Simplified report.--The employer maintaining 
                any SMART annuity (within the meaning of section 408B) 
                shall file a simplified annual return with the 
                Secretary containing only the information described in 
                subparagraph (B).
                    ``(B) Contents.--The return required by 
                subparagraph (A) shall set forth--
                            ``(i) the name and address of the employer,
                            ``(ii) the date the plan was adopted,
                            ``(iii) the number of employees of the 
                        employer,
                            ``(iv) the number of such employees who are 
                        eligible to participate in the plan,
                            ``(v) the total amount contributed by the 
                        employer to each such annuity for such year and 
                        the minimum amount required under section 408B 
                        to be so contributed,
                            ``(vi) the percentage elected under section 
                        408B(b)(5)(B),
                            ``(vii) the name of the issuer,
                            ``(viii) the employer identification 
                        number,
                            ``(ix) the name of the plan, and
                            ``(x) the date of the contribution.
                    ``(C) Reporting by issuer of smart annuity.--
                            ``(i) In general.--The issuer of each SMART 
                        annuity shall provide to the owner of the 
                        annuity for each year a statement setting forth 
                        as of the close of such year--
                                    ``(I) the benefits guaranteed at 
                                age 65 under the annuity, and
                                    ``(II) the cash surrender value of 
                                the annuity.
                            ``(ii) Summary description.--The issuer of 
                        any SMART annuity shall provide to the employer 
                        maintaining the annuity for each year a 
                        description containing the following 
                        information:
                                    ``(I) The name and address of the 
                                employer and the issuer.
                                    ``(II) The requirements for 
                                eligibility for participation.
                                    ``(III) The benefits provided with 
                                respect to the annuity.
                                    ``(IV) The procedures for, and 
                                effects of, withdrawals (including 
                                rollovers) from the annuity.
                    ``(D) Time and manner of reporting.--Any return, 
                report, or statement required under this paragraph 
                shall be made in such form and at such time as the 
                Secretary shall prescribe.''
            (2) SMART trusts.--Section 6059 (relating to actuarial 
        reports) is amended by redesignating subsections (c) and (d) as 
        subsections (d) and (e), respectively, and by inserting after 
        subsection (b) the following new subsection:
    ``(c) SMART Trusts.--In the case of a SMART trust (within the 
meaning of section 408B), the Secretary shall require a simplified 
actuarial report which contains--
            ``(1) information similar to the information required in 
        section 408(l)(3)(B),
            ``(2) the fair market value of the assets of the trust,
            ``(3) the amounts distributed directly to participants,
            ``(4) the amounts transferred to SMART rollover plans, and
            ``(5) the present value of the annual accrued benefits 
        under the plan to which the trust relates.''
    (f) Conforming Amendments.--
            (1) Subparagraph (A) of section 219(g)(5) is amended by 
        striking ``or'' at the end of clause (v) and by inserting after 
        clause (vi) the following new clause:
                            ``(vii) any SMART trust or SMART annuity 
                        (within the meaning of section 408B), or''.
            (2) Section 280G(b)(6) is amended by striking ``or'' at the 
        end of subparagraph (C), by striking the period at the end of 
        subparagraph (D) and inserting ``, or'' and by adding after 
        subparagraph (D) the following new subparagraph:
                    ``(E) a SMART annuity described in section 408B.''
            (3) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of 
        section 414 are each amended by inserting ``408B,'' after 
        ``408(p),''.
            (4) Section 4972(d)(1)(A) is amended by striking ``and'' at 
        the end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting ``, and'', and by adding after clause 
        (iv) the following new clause:
                            ``(v) any SMART annuity (within the meaning 
                        of section 408B).''
    (g) Reporting Requirements Under ERISA.--Section 101 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021) is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
    ``(h) SMART Annuities.--
            ``(1) No employer reports.--Except as provided in this 
        subsection, no report shall be required under this section by 
        an employer maintaining a SMART annuity under section 408B(b) 
        of the Internal Revenue Code of 1986.
            ``(2) Summary description.--The issuer of any SMART annuity 
        shall provide to the employer maintaining the annuity for each 
        year a description containing the following information:
                    ``(A) The name and address of the employer and the 
                issuer.
                    ``(B) The requirements for eligibility for 
                participation.
                    ``(C) The benefits provided with respect to the 
                annuity.
                    ``(D) The procedures for, and effects of, 
                withdrawals (including rollovers) from the annuity.''
            ``(3) Employee notification.--The employer shall provide 
        each employee eligible to participate in the SMART annuity with 
        the description described in paragraph (2) at the same time as 
        the notification required under section 408B(b)(5)(B) of the 
        Internal Revenue Code of 1986.''
    (h) $5 Per Participant PBGC Premium.--Subparagraph (A) of section 
4006(a)(3) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1306) is amended--
            (1) by inserting ``not described 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 single-employer plan described in 
        section 408B(c) of the Internal Revenue Code of 1986, an amount 
        equal to $5 for each participant.''.
    (i) Clerical Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 is amended by inserting after the 
item relating to section 408A the following new item:

                              ``Sec. 408B. SMART plans.''
    (j) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 5. FASTER VESTING OF EMPLOYER MATCHING CONTRIBUTIONS.

    (a) Amendment of Internal Revenue Code.--Paragraph (2) of section 
411(a) (relating to employer contributions) is amended--
            (1) by inserting ``, and, if applicable, (C)'' after ``or 
        (B)'', and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Matching contributions.--In the case of a 
                plan that includes an accrued benefit derived from 
                matching contributions (as defined in section 
                401(m)(4)(A)), the plan satisfies the requirements of 
                this subparagraph if--
                            ``(i) if an employee who has completed at 
                        least 3 years of service has a nonforfeitable 
                        right to 100 percent of the employee's accrued 
                        benefit derived from such matching 
                        contributions, or
                            ``(ii) an employee has a nonforfeitable 
                        right to a percentage of the employee's accrued 
                        benefit derived from employer matching 
                        contributions (as so defined) determined under 
                        the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    2.............................................                  20 
    3.............................................                  40 
    4.............................................                  60 
    5.............................................                  80 
    6.............................................               100.''
    (b) Amendment of ERISA.--Paragraph (2) of section 203(a) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is 
amended--
            (1) by inserting ``, and, if applicable, (C)'' after ``or 
        (B)'', and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Matching contributions.--In the case of a 
                plan that includes an accrued benefit derived from 
                matching contributions (as defined in section 
                401(m)(4)(A) of the Internal Revenue Code of 1986), the 
                plan satisfies the requirements of this subparagraph 
                if--
                            ``(i) if an employee who has completed at 
                        least 3 years of service has a nonforfeitable 
                        right to 100 percent of the employee's accrued 
                        benefit derived from such matching 
                        contributions, or
                            ``(ii) an employee has a nonforfeitable 
                        right to a percentage of the employee's accrued 
                        benefit derived from employer matching 
                        contributions (as so defined) determined under 
                        the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    2.............................................                  20 
    3.............................................                  40 
    4.............................................                  60 
    5.............................................                  80 
    6.............................................               100.''
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to plan 
        years beginning after December 31, 1999.
            (2) Application to current employees.--The amendments made 
        by this section shall not apply to any employee who does not 
        have at least 1 hour of service in any plan year beginning 
        after December 31, 1999.
            (3) 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 the enactment of this Act, 
        the amendments made by this section shall not apply to 
        employees covered by any such agreement in plan years beginning 
        before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 1999, or
                    (B) January 1, 2004.

SEC. 6. PENSION RIGHT TO KNOW PROPOSALS.

    (a) Spouse's Right To Know Distribution Information.--
            (1) Amendment of internal revenue code.--Paragraph (3) of 
        section 417(a) (relating to definitions and special rules for 
        purposes of minimum survivor annuity requirements) is amended 
        by adding at the end the following new subparagraph:
                    ``(C) Explanation to spouse.--At the time a plan 
                provides a participant with a written explanation under 
                subparagraph (A) or (B), such plan shall provide a copy 
                of such explanation to such participant's spouse. If 
                the last known address of the spouse is the same as the 
                last known address of the participant, the requirement 
                of the preceding sentence shall be treated as met if 
                the copy referred to in the preceding sentence is 
                included in a single mailing made to such address and 
                addressed to both such participant and spouse.''.
            (2) Amendment of erisa.--Paragraph (3) of section 205(c) of 
        Employee Retirement Income Security Act of 1974 is amended by 
        adding at the end the following new subparagraph:
                    ``(C) Explanation to spouse.--At the time a plan 
                provides a participant with a written explanation under 
                subparagraph (A) or (B), such plan shall provide a copy 
                of such explanation to such participant's spouse. If 
                the last known address of the spouse is the same as the 
                last known address of the participant, the requirement 
                of the preceding sentence shall be treated as met if 
                the copy referred to in the preceding sentence is 
                included in a single mailing made to such address and 
                addressed to both such participant and spouse.''.
    (b) Employee's Right To Know of Opportunity for Elective 
Contributions Under 401(k) Plans.-- Subparagraph (D) of section 
401(k)(12) (relating to notice requirements) is amended--
            (1) by striking ``, within a reasonable period before any 
        year,'' and inserting ``before the 60th day before the 
        beginning of any year'', and
            (2) by adding at the end the following new flush sentence:
                ``The requirements of paragraph (11)(B)(iii) shall 
                apply for purposes of this subparagraph.''
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 7. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR DEFERRED 
              ARRANGEMENTS AND MATCHING CONTRIBUTIONS.

    (a) Alternative Methods of Satisfying Section 401(k) 
Nondiscrimination Tests.--Subparagraph (B) of section 401(k)(12) 
(relating to alternative methods of meeting nondiscrimination 
requirements) is amended to read as follows:
                    ``(B) Nonelective and matching contributions.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Nonelective contributions.--The 
                        requirements of this clause are met if, under 
                        the arrangement, the employer 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 1 
                        percent of the employee's compensation.
                            ``(iii) Matching contributions.--The 
                        requirements of this clause are met if, under 
                        the arrangement, the employer makes matching 
                        contributions on behalf of each employee who is 
                        not a highly compensated employee in an amount 
                        equal to--
                                    ``(I) 100 percent of the elective 
                                contributions of the employee to the 
                                extent such elective contributions do 
                                not exceed 3 percent of the employee's 
                                compensation, and
                                    ``(II) 50 percent of the elective 
                                contributions of the employee to the 
                                extent that such elective contributions 
                                exceed 3 percent but do not exceed 5 
                                percent of the employee's compensation.
                            ``(iv) Rate for highly compensated 
                        employees.--The requirements of clause (iii) 
                        are not met if, under the arrangement, the rate 
                        of matching contribution with respect to any 
                        rate of elective contribution of a highly 
                        compensated employee is greater than that with 
                        respect to an employee who is not a highly 
                        compensated employee. For purposes of this 
                        clause, to the extent provided in regulations, 
                        the last sentences of paragraph (3)(A) and 
                        subsection (m)(2)(B) shall not apply.
                            ``(v) Alternative plan designs.--If the 
                        rate of matching contribution with respect to 
                        any rate of elective contribution is not equal 
                        to the percentage required under clause (iii), 
                        an arrangement shall not be treated as failing 
                        to meet the requirements of clause (iii) if--
                                    ``(I) the rate of an employer's 
                                matching contribution does not increase 
                                as an employee's rate of elective 
                                contribution increase, and
                                    ``(II) the aggregate amount of 
                                matching contributions at such rate of 
                                elective contribution is at least equal 
                                to the aggregate amount of matching 
                                contributions which would be made if 
                                matching contributions were made on the 
                                basis of the percentages described in 
                                clause (iii).''
    (b) Alternative Methods of Satisfying Section 401(m) 
Nondiscrimination Tests.--Section 401(m)(11) (relating to alternative 
method of satisfying tests) is amended by adding at the end of 
subparagraph (B) the following new flush sentence:
                ``To the extent provided in regulations, the last 
                sentences of paragraph (2)(B) and subsection (k)(3)(A) 
                shall not apply for purposes of clause (iii).''
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 8. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.

    (a) In General.--Subparagraph (B) of section 414(q)(1) (defining 
highly compensated employee) is amended to read as follows:
                    ``(B) for the preceding year had compensation from 
                the employer in excess of $80,000.''.
    (b) Conforming Amendments.--
            (1)(A) Subsection (q) of section 414 is amended by striking 
        paragraphs (3), (5), and (7) and by redesignating paragraphs 
        (4), (6), (8), and (9) as paragraphs (3) through (6), 
        respectively.
            (B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), 
        and 416(i)(1)(D) are each amended by striking ``section 
        414(q)(4)'' and inserting ``section 414(q)(3)''.
            (C) Section 416(i)(1)(A) is amended by striking ``section 
        414(q)(5)'' and inserting ``section 414(r)(9)''.
            (2)(A) Section 414(r) is amended by adding at the end the 
        following new paragraph:
            ``(9) Excluded employees.--For purposes of paragraph 
        (2)(A), the following employees shall be excluded:
                    ``(A) Employees who have not completed 6 months of 
                service.
                    ``(B) Employees who normally work less than 17\1/2\ 
                hours per week.
                    ``(C) Employees who normally work during not more 
                than 6 months during any year.
                    ``(D) Employees who have not attained the age of 
                21.
                    ``(E) Except to the extent provided in regulations, 
                employees who are included in a unit of employees 
                covered by an agreement which the Secretary of Labor 
                finds to be a collective bargaining agreement between 
                employee representatives and the employer.''.
            (B) Subparagraph (A) of section 414(r)(2) is amended by 
        striking ``subsection (q)(5)'' and inserting ``paragraph (9)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 9. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--Paragraph (11) of section 415(b) (relating 
to limitation for defined benefit plans) is amended to read as follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''.
    (b) Exemption for Survivor and Disability Benefits.--Subparagraph 
(I) of section 415(b)(2) (relating to limitation for defined benefit 
plans) is amended--
            (1) by inserting ``or a multiemployer plan (as defined in 
        section 414(f))'' after ``section 414(d))'' in clause (i),
            (2) by inserting ``or multiemployer plan'' after 
        ``governmental plan'' in clause (ii), and
            (3) by inserting ``and multiemployer'' after 
        ``governmental'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 10. FULL FUNDING LIMITATION FOR MULTIEMPLOYER PLANS.

    (a) Amendments to Code.--
            (1) Full funding limitation.--Section 412(c)(7)(C) 
        (relating to full funding limitation) is amended--
                    (A) by inserting ``or in the case of a 
                multiemployer plan,'' after ``paragraph (6)(B),'', and
                    (B) by inserting ``and multiemployer plans'' after 
                ``paragraph (6)(b)'' in the heading thereof.
            (2) Valuation.--Section 412(c)(9) (relating to annual 
        valuation) is amended--
                    (A) by inserting ``(3 years in the case of a 
                multiemployer plan)'' after ``year'', and
                    (B) by striking ``Annual valuation'' in the heading 
                and inserting ``Valuation''.
    (b) Amendments to ERISA.--
            (1) Full funding limitation.--Section 302(c)(7)(C) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1082(c)(7)(C)) is amended--
                    (A) by inserting ``or in the case of a 
                multiemployer plan,'' after ``paragraph (6)(B),'', and
                    (B) by inserting ``and multiemployer plans'' after 
                ``paragraph (6)(b)'' in the heading thereof.
            (2) Valuation.--Section 302(c)(9) of such Act (29 U.S.C. 
        1082(c)(9)) is amended--
                    (A) by inserting ``(3 years in the case of a 
                multiemployer plan)'' after ``year'', and
                    (B) by striking ``Annual valuation'' in the heading 
                and inserting ``Valuation''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1999.

SEC. 11. 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. 12. ALLOWANCE OF ROLLOVERS FROM AND TO 403(B) PLANS.

    (a) 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''.
    (b) Rollovers to Section 403(b) Plans.--Section 402(c)(8)(B) 
(defining eligible retirement plan) is amended by striking ``and'' at 
the end of clause (ii), by striking the period at the end of clause 
(iv) and inserting ``, and'', and by adding at the end the following:
                            ``(v) an annuity contract described in 
                        section 403(b).''
    (c) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), and 408(d)(3)''.
            (2) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), and 403(b)(8)''.
            (3) Subparagraph (B) of section 403(b)(8) is amended by 
        inserting ``and (9)'' after ``through (7)''.
            (4) Subparagraphs (A) and (B) of section 415(b)(2) are each 
        amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), and 408(d)(3)''.
    (d) 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 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. 13. ROLLOVER CONTRIBUTIONS FROM DEFERRED COMPENSATION PLANS OF 
              STATE AND LOCAL GOVERNMENTS.

    (a) Rollovers From Section 457 Plans.--
            (1) In general.--Section 457(e) (relating to other 
        definitions and special rules) is amended by adding at the end 
        the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan of an eligible employer 
                described in paragraph (1)(A), if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in a rollover distribution (other 
                        than a distribution described in subsection 
                        (d)(1)(A)(iii) or in subparagraph (A) or (B) of 
                        section 402(c)(4)),
                            ``(ii) the employee transfers any portion 
                        of the property such employee receives in such 
                        distribution to an individual retirement plan 
                        (as defined in section 7701(a)(37), and
                            ``(iii) in the case of a distribution of 
                        property other than money, the amount so 
                        transferred consists of the property 
                        distributed,
                then such distribution (to the extent so transferred) 
                shall not be includible in gross income for the taxable 
                year in which paid.
                    ``(B) Certain rules made applicable.--Rules similar 
                to the rules of section 401(a)(31), paragraphs (2), 
                (3), (5), (6), (7), and (9) of section 402(c), and 
                section 402(f) shall apply for purposes of subparagraph 
                (A).''
            (2) Distribution requirements.--Section 457(d)(1)(A) 
        (relating to distribution requirements) is amended by inserting 
        ``except as provided in subsection (e)(16),'' after ``(A)''.
            (3) Conforming amendments.--
                    (A) Section 72(o)(4) is amended--
                            (i) by striking ``and 408(d)(3)'' and 
                        inserting ``408(d)(3), and 457(e)(16)'',
                            (ii) by inserting ``or excludable'' after 
                        ``deductible'' each place it appears, and
                            (iii) in the heading by inserting ``or 
                        Excludable'' after ``Deductible''.
                    (B) Section 219(d)(2) is amended by striking ``or 
                408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
                    (C) Section 401(a)(31)(B) is amended by striking 
                ``and 403(b)(8)'' and inserting ``, 403(b)(8), and 
                457(e)(16)''.
                    (D) Paragraph (4) of section 402(c) is amended by 
                inserting ``or in an eligible deferred compensation 
                plan (as defined in section 457(b)) of an eligible 
                employer described in section 457(e)(1)(A)'' after 
                ``qualified trust''.
                    (E) Section 408(a)(1) is amended by striking ``or 
                403(b)(8)'' and inserting ``, 403(b)(8), or 
                457(e)(16)''.
                    (F) Section 408(d)(3)(A)(ii) is amended by striking 
                ``or'' after ``501(a)'' and inserting a comma, and by 
                inserting ``, or from an eligible deferred compensation 
                plan described in section 457(b)'' after 
                ``contribution)''.
                    (G) Subparagraphs (A) and (B) of section 415(b)(2) 
                are each amended by striking ``and 408(d)(3)'' and 
inserting ``408(d)(3), and 457(e)(16)''.
                    (H) Section 4973(b)(1)(A) is amended by striking 
                ``or 408(d)(3)'' and inserting ``408(d)(3), or 
                457(e)(16)''.
    (d) 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 
        individual retirement plan on behalf of an individual if there 
        was a rollover to such plan on behalf of such individual which 
        is permitted solely by reason of any amendment made by this 
        section.

SEC. 14. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by striking ``or'' at the end of clause 
(ii), by striking the period at the end of clause (iii) and inserting a 
semicolon, and by adding at the end the following:
                            ``(iv)(I) the entire amount received 
                        (including money and other property) represents 
                        the entire interest in the account or the 
                        entire value of the annuity,
                            ``(II) no amount in the account and no part 
                        of the value of the annuity is attributable to 
                        any source other than a rollover contribution 
                        from a defined contribution plan and any 
                        earnings on such rollover, and
                            ``(III) such entire amount received is paid 
                        into another defined contribution plan (for the 
                        benefit of such individual) not later than the 
                        60th day after he receives the payment or 
                        distribution; or
                            ``(v)(I) the entire amount received 
                        (including money and other property) represents 
                        the entire interest in the account or the 
                        entire value of the annuity,
                            ``(II) no amount in any such account and no 
                        part of the value of any such annuity is 
                        attributable to any source other than a 
                        rollover contribution from such an account or 
                        annuity of such individual (and any earnings on 
                        such contribution),
                            ``(III) all contributions to all individual 
                        retirement accounts, and all amounts paid for 
                        all individual retirement annuities, of such 
                        individual were allowed as a deduction under 
                        section 219, and
                            ``(IV) such entire amount received is paid 
                        (not later than the 60th day after being so 
                        received) into a defined contribution plan (for 
                        the benefit of such individual) under which 
                        amounts are held in trust by a person described 
                        in section 408(a)(2) or in a manner that 
                        satisfies section 401(f).
                If a payment or distribution from an individual 
                retirement plan is described in more than one clause of 
                this subparagraph, such payment or distribution shall 
                be treated as described only in the clause specified by 
                the payee or distributee. For purposes of this 
                subparagraph, the term `defined contribution plan' 
                means a defined contribution plan (as defined in 
                section 414(i)) which includes a trust exempt from tax 
                under section 501(a), an annuity plan described in 
                section 403(a), an annuity contract described in 
                section 403(b), and an eligible deferred compensation 
                plan described in section 457(b) of an eligible 
                employer described in section 457(e)(1)(A).''
    (b) Conforming Amendment.--Paragraph (1) of section 403(b) is 
amended by striking ``section 408(d)(3)(A)(iii)'' and inserting 
``clause (iii), (iv), or (v) of section 408(d)(3)(A)''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 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 a 
        defined contribution plan (as defined in section 408(d)(3)(A) 
        of the Internal Revenue Code of 1986 (as added by this section) 
        on behalf of an individual if there was a rollover to such plan 
        on behalf of such individual which is permitted solely by 
        reason of the amendments made by this section.

SEC. 15. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 402(c) (relating to rules 
applicable to rollovers from exempt trusts) is amended by adding at the 
end the following new sentence: ``In accordance with rules prescribed 
by the Secretary, the preceding sentence shall not apply to any 
distribution if--
                    ``(A) the portion of the distribution which would 
                be so includible is reported by the trustee, and
                    ``(B) the eligible retirement plan to which it is 
                paid agrees to report such amount in any subsequent 
                distribution.''
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 401(a)(31) is amended by 
        adding at the end the following new sentence: ``In accordance 
        with rules prescribed by the Secretary, the preceding sentence 
        shall not apply to any distribution if--
                            ``(i) the portion of the distribution which 
                        would be so includible is reported by the 
                        trustee, and
                            ``(ii) the eligible retirement plan to 
                        which it is paid agrees to report such amount 
                        in any subsequent distribution.''
            (2) Subparagraph (B) of section 408(d)(3) is amended--
                    (A) by striking ``Limitation.--'' in the heading 
                and inserting ``Limitations.--'', and
                    (B) by adding at the end the following: ``In 
                addition, this paragraph does not apply unless rules 
                similar to the rules of section 402(c)(2) are 
                satisfied, except that the rollover contribution may 
                exceed the amount includible in income to the extent 
                the rollover contribution consists of nondeductible 
                contributions described in subsection (o).''
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 1999.

SEC. 16. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT 
              PLANS.

    (a) 403(b) Plans.--Subsection (b) of section 403 is amended by 
adding at the end the following new paragraph:
            ``(13) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''
    (b) 457 Plans.--Subsection (e) of section 457, as amended by 
section 12, is amended by adding at the end the following new 
paragraph:
            ``(17) 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.''
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 1999.

SEC. 17. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.

    (a) Amendments to ERISA.--
            (1) Amount of annuity.--Paragraph (1) of section 205(a) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1055(a)) is amended by inserting ``or, at the election of the 
        participant, shall be provided in the form of a qualified joint 
        and 75 percent survivor annuity'' after ``survivor annuity,''.
            (2) Definition.--Subsection (d) of section 205 of such Act 
        (29 U.S.C. 1055) is amended--
                    (A) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively,
                    (B) by inserting ``(1)'' after ``(d)'', and
                    (C) by adding at the end the following new 
                paragraph:
    ``(2) For purposes of this section, the term ``qualified joint and 
75 percent survivor annuity'' means a joint and survivor annuity under 
which the survivor annuity for the life of the surviving spouse is 
equal to at least 75 percent of the amount of the annuity which is 
payable during the joint lives of the participant and spouse.''
    (b) Amendments to Internal Revenue Code.--
            (1) Amount of annuity.--Clause (i) of section 401(a)(11)(A) 
        (relating to requirement of joint and survivor annuity and 
        preretirement survivor annuity) is amended by inserting ``or, 
        at the election of the participant, shall be provided in the 
        form of a qualified joint and 75 percent survivor annuity'' 
        after ``survivor annuity,''.
            (2) Definition.--Section 417 (relating to definitions and 
        special rules for purposes of minimum survivor annuity 
        requirements), is amended by redesignating subsection (f) as 
        subsection (g) and by inserting after subsection (e) the 
        following new subsection:
    ``(f) Definition of Qualified Joint and 75 Percent Survivor 
Annuity.--For purposes of this section and section 401(a)(11), the term 
``qualified joint and 75 percent survivor annuity'' means a joint and 
survivor annuity under which the survivor annuity for the life of the 
surviving spouse is equal to at least 75 percent of the amount of the 
annuity which is payable during the joint lives of the participant and 
spouse.''
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to plan 
        years beginning after December 31, 1999.
            (2) Application to current employees.--The amendments made 
        by this section shall not apply to any employee who does not 
        have at least 1 hour of service in any plan year beginning 
        after December 31, 1999.
            (3) 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 the enactment of this Act, 
        the amendments made by this section shall not apply to 
        employees covered by any such agreement in plan years beginning 
        before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 1999, or
                    (B) January 1, 2004.

SEC. 18. PERIODS OF FAMILY AND MEDICAL LEAVE TREATED AS HOURS OF 
              SERVICE FOR PENSION PARTICIPATION AND VESTING.

    (a) Amendments of Internal Revenue Code.--
            (1) Participation.--
                    (A) In general.--Paragraph (3) of section 410(a) 
                (relating to minimum participation standards) is 
                amended by adding at the end the following new 
                subparagraph:
                    ``(E) Family and medical leave treated as 
                service.--
                            ``(i) In general.--For purposes of this 
                        subsection, in the case of an individual who is 
                        absent from work on leave required to be given 
                        to such individual under the Family and Medical 
                        Leave Act of 1993, the plan shall treat as 
                        hours of service--
                                    ``(I) the hours of service which 
                                otherwise would normally have been 
                                credited to such individual but for 
                                such absence, or
                                    ``(II) in any case in which the 
                                plan is unable to determine the hours 
                                described in subclause (I), 8 hours of 
                                service per day of absence.
                            ``(ii) Year to which hours are credited.--
                        The hours described in clause (i) shall be 
                        treated as hours of service as provided in this 
                        subparagraph--
                                    ``(I) only in the year in which the 
                                absence from work begins, if section 
                                411(a)(5)(E)(ii)(I) requires hours to 
                                be credited to the year in which the 
                                absence from work begins, or
                                    ``(II) in any other case, in the 
                                immediately following year.''
                    (B) Coordination with treatment of maternity and 
                paternity absences under break in service rules.--
                Subparagraph (E) of section 410(a)(5) is amended--
                            (i) by inserting ``not under family and 
                        medical leave act of 1993'' after ``absences'' 
                        in the heading, and
                            (ii) by adding at the end of clause (i) the 
                        following new sentence: ``The preceding 
                        sentence shall apply to an absence from work 
                        only if no part of such absence is required to 
                        be given under the Family and Medical Leave Act 
                        of 1993.''
            (2) Vesting.--
                    (A) In general.--Paragraph (5) of section 411(a) 
                (relating to minimum vesting standards) is amended by 
                adding at the end the following new subparagraph:
                    ``(E) Family and medical leave treated as 
                service.--
                            ``(i) In general.--For purposes of this 
                        subsection, in the case of an individual who is 
                        absent from work on leave required to be given 
                        to such individual under the Family and Medical 
                        Leave Act of 1993, the plan shall treat as 
                        hours of service--
                                    ``(I) the hours of service which 
                                otherwise would normally have been 
                                credited to such individual but for 
                                such absence, or
                                    ``(II) in any case in which the 
                                plan is unable to determine the hours 
                                described in subclause (I), 8 hours of 
                                service per day of absence.
                            ``(ii) Year to which hours are credited.--
                        The hours described in clause (i) shall be 
                        treated as hours of service as provided in this 
                        subparagraph--
                                    ``(I) only in the year in which the 
                                absence from work begins, if the 
                                participant's rights in his accrued 
                                benefit derived from employer 
                                contributions are to any extent not 
                                nonforfeitable and the participant 
                                would have a year of service solely 
                                because the period of absence is 
                                treated as hours of service as provided 
                                in clause (i); or
                                    ``(II) in any other case, in the 
                                immediately following year.''
                    (B) Coordination with treatment of maternity and 
                paternity absences under break in service rules.--
                Subparagraph (E) of section 411(a)(6) is amended--
                            (i) by inserting ``not under family and 
                        medical leave act of 1993'' after ``absences'' 
                        in the heading, and
                            (ii) by adding at the end of clause (i) the 
                        following new sentence: ``The preceding 
                        sentence shall apply to an absence from work 
                        only if no part of such absence is required to 
                        be given under the Family and Medical Leave Act 
                        of 1993.''
    (b) Amendments of ERISA.--
            (1) Participation.--
                    (A) In general.--Paragraph (3) of section 202(a) of 
                the Employee Retirement Income Security Act of 1974 
                (relating to minimum participation standards) is 
                amended by adding at the end the following new 
                subparagraph:
    ``(E)(i) For purposes of this subsection, in the case of an 
individual who is absent from work on leave required to be given to 
such individual under the Family and Medical Leave Act of 1993, the 
plan shall treat as hours of service--
            ``(I) the hours of service which otherwise would normally 
        have been credited to such individual but for such absence, or
            ``(II) in any case in which the plan is unable to determine 
        the hours described in subclause (I), 8 hours of service per 
        day of absence.
    ``(ii) The hours described in clause (i) shall be treated as hours 
of service as provided in this subparagraph--
            ``(I) only in the year in which the absence from work 
        begins, if section 203(b)(2)(E)(ii)(I) requires hours to be 
        credited to the year in which the absence from work begins, or
            ``(II) in any other case, in the immediately following 
        year.''
                    (B) Coordination with treatment of maternity and 
                paternity absences under break in service rules.--
                Subparagraph (A) of section 202(b)(5) of such Act is 
                amended by adding at the end of clause (i) the 
                following new sentence: ``The preceding sentence shall 
                apply to an absence from work only if no part of such 
                absence is required to be given under the Family and 
                Medical Leave Act of 1993.''
            (2) Vesting.--
                    (A) In general.--Paragraph (2) of section 203(b) of 
                such Act (relating to minimum vesting standards) is 
                amended by adding at the end the following new 
                subparagraph:
    ``(E)(i) For purposes of this subsection, in the case of an 
individual who is absent from work on leave required to be given to 
such individual under the Family and Medical Leave Act of 1993, the 
plan shall treat as hours of service--
            ``(I) the hours of service which otherwise would normally 
        have been credited to such individual but for such absence, or
            ``(II) in any case in which the plan is unable to determine 
        the hours described in subclause (I), 8 hours of service per 
        day of absence.
    ``(ii) The hours described in clause (i) shall be treated as hours 
of service as provided in this subparagraph--
            ``(I) only in the year in which the absence from work 
        begins, if the participant's rights in his accrued benefit 
        derived from employer contributions are to any extent not 
        nonforfeitable and the participant would have a year of service 
        solely because the period of absence is treated as hours of 
        service as provided in clause (i); or
            ``(II) in any other case, in the immediately following 
        year.''
                    (B) Coordination with treatment of maternity and 
                paternity absences under break in service rules.--
                Clause (i) of section 203(b)(3)(E) of such Act is 
                amended by adding at the end of clause (i) the 
                following new sentence: ``The preceding sentence shall 
                apply to an absence from work only if no part of such 
                absence is required to be given under the Family and 
                Medical Leave Act of 1993.''
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan years 
        beginning after December 31, 1999.
            (2) Application to current employees.--The amendments made 
        by this section shall not apply to any employee who does not 
        have at least 1 hour of service in any plan year beginning 
        after December 31, 1999.
                                 <all>