[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5546 Introduced in House (IH)]
106th CONGRESS
2d Session
H. R. 5546
To amend the Internal Revenue Code of 1986 to improve the retirement
security of American families.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 25, 2000
Mr. Andrews (for himself, Mr. Clay, Mr. Kildee, Mr. Owens, Mr. Payne,
Mrs. Mink of Hawaii, Ms. Woolsey, Mr. Romero-Barcelo, Mr. Fattah, Mr.
Tierney, Mr. Kind, Ms. Sanchez, Mr. Ford, Mr. Kucinich, and Mr. Holt)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to improve the retirement
security of American families.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Enhancement Revenue Act of 2000''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
TITLE I--PUBLIC EMPLOYEE PENSION PLANS
Sec. 101. New qualification requirements for public employee pension
``subpart f--public employee pension plans
``Sec. 420A. Reporting and disclosure requirements.
``Sec. 420B. Review by qualified review boards of changes in
employer contributions.
``Sec. 420C. Effect on other laws.
``Sec. 420D. Definitions and coverage.
Sec. 102. Effective date of title.
TITLE II--PENSION IMPROVEMENTS
Sec. 201. Automatic enrollment of all employees in 401(k) plans.
Sec. 202. Improvements in simplified employee pensions.
Sec. 203. Pension integration rules.
Sec. 204. Increase to age 75 for beginning mandatory distributions.
Sec. 205. Treatment of multiemployer plans under section 415.
Sec. 206. Restrictions on exclusion of unionized employees from
participation in 401(k) plans.
Sec. 207. Repeal of coordination requirements for deferred compensation
plans of State and local governments and
tax-exempt organizations.
Sec. 208. Clarification of tax treatment of division of section 457
plan benefits upon divorce.
Sec. 209. Rollovers allowed among various types of plans.
Sec. 210. Purchase of service credit in governmental defined benefit
plans.
TITLE III--ADDITIONAL AMENDMENTS
Sec. 301. Involuntary cash-outs from section 457 plans permitted only
if distribution rolled to a qualified plan.
Sec. 302. Statutory exemption from prohibited transaction rules for
emergent transactions.
Sec. 303. Loans from retirement plans for health insurance and job
training expenses.
Sec. 304. Missing participants.
Sec. 305. Income averaging of corrected civil service annuity benefit
payments.
TITLE IV--GENERAL PROVISIONS
Sec. 401. General effective date.
Sec. 402. Plan amendments.
TITLE I--PUBLIC EMPLOYEE PENSION PLANS
SEC. 101. NEW QUALIFICATION REQUIREMENTS FOR PUBLIC EMPLOYEE PENSION
PLANS.
Sec. (a) In General.--Subsection (a) of section 401 of the Internal
Revenue Code of 1986 (relating to requirements for qualification) is
amended by inserting after paragraph (34) the following new paragraph:
``(35) Public employee pension plans.--A trust forming a
part of a public employee pension plan (as defined in section
420D(a)(9)) shall not constitute a qualified trust under this
section unless the requirements of subpart F of this part are
met in connection with such plan.''
(b) Requirements.--
(1) In general.--Part I of subchapter D of chapter 1 of
such Code (relating to pension, profit-sharing, stock bonus
plans, etc.) is amended by inserting after subpart E the
following new subpart:
``Subpart F--Public Employee Pension Plans
``Sec. 420A. Reporting and disclosure
requirements.
``Sec. 420B. Review by qualified review
boards of changes in employer
contributions.
``Sec. 420C. Effect on other laws.
``Sec. 420D Definitions and coverage.
``SEC. 420A. REPORTING AND DISCLOSURE REQUIREMENTS.
``(a) In General.--The requirements of this subsection are met in
connection with a public employee pension plan if the terms of the plan
include the requirements of this section.
``(b) Required Disclosures.--The plan shall provide that, within
210 days after the close of each plan year, the administrator of the
plan shall furnish to each participant, and to each beneficiary
receiving benefits under the plan--
``(1) a statement of the assets and liabilities of the plan
aggregated by categories and valued at their current value, and
the same data displayed in comparative form for the end of the
previous plan year;
``(2) a statement of receipts and disbursements during the
preceding 12-month period aggregated by general sources and
applications;
``(3) a report containing--
``(A) a description of all investments and assets
of the plan, including their value;
``(B) the names and positions of all of the
trustees of the plan, and the time remaining before the
expiration of their term;
``(C) a description of the method of trustee
selection;
``(D) a description of any changes in investment
policy of the plan during the fiscal year;
``(E) an evaluation of the long-term solvency of
the plan, including the number of participants and
beneficiaries and a summary of their benefits, and a
projection of the amount of benefits expected to be
paid for the fifth, tenth, and fifteenth plan year
following the date of the publication of the report;
and
``(F) the percentage which the current value of the
assets of the plan is of the current liability under
the plan; and
``(4) any other material as is necessary to fairly
summarize the latest annual report.
Such information shall be written and calculated to be understood by
the average plan participant, and shall be sufficiently accurate and
comprehensive to reasonably apprise such participants and beneficiaries
of their rights and obligations under the plan.
``(c) Availability of Plan Documents for Examination.--The plan
shall provide that the administrator shall make copies of the plan
description and the latest annual report and the bargaining agreement,
trust agreement, contract, or other instruments under which the plan
was established or is operated available for examination by any plan
participant or beneficiary in the principal office of the administrator
and in such other places as may be necessary to make available all
pertinent information to all participants (including such places as the
Secretary may prescribe by regulations).
``(d) Availability of Information Upon Request.--The plan shall
provide that the administrator shall, upon written request of any
participant or beneficiary, furnish a copy of the latest annual report,
any terminal report, the bargaining agreement, trust agreement,
contract, or other instruments under which the plan is established or
operated. The administrator may make a reasonable charge to cover the
cost of furnishing such complete copies. The Secretary may by
regulation prescribe the maximum amount which will constitute a
reasonable charge under the preceding sentence.
``SEC. 420B. REVIEW BY QUALIFIED REVIEW BOARDS OF CHANGES IN EMPLOYER
CONTRIBUTIONS.
``(a) In General.--The requirements of this section are met in
connection with a public employee pension plan if, under the plan,
changes in employer contributions are subject to review by a qualified
review board established for the plan as provided in this section. For
purposes of this section, the term `qualified review board' means a
board--
``(1) whose membership is determined under the law of the
principal State in accordance with subsection (b), and
``(2) whose powers are determined under the law of the
principal State in accordance with subsection (c).
``(b) Membership.--
``(1) In general.--The membership of a qualified review
board established for a plan shall consist of 3 members
selected from among individuals who, by means of their
education and experience, have demonstrated expertise in the
area of pension fund management, as follows:
``(A) one member is appointed by the Governor of
the State,
``(B) one member is selected by the participants in
the plan, by means of an election held in such form and
manner as shall be prescribed in regulations of the
Secretary, and
``(C) one member is selected jointly by the
Governor and by a representative of participants in the
plan (from a certified list of pension experts
established in accordance with paragraph (2)).
Each member of the board shall have 1 vote. Members of the
board shall serve for such equivalent terms as shall be
prescribed under the law of the principal State.
``(2) Certified list of experts.--The Governor of the State
shall, for purposes of paragraph (1)(C), establish and maintain
with respect to each public employee pension plan (for which
such State is the principal State) a certified list of pension
experts meeting the requirements for membership on the
qualified review board. Individuals may be included on such
list only by agreement between the Governor of the State and a
representative elected by participants in the plan, entered
into by means of collective bargaining in such form and manner
as shall be prescribed in regulations of the Secretary.
``(c) Powers.--The board shall be treated as a qualified review
board for purposes of this section with respect to any public employee
pension plan (for which such State is the principal State) only if the
powers of such board under the law of the principal State include
review by the board, for approval or disapproval by the board, of any
change in the terms of such plan, as a necessary prerequisite for such
change to take effect, if--
``(1) such change would have the effect of changing levels
of employer contributions to the plan, and
``(2) such review is requested, in such form and manner as
shall be prescribed in regulations of the Secretary, by--
``(A) at least one-third of the total number of
trustees of any trust fund forming a part of the plan,
or
``(B) the head of any employee organization
representing at least 20 percent of the total number of
active participants in the plan.
The board may be treated as a qualified review board for purposes of
this section only if, under the law of the principal State, any such
change submitted to such review by the board may take effect only upon
approval of the change by the board.
``SEC. 420C. EFFECT ON OTHER LAWS.
``(a) In General.--Nothing in this subpart shall be construed to
alter, amend, modify, invalidate, impair, or supersede any law of a
State or any rule or regulation issued under any such law, except to
the extent that such law--
``(1) may now or hereafter relate to the subject matter of
the provisions of this subpart as they apply to any public
employee pension plan described in section 420D(b)(1) and not
exempt under section 420D(b)(2), and
``(2) prevents the application of such provisions.
``(b) State Causes of Action Preserved.--Nothing in this subpart
shall be construed to apply with respect to State causes of action
available in State courts.
``SEC. 420D. DEFINITIONS AND COVERAGE.
``(a) Definitions.--For purposes of this subpart--
``(1) Administrator.--The term `administrator' means--
``(A) the board of trustees, retirement board, or
similar person with administrative responsibilities in
connection with a plan, or any other person
specifically so designated in connection with any
requirement of this subpart by the terms of the
instrument or instruments under which the plan is
operated, including but not limited to the law of any
State or of any political subdivision of any State, or
``(B) in any case in which there is no person
described in subparagraph (A) in connection with the
plan, the plan sponsor.
``(2) Beneficiary.--The term `beneficiary' means a person
designated by a participant, or by the terms of a public
employee pension plan, who is or may become entitled to a
benefit thereunder.
``(3) Current liability.--The term `current liability' has
the meaning provided in section 302(d)(7) of the Employee
Retirement Income Security Act of 1974.
``(4) Employee.--The term `employee' means any individual
employed by an employer, employer representative, or other
person required to make employer contributions under the plan.
``(5) Employee organization.--The term `employee
organization' means any labor union or any organization of any
kind, or any agency or employee representation committee,
association, group, or plan, in which employees participate and
which exists for the purpose, in whole or in part, of dealing
with employers or employer representatives concerning a public
employee pension plan or other matters incidental to employment
relationships; or any employees' beneficiary association
organized for the purpose, in whole or in part, of establishing
such a plan.
``(6) Employer.--The term `employer' means--
``(A) the government of any State or of any
political subdivision of a State,
``(B) any agency or instrumentality of a government
referred to in subparagraph (A), or
``(C) any agency or instrumentality of two or more
governments referred to in subparagraph (A).
``(7) Employer contribution.--The term `employer
contribution' means any contribution to a public employee
pension plan other than a contribution made by a participant in
the plan.
``(8) Employer representative.--The term `employer
representative' means--
``(A) any group or association consisting, in whole
or in part, of employers acting, in connection with a
public employee pension plan, for an employer, or
``(B) any person acting, in connection with a
public employee pension plan, indirectly in the
interest of an employer or of a group or association
described in subparagraph (A).
``(9) Public employee pension plan.--The terms `public
employee pension plan' and `plan' mean any plan, fund, or
program which was heretofore or is hereafter established or
maintained, in whole or in part, by an employer, an employer
representative, or an employee organization, or by a
combination thereof, to the extent that by its express terms or
as a result of surrounding circumstances such plan, fund, or
program--
``(A) provides retirement income to employees, or
``(B) results in a deferral of income by employees
for periods extending to the termination of covered
employment or beyond,
regardless of the method of calculating the contributions made
to the plan, the method of calculating the benefits under the
plan, or the method of distributing benefits from the plan.
``(10) Principal state.--The term `principal State' means,
for any plan year with respect to a public employee pension
plan, the State in which, as of the beginning of such plan
year, the largest percentage of the participants of the plan
employed in any single State is employed.
``(11) Governor.--The term `Governor' means, in connection
with a public employee pension plan, the Governor (or
equivalent official) of the principal State.
``(12) Participant.--The term `participant' means any
individual who is or may become eligible to receive a benefit
of any type from a public employee pension plan or whose
beneficiaries may be eligible to receive any such benefit.
``(13) Person.--The term `person' means a State, a
political subdivision of a State, any agency or instrumentality
of a State or a political subdivision of a State, an
individual, a partnership, a joint venture, a corporation, a
mutual company, a joint-stock company, a trust, an estate, an
unincorporated organization, an association, or an employee
organization.
``(14) Plan sponsor.--The term `plan sponsor' means--
``(A) in the case of a plan established or
maintained solely for employees of a single employer,
such employer,
``(B) in the case of a plan established or
maintained by an employee organization, the employee
organization, or
``(C) in the case of a plan established or
maintained by two or more employers or jointly by one
or more employers and one or more employee organizations, the
association, committee, board of trustees, or other similar group of
representatives of the parties who establish or maintain the plan.
``(15) Plan year.--The term `plan year' means, with respect
to a plan, the calendar, policy, or fiscal year on which the
records of the plan are kept.
``(16) State.--The term `State' means any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, American Samoa, and Guam.
``(b) Coverage.--
``(1) In general.--Except as provided in paragraph (2),
this subpart shall apply to any public employee pension plan.
``(2) Exceptions from coverage.--The provisions of this
subpart shall not apply to--
``(A) any employee benefit plan described in
section 4(a) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1003(a)), which is not exempt
under section 4(b)(1) of such Act (29 U.S.C.
1003(b)(1));
``(B) any plan which is unfunded and is maintained
by an employer or employer representative primarily for
the purpose of providing deferred compensation for a
select group of management or highly compensated
employees;
``(C) any arrangement which would be a severance
pay arrangement, as defined in regulations of the
Secretary of Labor under section 3(2)(B)(i) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(2)(B)(i)), if the employer were an employer
within the meaning of section 3(5) of such Act (29
U.S.C. 1002(5));
``(D) any agreement to the extent it is a coverage
agreement entered into pursuant to section 218 of the
Social Security Act (42 U.S.C. 418);
``(E) any individual retirement account or any
individual retirement annuity within the meaning of
section 408, or a retirement bond within the meaning of
section 409;
``(F) any plan described in section 401(d);
``(G) any individual account plan consisting of an
annuity contract described in section 403(b);
``(H) any eligible State deferred compensation
plan, as defined in section 457(b); or
``(I) any plan maintained solely for the purpose of
complying with applicable workers' compensation laws or
disability insurance laws.''
SEC. 102. EFFECTIVE DATE OF TITLE.
The amendments made by this title shall apply with respect to plan
years beginning on or after January 1, 2001.
TITLE II--PENSION IMPROVEMENTS
SEC. 201. AUTOMATIC ENROLLMENT OF ALL EMPLOYEES IN 401(K) PLANS.
(a) In General.--Subparagraph (A) of section 401(m) of the Internal
Revenue Code of 1986 (relating to additional alternative method of
satisfying nondiscrimination tests) is amended by striking ``and'' at
the end of clause (ii), by striking the period at the end of clause
(iii) and inserting ``, and'', and by inserting after clause (iii) the
following new clause:
``(iv) meets the requirements of
subparagraph (C).''.
(b) Minimum Coverage Requirements.--Paragraph (11) of section
401(m) of such Code is amended by adding at the end the following new
subparagraph:
``(C) Minimum coverage requirements.--The
requirements of this subparagraph are met if--
``(i) the plan meets the requirements of
section 410(b), or
``(ii) the plan is offered to all eligible
employees.
For purposes of clause (ii), a plan shall be treated as
offered to an eligible employee if the employee is
eligible to participate in the plan and if the employee
may elect to have employer contributions made on the
employee's behalf under the plan as elective employer
contributions to such plan on behalf of the employee or
to the employee directly in cash.''.
SEC. 202. IMPROVEMENTS IN SIMPLIFIED EMPLOYEE PENSIONS.
(a) Participation Requirements.--Paragraph (2) of section 408(k) of
the Internal Revenue Code of 1986 (relating to participation
requirements) is amended--
(1) in subparagraph (A), by adding ``and'' at the end; and
(2) by striking subparagraphs (B) and (C) and inserting the
following:
``(B) has completed at least 3 years of service (as
defined in section 411(a)(5)) for the employer.''.
(b) Nondiscrimination Rules.--Subparagraph (C) of section 408(k)(3)
of such Code (requiring contribution to bear uniform relationship to
total compensation) is amended--
(1) in the heading, by striking ``must bear uniform
relationship to total compensation'' and inserting ``must be
uniform''; and
(2) by inserting after ``unless contributions thereto'' the
following: ``are uniform for all employees maintaining a
simplified employee pension or''.
(c) Consent to Participation Not Required.--Paragraph (2) of
section 408(k) of such Code (relating to participation requirements) is
amended by adding at the end the following new sentence: ``An employer
may establish and maintain a simplified employee pension for an
employee without the employee's consent.''.
(d) Raise in Limitation on Contributions.--Section 404(h)(1) of
such Code (relating to special rules for simplified employee pensions)
is amended by striking subparagraph (C) and inserting the following new
subparagraphs:
``(C) The amount deductible in a taxable year for a
simplified employee pension shall not exceed $30,000.
The excess of the amount contributed over the amount
deductible for a taxable year shall be deductible in
the succeeding taxable years in order of time, subject
to the limit of the preceding sentence.
``(D) The Secretary shall adjust annually the
$30,000 amount in subparagraph (C) for increases in the
cost-of-living at the same time and in the same manner
as adjustments under section 415(d), except that the
base period shall be the calendar quarter ending
September 30, 2000, and any increase which is not a
multiple of $100 shall be rounded to the next lowest
multiple of $100.''.
(e) Separate Treatment of Contributions to Simplified Employee
Pensions.--
(1) Determination of deductible contributions.--Subsection
(h) of section 404 of such Code is amended by striking
paragraphs (2) and (3) and inserting the following new
paragraph:
``(2) Limitation based on combination of plans
inapplicable.--Contributions to a simplified employee pension
shall not be taken into account for purposes of subsection
(a)(7).''.
(2) Determination of limits on annual contributions under
nondiscrimination rules.--Paragraph (5) of section 415(e) of
such Code (relating to special rules for sections 403(b) and
408) is amended by striking the second sentence and inserting
the following new sentence: ``For purposes of this section, any
contribution by an employer to a simplified employee pension
shall not be taken into account.''.
(f) Joint and Survivor Annuity Requirements.--Section 408(k) of
such Code is amended--
(1) by redesignating paragraph (9) as paragraph (10); and
(2) by inserting after paragraph (8) the following new
paragraph:
``(9) Joint and survivor annuity requirements.--
Requirements similar to the requirements of section 401(a)(11)
shall apply with respect to annuities purchased with amounts
distributed from simplified employee pensions.''.
(g) Annual Reporting Requirmeents for Simplified Employee
Pensions.--Paragraph (1) of section 408(l) of such Code (relating to
simplified employer reports) is amended to read as follows:
``(1) In general.--The Secretary shall require by
regulations that an employer who makes a contribution on behalf
of an employee to a simplified employee pension shall provide
simplified annual reports. The reports required by this
subsection shall be filed in such manner, and information with
respect to such contributions shall be furnished to the
employee in such manner, as may be required by regulations,
except that such reports shall include information sufficient
to allow the employee to determine that the simplified employee
pension is in compliance with the requirements of this
section.''.
SEC. 203. PENSION INTEGRATION RULES.
(a) Applicability of New Integration Rules Extended to All Existing
Accrued Benefits.--Notwithstanding subsection (c)(1) of section 1111 of
the Tax Reform Act of 1986 (relating to effective date of application
of nondiscrimination rules to integrated plans) (100 Stat. 2440),
effective for plan years beginning after the date of the enactment of
this Act, the amendments made by subsection (a) of such section 1111
shall also apply to benefits attributable to plan years beginning on or
before December 31, 1988.
(b) Integration Disallowed for Simplified Employee Pensions.--
(1) In general.--Subparagraph (D) of section 408(k)(3) of
the Internal Revenue Code of 1986 (relating to permitted
disparity under rules limiting discrimination under simplified
employee pensions) is repealed.
(2) Conforming amendment.--Subparagraph (C) of such section
408(k)(3) is amended by striking ``and except as provided in
subparagraph (D),''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to taxable years beginning on or after
January 1, 1999.
(c) Eventual Repeal of Integration Rules.--Effective for plan years
beginning on or after January 1, 2002--
(1) subparagraphs (C) and (D) of section 401(a)(5) of the
Internal Revenue Code of 1986 (relating to pension integration
exceptions under nondiscrimination requirements for
qualification) are repealed, and subparagraphs (E), (F), and
(G) of such section 401(a)(5) are redesignated as subparagraphs
(C), (D), and (E), respectively; and
(2) subsection (l) of section 401 of such Code (relating to
nondiscriminatory coordination of defined contribution plans
with OASDI) is repealed.
SEC. 204. INCREASE TO AGE 75 FOR BEGINNING MANDATORY DISTRIBUTIONS.
(a) Qualified Pension Plans.--Subparagraph (C) of section 401(a)(9)
of the Internal Revenue Code of 1986 (relating to required
distributions) is amended by striking ``age 70\1/2\'' each place it
appears and inserting ``the applicable age''.
(b) Applicable Age.--Subparagraph (C) of section 401(a)(9) of such
Code is amended by adding at the end the following new clause:
``(v) Applicable age.--
``(I) In general.--For purposes of
this clause, the term applicable age
shall be determined in accordance with
the following table:
Applicable
``Calendar Year: Age:
2001.......................................... 71
2002.......................................... 72
2003.......................................... 73
2004.......................................... 74
2005 and each calendar year thereafter........ 75.
``(II) Election to use age of
spouse.--For purposes of this
subparagraph, an employee who files a
joint return for a taxable year may
elect to substitute the age of the
employee's spouse for his age.''.
(c) Individual Retirement Accounts.--Paragraph (1) of section
219(d) of such Code is amended--
(1) by striking ``age 70\1/2\'' in the text and inserting
``the applicable age (as defined in section 401(a)(9)(C)(v))'',
and
(2) by striking ``age 70\1/2\'' in the heading and
inserting ``the applicable age''.
(d) Roth IRA's.--Paragraph (4) of section 408A(c) of such Code is
amended--
(1) by striking ``age 70\1/2\'' in the text and inserting
``the applicable age (as defined in section 401(a)(9)(C)(v))'',
and
(2) by striking ``age 70\1/2\'' in the heading and
inserting ``the applicable age''.
SEC. 205. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.
(a) Compensation Limit.--Paragraph (11) of section 415(b) of the
Internal Revenue Code of 1986 (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) Combining and Aggregation of Plans.--
(1) Combining of plans.--Subsection (f) of section 415 of
such Code (relating to combining of plans) is amended by adding
at the end the following:
``(3) Exception for multiemployer plans.--Notwithstanding
paragraph (1) and subsection (g), a multiemployer plan (as
defined in section 414(f)) shall not be combined or aggregated
with any other plan maintained by an employer for purposes of
applying the limitations established in this section, except
that such plan shall be combined or aggregated with another
plan which is not such a multiemployer plan solely for purposes
of determining whether such other plan meets the requirements
of subsections (b)(1)(A) and (c).''.
(2) Conforming amendment for aggregation of plans.--
Subsection (g) of section 415 of such Code (relating to
aggregation of plans) is amended by striking ``The Secretary''
and inserting ``Except as provided in subsection (f)(3), the
Secretary''.
SEC. 206. RESTRICTIONS ON EXCLUSION OF UNIONIZED EMPLOYEES FROM
PARTICIPATION IN 401(K) PLANS.
Paragraph (4) of section 401(k) of the Internal Revenue Code of
1986 (relating to other requirements) is amended by adding at the end
the following new subparagraph:
``(D) Benefits subject of bargaining.--A cash or
deferred arrangement of any employer shall not be
treated as a qualified cash or deferred arrangement if
any employee of such employer who is described in
section 410(b)(3)(A) and who is not eligible to benefit
under the arrangement is not otherwise covered under an
employee pension benefit plan (as defined in section
3(2)(A) of the Employee Retirement Income Security Act
of 1974) which is maintained for employees of such
employer pursuant to an agreement which the Secretary
of Labor finds to be a collective bargaining agreement
between employee representatives and one or more
employers and which is qualified under section
401(a).''.
SEC. 207. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION
PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT
ORGANIZATIONS.
(a) In General.--Subsection (c) of section 457 of the Internal
Revenue Code of 1986 (relating to deferred compensation plans of State
and local governments and tax-exempt organizations) is amended to read
as follows:
``(c) Limitation.--The maximum amount of the compensation of any
one individual which may be deferred under subsection (a) during any
taxable year shall not exceed the amount in effect under subsection
(b)(2)(A) (as modified by any adjustment provided under subsection
(b)(3)).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to years beginning after December 31, 2000.
SEC. 208. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457
PLAN BENEFITS UPON DIVORCE.
(a) In General.--Section 414(p)(11) of the Internal Revenue Code of
1986 (relating to application of rules to governmental and church
plans) is amended--
(1) by inserting ``or an eligible deferred compensation
plan (within the meaning of section 457(b))'' after
``subsection (e))'', and
(2) in the heading, by striking ``governmental and church
plans'' and inserting ``certain other plans''.
(b) Waiver of Certain Distribution Requirements.--Paragraph (10) of
section 414(p) of such Code is amended by striking ``and section
409(d)'' and inserting ``section 409(d), and section 457(d)''.
(c) Tax Treatment of Payments From a Section 457 Plan.--Subsection
(p) of section 414 of such Code is amended by redesignating paragraph
(12) as paragraph (13) and inserting after paragraph (11) the following
new paragraph:
``(12) Tax treatment of payments from a section 457 plan.--
If a distribution or payment from an eligible deferred
compensation plan described in section 457(b) is made pursuant
to a qualified domestic relations order, rules similar to the
rules of section 402(e)(1)(A) shall apply to such distribution
or payment.''.
(d) Effective Date.--The amendments made by this section shall
apply to transfers, distributions, and payments made after December 31,
2000.
SEC. 209. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.
(a) Rollovers From and to Section 457 Plans.--
(1) Rollovers from section 457 plans.--
(A) In general.--Section 457(e) of the Internal
Revenue Code of 1986 (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 established and maintained
by an employer described in subsection (e)(1)(A), if--
``(i) any portion of the balance to the
credit of an employee in such plan is paid to
such employee in an eligible rollover
distribution (within the meaning of section
402(c)(4) without regard to subparagraph (C)
thereof),
``(ii) the employee transfers any portion
of the property such employee receives in such
distribution to an eligible retirement plan
described in section 402(c)(8)(B), and
``(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property
distributed,
then such distribution (to the extent so transferred)
shall not be includible in gross income for the taxable
year in which paid.
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) (other than paragraph
(4)(C)) and (9) of section 402(c) and section 402(f)
shall apply for purposes of subparagraph (A).
``(C) Reporting.--Rollovers under this paragraph
shall be reported to the Secretary in the same manner
as rollovers from qualified retirement plans (as
defined in section 4974(c)).''.
(B) Deferral limit determined without regard to
rollover amounts.--Section 457(b)(2) of such Code
(defining eligible deferred compensation plan) is
amended by inserting ``(other than rollover amounts)''
after ``taxable year''.
(C) Direct rollover.--Paragraph (1) of section
457(d) of such Code is amended by striking ``and'' at
the end of subparagraph (A), by striking the period at
the end of subparagraph (B) and inserting ``, and'',
and by inserting after subparagraph (B) the following:
``(C) in the case of a plan maintained by an
employer described in subsection (e)(1)(A), the plan
meets requirements similar to the requirements of
section 401(a)(31).
Any amount transferred in a direct trustee-to-trustee transfer
in accordance with section 401(a)(31) shall not be includible
in gross income for the taxable year of transfer.''.
(D) Withholding.--
(i) Paragraph (12) of section 3401(a) of
such Code is amended by adding at the end the
following:
``(E) under or to an eligible deferred compensation
plan which, at the time of such payment, is a plan
described in section 457(b) maintained by an employer
described in section 457(e)(1)(A); or''.
(ii) Paragraph (3) of section 3405(c) of
such Code is amended to read as follows:
``(3) Eligible rollover distribution.--For purposes of this
subsection, the term `eligible rollover distribution' has the
meaning given such term by section 402(f)(2)(A).''.
(iii) Liability for withholding.--
Subparagraph (B) of section 3405(d)(2) of such
Code is amended by striking ``or'' at the end
of clause (ii), by striking the period at the
end of clause (iii) and inserting ``, or'', and
by adding at the end the following:
``(iv) section 457(b).''.
(2) Rollovers to section 457 plans.--
(A) In general.--Section 402(c)(8)(B) of such Code
(defining eligible retirement plan) is amended by
striking ``and'' at the end of clause (iii), by
striking the period at the end of clause (iv) and
inserting ``, and'', and by inserting after clause (iv)
the following new clause:
``(v) an eligible deferred compensation
plan described in section 457(b) of an employer
described in section 457(e)(1)(A).''.
(B) Separate accounting.--Section 402(c) of such
Code is amended by adding at the end the following new
paragraph:
``(11) Separate accounting.--Unless a plan described in
clause (v) of paragraph (8)(B) agrees to separately account for
amounts rolled into such plan from eligible retirement plans
not described in such clause, the plan described in such clause
may not accept transfers or rollovers from such retirement
plans.''.
(C) 10 percent additional tax.--Subsection (t) of
section 72 of such Code (relating to 10-percent
additional tax on early distributions from qualified
retirement plans) is amended by adding at the end the
following new paragraph:
``(11) Special rule for rollovers to section 457 plans.--
For purposes of this subsection, a distribution from an
eligible deferred compensation plan (as defined in section
457(b)) of an employer described in section 457(e)(1)(A) shall
be treated as a distribution from a qualified retirement plan
described in section 4974(c)(1) to the extent that such
distribution is attributable to an amount transferred to an
eligible deferred compensation plan from a qualified retirement
plan (as defined in section 4974(c)).''.
(b) Allowance of Rollovers From and to 403(b) Plans.--
(1) Rollovers from section 403(b) plans.--Section
403(b)(8)(A)(ii) of such Code (relating to rollover amounts) is
amended by striking ``such distribution'' and all that follows
and inserting ``such distribution to an eligible retirement
plan described in section 402(c)(8)(B), and''.
(2) Rollovers to section 403(b) plans.--Section
402(c)(8)(B) of such Code (defining eligible retirement plan),
as amended by subsection (a), is amended by striking ``and'' at
the end of clause (iv), by striking the period at the end of
clause (v) and inserting ``, and'', and by inserting after
clause (v) the following new clause:
``(vi) an annuity contract described in
section 403(b).''.
(c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) of such Code (relating to written
explanation to recipients of distributions eligible for rollover
treatment) is amended by striking ``and'' at the end of subparagraph
(C), by striking the period at the end of subparagraph (D) and
inserting ``, and'', and by adding at the end the following new
subparagraph:
``(E) of the provisions under which distributions
from the eligible retirement plan receiving the
distribution may be subject to restrictions and tax
consequences which are different from those applicable
to distributions from the plan making such
distribution.''.
(d) Spousal Rollovers.--Section 402(c)(9) of such Code (relating to
rollover where spouse receives distribution after death of employee) is
amended by striking ``; except that'' and all that follows up to the
end period.
(e) Conforming Amendments.--
(1) Section 72(o)(4) of such Code is amended by striking
``and 408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and
457(e)(16)''.
(2) Section 219(d)(2) of such Code is amended by striking
``or 408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
(3) Section 401(a)(31)(B) of such Code is amended by
striking ``and 403(a)(4)'' and inserting ``, 403(a)(4),
403(b)(8), and 457(e)(16)''.
(4) Subparagraph (A) of section 402(f)(2) of such Code is
amended by striking ``or paragraph (4) of section 403(a)'' and
inserting ``, paragraph (4) of section 403(a), subparagraph (A)
of section 403(b)(8), or subparagraph (A) of section
457(e)(16)''.
(5) Paragraph (1) of section 402(f) of such Code is amended
by striking ``from an eligible retirement plan''.
(6) Subparagraphs (A) and (B) of section 402(f)(1) of such
Code are each amended by striking ``another eligible retirement
plan'' and inserting ``an eligible retirement plan''.
(7) Subparagraph (B) of section 403(b)(8) of such Code is
amended to read as follows:
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) and (9) of section 402(c)
and section 402(f) shall apply for purposes of
subparagraph (A), except that section 402(f) shall be
applied to the payer in lieu of the plan
administrator.''.
(8) Section 408(a)(1) of such Code is amended by striking
``or 403(b)(8),'' and inserting ``403(b)(8), or 457(e)(16)''.
(9) Subparagraphs (A) and (B) of section 415(b)(2) of such
Code are each amended by striking ``and 408(d)(3)'' and
inserting ``403(b)(8), 408(d)(3), and 457(e)(16)''.
(10) Section 415(c)(2) of such Code is amended by striking
``and 408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
(11) Section 4973(b)(1)(A) of such Code is amended by
striking ``or 408(d)(3)'' and inserting ``408(d)(3), or
457(e)(16)''.
(f) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to distributions after December 31, 2000.
(2) Special rule.--Notwithstanding any other provision of
law, subsections (h)(3) and (h)(5) of section 1122 of the Tax
Reform Act of 1986 shall not apply to any distribution from an
eligible retirement plan (as defined in clause (iii) or (iv) of
section 402(c)(8)(B) of the Internal Revenue Code of 1986) on
behalf of an individual if there was a rollover to such plan on
behalf of such individual which is permitted solely by reason
of any amendment made by this section.
SEC. 210. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT
PLANS.
(a) 403(b) Plans.--Subsection (b) of section 403 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
paragraph:
``(13) Trustee-to-trustee transfers to purchase permissive
service credit.--No amount shall be includible in gross income
by reason of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section 414(d)) if
such transfer is--
``(A) for the purchase of permissive service credit
(as defined in section 415(n)(3)(A)) under such plan,
or
``(B) a repayment to which section 415 does not
apply by reason of subsection (k)(3) thereof.''.
(b) 457 Plans.--
(1) Subsection (e) of section 457 of such Code is amended
by adding after paragraph (16) 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.''.
(2) Section 457(b)(2) is amended by striking ``(other than
rollover amounts)'' and inserting ``(other than rollover
amounts and amounts received in a transfer referred to in
subsection (e)(17))''.
(c) Effective Date.--The amendments made by this section shall
apply to trustee-to-trustee transfers after December 31, 2000.
TITLE III--ADDITIONAL AMENDMENTS
SEC. 301. INVOLUNTARY CASH-OUTS FROM SECTION 457 PLANS PERMITTED ONLY
IF DISTRIBUTION ROLLED TO A QUALIFIED PLAN.
(a) In General.--Section 457(e)(9) of the Internal Revenue Code of
1986 is amended--
(1) by striking clause (i) and inserting the following:
``(i) in any case in which such amount
exceeds $500, such amount (to the extent the
distribution of such amount is otherwise
includible in gross income) is distributed in a
trustee-to-trustee transfer to a qualified plan
of such individual which is specified by such
individual.''; and
(2) by adding at the end the following new subparagraph:
``(C) Qualified plan.--For purposes of subparagraph
(A), the term `qualified plan' means a plan, contract,
pension, or trust described in subparagraph (A) or (B)
of section 219(g)(5).''.
(b) Exception From Income Tax Withholding.--Paragraph (2) of
section 3405(c) of such Code is amended by inserting before the period
``or if the distribution is a trustee-to-trustee transfer described in
section 203(e) or 205(g) of the Employee Retirement Income Security Act
of 1974 or section 457(e)(9) of this title''.
SEC. 302. STATUTORY EXEMPTION FROM PROHIBITED TRANSACTION RULES FOR
EMERGENT TRANSACTIONS.
(a) In General.--Section 4975 of the Internal Revenue Code of 1986
(relating to tax on prohibited transactions) is amended--
(1) by redesignating subsections (h) and (i) as subsections
(i) and (j), respectively; and
(2) by inserting after subsection (g) the following new
subsection:
``(h) Statutory Exemption From Prohibited Transaction Rules for
Emergent Transactions.--
``(1) In general.--Pursuant to regulations issued by the
Secretary of Labor, a transaction between a plan and an
eligible person constituting the purchase or sale of a
financial product which is in violation of a restriction
imposed by subsection (c)(1) may be exempted under section
408(a) of the Employee Retirement Income Security Act of 1974
from treatment as a violation of such restriction if--
``(A) prior to engaging in the transaction, the
plan acquires from the eligible person a qualifying
guarantee, consisting of a letter of credit or other
form of written guarantee, issued by a bank or similar
financial institution (other than the eligible person
requesting the exemption or an affiliate) regulated and
supervised by, and subject to periodic examination by,
an agency of a State or of the Federal Government, in a
stated amount equal, as of the close of business on the
day preceding the transaction, to not less than 100
percent of the amount of plan assets involved in the
transaction, plus interest on that amount at a rate
determined by the parties to the transaction, or in the
absence of such determination, an interest rate equal
to the underpayment rate defined in section 6621(a)(2);
``(B) the eligible person receives in such
transaction not more than reasonable compensation;
``(C) such transaction is expressly approved by an
independent fiduciary who has investment authority with
respect to the plan assets involved in the transaction;
``(D) within 60 days after the transaction, the
eligible person submits to the Secretary an application
for an exemption under subsection (a) from such
restriction;
``(E) immediately after the acquisition of the
financial product--
``(i) the fair market value of such
financial product does not exceed 1 percent of
the fair market value of the assets of the
plan, and
``(ii) the aggregate fair market value of
all outstanding financial products acquired by
the plan from the eligible person pursuant to
this subsection does not exceed 5 percent of the fair market value of
the assets of the plan;
``(F) the Secretary determines not to grant the
exemption; and
``(G) the transaction is reversed within 60 days
after the date of the Secretary's determination.
``(2) For purposes of this subsection--
``(A) a guarantee referred to in paragraph (1) is
`qualifying' if such guarantee is irrevocable and,
under the terms of the guarantee--
``(i) if the Secretary grants the
exemption, the guarantee may expire without any
payments made to the plan, and
``(ii) if the Secretary determines not to
grant the exemption, the plan has the
unconditional right to apply the amounts under
the guarantee to any losses suffered and to the
payment of interest determined under paragraph
(1); and
``(B) the term `eligible person' means a person
that--
``(i) consists of--
``(I) a bank as defined in section
202(a)(2) of the Investment Advisers
Act of 1940,
``(II) an investment adviser
registered under the Investment
Advisers Act of 1940,
``(III) an insurance company which
is qualified to do business in more
than one State, or
``(IV) a broker-dealer registered
under the Securities Exchange Act of
1934,
``(ii) has shareholders' or partners'
equity in excess of $1,000,000, and
``(iii) is not described in section 411 of
the Employee Retirement Income Security Act of
1974.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to transactions occurring after December 31, 2000.
SEC. 303. LOANS FROM RETIREMENT PLANS FOR HEALTH INSURANCE AND JOB
TRAINING EXPENSES.
(a) Qualification Requirement for Pension Plans.--Paragraph (13) of
section 401(a) of the Internal Revenue Code of 1986 (relating to
assignment and alienation) is amended by adding at the end the
following new subparagraph:
``(E) Loans from retirement plans for health
insurance and job training expenses.--Notwithstanding
subparagraph (A), a trust shall not constitute a
qualified trust under this section unless the plan of
which such trust is a part provides that a participant
or beneficiary who is involuntarily separated from
employment may, on the date of such separation, obtain
a loan from the plan the proceeds of which are to be
used within 6 months after the date of such loan--
``(i) for payments for insurance which
constitutes medical care for the taxpayer and
the taxpayer's spouse and dependents, or
``(ii) for job training expenses.
For purposes of the preceding sentence, the
requirements of clauses subparagraphs (B)(iv), (v), and
(vi), (C), (D), and (E) of section 408(e)(7) shall
apply, and in the case of a plan that is a defined
benefit plan, section 408(e)(7)(C) shall be applied by
substituting `accruals (other than contributions)' for
`interests and dividends'.''.
(b) Prohibited Transaction Exemption.--Section 4975(d) of such Code
(relating to exemptions from tax on prohibited transactions) is amended
by striking ``or'' at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ``; or'', and by inserting
after paragraph (15) the following new paragraph:
``(16) any loan--
``(A) from an individual retirement plan for the
payment of health insurance premiums or job training
expenses that is a qualified loan (as defined in
section 408(e)(7)(B)), or
``(B) made by the plan to a disqualified person who
is a participant or beneficiary of the plan if such
loan--
``(i) is for the payment of health
insurance premiums or job training expenses,
and
``(ii) meets the requirements of section
401(a)(13)(E).''.
(c) Effective Date.--The amendments made by this section shall
apply to loans made after the effective date specified in section 401.
SEC. 304. MISSING PARTICIPANTS.
(a) In General.--Section 401(a)(34) of the Internal Revenue Code of
1986 (relating to benefits of missing participants on plan termination)
is amended by striking ``title IV'' and inserting ``section 4050''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made after 1 year after the date of the enactment of
this Act.
SEC. 305. INCOME AVERAGING OF CORRECTED CIVIL SERVICE ANNUITY BENEFIT
PAYMENTS.
(a) In General.--Part I of subchapter Q of chapter 1 of the
Internal Revenue Code of 1986 (relating to income averaging) is amended
by inserting after section 1301 the following new section:
``SEC. 1302. AVERAGING OF CORRECTED CIVIL SERVICE ANNUITY BENEFIT
PAYMENTS.
``(a) In General.--Unless the taxpayer elects not to have this
section apply for a taxable year, any corrected civil service annuity
benefit payment includable in gross income for such taxable year
(without regard to this section) shall be so included ratably over the
5-taxable year period beginning with such taxable year.
``(b) Corrected Civil Service Annuity Benefit Payment.--For
purposes of subsection (a), the term `corrected civil service annuity
benefit payment' means with respect to an individual the sum of--
``(1) the lump sum payment awarded by reason of a court
order, or decision of the Merit Systems Protection Board, under
which the individual is entitled to receive an amount equal to
all or any part of an annuity not paid to the individual as a
result of an erroneous application or interpretation of
subchapter III of chapter 83 or chapter 84 of title 5, United
States Code, or any other provision of law (or any rule or
regulation relating thereto), plus
``(2) interest on the amount described in paragraph (1)
awarded under section 7704 of title 5, United States Code.
``(c) Annuity.--For purposes of subsection (b), the term `annuity'
has the meaning given to such term by section 7704(c) of title 5,
United States Code.
``(d) Finality of Election.--An election under subsection (a) with
respect to a corrected civil service annuity benefit payment for a
taxable year may not be changed after the due date of the return for
such taxable year.''.
(b) Clerical Amendment.--The table of sections for part I of
subchapter Q of chapter 1 of such Code is amended by inserting after
the item relating to section 1301 the following new item:
``Sec. 1302. Averaging of corrected civil
service annuity benefit
payments.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments received after December 31, 2000.
TITLE IV--GENERAL PROVISIONS
SEC. 401. GENERAL EFFECTIVE DATE.
(a) In General.--Except as otherwise provided in this Act, and
subject to subsection (b), the amendments made by this Act shall apply
with respect to plan years beginning on or after January 1, 2001.
(b) Special Rule for Collectively Bargained Plans.--In the case of
a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified on or before the date of the enactment of this Act, subsection
(a) shall be applied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ``January 1, 2001'' the date
of the commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 2002, or
(B) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof after the date of the
enactment of this Act), or
(2) January 1, 2003.
SEC. 402. PLAN AMENDMENTS.
If any amendment made by this Act requires an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after January 1, 2003, if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such amendment
made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and such
first plan year.
<all>