[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 646 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 646

    To amend the Internal Revenue Code of 1986 to provide increased 
       retirement savings opportunities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 17, 1999

 Mr. Roth (for himself and Mr. Baucus) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide increased 
       retirement savings opportunities, and for other purposes.

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

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

    (a) Short Title.--This Act may be cited as the ``Retirement Savings 
Opportunity Act of 1999''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents; amendment to 1986 Code.
                  TITLE I--INDIVIDUAL RETIREMENT PLANS

Sec. 101. Modification of deduction limits for IRA contributions.
Sec. 102. Modification of income limits on contributions and rollovers 
                            to Roth IRAs.
Sec. 103. Deemed IRAs under employer plans.
                        TITLE II--PENSION PLANS

Sec. 201. Option to treat elective deferrals as after-tax 
                            contributions.
Sec. 202. Increase in limit on exclusion amount for elective deferrals.
Sec. 203. Increased limit on deferred amount for plans of State and 
                            local governments.
Sec. 204. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 205. Repeal of 150 percent of current liability funding limit.
Sec. 203. Increased limit on contribution amount for SIMPLE retirement 
                            accounts.
                  TITLE III--SMALL BUSINESS INCENTIVES

Sec. 301. Credit for small employer pension plan contributions and 
                            start-up costs.
Sec. 302. SAFE annuities and trusts.
Sec. 303. Increased limit on contribution amount for simple retirement 
                            accounts.
                    TITLE IV--CATCHUP CONTRIBUTIONS

Sec. 401. Catchup contributions for individuals age 50 or over.
                        TITLE V--PLAN AMENDMENTS

Sec. 501. Provisions relating to plan amendments.
    (c) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

                  TITLE I--INDIVIDUAL RETIREMENT PLANS

SEC. 101. MODIFICATION OF DEDUCTION LIMITS FOR IRA CONTRIBUTIONS.

    (a) Increase in Contribution Limit.--Paragraph (1)(A) of section 
219(b) (relating to maximum amount of deduction) is amended by striking 
``$2,000'' and inserting ``$5,000''.
    (b) Inflation Adjustment.--Section 219 (relating to deduction for 
retirement savings) is amended by redesignating subsection (h) as 
subsection (i) and by inserting after subsection (g) the following new 
subsection:
    ``(h) Cost-of-Living Adjustment.--
            ``(1) Deductible amounts.--In the case of any taxable year 
        beginning in a calendar year after 2000, the $5,000 amount 
        under subsection (b)(1)(A) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 1999' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding rules.--If any amount after adjustment under 
        paragraph (1) is not a multiple of $100, such amount shall be 
        rounded to the next lower multiple of $100.''
    (c) Repeal of Restrictions on Active Participants.--
            (1) In general.--Section 219, as amended by subsection (b), 
        is amended by striking subsection (g) and by redesignating 
        subsections (h) and (i) as subsections (g) and (h).
            (2) Technical and conforming amendments.--
                    (A) Section 219(f) is amended by striking paragraph 
                (7).
                    (B) Section 408(d)(5) is amended by striking the 
                last sentence.
                    (C) Section 408(o) is amended by adding at the end 
                the following new paragraph:
            ``(5) Termination.--This subsection shall not apply to any 
        contribution for any taxable year beginning after December 31, 
        1999.''
                    (D) Section 408A(c)(2)(A) is amended by striking 
                ``or (g)''.
                    (E) Section 408A(c)(3)(A) is amended by striking 
                the last sentence.
                    (F) Section 408A(c)(3)(C) is amended--
                            (i) by striking all before clause (ii) and 
                        inserting the following:
                    ``(C) Special rules.--For purposes of this 
                paragraph--
                            ``(i) adjusted gross income shall be 
                        determined--
                                    ``(I) after application of sections 
                                86 and 469, and
                                    ``(II) without regard to sections 
                                135, 137, 221, and 911, the deduction 
                                allowable under section 219, or any 
                                amount included in gross income under 
                                subsection (d)(3),'',
                            (ii) by striking the period at the end of 
                        clause (ii) and inserting a comma, and
                            (iii) by adding at the end the following 
                        new clauses:
                            ``(iii) no dollar limitation shall be 
                        reduced below $200 under subparagraph (A) 
                        unless (without regard to this clause) such 
                        limitation is reduced to zero, and
                            ``(iv) any amount determined under 
                        subparagraph (A) which is not a multiple of $10 
                        shall be rounded to the next lowest $10.''
                    (G) Section 408A(c)(3)(D) is amended to read as 
                follows:
                    ``(D) Special rule for married individuals filing 
                separately and living apart.--A husband and wife who--
                            ``(i) file separate returns for any taxable 
                        year, and
                            ``(ii) live apart at all times during such 
                        taxable year,
                shall not be treated as married individuals for 
                purposes of this paragraph.''
                    (H) Section 4973(b) is amended by striking the last 
                sentence.
    (d) Additional Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the amount in effect for such 
        taxable year under section 219(b)(1)(A)''.
            (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
        and inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
            (3) Section 408(b) is amended by striking ``$2,000'' in the 
        matter following paragraph (4) and inserting ``the dollar 
        amount in effect under section 219(b)(1)(A)''.
            (4) Section 408(j) is amended by striking ``$2,000''.
            (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
        inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 102. MODIFICATION OF INCOME LIMITS ON CONTRIBUTIONS AND ROLLOVERS 
              TO ROTH IRAS.

    (a) Repeal of AGI Limit on Contributions.--Subsection 408A(c)(3) 
(relating to limits based on modified adjusted gross income), as 
amended by section 101(c)(2), is amended by striking subparagraph (A) 
and by redesignating subparagraphs (B), (C), and (D) as subparagraphs 
(A), (B), and (C), respectively.
    (b) Increase in AGI Limit for Rollover Contributions.--Clause (i) 
of section 408A(c)(3)(A) (relating to rollover from IRA), as 
redesignated by subsection (a), is amended by striking ``$100,000'' and 
inserting ``$1,000,000''.
    (c) Conforming Amendments.--
            (1)(A) Subparagraph (B) of section 408A(c)(3), as 
        redesignated by subsection (a) and as amended by section 
        101(c)(2)(F), is amended to read as follows:
                    ``(B) Definition of adjusted gross income.--For 
                purposes of subparagraph (A), adjusted gross income 
                shall be determined--
                            ``(i) after application of sections 86 and 
                        469, and
                            ``(ii) without regard to sections 135, 137, 
                        221, and 911, the deduction allowable under 
                        section 219, or any amount included in gross 
                        income under subsection (d)(3).''
            (B) Effective date.--The amendment made by this paragraph 
        shall apply to taxable years beginning after December 31, 1999.
            (2)(A) Subparagraph (B) of section 408A(c)(3), as amended 
        by paragraph (1), is amended to read as follows:
                    ``(B) Definition of adjusted gross income.--For 
                purposes of subparagraph (A), adjusted gross income 
                shall be determined--
                            ``(i) after application of sections 86 and 
                        469, and
                            ``(ii) without regard to sections 135, 137, 
                        221, and 911, the deduction allowable under 
                        section 219, or any amount included in gross 
                        income under subsection (d)(3) or by reason of 
                        a required distribution under a provision 
                        described in paragraph (5).''
            (B) Effective date.--The amendment made by this paragraph 
        shall apply to taxable years beginning after December 31, 2004.
    (d) Effective Date.--Except as otherwise provided in this section, 
the amendments made by this section shall apply to taxable years 
beginning after December 31, 1999.

SEC. 103. DEEMED IRAS UNDER EMPLOYER PLANS.

    (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) Deemed IRAs Under Qualified Employer Plans.--
            ``(1) General rule.--If--
                    ``(A) a qualified employer plan elects to allow 
                employees to make voluntary employee contributions to a 
                separate account or annuity established under the plan, 
                and
                    ``(B) under the terms of the qualified employer 
                plan, such account or annuity meets the applicable 
                requirements of this section or section 408A for an 
                individual retirement account or annuity,
        then such account or annuity shall be treated for purposes of 
        this title in the same manner as an individual retirement plan 
        (and contributions to such account or annuity as contributions 
        to an individual retirement plan). For purposes of subparagraph 
        (B), the requirements of subsection (a)(5) shall not apply.
            ``(2) Special rules for qualified employer plans.--For 
        purposes of this title--
                    ``(A) a qualified employer plan shall not fail to 
                meet any requirement of this title solely by reason of 
                establishing and maintaining a program described in 
                paragraph (1), and
                    ``(B) any account or annuity described in paragraph 
                (1), and any contribution to the account or annuity, 
                shall not be subject to any requirement of this title 
                applicable to a qualified employer plan or taken into 
                account in applying any such requirement to any other 
                contributions under the plan.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Qualified employer plan.--The term `qualified 
                employer plan' has the meaning given such term by 
                section 72(p)(4).
                    ``(B) Voluntary employee contribution.--The term 
                `voluntary employee contribution' means any 
                contribution (other than a mandatory contribution 
                within the meaning of section 411(c)(2)(C))--
                            ``(i) which is made by an individual as an 
                        employee under a qualified employer plan which 
                        allows employees to elect to make contributions 
                        described in paragraph (1), and
                            ``(ii) with respect to which the individual 
                        has designated the contribution as a 
                        contribution to which this subsection 
                        applies.''
    (b) Amendment of ERISA.--
            (1) In general.--Section 4 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1003) is amended by 
        adding at the end the following new subsection:
    ``(c) If a pension plan allows an employee to elect to make 
voluntary employee contributions to accounts and annuities as provided 
in section 408(q) of the Internal Revenue Code of 1986, such accounts 
and annuities (and contributions thereto) shall not be treated as part 
of such plan (or as a separate pension plan) for purposes of any 
provision of this title other than section 403(c), 404, or 405 
(relating to exclusive benefit, and fiduciary and co-fiduciary 
responsibilities).''
            (2) Conforming amendment.--Section 4(a) of such Act (29 
        U.S.C. 1003(a)) is amended by inserting ``or (c)'' after 
        ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1999.

                        TITLE II--PENSION PLANS

SEC. 201. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
              CONTRIBUTIONS.

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

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

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

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

SEC. 202. INCREASE IN LIMIT ON EXCLUSION AMOUNT FOR ELECTIVE DEFERRALS.

    (a) Increase in Elective Deferral Limit.--Paragraph (1) of section 
402(g) (relating to limitation on exclusion for elective deferrals) is 
amended by striking ``$7,000'' and inserting ``$15,000''.
    (b) Conforming Amendments.--
            (1)(A) Section 402(g) is amended by striking paragraph (4) 
        and by redesignating paragraphs (5), (6), (7), (8), and (9) as 
        paragraphs (4), (5), (6), (7), and (8), respectively.
            (B) Section 457(c)(2) is amended by striking ``section 
        402(g)(8)(A)(iii)'' and inserting ``section 
        402(g)(7)(A)(iii)''.
            (C) Section 501(c)(18)(D)(iii) is amended by striking 
        ``(other than paragraph (4) thereof)''.
            (2) Section 402(g)(4), as redesignated by paragraph (1)(A), 
        is amended by striking ``$7,000'' and inserting ``$15,000''.
            (3) Section 402(g)(4), as so redesignated, is amended by 
        inserting ``the base period taken into account shall be the 
        calendar quarter ending September 30, 1999, and'' after 
        ``except that''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 203. INCREASED LIMIT ON DEFERRED AMOUNT FOR PLANS OF STATE AND 
              LOCAL GOVERNMENTS.

    (a) In General.--Subparagraph (A) of section 457(b)(2) (defining 
eligible deferred compensation plan) is amended by inserting 
``($12,000, in the case of a plan of an eligible employer as defined in 
subsection (e)(1)(A))'' after ``$7,500''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 204. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) Equitable Treatment.--
            (1) In general.--Subparagraph (B) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended to read as follows:
                    ``(B) the participant's compensation.''
            (2) Application to section 403(b).--Section 403(b) is 
        amended--
                    (A) by striking ``the exclusion allowance for such 
                taxable year'' in paragraph (1) and inserting ``the 
                applicable limit under section 415'',
                    (B) by striking paragraph (2), and
                    (C) by inserting ``or any amount received by a 
                former employee after the 5th taxable year following 
                the taxable year in which such employee was 
                terminated'' before the period at the end of the second 
                sentence of paragraph (3).
            (3) Conforming amendments.--
                    (A) Subsection (f) of section 72 is amended by 
                striking ``section 403(b)(2)(D)(iii))'' and inserting 
                ``section 403(b)(2)(D)(iii), as in effect on December 
                31, 1998)''.
                    (B) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (C) Section 415(a)(2) is amended by striking ``, 
                and the amount of the contribution for such portion 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2)''.
                    (D) Section 415(c)(3) is amended by adding at the 
                end the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' means the participant's 
                includible compensation determined under section 
                403(b)(3).''
                    (E) Section 415(c) is amended by striking paragraph 
                (4) and redesignating paragraph (6) as paragraph (4).
                    (F) Section 415(c)(7) is amended to read as 
                follows:
            ``(5) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church, a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''
                    (G) Section 415(e)(3)(B) is amended--
                            (i) by striking ``subsection (c)(6)'' in 
                        clause (i) and inserting ``subsection (c)(4)'', 
                        and
                            (ii) by striking ``subsection (c)(7)'' in 
                        clause (ii)(II) and inserting ``subsection 
                        (c)(5)''.
                    (H) Section 415(e)(5) is amended--
                            (i) by striking ``(except in the case of a 
                        participant who has elected under subsection 
                        (c)(4)(D) to have the provisions of subsection 
                        (c)(4)(C) apply)'', and
                            (ii) by striking the last sentence.
                    (I) Section 415(n)(2)(B) is amended by striking 
                ``percentage''.
                    (J) Subparagraph (B) of section 402(g)(7), as 
                redesignated by section 202(b)(1)(A), is amended by 
                inserting before the period at the end the following: 
                ``(as in effect on the date of the enactment of the 
                Retirement Savings Opportunity Act of 1999)''.
    (b) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--Subparagraph (B) of section 457(b)(2) 
(relating to salary limitation on eligible deferred compensation 
plans'' is amended by striking ``33\1/3\ percent'' and inserting ``100 
percent''.
    (c) Elective Deferrals Not Taken Into Account for Purposes of 
Limits.--Section 404 (relating to deduction for contributions of an 
employer to an employees' trust or annuity plan and compensation under 
a deferred-payment plan) is amended by adding at the end the following 
new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Limits.--Elective deferrals (as defined in section 402(g)(3)) shall not 
be subject to any limitation described in this section (other than 
subsection (a)), and such elective deferrals shall not be taken into 
account in applying such limitations to any other contributions.''
    (d) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

SEC. 205. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.

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

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

``In the case of any plan year      The applicable percentage is--
        beginning in--
    1999..........................................                 155 
    2000..........................................                 160 
    2001..........................................                 165 
    2002..........................................               170.''
            (3) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after December 31, 1998.
    (b) Maximum Contribution Deduction Rules Modified and Applied to 
All Defined Benefit Plans.--
            (1) In general.--Section 404(a)(1)(D) (relating to special 
        rule in case of certain plans) is amended--
                    (A) by striking ``which has more than 100 
                participants for the plan year'',
                    (B) by striking ``unfunded current liability 
                determined under section 414(l)'' and inserting 
                ``unfunded termination liability (determined as if the 
                proposed termination date referred to in section 
                4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
                Security Act of 1974 were the last day of the plan 
                year)'',
                    (C) by inserting after the first sentence the 
                following new sentence: ``For purposes of this 
                subparagraph, in the case of a plan which has less than 
                100 participants for the plan year, termination 
                liability shall not include the liability attributable 
                to benefit increases for highly compensated employees 
                (as defined in section 414(q)) brought about by plan 
                amendment within the last 2 years before the 
                termination date.'', and
                    (D) by striking ``(other than a multiemployer 
                plan)''.
            (2) Conforming amendment.--Paragraph (6) of section 4972(c) 
        is amended by striking the sentence preceding the last sentence 
        thereof.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date of the 
        enactment of this Act.

                  TITLE III--SMALL BUSINESS INCENTIVES

SEC. 301. CREDIT FOR SMALL EMPLOYER PENSION PLAN CONTRIBUTIONS AND 
              START-UP COSTS.

    (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 CREDIT.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan credit determined 
under this section for any taxable year is an amount equal to the sum 
of--
            ``(1) 50 percent of the qualified employer contributions of 
        the taxpayer for the taxable year, and
            ``(2) the qualified start-up costs paid or incurred by the 
        taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) Limits on contributions.--For purposes of subsection 
        (a)(1)--
                    ``(A) qualified employer contributions may only be 
                taken into account for each of the first 5 taxable 
                years ending after the date the employer establishes 
                the qualified employer plan to which the contribution 
                is made, and
                    ``(B) the amount of the qualified employer 
                contributions taken into account with respect to any 
                qualified employee for any such taxable year shall not 
                exceed 3 percent of the compensation (as defined in 
                section 414(s)) of the qualified employee for such 
                taxable year.
            ``(2) Limits on start-up costs.--The amount of the credit 
        determined under subsection (a)(2) for any taxable year shall 
        not exceed--
                    ``(A) $500 for each of the first, second, and third 
                taxable years ending after the date the employer 
                established the qualified employer plan to which such 
                costs relate, and
                    ``(B) zero for each taxable year thereafter.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible employer.--
                    ``(A) In general.--The term `eligible employer'' 
                means, with respect to any year, an employer which has 
                no more than--
                            ``(i) for purposes of subsection (a)(1), 50 
                        employees, and
                            ``(ii) for purposes of subsection (a)(2), 
                        100 employees,
                who received at least $5,000 of compensation from the 
                employer for the preceding year.
                    ``(B) 2-year grace period.--An eligible employer 
                who establishes and maintains a qualified employer plan 
                for 1 or more years and who fails to be an eligible 
                employer for any subsequent year shall be treated as an 
                eligible employer for the 2 years following the last 
                year the employer was an eligible employer.
                    ``(C) Requirement for new qualified employer 
                plans.--Such term shall not include an employer if the 
                employer (or any predecessor employer) established or 
                maintained a qualified employer plan with respect to 
                which contributions were made, or benefits were 
                accrued, for service in the 3 taxable years ending 
                prior to the first taxable year in which the credit 
                under this section is allowed.
            ``(2) Qualified employer contributions.--
                    ``(A) In general.--The term `qualified employer 
                contributions' means, with respect to any taxable year, 
                any employer contributions made on behalf of a 
                qualified employee to a qualified employer plan for a 
                plan year ending with or within the taxable year.
                    ``(B) Employer contributions.--The term `employer 
                contributions' shall not include any elective deferral 
                (within the meaning of section 402(g)(3)).
            ``(3) Qualified employee.--The term `qualified employee' 
        means an individual who--
                    ``(A) is eligible to participate in the qualified 
                employer plan to which the employer contributions are 
                made, and
                    ``(B) is not a highly compensated employee (within 
                the meaning of section 414(q)) for the year for which 
                the contribution is made.
            ``(4) Qualified start-up costs.--The term `qualified start-
        up costs' means any ordinary and necessary expenses of an 
        eligible employer which are paid or incurred in connection 
        with--
                    ``(A) the establishment or maintenance of a 
                qualified employer plan in which qualified employees 
                are eligible to participate, and
                    ``(B) providing educational information to 
                employees regarding participation in such plan and the 
                benefits of establishing an investment plan.
            ``(5) Qualified employer plan.--The term `qualified 
        employer plan' has the meaning given such term in section 
        4972(d).
    ``(d) Special Rules.--
            ``(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 qualified employer plans of an employer shall be 
        treated as 1 qualified employer plan.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowable under this chapter for any qualified start-up costs 
        or qualified employer contributions for which a credit is 
        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 credit 
        determined under section 45D(a).''
    (c) Conforming Amendment.--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 
                                        credit.''
    (d) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred or contributions made in connection 
with qualified employer plans established after December 31, 1999.

SEC. 302. SAFE ANNUITIES AND TRUSTS.

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

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

    ``(a) Employer Eligibility.--
            ``(1) In general.--An employer may establish and maintain a 
        SAFE annuity or a SAFE trust for any year only if--
                    ``(A) the employer is an eligible employer (as 
                defined in section 408(p)(2)(C)), and
                    ``(B) the employer does not maintain (and no 
                predecessor of the employer maintains) a qualified plan 
                (other than a permissible plan) with respect to which 
                contributions were made, or benefits were accrued, for 
                service in any year in the period beginning with the 
                year such annuity or trust became effective and ending 
                with the year for which the determination is being 
                made.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Qualified plan.--The term `qualified plan' 
                has the meaning given such term by section 
                408(p)(2)(D)(ii).
                    ``(B) Permissible plan.--The term `permissible 
                plan' means--
                            ``(i) a plan under which only elective 
                        deferrals described in section 402(g)(3), 
                        deferred compensation described in section 457, 
                        or employer matching contributions may be made, 
                        and
                            ``(ii) any collectively bargained plan.
    ``(b) SAFE Annuity.--
            ``(1) In general.--For purposes of this title, the term 
        `SAFE annuity' means an individual retirement annuity (as 
        defined in section 408(b) without regard to paragraph (2) 
        thereof and without regard to the limitation on aggregate 
        annual premiums contained in the flush language of section 
        408(b)) if--
                    ``(A) such annuity meets the requirements of 
                paragraphs (2) through (6), and
                    ``(B) the only contributions to such annuity (other 
                than rollover contributions) are employer 
                contributions.
        Nothing in this section shall be construed as preventing an 
        employer from using a group annuity contract which is divisible 
        into individual retirement annuities for purposes of providing 
        SAFE annuities.
            ``(2) Participation requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any year only if all employees of 
                the employer who--
                            ``(i) received at least $5,000 in 
                        compensation from the employer during any 2 
                        consecutive preceding years, and
                            ``(ii) received at least $5,000 in 
                        compensation during the year,
                are entitled to the benefit described in paragraph (5) 
                for such year.
                    ``(B) Excludable employees.--An employer may elect 
                to exclude from the requirements under subparagraph (A) 
                employees described in section 410(b)(3).
            ``(3) Vesting.--The requirements of this paragraph are met 
        if the employee's rights to any benefits are nonforfeitable.
            ``(4) Benefit form.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the only form of benefit is--
                            ``(i) a benefit payable annually in the 
                        form of a single life annuity with monthly 
                        payments (with no ancillary benefits) beginning 
                        at age 65, or
                            ``(ii) any other form of benefit which is 
                        the actuarial equivalent (based on the 
                        assumptions specified in the SAFE annuity) of 
                        the benefit described in clause (i).
                    ``(B) Direct transfers and rollovers.--A plan shall 
                not fail to meet the requirements of this paragraph by 
                reason of permitting, at the election of the employee, 
                a trustee-to-trustee transfer or a rollover 
                contribution.
            ``(5) Amount of annual accrued benefit.--
                    ``(A) In general.--The requirements of this 
                paragraph are met for any plan year if the accrued 
                benefit of each participant derived from employer 
                contributions for such year, when expressed as a 
                benefit described in paragraph (4)(A), equals the 
                applicable percentage of the participant's compensation 
                for such year.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `applicable 
                        percentage' means 3 percent.
                            ``(ii) Election of lower percentage.--An 
                        employer may elect to apply an applicable 
                        percentage of 1 percent, 2 percent or zero 
                        percent for any year for all employees eligible 
                        to participate in the plan for such year if the 
                        employer notifies the employees of such 
                        percentage within a reasonable period before 
                        the beginning of such year.
                    ``(C) Compensation limit.--The compensation taken 
                into account under this paragraph for any year shall 
                not exceed the limitation in effect for such year under 
                section 401(a)(17).
                    ``(D) Credit for service before plan adopted.--
                            ``(i) In general.--An employer may elect to 
                        take into account a specified number of years 
                        of service (not greater than 10) performed 
                        before the adoption of the plan (each 
                        hereinafter referred to as a `prior service 
                        year') as service under the plan if the same 
                        specified number of years is available to all 
                        employees eligible to participate in the plan 
                        for the first plan year.
                            ``(ii) Accrual of prior service benefit.--
                        Such an election shall be effective for a prior 
                        service year only if the requirements of this 
                        paragraph are met for an eligible plan year 
                        (with respect to employees entitled to credit 
                        for such prior service year) by doubling the 
                        applicable percentage (if any) for such plan 
                        year. For purposes of the preceding sentence, 
                        an eligible plan year is a plan year in the 
                        period of consecutive plan years (but not more 
                        than the number specified under clause (i)) 
                        beginning with the first plan year that the 
                        plan is in effect.
                            ``(iii) Election may not apply to certain 
                        prior service years.--This subparagraph shall 
                        not apply with respect to any prior service 
                        year of an employee if--
                                    ``(I) for any part of such prior 
                                service year such employee was an 
                                active participant (within the meaning 
                                of section 219(g)(5), as in effect on 
                                the day before the date of the 
                                enactment of the Retirement Savings 
                                Opportunity Act of 1999) under any 
                                defined benefit plan of the employer 
                                (or any predecessor thereof), or
                                    ``(II) such employee received 
                                during such prior service year less 
                                than $5,000 in compensation from the 
                                employer.
            ``(6) Funding.--
                    ``(A) In general.--The requirements of this 
                paragraph are met only if the employer is required to 
                contribute to the annuity for each plan year the amount 
                necessary (determined in accordance with subparagraph 
                (B)) to fund the accrued benefit for each participant 
                entitled to such benefit for such year.
                    ``(B) Actuarial assumptions.--In determining the 
                amount required to be contributed under subparagraph 
                (A)--
                            ``(i) the assumed interest rate shall be 
                        not less than 3 percent and not greater than 5 
                        percent per year,
                            ``(ii) the assumed mortality shall be 
                        determined under the applicable mortality table 
                        (as defined in section 417(e)(3), as modified 
                        by the Secretary so that it does not include 
                        any assumption for preretirement mortality),
                            ``(iii) the assumed retirement age shall be 
                        65, and
                            ``(iv) an assumption for reasonable 
                        expenses shall be permitted consistent with 
                        State law.
                    ``(C) Time when contributions deemed made.--For 
                purposes of this paragraph, an employer shall be deemed 
                to have made a contribution on the last day of the 
                preceding taxable year if the payment is on account of 
                such taxable year and is made not later than the time 
                prescribed by law for filing the return for such 
                taxable year (including extensions thereof).
                    ``(D) Penalty for failure to make required 
                contribution.--The taxes imposed by section 4971 shall 
                apply to a failure to make the contribution required by 
                this paragraph in the same manner as if the amount of 
                the failure were an accumulated funding deficiency to 
                which such section applies.
            ``(7) Definitions and special rule.--
                    ``(A) Definitions.--The definitions in section 
                408(p)(6) shall apply for purposes of this subsection.
                    ``(B) Use of designated financial institutions.--A 
                rule similar to the rule of section 408(p)(7) (without 
                regard to the last sentence thereof) shall apply for 
                purposes of this subsection.
                    ``(C) Treatment of matching contributions.--A rule 
                similar to the rule of section 408(p)(8) shall apply 
                for purposes of this subsection.
    ``(c) SAFE Trust.--
            ``(1) In general.--For purposes of this title, the term 
        `SAFE trust' means a trust forming part of a defined benefit 
        plan if--
                    ``(A) such trust meets the requirements of section 
                401(a) as modified by subsection (d),
                    ``(B) a participant's benefits under the plan are 
                based solely on the balance of a separate account in 
                such plan of such participant,
                    ``(C) such plan meets the requirements of 
                paragraphs (2) through (8), and
                    ``(D) the only contributions to such trust (other 
                than rollover contributions) 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 plan meets the requirements of this 
        paragraph only if the requirements of subsection (b)(4) are 
        met. For purposes of this paragraph, a plan may satisfy the 
        requirements of subsection (b)(4) by purchasing an annuity 
        contract which meets the requirements of subsection (b)(4).
            ``(5) Amount of annual accrued benefit.--A plan meets the 
        requirements of this paragraph for any year only if the 
        requirements of subsection (b)(5) are met for such year.
            ``(6) Funding.--
                    ``(A) In general.--A plan meets the requirements of 
                this paragraph for any year only if--
                            ``(i) the requirements of subsection (b)(6) 
                        are met for such year, and
                            ``(ii) in the case of a plan which has an 
                        unfunded prior year liability as of the close 
                        of such plan year, the plan requires that the 
                        employer make an additional contribution to 
                        such plan for such year equal to the amount of 
                        such unfunded prior year liability.
                    ``(B) Unfunded prior year liability.--For purposes 
                of this paragraph, the term `unfunded prior year 
                liability' means, with respect to any plan year, the 
                excess (if any) of--
                            ``(i) the aggregate of the accrued 
                        liabilities under the plan as of the close of 
                        the prior plan year, over
                            ``(ii) the value of the plan's assets 
                        determined under section 412(c)(2) as of the 
                        close of the plan year (determined without 
                        regard to any contributions for such plan 
                        year).
                Such accrued liabilities shall be determined using the 
                assumptions specified in subsection (b)(6)(B).
                    ``(C) Changes in mortality table.--If the 
                applicable mortality table under section 417(e)(3) for 
                any plan year is not the same as such table for the 
                prior plan year, the Secretary shall prescribe 
                regulations which phase in the effect of the changes 
over a reasonable period of plan years determined by the Secretary.
                    ``(D) Disregard assumptions for expenses.--For 
                purposes of this paragraph, the assumption specified in 
                subsection (b)(6)(B)(iv) shall be disregarded.
            ``(7) Separate accounts for participants.--A plan meets the 
        requirements of this paragraph for any year only if the plan 
        provides--
                    ``(A) for an individual account for each 
                participant, and
                    ``(B) for benefits based solely on--
                            ``(i) the amount contributed to the 
                        participant's account, and
                            ``(ii) any income, expenses, gains and 
                        losses, and any forfeitures of accounts of 
                        other participants which may be allocated to 
                        such participant's account.
            ``(8) Trust may not hold securities which are not readily 
        tradable.--A plan meets the requirements of this paragraph only 
        if the plan prohibits the trust from holding directly or 
        indirectly securities which are not readily tradable on an 
        established securities market or otherwise. Nothing in this 
        paragraph shall prohibit the trust from holding insurance 
        company products regulated by State law.
            ``(9) Definitions and special rule.--The definitions and 
        special rule applicable under subsection (b)(7) shall apply for 
        purposes of this subsection.
    ``(d) Special Rules for SAFE Annuities and Trusts.--
            ``(1) Certain requirements treated as met.--For purposes of 
        section 401(a), a SAFE annuity and a SAFE trust shall be 
        treated as meeting the requirements of the following 
        provisions:
                    ``(A) Section 401(a)(4) (relating to 
                nondiscrimination rules).
                    ``(B) Section 401(a)(26) (relating to minimum 
                participation).
                    ``(C) Section 410 (relating to minimum 
                participation and coverage requirements).
                    ``(D) Section 411(b) (relating to accrued benefit 
                requirements).
                    ``(E) Paragraphs (6) and (7) of section 412(c) 
                (relating to full funding limitation).
                    ``(F) Section 415 (relating to limitations on 
                benefits and contributions under qualified plans).
                    ``(G) Section 416 (relating to special rules for 
                top-heavy plans).
            ``(2) Contributions not taken into account in applying 
        limits to other plans.--Contributions to a SAFE annuity or a 
        SAFE trust shall not be taken into account in applying sections 
        404 and 415 to other plans maintained by the employer.
            ``(3) Coordination with maximum limitation under subsection 
        (a).--In the case of any SAFE annuity or SAFE trust, 
        subsections (a)(1) and (b) of section 408 shall be applied by 
        substituting `the dollar amount in effect under section 
        408B(b)(5)(C)' for `$2,000' each place it appears in such 
        subsections.
    ``(e) Rollover Contribution.--For purposes of this section, the 
term `rollover contribution' means any rollover contribution under 
section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16).''
    (b) Deduction Limits Not To Apply to Employer Contributions.--
            (1) In general.--Section 404 (relating to deductions for 
        contributions of an employer to pension, etc., plans), as 
        amended by section 204(c), is amended by adding at the end the 
        following new subsection:
    ``(o) Special Rules for SAFE Annuities and Trusts.--
            ``(1) In general.--Employer contributions to a SAFE annuity 
        or SAFE trust shall be treated as if they are made to a plan 
        subject to the requirements of this section.
            ``(2) Timing.--
                    ``(A) Deduction.--Contributions described in 
                paragraph (1) shall be deductible in the taxable year 
                of the employer with or within which the calendar year 
                for which the contributions were made ends.
                    ``(B) Contributions after end of year.--For 
                purposes of this subsection, contributions shall be 
                treated as made for a taxable year if they are made on 
                account of the taxable year and are made not later than 
                the time prescribed by law for filing the return for 
                the taxable year (including extensions thereof).''
            (2) Coordination with deduction under section 219.--Section 
        219(b) (relating to maximum amount of deduction) is amended by 
        adding at the end the following new paragraph:
            ``(5) Special rule for safe annuities.--This section shall 
        not apply with respect to any amount contributed to a SAFE 
        annuity established under section 408A(B).''
    (c) 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 SAFE Annuities.--Rules similar to the rules of 
paragraphs (1) and (3) of subsection (h) shall apply to contributions 
and distributions with respect to a SAFE annuities under section 
408B.''
    (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 safe annuities and trusts.--In the 
        case of any amount received from a SAFE annuity or a SAFE trust 
        (within the meaning of section 408B), paragraph (1) shall be 
        applied by substituting `20 percent' for `10 percent'.''
    (e) Simplified Employer Reports.--
            (1) SAFE annuities.--Section 408(l) (relating to simplified 
        employer reports) is amended by adding at the end the following 
        new paragraph:
            ``(3) SAFE annuities.--
                    ``(A) Simplified report.--The employer maintaining 
                any SAFE annuity (within the meaning of section 408B) 
                shall file a simplified annual return with the 
                Secretary containing only the information described in 
                subparagraph (B).
                    ``(B) Contents.--The return required by 
                subparagraph (A) shall set forth--
                            ``(i) the name and address of the employer,
                            ``(ii) the date the plan was adopted,
                            ``(iii) the number of employees of the 
                        employer,
                            ``(iv) the number of such employees who are 
                        eligible to participate in the plan,
                            ``(v) the total amount contributed by the 
                        employer to each such annuity for such year and 
                        the minimum amount required under section 408B 
                        to be so contributed,
                            ``(vi) the percentage elected under section 
                        408B(b)(5)(B), and
                            ``(vii) the number of employees with 
                        respect to whom contributions are required to 
                        be made for such year under section 
                        408B(b)(5)(D).
                    ``(C) Reporting by issuer of safe annuity.--
                            ``(i) In general.--The issuer of each SAFE 
                        annuity shall provide to the owner of the 
                        annuity for each year a statement setting forth 
                        as of the close of such year--
                                    ``(I) the benefits guaranteed at 
                                age 65 under the annuity, and
                                    ``(II) the cash surrender value of 
                                the annuity.
                            ``(ii) Summary description.--The issuer of 
                        any SAFE annuity shall provide to the employer 
                        maintaining the annuity for each year a 
                        description containing the following 
                        information:
                                    ``(I) The name and address of the 
                                employer and the issuer.
                                    ``(II) The requirements for 
                                eligibility for participation.
                                    ``(III) The benefits provided with 
                                respect to the annuity.
                                    ``(IV) The procedures for, and 
                                effects of, withdrawals (including 
                                rollovers) from the annuity.
                    ``(D) Time and manner of reporting.--Any return, 
                report, or statement required under this paragraph 
                shall be made in such form and at such time as the 
                Secretary shall prescribe.''
            (2) SAFE trusts.--Section 6059 (relating to actuarial 
        reports) is amended by redesignating subsections (c) and (d) as 
        subsections (d) and (e), respectively, and by inserting after 
        subsection (b) the following new subsection:
    ``(c) SAFE Trusts.--In the case of a SAFE Trust (within the meaning 
of section 408B), the Secretary shall require a simplified actuarial 
report which contains information similar to the information required 
in section 408(l)(3)(B).''
    (f) Conforming Amendments.--
            (1) Section 280G(b)(6) is amended by striking ``or'' at the 
        end of subparagraph (C), by striking the period at the end of 
        subparagraph (D) and inserting ``, or'' and by adding after 
        subparagraph (D) the following new subparagraph:
                    ``(E) a SAFE annuity described in section 408B.''
            (2) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of 
        section 414 are each amended by inserting ``408B,'' after 
        ``408(p),''.
            (3) Section 4972(d)(1)(A) is amended by striking ``and'' at 
        the end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting ``, and'', and by adding after clause 
        (iv) the following new clause:
                            ``(v) any SAFE annuity (within the meaning 
                        of section 408B).''
            (4) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 408A the following new item:

                              ``Sec. 408B. SAFE annuities and trusts.''
    (g) Modifications of ERISA.--
            (1) Exemption from insurance coverage.--Subsection (b) of 
        section 4021 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1321) is amended by striking ``or'' at the end 
        of paragraph (12), by striking the period at the end of 
        paragraph (13) and inserting ``; or'', and by adding at the end 
        the following new paragraph:
            ``(14) which is established and maintained as part of a 
        SAFE trust (as defined in section 408B of the Internal Revenue 
        Code of 1986).''
            (2) Reporting requirements.--Section 101 of such Act (29 
        U.S.C. 1021) is amended by redesignating the second subsection 
        (h) as subsection (j) and by inserting after the first 
        subsection (h) the following new subsection:
    ``(i) SAFE Annuities.--
            ``(1) No employer reports.--Except as provided in this 
        subsection, no report shall be required under this section by 
        an employer maintaining a SAFE annuity under section 408B(b) of 
        the Internal Revenue Code of 1986.
            ``(2) Summary description.--The issuer of any SAFE annuity 
        shall provide to the employer maintaining the annuity for each 
        year a description containing the following information:
                    ``(A) The name and address of the employer and the 
                issuer.
                    ``(B) The requirements for eligibility for 
                participation.
                    ``(C) The benefits provided with respect to the 
                annuity.
                    ``(D) The procedures for, and effects of, 
                withdrawals (including rollovers) from the annuity.
            ``(3) Employee notification.--The employer shall provide 
        each employee eligible to participate in the SAFE annuity with 
        the description described in paragraph (2) at the same time as 
        the notification required under section 408B(b)(5)(B) of the 
        Internal Revenue Code of 1986.''
    (h) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1998.

SEC. 303. INCREASED LIMIT ON CONTRIBUTION AMOUNT FOR SIMPLE RETIREMENT 
              ACCOUNTS.

    (a) Increase in Contribution Limit.--Subparagraph (A)(ii) of 
section 408(p)(2) (relating to qualified salary reduction arrangement) 
is amended by striking ``$6,000'' and inserting ``$10,000''.
    (b) Conforming Amendments.--
            (1) Section 401(k)(11)(B)(i)(I) is amended by striking 
        ``$6,000'' and inserting ``$10,000''.
            (2) Section 401(k)(11)(E) of such Code is amended by 
        striking ``$6,000'' and inserting ``$10,000''.
            (3) Section 408(p)(2)(E) of such Code is amended--
                    (A) by striking ``$6,000'' and inserting 
                ``$10,000'', and
                    (B) by striking ``1996'' and inserting ``1999''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1999.

                    TITLE IV--CATCHUP CONTRIBUTIONS

SEC. 401. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.

    (a) Elective Deferrals.--Section 414 (relating to definitions and 
special rules) is amended by adding at the end the following new 
subsection:
    ``(v) Catchup Contributions for Individuals Age 50 or Over.--
            ``(1) In general.--An applicable employer plan shall not be 
        treated as failing to meet any requirement of this title solely 
        because the plan permits an eligible participant to make 
        additional elective deferrals in any plan year.
            ``(2) Limitation on amount of additional deferrals.--A plan 
        shall not permit additional elective deferrals under paragraph 
        (1) for any year in an amount greater than the lesser of--
                    ``(A) 50 percent of the maximum amount of elective 
                deferrals excludable from gross income of the 
                participant for such year (determined without regard to 
                this subsection, subsection (u), or any limitation 
                described in paragraph (3)(A)), or
                    ``(B) the excess (if any) of--
                            ``(i) the participant's compensation for 
                        the year, over
                            ``(ii) any other elective deferrals of the 
                        participant for such year which are made 
                        without regard to this subsection.
            ``(3) Treatment of contributions.--In the case of any 
        contribution to a plan under paragraph (1) (and any employer 
        matching contribution with respect thereto)--
                    ``(A) such contribution shall not, with respect to 
                the year in which the contribution is made--
                            ``(i) be subject to any otherwise 
                        applicable limitation contained in section 
                        402(g), 402(h), 403(b), 404(a), 404(h), 408, 
                        415, or 457, or
                            ``(ii) be taken into account in applying 
                        such limitations to other contributions or 
                        benefits under such plan or any other such 
                        plan, and
                    ``(B) except as provided in paragraph (4), such 
                plan shall not be treated as failing to meet the 
                requirements of section 401(a)(4), 401(a)(26), 
                401(k)(3), 401(k)(11), 401(k)(12), 401(m), 403(b)(12), 
                408(k), 408(p), 408B, 410(b), or 416 by reason of the 
                making of (or the right to make) such contribution.
            ``(4) Matching contributions.--Nothing in paragraph (1) 
        shall require an employer to make any matching contribution 
        with respect to any additional elective deferrals under 
        paragraph (1) for any year, but if the employer elects to make 
        any such matching contribution, such matching contribution 
        shall be taken into account in determining whether the 
        requirements of section 401(a)(4) are met for the year.
            ``(5) Eligible participant.--For purposes of this 
        subsection, the term `eligible participant' means, with respect 
        to any plan year, a participant in a plan--
                    ``(A) who has attained the age of 50 before the 
                close of the plan year, and
                    ``(B) with respect to whom no other elective 
                deferrals may (without regard to this subsection) be 
                made to the plan for the plan year by reason of the 
                application of any limitation or other restriction 
                described in paragraph (3) or contained in the terms of 
                the plan.
            ``(6) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Applicable employer plan.--The term 
                `applicable employer plan' means--
                            ``(i) an employees' trust described in 
                        section 401(a) which is exempt from tax under 
                        section 501(a),
                            ``(ii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iii) an eligible deferred compensation 
                        plan under section 457 of an eligible employer 
                        as defined in section 457(e)(1)(A), and
                            ``(iv) an arrangement meeting the 
                        requirements of section 408 (k) or (p).
                    ``(B) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C).''
    (b) Individual Retirement Plans.--Section 219(b), as amended by 
section 302(b)(2)(A), is amended by adding at the end the following new 
paragraph:
            ``(6) Catchup contributions.--In the case of an individual 
        who has attained the age of 50 before the close of the taxable 
        year, the dollar amount in effect under paragraph (1)(A) for 
        such taxable year shall be equal to 150 percent of such amount 
        determined without regard to this paragraph.''
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 2000.

                        TITLE V--PLAN AMENDMENTS

SEC. 501. PROVISIONS RELATING TO PLAN AMENDMENTS.

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