<enum>I</enum><header>Public employee pension plans</header> <section id="H50954745C59E43DC85715F7267F2011D"><enum>101.</enum><header>New qualification requirements for public employee pension plans</header> <subsection id="HCBEE048FF18144078832B1655F9F8DF4"><enum>(a)</enum><header>In general</header><text>Subsection (a) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401</external-xref> of the Internal Revenue Code of 1986 (relating to requirements for qualification) is amended by inserting after paragraph (34) the following new paragraph:</text> <quoted-block id="H0745E2A07F984B028C3D02739BD76C66"> <paragraph id="HA6D1EC4EBF1348E0AE28116CE585F00"><enum>(35)</enum><header>Public employee pension plans</header><text>A trust forming a part of a public employee pension plan (as defined in section 420C(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.</text></paragraph><after-quoted-block/></quoted-block></subsection> <subsection id="HBC1BA40F00E24846A48B6B5176F6CF7D"><enum>(b)</enum><header>Requirements</header><text>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:</text> <quoted-block id="HBC3B6E1E81E74B819309FABDD18016AE"> <subpart id="H7D8FE830DCCE4901927FE181268D4C53"><enum>F</enum><header>Public employee pension plans</header> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 420A. Reporting and disclosure requirements</toc-entry> <toc-entry level="section">Sec. 420B. Review by qualified review boards of changes in employer contributions</toc-entry> <toc-entry level="section">Sec. 420C. Definitions and coverage</toc-entry></toc> <section id="H621BAA43DB964FC98F21DEA7EC6D83EC"><enum>420A.</enum><header>Reporting and disclosure requirements</header> <subsection id="HE89851708E0146F7BBF173B8FFCFB5C3"><enum>(a)</enum><header>In general</header><text>A public employee pension plan does not meet the requirements of section 401(a)(35) unless the terms of the plan include the requirements of this section.</text></subsection> <subsection id="HD993EC25BC8A40A8AFE39A966E592D5"><enum>(b)</enum><header>Required disclosures</header><text>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—</text> <paragraph id="H0AECB14B5D094E068D00430900BD86E2"><enum>(1)</enum><text>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,</text></paragraph> <paragraph id="H7E2F967109984A6CA584E964B6F6C6CE"><enum>(2)</enum><text>a statement of receipts and disbursements during the preceding 12-month period aggregated by general sources and applications,</text></paragraph> <paragraph id="HB2DE0ED9AF8C4A83B35627E8A8C15156"><enum>(3)</enum><text>a report containing—</text> <subparagraph id="H697B4CE5E3B248A084E34368283E337C"><enum>(A)</enum><text>a description of all investments and assets of the plan, including their value,</text></subparagraph> <subparagraph id="HF586AEA051414082B8E9158E00C25031"><enum>(B)</enum><text>the names and positions of all of the trustees of the plan, and the time remaining before the expiration of their term,</text></subparagraph> <subparagraph id="HDE5DC33CCEF4479EA1B39CE31DDE7651"><enum>(C)</enum><text>a description of the method of trustee selection,</text></subparagraph> <subparagraph id="H2867F0A8DC7048C6B12B837D002DF712"><enum>(D)</enum><text>a description of any changes in investment policy of the plan during the fiscal year,</text></subparagraph> <subparagraph id="H7A3B3845C8B141CDAEC683079638DA4F"><enum>(E)</enum><text>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</text></subparagraph> <subparagraph id="HF58B9E6D10E74821BAB3BCF45BB345C0"><enum>(F)</enum><text>the percentage which the current value of the assets of the plan is of the current liability under the plan, and</text></subparagraph></paragraph> <paragraph id="H1D4796728BCD46978E56E9505FAC417F"><enum>(4)</enum><text>any other material as is necessary to fairly summarize the latest annual report.</text></paragraph><continuation-text continuation-text-level="subsection">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.</continuation-text></subsection> <subsection id="HE47D7F9993D24FCAB0267D4ECF65622C"><enum>(c)</enum><header>Availability of plan documents for examination</header><text>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).</text></subsection> <subsection id="H5EE6EF4BB9624873A161FFB62D40539D"><enum>(d)</enum><header>Availability of information upon request</header><text>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.</text></subsection></section> <section id="H4401F7E76A5C4E219B716B60C9D03BE6"><enum>420B.</enum><header>Review by qualified review boards of changes in employer contributions</header> <subsection id="H096F3AF5F16E4CB1A5F1C910C12825C5"><enum>(a)</enum><header>In general</header><text>A public employee pension plan does not meet the requirements of section 401(a)(35) unless, 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 <term>qualified review board</term> means a board—</text> <paragraph id="H1B3D373B10D04BB3BF82EA9D1C92FC8"><enum>(1)</enum><text>whose membership is determined under the law of the principal State in accordance with subsection (b), and</text></paragraph> <paragraph id="H8B6E31336C01451FB0A7AEE6C995F0EF"><enum>(2)</enum><text>whose powers are determined under the law of the principal State in accordance with subsection (c).</text></paragraph></subsection> <subsection id="H8AE1A471BEED4B25ACB0E78EFE709759"><enum>(b)</enum><header>Membership</header> <paragraph id="H1993471C5EB94D25ABE95138F627F141"><enum>(1)</enum><header>In general</header><text>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:</text> <subparagraph id="H72DA4239FCC94EA98B67377B136E02E3"><enum>(A)</enum><text>one member is appointed by the Governor of the State,</text></subparagraph> <subparagraph id="H78BFF7A7B8D942D5ABBBF240E000B93E"><enum>(B)</enum><text>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</text></subparagraph> <subparagraph id="HA116282326BA46F291F418725F47C8FE"><enum>(C)</enum><text>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)).</text></subparagraph><continuation-text continuation-text-level="paragraph">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.</continuation-text></paragraph> <paragraph id="HECC8139E89614A54AD4B9BF3AE4961CB"><enum>(2)</enum><header>Certified list of experts</header><text>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.</text></paragraph></subsection> <subsection id="H4AFDF60559F34B9CB03D7C56457330D0"><enum>(c)</enum><header>Powers</header><text>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—</text> <paragraph id="H1E0225C910D24C7ABD124C13958E4600"><enum>(1)</enum><text>such change would have the effect of changing levels of employer contributions to the plan, and</text></paragraph> <paragraph id="H96063EF4B32444D20081D1ABD7CCD91F"><enum>(2)</enum><text>such review is requested, in such form and manner as shall be prescribed in regulations of the Secretary, by—</text> <subparagraph id="HB6CCA3E5DC3841ED877EAE00EFFF3C56"><enum>(A)</enum><text>at least one-third of the total number of trustees of any trust fund forming a part of the plan, or</text></subparagraph> <subparagraph id="H5A656EE25F76451284B307B8A651FEA8"><enum>(B)</enum><text>the head of any employee organization representing at least 20 percent of the total number of active participants in the plan.</text></subparagraph></paragraph><continuation-text continuation-text-level="subsection">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.</continuation-text></subsection></section> <section id="H88E2BDF0DA7B46F09584BCF95CC4BB2"><enum>420C.</enum><header>Definitions and coverage</header> <subsection id="H0ED62582F9BD493892927DB562FFE2DA"><enum>(a)</enum><header>Definitions</header><text>For purposes of this subpart—</text> <paragraph id="HB663B1CDAE4E478B8C5EB0355B636558"><enum>(1)</enum><header>Administrator</header><text>The term <term>administrator</term> means—</text> <subparagraph id="HEE48B45763A3421FB94766B5C2F99DA5"><enum>(A)</enum><text>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</text></subparagraph> <subparagraph id="H81B4431BF5D242EDB48C4F1564E87719"><enum>(B)</enum><text>in any case in which there is no person described in subparagraph (A) in connection with the plan, the plan sponsor.</text></subparagraph></paragraph> <paragraph id="H78AB98FC8BC641B3A83E9200F87DEC2D"><enum>(2)</enum><header>Beneficiary</header><text>The term <term>beneficiary</term> 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.</text></paragraph> <paragraph id="H81897D7E2C434AFFB44BBF69E176CD3E"><enum>(3)</enum><header>Current liability</header><text>The term <term>current liability</term> has the meaning provided in section 302(d)(7) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></paragraph> <paragraph id="HECC7369542CB47B092D21CD987E6AC82"><enum>(4)</enum><header>Employee</header><text>The term <term>employee</term> means any individual employed by an employer, employer representative, or other person required to make employer contributions under the plan.</text></paragraph> <paragraph id="H9BD1F2A459734557AA869D865912AA52"><enum>(5)</enum><header>Employee organization</header><text>The term <term>employee organization</term> 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.</text></paragraph> <paragraph id="H9F8B48F264454E7DBF352EB6450010F4"><enum>(6)</enum><header>Employer</header><text>The term <term>employer</term> means—</text> <subparagraph id="H1D5AA69D362446E3A3CF66EA534F87E8"><enum>(A)</enum><text>the government of any State or of any political subdivision of a State,</text></subparagraph> <subparagraph id="HB4E2B99F343B49A596E73300699BC083"><enum>(B)</enum><text>any agency or instrumentality of a government referred to in subparagraph (A), or</text></subparagraph> <subparagraph id="HD9221F0D175E46A3AE7CA4EC588D8500"><enum>(C)</enum><text>any agency or instrumentality of two or more governments referred to in subparagraph (A).</text></subparagraph></paragraph> <paragraph id="HAC674D5CDAB84BAD82A4F4B6865F3110"><enum>(7)</enum><header>Employer contribution</header><text>The term <term>employer contribution</term> means any contribution to a public employee pension plan other than a contribution made by a participant in the plan.</text></paragraph> <paragraph id="H024F63265BB340E0BE8DA58BDF9E38D"><enum>(8)</enum><header>Employer representative</header><text>The term <term>employer representative</term> means—</text> <subparagraph id="H887A9E4B4C2947CC81123E8D005E7332"><enum>(A)</enum><text>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</text></subparagraph> <subparagraph id="H04FB3ED15275469592CB3D374DA98315"><enum>(B)</enum><text>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).</text></subparagraph></paragraph> <paragraph id="H8F9080DBE58542E4B8B01D693B007468"><enum>(9)</enum><header>Public employee pension plan</header><text>The terms <term>public employee pension plan</term> and <term>plan</term> 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—</text> <subparagraph id="H65BE6DE9F81044CF9DFEB82B666986B7"><enum>(A)</enum><text>provides retirement income to employees, or</text></subparagraph> <subparagraph id="H70A8160D68DB409591F710607BD6E1BC"><enum>(B)</enum><text>results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,</text></subparagraph><continuation-text continuation-text-level="paragraph">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.</continuation-text></paragraph> <paragraph id="H0CC5E068F0B94A96B23ED2DA21FE3B00"><enum>(10)</enum><header>Principal State</header><text>The term <term>principal State</term> 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.</text></paragraph> <paragraph id="H49D6EDC2D096401191E0001CD6E3444D"><enum>(11)</enum><header>Governor</header><text>The term <term>Governor</term> means, in connection with a public employee pension plan, the Governor (or equivalent official) of the principal State.</text></paragraph> <paragraph id="H76C9DA4C36424066BDD16276004C2CC5"><enum>(12)</enum><header>Participant</header><text>The term <term>participant</term> 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.</text></paragraph> <paragraph id="H89918015CD5B4608B8E69EE64CCACEF2"><enum>(13)</enum><header>Person</header><text>The term <term>person</term> 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.</text></paragraph> <paragraph id="H83315F8E993E404F8B83206042884D9E"><enum>(14)</enum><header>Plan sponsor</header><text>The term <term>plan sponsor</term> means—</text> <subparagraph id="HA0FFB9E9EEFA4F89B1A065DE5486EC48"><enum>(A)</enum><text>in the case of a plan established or maintained solely for employees of a single employer, such employer,</text></subparagraph> <subparagraph id="H3F7611857D4F4A659FF30900366E5516"><enum>(B)</enum><text>in the case of a plan established or maintained by an employee organization, the employee organization, or</text></subparagraph> <subparagraph id="H0AE3753E6BB9428780EA51EEC9C8F94B"><enum>(C)</enum><text>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.</text></subparagraph></paragraph> <paragraph id="HDE89EF0420EE41DA86D9C1F3588E8082"><enum>(15)</enum><header>Plan year</header><text>The term <term>plan year</term> means, with respect to a plan, the calendar, policy, or fiscal year on which the records of the plan are kept.</text></paragraph> <paragraph id="HCBCDE93FE10B48D3A5ABA556B73BC634"><enum>(16)</enum><header>State</header><text>The term <term>State</term> means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, and Guam.</text></paragraph></subsection> <subsection id="H0B927B028ED34A14BAF0FCA83383A133"><enum>(b)</enum><header>Coverage</header> <paragraph id="H801D1968BBC54998A6197B966487E5DE"><enum>(1)</enum><header>In general</header><text>Except as provided in paragraph (2), this subpart shall apply to any public employee pension plan.</text></paragraph> <paragraph id="HD96A7CE28AAA411998126E1C49EE06F7"><enum>(2)</enum><header>Exceptions from coverage</header><text>The provisions of this subpart shall not apply to—</text> <subparagraph id="HB1C06A4FC0B845AB809BCDAE149E7FEB"><enum>(A)</enum><text>any employee benefit plan described in section 4(a) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/29/1003">29 U.S.C. 1003(a)</external-xref>), which is not exempt under section 4(b)(1) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1003">29 U.S.C. 1003(b)(1)</external-xref>),</text></subparagraph> <subparagraph id="HBA3B83385BD842ACB2BA3290CCE26F46"><enum>(B)</enum><text>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,</text></subparagraph> <subparagraph id="H6D1E6D80C8344DC0B0F5F688AAA6002C"><enum>(C)</enum><text>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 <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002(2)(B)(i)</external-xref>), if the employer were an employer within the meaning of section 3(5) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002(5)</external-xref>),</text></subparagraph> <subparagraph id="HFCA0AE583A704A70876F379639F5773F"><enum>(D)</enum><text>any agreement to the extent it is a coverage agreement entered into pursuant to section 218 of the <act-name parsable-cite="SSA">Social Security Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/418">42 U.S.C. 418</external-xref>),</text></subparagraph> <subparagraph id="H851347BA24774DD9938E561767D3C5F2"><enum>(E)</enum><text>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,</text></subparagraph> <subparagraph id="HD81702FDCA7244D5985F28C44BD1F3AE"><enum>(F)</enum><text>any plan described in section 401(d),</text></subparagraph> <subparagraph id="H3AC4C6F380874180A419FA08BCB148C"><enum>(G)</enum><text>any individual account plan consisting of an annuity contract described in section 403(b),</text></subparagraph> <subparagraph id="HB2FC38C922714876BB00DDA6E82E3521"><enum>(H)</enum><text>any eligible State deferred compensation plan, as defined in section 457(b), or</text></subparagraph> <subparagraph id="HEF45CB042AB44B91ABDD397FDB734402"><enum>(I)</enum><text>any plan maintained solely for the purpose of complying with applicable workers’ compensation laws or disability insurance laws.</text></subparagraph></paragraph></subsection></section></subpart><after-quoted-block>.</after-quoted-block></quoted-block></subsection> </section>

Short title and table of contents

(a)

Short title

This Act may be cited as the

Retirement Enhancement Revenue Act of 2004

. (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 plans

Title II—Pension improvements

Sec. 201. Automatic enrollment of all employees in 401(k) plans

Sec. 202. Diversification requirements for defined contribution plans that hold employer securities

Sec. 203. Improvements in simplified employee pensions

Sec. 204. Pension integration rules

Sec. 205. Increase to age 75 for beginning mandatory distributions

Sec. 206. Restrictions on exclusion of unionized employees from participation in 401(k) plans

Sec. 207. Removal of $5,000 limit on plans subject to automatic rollover upon mandatory distribution

Title III—Tax credits to promote pension coverage

Sec. 301. Savers credit made refundable and permanent

Sec. 302. Credit for qualified pension plan contributions of small employers

Sec. 303. Notice

Title IV—Improved pension protections for women

Sec. 401. Modifications of joint and survivor annuity requirements

Sec. 402. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee

Sec. 403. Extension of tier II railroad retirement benefits to surviving former spouses pursuant to divorce agreements

Title V—Defined benefit plans which include qualified cash or deferred arrangements

Sec. 501. Defined benefit plan with deferred compensation arrangement in a single plan

Sec. 502. Defined benefit accruals satisfy 401(k) safe harbor

Sec. 503. Additional accruals under defined benefit plan provided as matching contributions

Sec. 504. Limitation on deductions where combination of defined contribution plan and defined benefit plan

Sec. 505. Conforming amendments to the Employee Retirement Income Security Act of 1974

Title VI—Additional amendments

Sec. 601. Exemption from prohibited transaction rules for certain aborted emergent transactions

Sec. 602. Loans from retirement plans for health insurance and job training expenses

Sec. 603. Treatment of unclaimed benefits

Sec. 604. Income averaging of corrected civil service annuity benefit payments

Sec. 605. Prohibited transaction exemption for the provision of investment advice

Sec. 606. Increase in deductible contributions to single-employer defined benefit plan upon payment of increased premium to the Pension Benefit Guaranty Corporation

Sec. 607. Exemption from prohibited transaction rules for certain aborted emergent transactions

Sec. 608. Pension benefit information

Sec. 609. Permanency of transition rule in Retirement Protection Act of 1994

Title VII—General provisions

Sec. 701. General effective date

Sec. 702. Plan amendments

<enum>I</enum><header>Public employee pension plans</header> <section id="H50954745C59E43DC85715F7267F2011D"><enum>101.</enum><header>New qualification requirements for public employee pension plans</header> <subsection id="HCBEE048FF18144078832B1655F9F8DF4"><enum>(a)</enum><header>In general</header><text>Subsection (a) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401</external-xref> of the Internal Revenue Code of 1986 (relating to requirements for qualification) is amended by inserting after paragraph (34) the following new paragraph:</text> <quoted-block id="H0745E2A07F984B028C3D02739BD76C66"> <paragraph id="HA6D1EC4EBF1348E0AE28116CE585F00"><enum>(35)</enum><header>Public employee pension plans</header><text>A trust forming a part of a public employee pension plan (as defined in section 420C(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.</text></paragraph><after-quoted-block/></quoted-block></subsection> <subsection id="HBC1BA40F00E24846A48B6B5176F6CF7D"><enum>(b)</enum><header>Requirements</header><text>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:</text> <quoted-block id="HBC3B6E1E81E74B819309FABDD18016AE"> <subpart id="H7D8FE830DCCE4901927FE181268D4C53"><enum>F</enum><header>Public employee pension plans</header> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 420A. Reporting and disclosure requirements</toc-entry> <toc-entry level="section">Sec. 420B. Review by qualified review boards of changes in employer contributions</toc-entry> <toc-entry level="section">Sec. 420C. Definitions and coverage</toc-entry></toc> <section id="H621BAA43DB964FC98F21DEA7EC6D83EC"><enum>420A.</enum><header>Reporting and disclosure requirements</header> <subsection id="HE89851708E0146F7BBF173B8FFCFB5C3"><enum>(a)</enum><header>In general</header><text>A public employee pension plan does not meet the requirements of section 401(a)(35) unless the terms of the plan include the requirements of this section.</text></subsection> <subsection id="HD993EC25BC8A40A8AFE39A966E592D5"><enum>(b)</enum><header>Required disclosures</header><text>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—</text> <paragraph id="H0AECB14B5D094E068D00430900BD86E2"><enum>(1)</enum><text>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,</text></paragraph> <paragraph id="H7E2F967109984A6CA584E964B6F6C6CE"><enum>(2)</enum><text>a statement of receipts and disbursements during the preceding 12-month period aggregated by general sources and applications,</text></paragraph> <paragraph id="HB2DE0ED9AF8C4A83B35627E8A8C15156"><enum>(3)</enum><text>a report containing—</text> <subparagraph id="H697B4CE5E3B248A084E34368283E337C"><enum>(A)</enum><text>a description of all investments and assets of the plan, including their value,</text></subparagraph> <subparagraph id="HF586AEA051414082B8E9158E00C25031"><enum>(B)</enum><text>the names and positions of all of the trustees of the plan, and the time remaining before the expiration of their term,</text></subparagraph> <subparagraph id="HDE5DC33CCEF4479EA1B39CE31DDE7651"><enum>(C)</enum><text>a description of the method of trustee selection,</text></subparagraph> <subparagraph id="H2867F0A8DC7048C6B12B837D002DF712"><enum>(D)</enum><text>a description of any changes in investment policy of the plan during the fiscal year,</text></subparagraph> <subparagraph id="H7A3B3845C8B141CDAEC683079638DA4F"><enum>(E)</enum><text>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</text></subparagraph> <subparagraph id="HF58B9E6D10E74821BAB3BCF45BB345C0"><enum>(F)</enum><text>the percentage which the current value of the assets of the plan is of the current liability under the plan, and</text></subparagraph></paragraph> <paragraph id="H1D4796728BCD46978E56E9505FAC417F"><enum>(4)</enum><text>any other material as is necessary to fairly summarize the latest annual report.</text></paragraph><continuation-text continuation-text-level="subsection">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.</continuation-text></subsection> <subsection id="HE47D7F9993D24FCAB0267D4ECF65622C"><enum>(c)</enum><header>Availability of plan documents for examination</header><text>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).</text></subsection> <subsection id="H5EE6EF4BB9624873A161FFB62D40539D"><enum>(d)</enum><header>Availability of information upon request</header><text>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.</text></subsection></section> <section id="H4401F7E76A5C4E219B716B60C9D03BE6"><enum>420B.</enum><header>Review by qualified review boards of changes in employer contributions</header> <subsection id="H096F3AF5F16E4CB1A5F1C910C12825C5"><enum>(a)</enum><header>In general</header><text>A public employee pension plan does not meet the requirements of section 401(a)(35) unless, 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 <term>qualified review board</term> means a board—</text> <paragraph id="H1B3D373B10D04BB3BF82EA9D1C92FC8"><enum>(1)</enum><text>whose membership is determined under the law of the principal State in accordance with subsection (b), and</text></paragraph> <paragraph id="H8B6E31336C01451FB0A7AEE6C995F0EF"><enum>(2)</enum><text>whose powers are determined under the law of the principal State in accordance with subsection (c).</text></paragraph></subsection> <subsection id="H8AE1A471BEED4B25ACB0E78EFE709759"><enum>(b)</enum><header>Membership</header> <paragraph id="H1993471C5EB94D25ABE95138F627F141"><enum>(1)</enum><header>In general</header><text>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:</text> <subparagraph id="H72DA4239FCC94EA98B67377B136E02E3"><enum>(A)</enum><text>one member is appointed by the Governor of the State,</text></subparagraph> <subparagraph id="H78BFF7A7B8D942D5ABBBF240E000B93E"><enum>(B)</enum><text>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</text></subparagraph> <subparagraph id="HA116282326BA46F291F418725F47C8FE"><enum>(C)</enum><text>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)).</text></subparagraph><continuation-text continuation-text-level="paragraph">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.</continuation-text></paragraph> <paragraph id="HECC8139E89614A54AD4B9BF3AE4961CB"><enum>(2)</enum><header>Certified list of experts</header><text>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.</text></paragraph></subsection> <subsection id="H4AFDF60559F34B9CB03D7C56457330D0"><enum>(c)</enum><header>Powers</header><text>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—</text> <paragraph id="H1E0225C910D24C7ABD124C13958E4600"><enum>(1)</enum><text>such change would have the effect of changing levels of employer contributions to the plan, and</text></paragraph> <paragraph id="H96063EF4B32444D20081D1ABD7CCD91F"><enum>(2)</enum><text>such review is requested, in such form and manner as shall be prescribed in regulations of the Secretary, by—</text> <subparagraph id="HB6CCA3E5DC3841ED877EAE00EFFF3C56"><enum>(A)</enum><text>at least one-third of the total number of trustees of any trust fund forming a part of the plan, or</text></subparagraph> <subparagraph id="H5A656EE25F76451284B307B8A651FEA8"><enum>(B)</enum><text>the head of any employee organization representing at least 20 percent of the total number of active participants in the plan.</text></subparagraph></paragraph><continuation-text continuation-text-level="subsection">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.</continuation-text></subsection></section> <section id="H88E2BDF0DA7B46F09584BCF95CC4BB2"><enum>420C.</enum><header>Definitions and coverage</header> <subsection id="H0ED62582F9BD493892927DB562FFE2DA"><enum>(a)</enum><header>Definitions</header><text>For purposes of this subpart—</text> <paragraph id="HB663B1CDAE4E478B8C5EB0355B636558"><enum>(1)</enum><header>Administrator</header><text>The term <term>administrator</term> means—</text> <subparagraph id="HEE48B45763A3421FB94766B5C2F99DA5"><enum>(A)</enum><text>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</text></subparagraph> <subparagraph id="H81B4431BF5D242EDB48C4F1564E87719"><enum>(B)</enum><text>in any case in which there is no person described in subparagraph (A) in connection with the plan, the plan sponsor.</text></subparagraph></paragraph> <paragraph id="H78AB98FC8BC641B3A83E9200F87DEC2D"><enum>(2)</enum><header>Beneficiary</header><text>The term <term>beneficiary</term> 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.</text></paragraph> <paragraph id="H81897D7E2C434AFFB44BBF69E176CD3E"><enum>(3)</enum><header>Current liability</header><text>The term <term>current liability</term> has the meaning provided in section 302(d)(7) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></paragraph> <paragraph id="HECC7369542CB47B092D21CD987E6AC82"><enum>(4)</enum><header>Employee</header><text>The term <term>employee</term> means any individual employed by an employer, employer representative, or other person required to make employer contributions under the plan.</text></paragraph> <paragraph id="H9BD1F2A459734557AA869D865912AA52"><enum>(5)</enum><header>Employee organization</header><text>The term <term>employee organization</term> 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.</text></paragraph> <paragraph id="H9F8B48F264454E7DBF352EB6450010F4"><enum>(6)</enum><header>Employer</header><text>The term <term>employer</term> means—</text> <subparagraph id="H1D5AA69D362446E3A3CF66EA534F87E8"><enum>(A)</enum><text>the government of any State or of any political subdivision of a State,</text></subparagraph> <subparagraph id="HB4E2B99F343B49A596E73300699BC083"><enum>(B)</enum><text>any agency or instrumentality of a government referred to in subparagraph (A), or</text></subparagraph> <subparagraph id="HD9221F0D175E46A3AE7CA4EC588D8500"><enum>(C)</enum><text>any agency or instrumentality of two or more governments referred to in subparagraph (A).</text></subparagraph></paragraph> <paragraph id="HAC674D5CDAB84BAD82A4F4B6865F3110"><enum>(7)</enum><header>Employer contribution</header><text>The term <term>employer contribution</term> means any contribution to a public employee pension plan other than a contribution made by a participant in the plan.</text></paragraph> <paragraph id="H024F63265BB340E0BE8DA58BDF9E38D"><enum>(8)</enum><header>Employer representative</header><text>The term <term>employer representative</term> means—</text> <subparagraph id="H887A9E4B4C2947CC81123E8D005E7332"><enum>(A)</enum><text>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</text></subparagraph> <subparagraph id="H04FB3ED15275469592CB3D374DA98315"><enum>(B)</enum><text>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).</text></subparagraph></paragraph> <paragraph id="H8F9080DBE58542E4B8B01D693B007468"><enum>(9)</enum><header>Public employee pension plan</header><text>The terms <term>public employee pension plan</term> and <term>plan</term> 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—</text> <subparagraph id="H65BE6DE9F81044CF9DFEB82B666986B7"><enum>(A)</enum><text>provides retirement income to employees, or</text></subparagraph> <subparagraph id="H70A8160D68DB409591F710607BD6E1BC"><enum>(B)</enum><text>results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,</text></subparagraph><continuation-text continuation-text-level="paragraph">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.</continuation-text></paragraph> <paragraph id="H0CC5E068F0B94A96B23ED2DA21FE3B00"><enum>(10)</enum><header>Principal State</header><text>The term <term>principal State</term> 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.</text></paragraph> <paragraph id="H49D6EDC2D096401191E0001CD6E3444D"><enum>(11)</enum><header>Governor</header><text>The term <term>Governor</term> means, in connection with a public employee pension plan, the Governor (or equivalent official) of the principal State.</text></paragraph> <paragraph id="H76C9DA4C36424066BDD16276004C2CC5"><enum>(12)</enum><header>Participant</header><text>The term <term>participant</term> 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.</text></paragraph> <paragraph id="H89918015CD5B4608B8E69EE64CCACEF2"><enum>(13)</enum><header>Person</header><text>The term <term>person</term> 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.</text></paragraph> <paragraph id="H83315F8E993E404F8B83206042884D9E"><enum>(14)</enum><header>Plan sponsor</header><text>The term <term>plan sponsor</term> means—</text> <subparagraph id="HA0FFB9E9EEFA4F89B1A065DE5486EC48"><enum>(A)</enum><text>in the case of a plan established or maintained solely for employees of a single employer, such employer,</text></subparagraph> <subparagraph id="H3F7611857D4F4A659FF30900366E5516"><enum>(B)</enum><text>in the case of a plan established or maintained by an employee organization, the employee organization, or</text></subparagraph> <subparagraph id="H0AE3753E6BB9428780EA51EEC9C8F94B"><enum>(C)</enum><text>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.</text></subparagraph></paragraph> <paragraph id="HDE89EF0420EE41DA86D9C1F3588E8082"><enum>(15)</enum><header>Plan year</header><text>The term <term>plan year</term> means, with respect to a plan, the calendar, policy, or fiscal year on which the records of the plan are kept.</text></paragraph> <paragraph id="HCBCDE93FE10B48D3A5ABA556B73BC634"><enum>(16)</enum><header>State</header><text>The term <term>State</term> means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, and Guam.</text></paragraph></subsection> <subsection id="H0B927B028ED34A14BAF0FCA83383A133"><enum>(b)</enum><header>Coverage</header> <paragraph id="H801D1968BBC54998A6197B966487E5DE"><enum>(1)</enum><header>In general</header><text>Except as provided in paragraph (2), this subpart shall apply to any public employee pension plan.</text></paragraph> <paragraph id="HD96A7CE28AAA411998126E1C49EE06F7"><enum>(2)</enum><header>Exceptions from coverage</header><text>The provisions of this subpart shall not apply to—</text> <subparagraph id="HB1C06A4FC0B845AB809BCDAE149E7FEB"><enum>(A)</enum><text>any employee benefit plan described in section 4(a) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/29/1003">29 U.S.C. 1003(a)</external-xref>), which is not exempt under section 4(b)(1) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1003">29 U.S.C. 1003(b)(1)</external-xref>),</text></subparagraph> <subparagraph id="HBA3B83385BD842ACB2BA3290CCE26F46"><enum>(B)</enum><text>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,</text></subparagraph> <subparagraph id="H6D1E6D80C8344DC0B0F5F688AAA6002C"><enum>(C)</enum><text>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 <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002(2)(B)(i)</external-xref>), if the employer were an employer within the meaning of section 3(5) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002(5)</external-xref>),</text></subparagraph> <subparagraph id="HFCA0AE583A704A70876F379639F5773F"><enum>(D)</enum><text>any agreement to the extent it is a coverage agreement entered into pursuant to section 218 of the <act-name parsable-cite="SSA">Social Security Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/418">42 U.S.C. 418</external-xref>),</text></subparagraph> <subparagraph id="H851347BA24774DD9938E561767D3C5F2"><enum>(E)</enum><text>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,</text></subparagraph> <subparagraph id="HD81702FDCA7244D5985F28C44BD1F3AE"><enum>(F)</enum><text>any plan described in section 401(d),</text></subparagraph> <subparagraph id="H3AC4C6F380874180A419FA08BCB148C"><enum>(G)</enum><text>any individual account plan consisting of an annuity contract described in section 403(b),</text></subparagraph> <subparagraph id="HB2FC38C922714876BB00DDA6E82E3521"><enum>(H)</enum><text>any eligible State deferred compensation plan, as defined in section 457(b), or</text></subparagraph> <subparagraph id="HEF45CB042AB44B91ABDD397FDB734402"><enum>(I)</enum><text>any plan maintained solely for the purpose of complying with applicable workers’ compensation laws or disability insurance laws.</text></subparagraph></paragraph></subsection></section></subpart><after-quoted-block>.</after-quoted-block></quoted-block></subsection> </section> <enum>II</enum><header>Pension improvements</header> <section id="H592BE120D79F4C638189CF8858C447F1"><enum>201.</enum><header>Automatic enrollment of all employees in 401(k) plans</header> <subsection id="H399EEF2FE86043CDBDCF2BB316BA12FC"><enum>(a)</enum><header>In general</header><text>Subparagraph (A) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(m)(11)</external-xref> of the Internal Revenue Code of 1986 (relating to additional alternative method of satisfying nondiscrimination tests) is amended by striking <quote>and</quote> at the end of clause (ii), by striking the period at the end of clause (iii) and inserting <quote>, and</quote>, and by inserting after clause (iii) the following new clause:</text> <quoted-block id="HCF02928894FE440E89AD5C369D64B554"> <clause id="H0457FF3288944A9BA0EEBF2286E808C5"><enum>(iv)</enum><text>meets the requirements of subparagraph (C).</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H897557A2E5ED44B0A142F25220009E3"><enum>(b)</enum><header>Minimum coverage requirements</header><text>Paragraph (11) of section 401(m) of such Code is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H5210AF4E3AC0414A9D7C9C23E53403DA"> <subparagraph id="H5DB71176228048978440E154A9C2122C"><enum>(C)</enum><header>Minimum coverage requirements</header><text>The requirements of this subparagraph are met if—</text> <clause id="H852261CC954848A294CEAD4DB153A9C4"><enum>(i)</enum><text>the plan meets the requirements of section 410(b), or</text></clause> <clause id="HABDDFE223CA044C3B5002D7E809C114E"><enum>(ii)</enum><text>the plan is offered to all eligible employees.</text></clause><continuation-text continuation-text-level="subparagraph">For purposes of clause (ii) a plan shall be treated as offered to an eligible employee if, under the plan, employer contributions are made on the employee’s behalf under the plan, unless, pursuant to an election by the employee, payments are made to the employee directly in cash in lieu of such employer contributions.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HC71DB3FE58974C1987420030450013F1"><enum>(c)</enum><header>Preemption of State law</header><text display-inline="yes-display-inline">The amendments made by this section supersede any provision of a statute, regulation, or rule of a State or political subdivision of a State that would otherwise require an employer to obtain an employee’s consent before making a deduction from the wages of such employee.</text></subsection> <subsection id="HA95B4B5DF30F474BB3B1B1007D3D7692"><enum>(d)</enum><header>Guidelines for meeting fiduciary requirements</header><text>Section 404(a) of the Employee Retirement Income Security Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/29/1104">29 U.S.C. 1104(a)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block style="traditional" id="H4792899194394B05B28C006D867F006D" display-inline="no-display-inline"> <paragraph id="HD1153657BF9F47B4B6CED7EDE8F0ABA3" indent="up1"><enum>(3)</enum> <subparagraph id="HB1FFD135147A41F284A115ABB299E837" display-inline="yes-display-inline"><enum>(A)</enum><text>The Secretary shall prescribe by regulation guidelines for compliance with the requirements of the diversification requirement of paragraph (1)(C) and the prudence requirement (to the extent that it requires diversification) of paragraph (1)(B) in the case of plans which are treated as in compliance with the requirements of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(m)(2)</external-xref> of the Internal Revenue Code of 1986 solely by reason of compliance with the requirements of section 401(m)(11) of such Code. Such guidelines shall consist of criteria for meeting a standard of well-balanced and highly diversified investment of plan assets. Compliance with such guidelines shall be deemed compliance with such requirements.</text></subparagraph> <subparagraph id="H807CCE05D0AB44F19BA07B34B982F6D2" indent="up1"><enum>(B)</enum><text>The criteria prescribed by the Secretary pursuant to subparagraph (A) shall include at least the following:</text> <clause id="HE8A0039D5A7845769370FA40DB9F003D" display-inline="no-display-inline"><enum>(i)</enum><text>sufficiently limited investment of plan assets in securities issued by any single issuer (other than in obligations issued by, or guaranteed as to both principal and interest by, the Government of the United States);</text></clause> <clause id="H6E8954BCC51047E69ECDAF782118E8D4"><enum>(ii)</enum><text>sufficient diversification of investment among and within asset classes, which shall include at least sufficient diversification measured as between stocks and bonds, sufficient diversification measured as among varieties of stock categorized by large capitalization, medium capitalization, and small capitalization, and sufficient diversification measured as between investment funds focused on growth and investment funds focused on income; and</text></clause> <clause id="H7CA52F4ABB594E3C97E16DA853FA439F"><enum>(iii)</enum><text>adequate prospects for a reasonable rate of return on the investment, together with adequate assurance against loss of principal and minimization of fees and other associated costs chargeable to participants.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section> <section id="H42E8031D45F4639226242BB4B8A6BB2" display-inline="no-display-inline" section-type="subsequent-section"><enum>202.</enum><header>Diversification requirements for defined contribution plans that hold employer securities</header> <subsection id="H5F84B3C64669E58AE8933D9A46D5D3B"><enum>(a)</enum><header>In general</header><text>Subsection (a) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401</external-xref> of the Internal Revenue Code of 1986 (relating to requirements for qualification), as amended by this Act, is further amended by inserting after paragraph (35) the following new paragraph:</text> <quoted-block id="HFF8073484D870E21C75339B2D5B3498"> <paragraph id="H569A5EDB458B2FB739CCE283905871C"><enum>(36)</enum><header>Diversification requirements for defined contribution plans that hold employer securities</header> <subparagraph id="HBED241D0476E8F7F698452B8F9E9FDF"><enum>(A)</enum><header>In general</header><text>In the case of a defined contribution plan described in this subsection that includes a trust which is exempt from tax under section 501(a) and which holds employer securities that are readily tradable on an established securities market, such trust shall not constitute a qualified trust under this section unless such plan meets the requirements of subparagraphs (B) and (C).</text></subparagraph> <subparagraph id="H35C73B144A956E58E2382EB97D33DB8"><enum>(B)</enum><header>Elective deferrals invested in employer securities</header> <clause id="H736AB2A94F8C1F7D3C853EB0D500FF9"><enum>(i)</enum><header>In general</header><text>In the case of the portion of the account attributable to elective deferrals which is invested in employer securities, a plan meets the requirements of this subparagraph if each applicable individual in such plan may elect to direct the plan to divest any portion of such securities in the individual’s account and to reinvest an equivalent amount in other investment options which meet the requirements of subparagraph (D). The preceding sentence shall apply to the extent that the amount attributable to reinvested portion exceeds the amount to which a prior election under this subparagraph or paragraph (28) applies.</text></clause> <clause id="H688F70E74C47B23BE02A47869CFD913"><enum>(ii)</enum><header>Applicable individual</header><text>For purposes of this subparagraph, the term <term>applicable individual</term> means—</text> <subclause id="HA6ED05194A6561EDE93D2698AFEC64D"><enum>(I)</enum><text>any participant in the plan,</text></subclause> <subclause id="H22FED630414AA044009298AB8BDC234"><enum>(II)</enum><text>any beneficiary who is an alternate payee (within the meaning of section 414(p)(8)) under an applicable qualified domestic relations order (within the meaning of section 414(p)(1)(A)), and</text></subclause> <subclause id="H3424171F46B7D629CFA4DD8BE830DDA"><enum>(III)</enum><text>any beneficiary of a deceased participant or alternate payee.</text></subclause></clause></subparagraph> <subparagraph id="H0116D9494AA1F1FAFCC1639121E666B"><enum>(C)</enum><header>Other employer contributions</header> <clause id="H637230F94E4A302459A0048CEA0E4EF"><enum>(i)</enum><header>In general</header><text>In the case of the portion of the account attributable to employer contributions (other than elective deferrals) which is invested in employer securities, a plan meets the requirements of this subparagraph if each qualified participant in the plan may elect to direct the plan to divest any portion of such securities in the participant’s account and to reinvest an equivalent amount in other investment options which meet the requirements of subparagraph (E). The preceding sentence shall apply to the extent that the amount attributable to such reinvested portion exceeds the amount to which a prior election under this subparagraph or paragraph (28) applies.</text></clause> <clause id="H1E42BB154F4C4580A3A32B82FFE59A3"><enum>(ii)</enum><header>Qualified participant</header><text>For purposes of this subparagraph, the term <term>qualified participant</term> means—</text> <subclause id="H1888CE90449499D6D207A18F20CDA5C"><enum>(I)</enum><text>any participant in the plan who has completed at least 3 years of service (as determined under section 411(a)) under the plan,</text></subclause> <subclause id="H0F1064824AAEAB720090B7B4B03FF33"><enum>(II)</enum><text>any beneficiary who, with respect to a participant who met the service requirement in subclause (I), is an alternate payee (within the meaning of section 414(p)(8)) under an applicable qualified domestic relations order (within the meaning of section 414(p)(1)(A)), and</text></subclause> <subclause id="HA2268911451C77C1BA4CADA6EE25F20"><enum>(III)</enum><text>any beneficiary of a deceased participant who met the service requirement in subclause (I) or alternate payee described in subclause (II).</text></subclause></clause></subparagraph> <subparagraph id="H5F63B2084B1CF0F346C7FFB1EF19181"><enum>(D)</enum><header>Investment options</header><text>The requirements of this subparagraph are met if the plan offers not less than 3 investment options (not inconsistent with regulations prescribed by the Secretary) other than employer securities.</text></subparagraph> <subparagraph id="H48665B0044F9F8250E2232BF9223A5C"><enum>(E)</enum><header>Preservation of authority of plan to limit investment</header><text>Nothing in this paragraph shall be construed to limit the authority of a plan to impose limitations on the portion of plan assets in any account which may be invested in employer securities.</text></subparagraph> <subparagraph id="H0B7F92D34474BF1F05FB28BB51D410C"><enum>(F)</enum><header>Other definitions and rules</header><text>For purposes of this paragraph—</text> <clause id="H4FF2935C45AB50C7D5F9098CE38B642"><enum>(i)</enum><header>Employer securities</header><text>The term <term>employer securities</term> shall have the meaning given such term by section 407(d)(1) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></clause> <clause id="HBC67D8C24A3FC00E9357D18500C0752"><enum>(ii)</enum><header>Elective deferrals</header><text>For purposes of this subparagraph, the term <term>elective deferrals</term> means an employer contribution described in section 402(g)(3)(A) and any employee contribution.</text></clause> <clause id="HFCC39202419E2D781E121ABB861F6CD"><enum>(iii)</enum><header>Election</header><text>Elections under this paragraph shall be not less frequently than quarterly.</text></clause> <clause id="H13D26E354E7A28DDCACB8BBF9C75C1D"><enum>(iv)</enum><header>Employee stock ownership plan</header><text>The term <term>employee stock ownership plan</term> shall have the same meaning given to such term by section 4975(e)(7).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H4048C971496F4E21C6CE599AA22CBCD"><enum>(b)</enum><header>Conforming amendments</header> <paragraph id="H81209EA24F2FB474B694DD8398CCC07"><enum>(1)</enum><text>Section 401(a)(28) of such Code is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H88173CB6405566E9BEB9A28CDED8FA2"> <subparagraph id="H6808BA7343ACD62B83ED2F905CC4CB5"><enum>(D)</enum><header>Application</header><text>This paragraph shall not apply with respect to employer securities which are readily tradable on an established securities market.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H1D2D1B6E47084DAD6F4E3495C6A58D6"><enum>(2)</enum><text>Section 409(h)(7) of such Code is amended by inserting at the end <quote>or subparagraph (B) or (C) of section 401(a)(36)</quote>.</text></paragraph> <paragraph id="H6BDE54A049B96A3F660077BD6C17B00"><enum>(3)</enum><text>Section 4975(e)(7) of such Code is amended by adding at the end the following new sentence: <quote>A plan shall not fail to be treated as an employee stock ownership plan merely because the plan meets the requirements of section 401(a)(36) (or provides greater diversification rights) or because participants in such plan exercise diversification rights under such section (or greater diversification rights available under the plan).</quote>.</text></paragraph> <paragraph id="H81BA5B974D67CE298903448CEBE876B"><enum>(4)</enum><text>Section 4980(c)(3)(A) of such Code is amended by striking <quote>if—</quote> and all that follows and inserting <quote>if the requirements of subparagraphs (B) and (C) are met.</quote>.</text></paragraph> <paragraph id="HA50859B149E9EA29F03BA982D042E0E"><enum>(5)</enum><text>Section 407 of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/29/1107">29 U.S.C. 1107</external-xref>) is amended by adding at the end the following new subsection:</text> <quoted-block act-name="Employee" id="H3C81B809413FD43DE0979CBCEB3E785"> <subsection id="H6806CD5E436C48248E3239AC6BE3DBE"><enum>(g)</enum><text>Notwithstanding section 408(e) or any other provision of this title, an individual account plan may not include provisions that do not meet the requirements of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(a)(36)(B)</external-xref> of the Internal Revenue Code of 1986.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section> <section id="HD1866FB1B72C402D9182FDF1B44D63DC"><enum>203.</enum><header>Improvements in simplified employee pensions</header> <subsection id="H12ED1468B4A74C988B6FD4A073C626D0"><enum>(a)</enum><header>Participation requirements</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/408">section 408(k)</external-xref> of the Internal Revenue Code of 1986 (relating to participation requirements) is amended—</text> <paragraph id="H6B822EFF01A54A949B87ADA34200B1F2"><enum>(1)</enum><text>in subparagraph (A), by adding <quote>and</quote> at the end, and</text></paragraph> <paragraph id="HFD3784BE1F4C4288002793ED597169C4"><enum>(2)</enum><text>by striking subparagraphs (B) and (C) and inserting the following:</text> <quoted-block id="HB596FC030A1A486798C23E9CDB84A9B7"> <subparagraph id="H415ACA26353748A3A5942135EA7CF166"><enum>(B)</enum><text>has completed at least 3 years of service (as defined in section 411(a)(5)) for the employer.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="HE690A3ED9B7D41F0856B6DD02628BC8B"><enum>(b)</enum><header>Nondiscrimination rules</header><text>Subparagraph (C) of section 408(k)(3) of such Code (requiring contribution to bear uniform relationship to total compensation) is amended—</text> <paragraph id="H18F255EA6C9F45F800003F4FC01B7139"><enum>(1)</enum><text>in the heading, by striking <quote><header-in-text level="subparagraph">must bear uniform relationship to total compensation</header-in-text></quote> and inserting <quote><header-in-text level="subparagraph">must be uniform</header-in-text></quote>, and</text></paragraph> <paragraph id="H34C7A78EDFBC48AF81A448E0F939892C"><enum>(2)</enum><text>by inserting after <quote>unless contributions thereto</quote> the following: <quote>are uniform for all employees maintaining a simplified employee pension or</quote>.</text></paragraph></subsection> <subsection id="HB06239D05CA742AF913E415D9BDB80D5"><enum>(c)</enum><header>Consent to participation not required</header><text>Paragraph (2) of section 408(k) of such Code (relating to participation requirements) is amended by adding at the end the following new flush sentence: <quote>An employer may establish and maintain a simplified employee pension for an employee without the employee’s consent.</quote>.</text></subsection> <subsection id="HB7C8867A6DAF40EE943B5BA2E7D60296"><enum>(d)</enum><header>Separate treatment of contributions to simplified employee pensions</header><text>Subsection (h) of section 404 of such Code is amended by striking paragraphs (2) and (3) and inserting the following new paragraph:</text> <quoted-block id="H18115887DDEA44A1B632C207075C3FDE"> <paragraph id="H3E8D6EB95037480CBFCE43F4A9F15304"><enum>(2)</enum><header>Limitation based on combination of plans inapplicable</header><text>Contributions to a simplified employee pension shall not be taken into account for purposes of subsection (a)(7).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H33262CED369A422DBD40FE2F75C8EB64"><enum>(e)</enum><header>Joint and survivor annuity requirements</header><text>Section 408(k) of such Code is amended—</text> <paragraph id="HD7D6A49AB2234A7A89DAEA6DD2B6D064"><enum>(1)</enum><text>by redesignating paragraph (9) as paragraph (10), and</text></paragraph> <paragraph id="H0C1EC45858324C57B3918D43616B7D70"><enum>(2)</enum><text>by inserting after paragraph (8) the following new paragraph:</text> <quoted-block id="H33905459FB944A50A4001150AAC8DEE3"> <paragraph id="HCC36185A60A54440B408005643338BDC"><enum>(9)</enum><header>Joint and survivor annuity requirements</header><text>Requirements similar to the requirements of section 401(a)(11) shall apply with respect to annuities purchased with amounts distributed from simplified employee pensions.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="HAE864180495C44799E1CE19B8FB90046"><enum>(f)</enum><header>Annual reporting requirements for simplified employee pensions</header><text>Paragraph (1) of section 408(l) of such Code (relating to simplified employer reports) is amended to read as follows:</text> <quoted-block id="H94C3E4F1920F443CBECCE453C00CFDF"> <paragraph id="HBC09246A23E34366926D120092D18D44"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H8D9716838AD548A890A2A998BA5888B8"><enum>(g)</enum><header>Deductibility of contributions to simplified employee pensions in connection with domestic service</header> <paragraph id="HBE4936D5BFBF436DB6AD5298BB04A7CC"><enum>(1)</enum><header>In general</header><text>Section 404 of such Code (relating to deductions for contributions of an employer to an employee’s trust or annuity plan and compensation under a deferred-payment plan) is amended by adding at the end the following new subsection:</text> <quoted-block id="H04E4AB3CBA9D464892393C238F8C854B"> <subsection id="H6B7166EA0F1F4EC282002D66EFB37B9E"><enum>(o)</enum><header>Deductibility of contributions to simplified employee pensions in connection with domestic service</header> <paragraph id="HEF9E91EBAB6A47749D0164F091DBFFA"><enum>(1)</enum><header>In general</header><text>Solely for purposes of subsection (a), contributions by an employer to a simplified employee pension of an employee in connection with service constituting domestic service employment shall be treated as if such contributions would otherwise be deductible under section 162 but for subsection (a).</text></paragraph> <paragraph id="H191399FC19264709B31546BD6BEB7403"><enum>(2)</enum><header>Domestic service employment</header><text>For purposes of paragraph (1), the term <term>domestic service employment</term> means domestic service in a private home of the employer (within the meaning of the last sentence of section 3510(c)) in any case in which taxes are imposed by chapter 21 or 23 on remuneration paid for such service.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="HC89637E32E3140C395A0A403C642C978"><enum>(2)</enum><header>Effective date</header><text>The amendment made by this subsection shall apply to taxable years beginning after December 31, 2004.</text></paragraph></subsection></section> <section id="H735B6A6AA82C4A719E3F366E00474F44"><enum>204.</enum><header>Pension integration rules</header> <subsection id="HFBDA98645D294ED393C3CC59C63CF58"><enum>(a)</enum><header>Applicability of new integration rules extended to all existing accrued benefits</header><text>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.</text></subsection> <subsection id="H198B9D12DA404124B5D7560976CD93D0"><enum>(b)</enum><header>Integration disallowed for simplified employee pensions</header> <paragraph id="H87681AC365124BFDAC53455F8DA69CF0"><enum>(1)</enum><header>In general</header><text>Subparagraph (D) of <external-xref legal-doc="usc" parsable-cite="usc/26/408">section 408(k)(3)</external-xref> of the Internal Revenue Code of 1986 (relating to permitted disparity under rules limiting discrimination under simplified employee pensions) is repealed.</text></paragraph> <paragraph id="HA8E3AA775F374FFE956CEFC130A597C6"><enum>(2)</enum><header>Conforming amendment</header><text>Subparagraph (C) of such section 408(k)(3) is amended by striking <quote>and except as provided in subparagraph (D),</quote>.</text></paragraph> <paragraph id="H9B2D81468CDE45C6A209C8C9BB4F6300"><enum>(3)</enum><header>Effective date</header><text>The amendments made by this subsection shall apply with respect to taxable years beginning on or after January 1, 2005.</text></paragraph></subsection> <subsection id="HC3BCFB91E7344A0D8CE0179584B79DB3"><enum>(c)</enum><header>Eventual repeal of integration rules</header><text>Effective for plan years beginning on or after January 1, 2006—</text> <paragraph id="H9522B6E38E8847A88615AEC03279F61B"><enum>(1)</enum><text>subparagraphs (C) and (D) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(a)(5)</external-xref> 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</text></paragraph> <paragraph id="H54D72AAAF9C04529A7C28136B5D91F4"><enum>(2)</enum><text>subsection (l) of section 401 of such Code (relating to permitted disparity in plan contributions or benefits) is repealed.</text></paragraph></subsection></section> <section id="HAA836E56896F4E48A88B0719FB26A4D6"><enum>205.</enum><header>Increase to age 75 for beginning mandatory distributions</header> <subsection id="H9F0205716EC644C09E15B40038C355CB"><enum>(a)</enum><header>Qualified pension plans</header><text>Subparagraph (C) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(a)(9)</external-xref> of the Internal Revenue Code of 1986 (relating to required distributions) is amended by striking <quote>age 70<fraction>1/2</fraction></quote> each place it appears and inserting <quote>the applicable age</quote>.</text></subsection> <subsection id="H7602BF57222F42B1B3FD43FEA0690944"><enum>(b)</enum><header>Applicable age</header><text>Subparagraph (C) of section 401(a)(9) of such Code is amended by adding at the end the following new clause:</text> <quoted-block id="HF090CB3CE6CA48FEB34EA7B2ED0995C2"> <clause id="H4E8131B7DCD04178ABC2187FB41C8671"><enum>(v)</enum><header>Applicable age</header> <subclause id="H9ECD408C400B42329E1723CCF00059A8"><enum>(I)</enum><header>In general</header><text>For purposes of this clause, the term applicable age shall be determined in accordance with the following table:</text> <table table-type="subformat" line-rules="no-gen" blank-lines-before="1"> <tgroup cols="2"><thead> <row><entry></entry><entry colname="I50">Applicable</entry></row> <row><entry colname="I49">Calendar year:</entry><entry colname="I50">age:</entry></row></thead> <tbody> <row><entry colname="I51">2005</entry><entry colname="I52">71 </entry></row> <row><entry colname="I51">2006</entry><entry colname="I52">72 </entry></row> <row><entry colname="I51">2007</entry><entry colname="I52">73 </entry></row> <row><entry colname="I51">2008</entry><entry colname="I52">74 </entry></row> <row><entry colname="I51">2009 and each calendar year thereafter</entry><entry colname="I52">75.</entry></row></tbody></tgroup></table></subclause> <subclause id="H09B7CFE2755D4D0C9E5DA19B6DD59E7B"><enum>(II)</enum><header>Election to use age of spouse</header><text>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.</text></subclause></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HD425DA4656F94228B68792A5FA711875"><enum>(c)</enum><header>Individual retirement accounts</header><text>Paragraph (1) of section 219(d) of such Code is amended—</text> <paragraph id="H9333D00D3F9E411DAB06D138DD043D5C"><enum>(1)</enum><text>by striking <quote>age 70<fraction>1/2</fraction></quote> in the text and inserting <quote>the applicable age (as defined in section 401(a)(9)(C)(v))</quote>, and</text></paragraph> <paragraph id="H93E46A8834D341518C02371CC6EEBBDF"><enum>(2)</enum><text>by striking <quote><header-in-text level="paragraph">age 70<fraction>1/2</fraction></header-in-text></quote> in the heading and inserting <quote><header-in-text level="paragraph">the applicable age</header-in-text></quote>.</text></paragraph></subsection> <subsection id="HC6DAD98F69614BC28587E8F7F98C74B6"><enum>(d)</enum><header>Roth IRA’s</header><text>Paragraph (4) of section 408A(c) of such Code is amended—</text> <paragraph id="HA25BB5C88E4E420F9114B768EC46B6B3"><enum>(1)</enum><text>by striking <quote>age 70<fraction>1/2</fraction></quote> in the text and inserting <quote>the applicable age (as defined in section 401(a)(9)(C)(v))</quote>, and</text></paragraph> <paragraph id="H514749A21440431BBAB9D89036CBB53"><enum>(2)</enum><text>by striking <quote><header-in-text level="paragraph">age 70<fraction>1/2</fraction></header-in-text></quote> in the heading and inserting <quote><header-in-text level="paragraph">the applicable age</header-in-text></quote>.</text></paragraph></subsection></section> <section id="H50B6BC73D4A942ADB1ADD89B9B70754B"><enum>206.</enum><header>Restrictions on exclusion of unionized employees from participation in 401(k) plans</header><text display-inline="no-display-inline">Paragraph (4) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(k)</external-xref> of the Internal Revenue Code of 1986 (relating to other requirements) is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H42D4BBACD24B433E006544AC6264D5CE"> <subparagraph id="H5A84E754E98045D2A8AF6F828D292E43"><enum>(D)</enum><header>Benefits subject of bargaining</header><text>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—</text> <clause id="H2040A52821204A7C969EEFC6FEA0B07B"><enum>(i)</enum><text>who is described in section 410(b)(3)(A), and</text></clause> <clause id="HAE83323C8E2742C294003B4F7609004F"><enum>(ii)</enum><text>who is not eligible to benefit under the arrangement,</text></clause><continuation-text continuation-text-level="subparagraph">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).</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></section> <section id="H8D916A3F6C39472E863BB5F88424D5B5"><enum>207.</enum><header>Removal of $5,000 limit on plans subject to automatic rollover upon mandatory distribution</header><text display-inline="no-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/401">Section 401(a)(31)(B)</external-xref> of the Internal Revenue Code of 1986 (relating to certain mandatory distributions) is amended—</text> <paragraph id="HF4CBB7FB98C14E6DBECA9110E29500D4"><enum>(1)</enum><text>in clause (i), by striking <quote>In case of a trust which is part of an eligible plan, such trust</quote> and inserting <quote>A trust</quote>,</text></paragraph> <paragraph id="H6D240A977FAA4A73ACA0C3669346054F"><enum>(2)</enum><text>in clause (i)(I), by striking <quote>in excess of $1,000</quote>, and</text></paragraph> <paragraph id="H944E433E262A4F3B92648E8E22B0EEF3"><enum>(3)</enum><text>by striking clause (ii) and inserting the following new clause:</text> <quoted-block id="H91E2A53AD3174011B990A2568F9582FE"> <clause id="HF1AF1DCA14874EE3857352EB7E8EF7E8"><enum>(ii)</enum><header>Distribution described</header><text>A distribution from a plan is described in this clause if such distribution is an immediate distribution of the entire nonforfeitable accrued benefit of the participant and is in excess of $1,000.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section> <enum>III</enum><header>Tax credits to promote pension coverage</header> <section id="H17F991327BBF4E4A85B55130C2481B37"><enum>301.</enum><header>Savers credit made refundable and permanent</header> <subsection id="HAD94622FC8D041D7BE004841CCCDD722"><enum>(a)</enum><header>Savers credit made refundable</header> <paragraph id="H0E9E98E4F3654E9BB1EA1906282930FE"><enum>(1)</enum><header>In general</header><text>The Internal Revenue Code of 1986 is amended by redesignating section 25B as section 35A and by moving such section after section 35 in subpart C of part IV of subchapter A of chapter 1 of such Code (relating to refundable credits).</text></paragraph> <paragraph id="H81618C70791144E3B6DBB28223165E20"><enum>(2)</enum><header>Conforming amendments</header> <subparagraph id="H33527F3A2EA446B88904201EC6363BD3"><enum>(A)</enum><text>Section 35A of such Code, as so redesignated, is amended by striking subsection (g) and redesignating subsection (h) as subsection (g).</text></subparagraph> <subparagraph id="H923CADB2203C4E889DEF2681657356EC"><enum>(B)</enum><text>Subparagraph (B) of section 24(b)(3) of such Code is amended by striking <quote>sections 23 and 25B</quote> and inserting <quote>section 23</quote>.</text></subparagraph> <subparagraph id="HAC23FB2CA60640F697D61C0047244282"><enum>(C)</enum><text>Subparagraph (C) of section 25(e)(1) of such Code is amended by striking <quote>25B,</quote>.</text></subparagraph> <subparagraph id="HDBF2A535B99547D59C5562F1F2659C07"><enum>(D)</enum><text>Each of the following provisions of such Code are amended by striking <quote>24, and 25B</quote> and inserting <quote>and 24</quote>:</text> <clause id="H31AF5292B7304590AB5B88EAFF6C009E"><enum>(i)</enum><text>Section 26(a)(1).</text></clause> <clause id="H94D239E1F4A5477D9CDAC76C1D86DFAE"><enum>(ii)</enum><text>Section 904(h).</text></clause> <clause id="H57AB423859BA432094A9ADBA11458100"><enum>(iii)</enum><text>Section 1400C(d).</text></clause></subparagraph> <subparagraph id="HA3C72FC8F39940DB8496139C6D00F419"><enum>(E)</enum><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/31/1324">section 1324(b)</external-xref> of title 31, United States Code, is amended by inserting <quote>or 35A</quote> after <quote>section 35</quote>. </text></subparagraph> <subparagraph id="H6F190EB312D24EF083C8C76B2982BFC"><enum>(F)</enum><text>The table of sections for subpart A of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by striking the item relating to <external-xref legal-doc="usc" parsable-cite="usc/26/25">section 25</external-xref>B.</text></subparagraph> <subparagraph id="H0A0176D2DF574768B8AD254CD63E7E18"><enum>(G)</enum><text>The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 35 the following new item:</text> <quoted-block style="OLC" id="H78E678D9114E4B0AB376F6A9B3D5EF44" display-inline="no-display-inline"> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 35A. Elective deferrals and IRA contributions by certain individuals</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection> <subsection id="H27722EA58B3A4E97A196E401F575F611"><enum>(b)</enum><header>Savers credit made permanent</header> <paragraph id="H5AECA65F99CC46C38596F907A998FFE1"><enum>(1)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/35A">Section 35A</external-xref> of the Internal Revenue Code of 1986, as amended by this section, is amended by striking subsection (g).</text></paragraph> <paragraph id="HA0C2B51B96AB42F7B10503D851DB8BD"><enum>(2)</enum><header>Repeal of EGTRRA sunset</header><text display-inline="yes-display-inline">Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to section 618 of such Act. </text></paragraph></subsection></section> <section id="H5F19310A9A7E4FC2B1E48523AC479195"><enum>302.</enum><header>Credit for qualified pension plan contributions of small employers</header> <subsection id="HF73747650BA742340008822D69E9FD20"><enum>(a)</enum><header>In general</header><text>Subpart D of part IV of subchapter A of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:</text> <quoted-block id="H3FFE728F91DA46768802D80604CABE00" style="OLC"> <section id="H999406EFCB6C4702AFD2F36B167C6EA5"><enum>45G.</enum><header>Small employer pension plan contributions</header> <subsection id="HE82E46B37A4D4B74BB39A4A798EA7CC3"><enum>(a)</enum><header>General rule</header><text>For purposes of section 38, in the case of an eligible employer, the small employer pension plan contribution credit determined under this section for any taxable year is an amount equal to 50 percent of the amount which would (but for subsection (f)(1)) be allowed as a deduction under section 404 for such taxable year for qualified employer contributions made to any qualified retirement plan on behalf of any nonhighly compensated employee.</text></subsection> <subsection id="HF889AF7DA8034D19B0F94453FC5E2542"><enum>(b)</enum><header>Credit limited to 3 years</header><text>The credit allowable by this section shall be allowed only with respect to the period of 3 taxable years beginning with the taxable year in which the qualified retirement plan becomes effective.</text></subsection> <subsection id="H86A8040667684F3E9B2238B58F8E008F"><enum>(c)</enum><header>Qualified employer contribution</header><text>For purposes of this section—</text> <paragraph id="HB62455A0BB3A471FBB6389CF2C1B0036"><enum>(1)</enum><header>Defined contribution plans</header><text>In the case of a defined contribution plan, the term <term>qualified employer contribution</term> means the amount of nonelective and matching contributions to the plan made by the employer on behalf of any nonhighly compensated employee to the extent such amount does not exceed 3 percent of such employee’s compensation from the employer for the year.</text></paragraph> <paragraph id="HC202357D5B62433E998D9EFD4CFF5240"><enum>(2)</enum><header>Defined benefit plans</header><text>In the case of a defined benefit plan, the term <term>qualified employer contribution</term> means the amount of employer contributions to the plan made on behalf of any nonhighly compensated employee to the extent that the accrued benefit of such employee derived from such contributions for the year do not exceed the equivalent (as determined under regulations prescribed by the Secretary and without regard to contributions and benefits under the Social Security Act) of 3 percent of such employee’s compensation from the employer for the year.</text></paragraph></subsection> <subsection id="HF4F2F09AC6104CFA98DE5006B2AAF900"><enum>(d)</enum><header>Qualified retirement plan</header> <paragraph id="HBB205E0746124A0EAD4E85A063D0657"><enum>(1)</enum><header>In general</header><text>The term <term>qualified retirement plan</term> means any plan described in section 401(a) which includes a trust exempt from tax under section 501(a) if the plan meets—</text> <subparagraph id="H444A47F1ECC740E3AC9EF454E7FB0733"><enum>(A)</enum><text>the contribution requirements of paragraph (2),</text></subparagraph> <subparagraph id="H7199F38F66A34A009F2D8014583F7D43"><enum>(B)</enum><text>the vesting requirements of paragraph (3), and</text></subparagraph> <subparagraph id="HA52FA798D59C432A80D4B431BF205150"><enum>(C)</enum><text>the distributions requirements of paragraph (4).</text></subparagraph></paragraph> <paragraph id="HC10DDC71A06F4F790008252628F4AA2F"><enum>(2)</enum><header>Contribution requirements</header> <subparagraph id="HAC760C40D0D64C76B3DC07CAD1F18361"><enum>(A)</enum><header>In general</header><text>The requirements of this paragraph are met if, under the plan—</text> <clause id="H9539AEDE0C7047A189C0C4AD38B8577E"><enum>(i)</enum><text>the employer is required to make nonelective contributions of at least 1 percent of compensation (or the equivalent thereof in the case of a defined benefit plan) for each nonhighly compensated employee who is eligible to participate in the plan, and</text></clause> <clause id="HC5F75C9D58EE47438B2700B9B4108DC9"><enum>(ii)</enum><text>except in the case of a defined benefit plan, allocations of nonelective employer contributions are either in equal dollar amounts for all employees covered by the plan or bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of the employees covered by the plan.</text></clause></subparagraph> <subparagraph id="HC8B4AC3E8ECC4B37A000D6003DFF00F5"><enum>(B)</enum><header>Compensation limitation</header><text>The compensation taken into account under subparagraph (A) for any year shall not exceed the limitation in effect for such year under section 401(a)(17).</text></subparagraph></paragraph> <paragraph id="H20A7A45A4CF84BA4982E6CD8C48FEF02"><enum>(3)</enum><header>Vesting requirements</header><text>The requirements of this paragraph are met if the plan satisfies the requirements of subparagraph (A) or (B).</text> <subparagraph id="HB7E957858A684C8E8416DEA558561E47"><enum>(A)</enum><header>3-year vesting</header><text>A plan satisfies the requirements of this subparagraph if an employee who has completed at least 3 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit derived from employer contributions.</text></subparagraph> <subparagraph id="H904773CF6CF34488A253E67723C91452"><enum>(B)</enum><header>5-year graded vesting</header><text>A plan satisfies the requirements of this subparagraph if an employee has a nonforfeitable right to a percentage of the employee’s accrued benefit derived from employer contributions determined under the following table:</text> <table table-type="subformat-2-Flush-Right" align-to-level="section" frame="none" line-rules="no-gen" rule-weights="0.0.0.4.0.0" blank-lines-before="1" subformat="S6211"> <tgroup cols="2"><colspec colname="col1" coldef="txt" min-data-value="0" colwidth="275" colsep="0"/><colspec colname="col2" coldef="txt" min-data-value="0" colwidth="80" colsep="0"/><thead> <row><entry colname="I49" align="left" rowsep="0"></entry><entry colname="I50" align="right" rowsep="0"><bold>The nonforfeitable</bold></entry></row> <row><entry colname="I49" align="left" rowsep="0"> <bold>Years of service:</bold></entry><entry colname="I50" align="right" rowsep="0"><bold>percentage is:</bold></entry></row></thead> <tbody> <row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">1</entry><entry colname="I07" align="right" rowsep="0">20</entry></row> <row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">2</entry><entry colname="I07" align="right" rowsep="0">40</entry></row> <row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">3</entry><entry colname="I07" align="right" rowsep="0">60</entry></row> <row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">4</entry><entry colname="I07" align="right" rowsep="0">80</entry></row> <row><entry colname="I15" align="left" rowsep="0" stub-definition="txt-ldr">5 or more</entry><entry colname="I07" align="right" rowsep="0">100.</entry></row></tbody></tgroup></table> </subparagraph></paragraph> <paragraph id="H68359AC4D3624FC7A9C93586F4BD4E4"><enum>(4)</enum><header>Distribution requirements</header> <subparagraph id="HC6CAEE73FACD4A9FB33B009DC22548F7"><enum>(A)</enum><header>In general</header><text>Except as provided in subparagraph (B), the requirements of this paragraph are met if, under the plan—</text> <clause id="H18DCCC1A57AE4455AA970000DDFE8804"><enum>(i)</enum><text>in the case of a profit-sharing or stock bonus plan, amounts are distributable only as provided in section 401(k)(2)(B), and</text></clause> <clause id="H3B21B44DB0AE410E9CAECA4E216E2E56"><enum>(ii)</enum><text>in the case of a pension plan, amounts are distributable subject to the limitations applicable to other distributions from the plan.</text></clause></subparagraph> <subparagraph id="H7C9BF5F91B964A2EA2397984C4C5EAC2"><enum>(B)</enum><header>Distributions within 5 years after separation, etc</header><text>In no event shall a plan meet the requirements of this paragraph unless, under the plan, amounts distributed—</text> <clause id="HFCD3EFC737134AD4BBF9051C73BE1DE9"><enum>(i)</enum><text>after separation from service or severance from employment, and</text></clause> <clause id="HD31CBAE86E404548ADB2C7A6223DDBB8"><enum>(ii)</enum><text>within 5 years after the date of the earliest employer contribution to the plan,</text></clause><continuation-text continuation-text-level="subparagraph">may be distributed only in a direct trustee-to-trustee transfer to a plan having the same distribution restrictions as the distributing plan.</continuation-text></subparagraph></paragraph></subsection> <subsection id="H648DB7B36CD54E429CA39386B59DFFE6"><enum>(e)</enum><header>Other definitions</header><text>For purposes of this section—</text> <paragraph id="H529F93A6292E497A881C075D5B449FC9"><enum>(1)</enum><header>Eligible employer</header><text>The term <term>eligible employer</term> has the meaning given such term by section 408(p)(2)(C)(i).</text></paragraph> <paragraph id="H029C6DC2F0BA4CE58F243948B0C4E71"><enum>(2)</enum><header>Nonhighly compensated employees</header><text>The term <term>highly compensated employee</term> has the meaning given such term by section 414(q) (determined without regard to section 414(q)(1)(B)(ii)).</text></paragraph></subsection> <subsection id="HBF84CB09D1924A61A14315FEB300E785"><enum>(f)</enum><header>Special rules</header> <paragraph id="H742B79E824FE4AFA8CE054B1060153E3"><enum>(1)</enum><header>Disallowance of deduction</header><text>No deduction shall be allowed for that portion of the qualified employer contributions paid or incurred for the taxable year which is equal to the credit determined under subsection (a).</text></paragraph> <paragraph id="H67BCF16501A94A229DE4703D722C5F08"><enum>(2)</enum><header>Election not to claim credit</header><text>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.</text></paragraph></subsection> <subsection id="H467D5B5AA8EA4A2592309F66176E1C51"><enum>(g)</enum><header>Recapture of credit on forfeited contributions</header><text>If any accrued benefit which is forfeitable by reason of subsection (d)(3) is forfeited, the employer’s tax imposed by this chapter for the taxable year in which the forfeiture occurs shall be increased by 35 percent of the employer contributions from which such benefit is derived to the extent such contributions were taken into account in determining the credit under this section.</text></subsection> <subsection id="HB754878B845C422BAA9F34007710EDB"><enum>(h)</enum><header>Regulations</header><text>The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations to prevent the abuse of the purposes of this section through the use of multiple plans.</text></subsection> <subsection id="H1261571BC65A44EBA71E05E586AB311D"><enum>(i)</enum><header>Termination</header><text>This section shall not apply to any plan established after December 31, 2012.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HE4AA727E1DD24AA5B65C61009CD5C792"><enum>(b)</enum><header>Credit allowed as part of general business credit</header><text>Section 38(b) of such Code (defining current year business credit) is amended by striking <quote>plus</quote> at the end of paragraph (13), by striking the period at the end of paragraph (14) and inserting <quote>, plus</quote>, and by adding at the end the following new paragraph:</text> <quoted-block id="H41A4F52406A6448693FFCB804D126857" style="OLC"> <paragraph id="H3EDE3308032F464E978CB488C3E2A821"><enum>(16)</enum><text>in the case of an eligible employer (as defined in section 45G(e)), the small employer pension plan contribution credit determined under section 45G(a).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HFBBAA07A11554F52A530CDB8D26D70CE"><enum>(c)</enum><header>Conforming amendments</header> <paragraph id="H432EC71C63634C0AA26BD3CC2609FEFF"><enum>(1)</enum><text>Section 39(d) of such Code is amended by adding at the end the following new paragraph:</text> <quoted-block id="H4B26954681F84CC59B009E105BEBF31C" style="OLC"> <paragraph id="H05A521DD255147A684005639564214B3"><enum>(11)</enum><header>No carryback of small employer pension plan contribution credit before January 1, 2002</header><text>No portion of the unused business credit for any taxable year which is attributable to the small employer pension plan contribution credit determined under section 45G may be carried back to a taxable year beginning before January 1, 2005.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H0CCF57A44ABA48B400E984388571A893"><enum>(2)</enum><text>Subsection (c) of section 196 of such Code is amended by striking <quote>and</quote> at the end of paragraph (9), by striking the period at the end of paragraph (10) and inserting <quote>, and</quote>, and by adding at the end the following new paragraph:</text> <quoted-block id="HCD8274D14ED34FBF90DFD4561E97C67F" style="OLC"> <paragraph id="H56E7802F219E4354835693F91CAF6D00"><enum>(11)</enum><text>the small employer pension plan contribution credit determined under section 45G(a).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="HD7E16B6842A7488883ED3DF2D255E1D7"><enum>(3)</enum><text>The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:</text> <quoted-block style="OLC" id="H2C772C039DA44F4EAF01E6CCB514B5ED" display-inline="no-display-inline"> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec 45G. Small employer pension plan contributions</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H9AD94432570A4A11AED841B3960000AC"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to contributions paid or incurred in taxable years beginning after December 31, 2004.</text></subsection></section> <section id="HF7202B4E141F4C0B8B15C5DE048D669F"><enum>303.</enum><header>Notice</header><text display-inline="no-display-inline">The Secretary of the Treasury shall establish an ongoing program, in coordination with employers, under which the Secretary shall ensure that employees and other affected individuals remain fully and effectively notified of the availability of tax credits under sections 35, 35A, and 45G of the Internal Revenue Code of 1986.</text></section> <enum>IV</enum><header>Improved pension protections for women</header> <section id="HCF7FB582708B4B6DA2F6BE0858DAFEE" section-type="subsequent-section" display-inline="no-display-inline"><enum>401.</enum><header>Modifications of joint and survivor annuity requirements</header> <subsection id="HD79DCA81F6EB45CFB1D3359B83419571"><enum>(a)</enum><header>Amount of annuity</header> <paragraph id="HE64FB0F1005948DCB6E019EC3585FDDB"><enum>(1)</enum><header>Option to elect qualified alternative joint and survivor annuity form of benefit upon waiver of qualified joint and survivor annuity form of benefit</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/417">Section 417(a)(1)(A)</external-xref> of the Internal Revenue Code of 1986 is amended to read as follows:</text> <quoted-block style="traditional" id="H95A4AC43A548494DBEE210DC12E8D242" display-inline="no-display-inline"> <subparagraph id="H14ED7A283B874930B08E541D9355A181"><enum>(A)</enum><text>under the plan, each participant—</text> <clause id="HDF06DCA1A5B5444BB695E1E50161000" display-inline="no-display-inline"><enum>(i)</enum><text>may elect at any time during the applicable election period to waive the qualified joint and survivor annuity form of benefit,</text></clause> <clause id="H8115B520CC1148CB91F6D9BDBE1E0050"><enum>(ii)</enum><text>may elect at any time during the applicable election period to waive the qualified preretirement survivor annuity form of benefit,</text></clause> <clause id="H9CB3DB6957664F76B3FA9DC919A0F79B"><enum>(iii)</enum><text>may elect at any time during the applicable election period, in any case in which the qualified joint and survivor annuity form of benefit is not provided by reason of a waiver under clause (i), to be provided a qualified alternative joint and survivor annuity form of benefit, and</text></clause> <clause id="H27D715DC68D4446AB652C73B7BBA46CE"><enum>(iv)</enum><text>may revoke any such election at any time during the applicable election period, and</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H8811B16F55774BB4005265080002B399"><enum>(2)</enum><header>Qualified alternative joint and survivor annuity defined</header><text>Section 417 of such Code is amended by adding at the end the following new subsection:</text> <quoted-block style="OLC" id="HBB09C882DA3F4EA2BEBDAC979C38A7F1" display-inline="no-display-inline"> <subsection id="HE009D543F9834D8A8461B9786B4FE7B9"><enum>(i)</enum><header>Definition of qualified optional survivor annuity</header> <paragraph id="HDF55DA3FF5E74DD3A622B971686020E0"><enum>(1)</enum><header>In general</header><text>For purposes of this section, the term <term>qualified alternative joint and survivor annuity</term> means an annuity—</text> <subparagraph id="H981CFD6AAD134207B6CCA9CCCBF454"><enum>(A)</enum><text>for the life of the participant with a survivor annuity for the life of the spouse which is equal to the applicable percentage (determined under paragraph (2)) of (and not greater than 100 percent of) the amount of the annuity which is payable during the joint lives of the participant and the spouse, and</text></subparagraph> <subparagraph id="H6AB4707ED12545FEA7DBAA08112E7F55"><enum>(B)</enum><text>which is the actuarial equivalent of a single annuity for the life of the participant.</text></subparagraph><continuation-text continuation-text-level="paragraph">Such term also includes any annuity form having the effect of an annuity described in the preceding sentence.</continuation-text></paragraph> <paragraph id="H54833D502304419A9EBE399CE4D42FBE"><enum>(2)</enum><header>Applicable percentage</header> <subparagraph id="H3C4864C858A640838025AEEEE2649A5"><enum>(A)</enum><header>In general</header><text>For purposes of paragraph (1)—</text> <clause id="H1705114CE0C149C98C8EBF40BBF5DE05"><enum>(i)</enum><text>if the base survivor annuity percentage is less than 75 percent, the applicable percentage is 75 percent, and</text></clause> <clause id="H8966FBFD21FA4362B9EB5522F285DFC"><enum>(ii)</enum><text>if the base survivor annuity percentage is equal to at least 75 percent, the applicable percentage is 50 percent.</text></clause></subparagraph> <subparagraph id="HDCC3F6F287C6437984EC90F85157852D"><enum>(B)</enum><header>Survivor annuity percentage</header><text>For purposes of subparagraph (A), the term <term>survivor annuity percentage</term> means the percentage which the survivor annuity under the plan’s qualified joint and survivor annuity form of benefit bears to the annuity payable during the joint lives of the participant and the spouse under such form of benefit.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph> </subsection> <subsection id="H5F6E9FFC17B240FB837D8E2E01371150"><enum>(b)</enum><header>Exemption in the case of plans offering fully subsidized qualified joint and survivor annuities</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/417">Section 417(a)(5)</external-xref> of the Internal Revenue Code of 1986 is amended—</text> <paragraph id="H300248C4B7C94225BB6573EBBFA5F79F"><enum>(1)</enum><text>by redesignating subparagraph (B) as subparagraph (C), and</text></paragraph> <paragraph id="HE6D47BDE8E064D55B158C3F7E5D90664"><enum>(2)</enum><text>by inserting after subparagraph (A) the following new subparagraph:</text> <quoted-block style="traditional" id="HEBE1AEED28C246CDB1B3BE59BBE16BC5" display-inline="no-display-inline"> <subparagraph id="H18A71C5823C7436684EB142F76294E1F" indent="up2"><enum>(B)</enum><header>Qualified alternative joint and survivor annuities</header><text>The requirements of this subsection shall not apply with respect to the qualified alternative joint and survivor annuity form of benefit if the plan fully subsidizes the costs of the qualified joint and survivor annuity form of benefit.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="HCDC459C61C004874BBCA99D1B8294BCA"><enum>(c)</enum><header>Illustration requirement</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/417">Section 417(a)(3)(A)(i)</external-xref> of the Internal Revenue Code of 1986 is amended to read as follows:</text> <quoted-block id="H025174E085BA458AA1FEC457C2BD79EB"> <subsection indent="down1" id="H9B469B1AD2D247F0BABE8D7607CDF35"><enum>(i)</enum><text>the terms and conditions of the qualified joint and survivor annuity form of benefit offered by the plan, the terms and conditions of the qualified preretirement survivor annuity form of benefit offered by the plan, and the terms and conditions of the qualified alternative joint and survivor annuity form of benefit offered by the plan, accompanied by an illustration of the benefits under each such form of benefit for the particular participant and spouse and an acknowledgement form to be signed by the participant and the spouse that they have read and considered the illustration before any election is made pursuant to clause (i) or (ii) of subsection (c)(1)(A).</text></subsection><after-quoted-block>. </after-quoted-block></quoted-block></subsection> <subsection id="HE3734C4A9A3C4129A53333E6B535594C"><enum>(d)</enum><header>Rule of construction</header><text>For purposes of <external-xref legal-doc="usc" parsable-cite="usc/26/411">section 411(d)(6)</external-xref> of the Internal Revenue Code of 1986, a plan shall not be treated as having decreased the accrued benefit of a participant solely by reason of the adoption of a plan amendment under which a qualified alternative joint and survivor annuity form of benefit is added to the plan in accordance with section 417(a)(1)(A)(ii) of such Code (as amended by this section).</text></subsection></section> <section id="HD84953F40B2B4CE1A5D0A680131C5C38" section-type="subsequent-section" display-inline="no-display-inline"><enum>402.</enum><header>Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee</header> <subsection id="HAB8C15091ABE4635AD4D57B5B5FC9BAD"><enum>(a)</enum><header>In general</header><text>Section 2 of the Railroad Retirement Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/45/231a">45 U.S.C. 231a</external-xref>) is amended—</text> <paragraph id="H792E98D0F8154C158B901286EC65D5A2"><enum>(1)</enum><text>in subsection (c)(4)(i), by striking <quote>(A) is entitled to an annuity under subsection (a)(1) and (B)</quote>; and</text></paragraph> <paragraph id="HC074AAF212254ED38355315EB9C20965"><enum>(2)</enum><text>in subsection (e)(5), by striking <quote>or divorced wife</quote> the second place it appears.</text></paragraph></subsection> <subsection id="H4915640D36694262A27C008CE0860013"><enum>(b)</enum><header>Effective date</header><text>The amendments made by this section shall take effect 1 year after the date of the enactment of this Act.</text></subsection></section> <section id="HAF37B363C19B45BFA714FA823525A8AE" display-inline="no-display-inline" section-type="subsequent-section"><enum>403.</enum><header>Extension of tier II railroad retirement benefits to surviving former spouses pursuant to divorce agreements</header> <subsection id="H530AFD5E54224D759E4891E0D08DE8DC"><enum>(a)</enum><header>In general</header><text>Section 5 of the Railroad Retirement Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/45/231d">45 U.S.C. 231d</external-xref>) is amended by adding at the end the following:</text> <quoted-block id="HA04C99E8652341AB0041136618ABBE61"> <subsection id="HCD20B89DA7A845C29BD40718EDEFED90"><enum>(d)</enum><text>Notwithstanding any other provision of law, the payment of any portion of an annuity computed under section 3(b) to a surviving former spouse in accordance with a court decree of divorce, annulment, or legal separation or the terms of any court-approved property settlement incident to any such court decree shall not be terminated upon the death of the individual who performed the service with respect to which such annuity is so computed unless such termination is otherwise required by the terms of such court decree.</text></subsection><after-quoted-block></after-quoted-block></quoted-block></subsection> <subsection id="H85F0988B7DC242B0B9CA6B937D9148F9"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall take effect 1 year after the date of the enactment of this Act.</text></subsection></section> <enum>V</enum><header>Defined benefit plans which include qualified cash or deferred arrangements</header> <section id="HA3486C3D087D4F98B11D4CCAF7822809"><enum>501.</enum><header>Defined benefit plan with deferred compensation arrangement in a single plan</header> <subsection id="H9797082865F24E2CB52E1BAA34783E87"><enum>(a)</enum><header>Defined benefit plan permitted to have 401(k) arrangement</header> <paragraph id="H864F07AA020F4F6680FB9933E9F625DE"><enum>(1)</enum><header>In general</header><text>Paragraphs (1) and (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(k)</external-xref> of the Internal Revenue Code of 1986 are both amended by striking <quote>or a rural cooperative plan</quote> and inserting <quote>, a rural cooperative plan, or a defined benefit plan</quote>.</text></paragraph> <paragraph id="H07ECC3928051449A8F583B583F2D5601"><enum>(2)</enum><header>Adjustment of 401(k) rules</header><text>Section 401(k) of such Code is amended—</text> <subparagraph id="HAC84F6EF55194198004D336DE3A324E2"><enum>(A)</enum><text>in paragraph (2)(B)(i)(III), by striking <quote>in the case of a profit-sharing or stock bonus plan,</quote>,</text></subparagraph> <subparagraph id="H1464C2CDC11942CE8F007190F227EA7F"><enum>(B)</enum><text>in paragraph (2)(B)(i)(IV), by striking <quote>to a profit-sharing or stock bonus plan</quote>, and</text></subparagraph> <subparagraph id="HC07E24F303AA407A98C98FE7ACDD815D"><enum>(C)</enum><text>in paragraph (10)(A), by inserting before the period at the end the following: <quote>or a defined benefit plan that includes a qualified cash or deferred arrangement</quote>.</text></subparagraph></paragraph></subsection> <subsection id="H90F432E19327413800331659227FC41"><enum>(b)</enum><header>Qualified cash or deferred arrangement under defined benefit plan satisfies definitely determinable benefit requirement</header><text>Subsection (a) of section 401 of such Code is amended by inserting after paragraph (34) the following new paragraph:</text> <quoted-block id="H3FA32044E2C6419D8D4193573379E9E7" style="OLC"> <paragraph id="HCE0849A0B3D941539E1BC205CA1188D8"><enum>(35)</enum><header>Qualified cash or deferred arrangement under defined benefit plan satisfies definitely determinable benefit requirement</header><text>A trust forming part of a defined benefit plan shall not be treated as failing to constitute a qualified trust merely because such plan includes a qualified cash or deferred arrangement.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H9F2DD576BCDA468C9BBAD92E6FF3D200"><enum>(c)</enum><header>Clarification of extent to which defined contribution and defined benefit rules apply</header> <paragraph id="H95E0CC38920347CFB9F27C171E3C6421"><enum>(1)</enum><header>Treatment as defined benefit plan</header><text>Subsection (j) of section 414 of such Code is amended to read as follows:</text> <quoted-block style="OLC" id="HF02F06F6848646D1B685F9AF922DCD4E" display-inline="no-display-inline"> <subsection id="HB95D2ABF295340B2B2DA460502763BEE"><enum>(j)</enum><header>Defined benefit plan</header><text>For purposes of this part—</text> <paragraph id="HFB41B76A081E4BAF923CF0860091A73"><enum>(1)</enum><header>In general</header><text>The term <term>defined benefit plan</term> means any plan which is not a defined contribution plan.</text></paragraph> <paragraph id="HDA215F18136A42D8B922EB628F00A93B"><enum>(2)</enum><header>Plans including qualified cash and deferred arrangements</header><text display-inline="yes-display-inline">Except as otherwise provided in this title—</text> <subparagraph id="H5BF12C75CABF4685854C8815E6F99D5B"><enum>(A)</enum><text>a pension plan which provides benefits other than benefits described in subsection (i) shall not be treated as a <quote>defined contribution plan</quote> on the basis of the inclusion in the plan of a qualified cash or deferred arrangement, and</text></subparagraph> <subparagraph id="HEBEE36C26E5346DAA6FA276B6154F8F"><enum>(B)</enum><text display-inline="yes-display-inline">any such pension plan which includes such an arrangement shall be treated as a single plan.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="HCFA33D34339F479180734E96F5B9509"><enum>(2)</enum><header>Special rules</header><text>Subsection (k) of section 414 of such Code is amended—</text> <subparagraph id="H6A0154096A78444AA6B2B81F09929C80"><enum>(A)</enum><text>by redesignating paragraphs (1), (2), and (3), as subparagraphs (A), (B), and (C), respectively, and by moving such subparagraphs 2 ems to the right,</text></subparagraph> <subparagraph id="H3A7EB8E56EBB4019A15DA8428478D954"><enum>(B)</enum><text>by striking <quote>A defined benefit plan</quote> and inserting the following: </text> <quoted-block style="OLC" id="HC3ADC4ABDC394F528BA0AF937E42B14D" display-inline="no-display-inline"> <paragraph id="H7FE1A18550EF4E9DB062529807ADD7A1"><enum>(1)</enum><header>Plans with separate accounts</header><text>A defined benefit plan</text></paragraph><after-quoted-block>, and</after-quoted-block></quoted-block></subparagraph> <subparagraph id="HFD009806A9B74B60AFB6DA68373B4DA4"><enum>(C)</enum><text>by adding at the end the following new paragraph:</text> <quoted-block style="OLC" id="HEB10C4500C654E07A702ECC35C4995CE" display-inline="no-display-inline"> <paragraph id="HC935BD41AD764512817FF47D704901CA"><enum>(2)</enum><header>Plans with cash or deferred arrangements</header><text>In the case of a defined benefit plan which includes a qualified cash or deferred arrangement—</text> <subparagraph id="H5FA2C08B0AD440E89541B9C81182884B"><enum>(A)</enum><text>rules similar to the rules of subparagraphs (A), (B), and (C) of paragraph (1) shall apply,</text></subparagraph> <subparagraph id="H2D58AA74A7E846B9AF844FDF41B89D8"><enum>(B)</enum><text>for purposes of section 401(a)(4) (relating to nondiscrimination testing), section 401(a)(9) (relating to required distributions), section 401(a)(26) (relating to additional participation requirements), section 401(a)(31) (relating to direct transfer of eligible rollover distributions), section 404 (relating to deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan), section 412 (relating to minimum funding standards), section 414(l) (relating to merger and consolidations of plans or transfers of plan assets), and section 416 (relating to special rules for top-heavy plans), such plan shall be treated as consisting of a defined contribution plan to the extent benefits are attributable to such arrangement and as a defined benefit plan with respect to the remaining portion of benefits under the plan, and</text></subparagraph> <subparagraph id="H2FC5CB1E25C74A30996F7BF7FC0A3B7"><enum>(C)</enum><text>for purposes of sections 411(a)(11) and 417(e), the present value of the portion of the benefit attributable to such arrangement shall be treated as being the fair market value of such arrangement.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection> <subsection id="H0520C14E1FA64E1497B78D1536637CC"><enum>(d)</enum><header>Application of pre-termination restrictions</header><text>The Secretary of the Treasury shall amend Treasury Regulation section 1.401(a)(4)-5(b) to provide that, in the case of a defined benefit plan which includes a qualified cash or deferred arrangement—</text> <paragraph id="HB1370900B25B45CA888410B21BDFDAB"><enum>(1)</enum><text>the provisions of such section shall not apply to such arrangement, and</text></paragraph> <paragraph id="HBC2CD9160FFD4C2D89F7EC1578C5C41D"><enum>(2)</enum><text>the assets attributable to such arrangement shall be disregarded in applying the requirements of such section to such plan.</text></paragraph></subsection> <subsection id="H07E7C1E27A334DB9004B10B7D696AAB"><enum>(e)</enum><header>Treatment as single plan for information reporting</header><text>Subsection (a) of section 6058 of such Code is amended by adding at the end the following: <quote>For purposes of the preceding sentence, a defined benefit plan which includes a qualified cash or deferred arrangement shall be treated as a single plan.</quote>.</text></subsection> <subsection id="H342846CE0E3D4DAE8825DD86E074D829"><enum>(f)</enum><header>Rules for income tax deduction</header> <paragraph id="HF7D903E20249435987AE99F1E5CF6D65"><enum>(1)</enum><header>Treatment of cash or deferred arrangement as separate profit sharing plan</header><text>Subparagraph (A) of section 404(a)(3) of such Code is amended by adding at the end the following new clause:</text> <quoted-block id="H36534C9B20DF4E16A42C76FA01A4B8A4" style="OLC"> <clause id="HD3BF7766FE3E4EB6B8C93BA7C6DDC2F"><enum>(vi)</enum><text>For purposes of this subparagraph, employer contributions made with respect to a qualified cash or deferred arrangement which is part of a defined benefit plan shall be treated in the same manner as contributions to a stock bonus or profit-sharing plan.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H157AA47AC1554EDABF419F972FC3A800"><enum>(2)</enum><header>Special deduction limit for defined benefit plan</header><text>Paragraph (1) of section 404(a) is amended by redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively, and by inserting after subparagraph (D) the following new subparagraph:</text> <quoted-block id="H504AEBEC044C4DA586C610D3FC12D7DA" style="OLC"> <subparagraph id="HF81F77FB39F441BEBD00702112C99517"><enum>(E)</enum><header>Special rule for defined benefit plans with qualified cash or deferred arrangements</header><text>In the case of a defined benefit plan which includes a qualified cash or deferred arrangement, the maximum amount deductible under this section (notwithstanding any other limitation under this paragraph) with respect to such plan shall not be less than the full funding limitation that would be determined under section 412(c)(7)(A) if 130 percent of the amount determined clause (i) of such section were substituted for the amount otherwise determined under clause (i).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="HA82015AF596C42EBBB6DCD7DAD808671"><enum>(g)</enum><header>Allowable reductions in rate of benefit accrual</header><text>Subsection (e) of section 4980F of such Code is amended by adding at the end the following new paragraph:</text> <quoted-block id="H053539685DE64579BCB8636FCB06A9F" style="OLC"> <paragraph id="HD0D4C8248E3F42279B635C49472FE038"><enum>(6)</enum><header>Exception for qualified cash or deferred arrangements</header><text>A plan shall not be treated as failing to meet the requirements of paragraph (1) merely because of a reduction in, or elimination of, any contributions to a qualified cash or deferred arrangement which is part of such plan.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H0CE91081939F4975BA828DD7EC95EC14"><enum>(h)</enum><header>Defined benefit funding standards not to apply to qualified cash or deferred arrangements</header><text>Subsection (h) of section 412 of such Code is amended by striking <quote>or</quote> at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting <quote>, or</quote>, and by inserting after paragraph (6) the following new paragraph:</text> <quoted-block id="H26755E27919E4DD2004900B0756B5B32" style="OLC"> <paragraph id="H6055B1EF6BB54FE6B962C462E00FF38"><enum>(7)</enum><text>any qualified cash or deferred arrangement which is part of a defined benefit plan.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H52B97B0DD9B34CE2BD8C21E93042A869"><enum>(i)</enum><header>Inclusion in cafeteria plan</header><text>Subparagraph (B) of section 125(d)(2) of such Code is amended by striking <quote>or rural cooperative plan (within the meaning of section 401(k)(7))</quote> and inserting <quote>rural cooperative plan (within the meaning of section 401(k)(7)), or a defined benefit plan</quote>.</text></subsection> <subsection id="HEA6FA9A7F4EA4ACBA01B1E6DA81050D5"><enum>(j)</enum><header>Vesting requirements</header><text>Section 411(a) is amended by adding the following new paragraph:</text> <quoted-block id="H4409A0F19085400995E8F0D4C16965D6" style="OLC"> <paragraph id="H547F8A3718E046549BCC49A9B76DE79E"><enum>(13)</enum><header>Faster vesting for accruals under defined benefit plans with cash or deferred arrangements</header><text>In the case of a defined benefit plan which includes a qualified cash or deferred arrangement, benefit accruals and employer contributions (other than elective deferrals, as defined in section 401(m)(4)) shall be treated as matching contributions for purposes of paragraph (12).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H5C2C396AEBCB4F8FB38B2FA58F18261"><enum>(k)</enum><header>Effective date</header><text>The amendments made by this section shall apply to plan years beginning after December 31, 2005.</text></subsection></section> <section id="HBB1AFC735E9C4D35BC8D45EC1E08BAAE"><enum>502.</enum><header>Defined benefit accruals satisfy 401(k) safe harbor</header> <subsection id="H2812A8DC13D1421CA93C30CC2420EFB5"><enum>(a)</enum><header>In general</header><text>Paragraph (12) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(k)</external-xref> of the Internal Revenue Code of 1986 is amended—</text> <paragraph id="H8FA28B5535894EFBBF9916C2C705F1E6"><enum>(1)</enum><text>in subparagraph (A)(i) by inserting <quote>or the benefit accrual requirements of subparagraph (D)</quote> after <quote>or (C)</quote>, and</text></paragraph> <paragraph id="H01DAA2BCBBB145B5B040FEAF1924F521"><enum>(2)</enum><text>by redesignating subparagraphs (D), (E), and (F) as subparagraphs (E), (F), and (G), respectively, and by inserting after subparagraph (C) the following new subparagraph:</text> <quoted-block id="H88627937024D420D9D49752D21AF7766" style="OLC"> <subparagraph id="H6A61D6FCBC46472CA2F0CFB258E0D2F4"><enum>(D)</enum><header>Benefit accruals</header> <clause id="H7BC660F1D74E49D4BD311E02F8053114"><enum>(i)</enum><header>In general</header><text>The requirements of this subparagraph are met if the requirements of clause (ii) or (iii) are met.</text></clause> <clause id="H474322D8E2FF4ABF9E8FBBBDF93BD92E"><enum>(ii)</enum><header>Traditional formula</header> <subclause id="H50D3092ACEF0463CBBD343399B86F00"><enum>(I)</enum><header>In general</header><text>The requirements of this clause are met if, under the arrangement, the employer is required, without regard to whether the employee makes an elective contribution or employee contribution, to provide an accrual under a defined benefit plan on behalf of each employee who is not a highly compensated employee and who is eligible to participate in the arrangement. Such accrual shall be for each year in which the participant is eligible for the arrangement, and the plan is satisfying the requirements of this subparagraph, in an amount equal to at least 1 percent of average compensation multiplied by years of service, payable as a life annuity commencing at age 65. The plan may cap the cumulative benefit accrued under such formula to an amount that is not less than 20 percent of average compensation.</text></subclause> <subclause id="H43313B77FA75471DA0EAB0EFE2DA23F"><enum>(II)</enum><header>Average compensation</header><text>For purposes of subclause (I), the term <term>average compensation</term> means the average compensation (as defined by section 414(s)) received by the participant during the testing period. The plan may define the testing period as all years of service of the participant, as a period of consecutive years of service of the participant which produces the highest average compensation, or as a period of consecutive years of service which includes the last year of service of the participant. The testing period shall not include fewer than 3 years of service except in the case of participants with fewer than 3 years of service.</text></subclause> <subclause id="HEF4812998386489C8B19882D96D20444"><enum>(III)</enum><header>Years of service</header><text>For purposes of this clause, a year of service shall be determined under paragraphs (4), (5), and (6) of section 411(a), except the plan need not include as a year of service any year of service ending in a plan year that began before the employee became a participant in the plan, or any year of service that begins in a plan year in which the participant dies, has a severance from employment, or becomes disabled (within the meaning of section 72(m)(7)).</text></subclause> <subclause id="H2D2C5EB59E4541C0AFA47F0088B06C02"><enum>(IV)</enum><header>Adjustments for early and late retirement</header><text>The amount determined under subclause (I) shall be adjusted actuarially if benefits under the plan commence later than age 65. Such amount may (but is not required to) be adjusted for early retirement if benefits commence (or normal retirement age is) earlier than age 65.</text></subclause></clause> <clause id="H0BA480756E05430A996F26061E14B8A8"><enum>(iii)</enum><header>Cash balance formula</header> <subclause id="HD008E7058B614A1BBD6E10D520660019"><enum>(I)</enum><header>In general</header><text>The requirements of this clause are met if, under the arrangement, the employer is required, without regard to whether the employee makes an elective contribution or employee contribution, to provide a hypothetical allocation under a cash balance plan on behalf of each employee who is not a highly compensated employee and who is eligible to participate in the arrangement in any year in an amount which is not less than the product of the average compensation of the employee (within the meaning of clause (ii)(II), multiplied by the cash balance contribution percentage with respect to such employee. </text></subclause> <subclause id="HEF2210C415434D18B8C3AE8370072970"><enum>(II)</enum><header>Cash balance contribution percentage</header><text>For purposes of subclause (I), the term <term>cash balance contribution percentage</term> means, with respect to any employee, 2 percent if such employee has not attained age 31, 4 percent if such employee has attained age 31 but has not attained age 40, 6 percent if such employee has attained age 40 but has not attained age 50, and 8 percent if such employee has attained age 50.</text></subclause> <subclause id="H842C84D3B5F54975AAD6299F003027CB"><enum>(III)</enum><header>Cash balance plan defined</header><text display-inline="yes-display-inline">For purposes of subclause (I), a cash balance plan is a defined benefit plan that defines an employee’s benefits by reference to the employee’s hypothetical account. Such hypothetical account is determined by reference, first, to hypothetical contribution allocations, and, second, to hypothetical interest credits (on an annual or more frequent basis). The right to future interest credits are determined without regard to future service.</text></subclause> <subclause id="HAA51D075ECCF437BABBEFA1558B741A6"><enum>(IV)</enum><header>No predecessor defined benefit plan</header><text display-inline="yes-display-inline">The requirements of this clause shall not be treated as met if, during the 3-year period immediately preceding the effective date of a cash balance plan meeting the requirements of subclause (I), the employer (or any related employer, within the meaning of subsection (b), (c), (m), or (o) of section 414), maintained a defined benefit plan that was not a cash balance plan and which benefited any participant who is a participant in the plan which meets the requirements of subclause (I).</text></subclause></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H8CE96E0730584770BA6BD84EE5980065"><enum>(b)</enum><header>Conforming amendments</header> <paragraph id="H66E74B397117488890C4B85BC2837D84"><enum>(1)</enum><text>Section 401(k)(12)(A)(ii) of such Code is amended by striking <quote>subparagraph (D)</quote> and inserting <quote>subparagraph (E)</quote>.</text></paragraph> <paragraph id="H87F086A88DE54EAF9F36D3AA5DAE3E54"><enum>(2)</enum><text>Section 401(k)(12)(F)(i) of such Code (as redesignated by subsection (a)) is amended by adding at the end the following: <quote>An arrangement shall not be treated as meeting the requirements of subparagraph (D) of this paragraph unless the requirements of paragraph (2)(B) are met with respect to the benefit accruals provided pursuant to subparagraph (D) of this paragraph.</quote>.</text></paragraph> <paragraph id="H9EA66867200E4596AEE0BD1831033DB8"><enum>(3)</enum><text> Section 401(k)(12)(F)(ii) of such Code (as redesignated by subsection (a)) is amended—</text> <subparagraph id="HD773573C1B0D4347A000651DDE4649DE"><enum>(A)</enum><text>by striking <quote>subparagraph (B) or (C)</quote> the first place it appears and inserting <quote>subparagraph (B), (C), or (D)</quote>, and</text></subparagraph> <subparagraph id="HF4EEAB4F94624478921F00294410F21F"><enum>(B)</enum><text>by inserting <quote>and benefit accruals under subparagraph (D)</quote> after <quote>subparagraph (B) or (C)</quote> the second place it appears.</text></subparagraph></paragraph> <paragraph id="H4F0E425895E54FFFAF9F0039D0AD8572"><enum>(4)</enum><text>Section 416(g)(4)(H) of such Code is amended to read as follows:</text> <quoted-block id="H1B8A550EE76447219614056DFE6CE76B"> <subparagraph id="HB4930F1F939E41E8ADBE30C667F6D841"><enum>(H)</enum><header>Cash or deferred arrangements using alternative methods of meeting nondiscrimination requirements</header> <clause id="HCB5CCF7D89304EE388908C1FD989BECA"><enum>(i)</enum><header>In general</header><text>The term <term>top-heavy plan</term> shall not include a plan described in clause (ii) or (iii).</text></clause> <clause id="H776B9EC87CB94AD580BC5364BBD8B189"><enum>(ii)</enum><header>Defined contribution plan</header><text>The plan described in this clause is a defined contribution plan which consists solely of—</text> <subclause id="H16266177628E4CA581005D723BBC373C"><enum>(I)</enum><text>a cash or deferred arrangement which meets the requirements of section 401(k)(12), and</text></subclause> <subclause id="H5A0F67752B964DC9BACC18A715854FC"><enum>(II)</enum><text>matching contributions with respect to which the requirements of section 401(m)(11) are met.</text></subclause></clause> <clause id="H9F4354008A4F4BA8904529394F1C461E"><enum>(iii)</enum><header>Defined benefit plan</header><text> The plan described in this clause is a defined benefit plan which consists exclusively of one or more—</text> <subclause id="H52A315B35AF9488B845575675D73A9DD"><enum>(I)</enum><text>cash or deferred arrangements which meet the requirements of section 401(k)(12), and</text></subclause> <subclause id="H9EDF29F9318D48AD85F7CB319000F2B"><enum>(II)</enum><text>qualified matching accruals, as described in section 401(m)(12).</text></subclause></clause><continuation-text continuation-text-level="subparagraph">If, but for this subparagraph, a plan would be treated as a top-heavy plan because it is a member of an aggregation group which is a top-heavy group, contributions or benefits under the plan may be taken into account in determining whether any other plan in the group meets the requirements of subsection (c) and, a plan meeting the requirements of section 401(k)(12)(D) shall be deemed to satisfy the requirements of subsection (c).</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H54B709CDBA6C48A2B04395830048A5BD"><enum>(5)</enum><header>Special rule for plan with multiple accrual formulas</header><text>Paragraph (1) of section 411(b) of such Code is amended by adding at the end the following new subparagraph:</text> <quoted-block id="HE7D34A62C82E457DBA87F7829CE2CD91"> <subparagraph id="H9BAAA475826E42188257B0D924410609"><enum>(I)</enum><header>Multiple formulas</header> <clause id="H78693A5A2B684E9B8D002460AD29A2BB"><enum>(i)</enum><header>In general</header><text>If a defined benefit plan contains multiple accrual formulas, the requirements of this paragraph may be satisfied separately for each formula.</text></clause> <clause id="HDF30EF689F084A4E814900D89F97EBE9"><enum>(ii)</enum><header>Certain benefit accruals treated as multiple accruals treated as multiple accrual formulas</header><text>For purposes of this subparagraph, a plan has multiple accrual formulas if a participant’s accrued benefit is determined either as the greater of the benefit determined under two or more separate formulas or as the sum of the benefit determined under two or more separate formulas.</text></clause> <clause id="H7E711C205E5E4E4EAE563FC7C4FD1C24"><enum>(iii)</enum><header>Certain formulas treated as separate accrual formulas</header><text>For purposes of clause (i), the benefit formulas described in section 401(k)(12)(D) and section 401(m)(12) shall be treated as separate from the minimum benefit formula described in section 416(c)(1).</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="HA2770D0525844C1EA447C9B7A90048CC"><enum>(c)</enum><header>Effective date</header> <paragraph id="H9F0926D5B0AD41F7BC1846B247132F08"><enum>(1)</enum><header>In general</header><text>Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 2005.</text></paragraph> <paragraph id="H22BD0941D1714CFC94F01170633B71D5"><enum>(2)</enum><header>Cash balance formula</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/401">Section 401(k)(12)(D)(iii)</external-xref> of the Internal Revenue Code of 1986, as added by subsection (a)(2), shall not apply to plan years beginning before the effective date of an Act which provides for the application of section 411(b)(1)(H) of such Code to cash balance plans.</text></paragraph></subsection></section> <section id="HB736C0A6E53E48178D5FC195BDE06B2B"><enum>503.</enum><header>Additional accruals under defined benefit plan provided as matching contributions</header> <subsection id="H8D1D9853960842A19FB3EFCB5F3336D2"><enum>(a)</enum><header>Certain arrangements under defined benefit plan satisfy definitely determinable benefit requirement</header><text>Paragraph (35) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(a)</external-xref> of the Internal Revenue Code of 1986 (as added by section 2(b)) is amended by inserting <quote>or qualified matching accruals (as defined in subsection (m)(12))</quote> before the period at the end.</text></subsection> <subsection id="H3185B89C04C14BB38F4CA83CDDBCC0E7"><enum>(b)</enum><header>Matching accruals</header><text>Subsection (m) of section 401 of such Code is amended by redesignating paragraph (12) as paragraph (13) and by inserting after paragraph (11) the following new paragraph:</text> <quoted-block id="H5507B1588C21440CB4DC5F43F40010A"> <paragraph id="H9297E55E2B0049E3A4E242C76322DF06"><enum>(12)</enum><header>Special rules relating to qualified matching accruals under a defined benefit plan</header><text>For purposes of this section—</text> <subparagraph id="H52F2363062BB476AB3342555B1DD41A6"><enum>(A)</enum><header>Qualified matching accrual</header><text>The term <term>qualified matching accrual</term> means an amount funded by an employer in the form of a benefit accrual under a defined benefit plan to match elective deferrals under a qualified cash or deferred arrangement which is part of such plan and which meets the formula requirements of subparagraph (B). The benefit accrual shall be determined under a nondiscretionary formula set forth in the defined benefit plan. For purposes of determining such benefit accrual, the amount of elective deferrals taken into account under such formula may be limited under the plan.</text></subparagraph> <subparagraph id="H42C430F3E7BF422D96E816FDD6350361"><enum>(B)</enum><header>Formula requirements</header><text>A benefit accrual meets the requirements of this subparagraph if such accrual is a hypothetical contribution that is added to a participant’s hypothetical account balance, the amount of which is determined, in accordance with the matching accrual formula set forth in the plan, with reference to the amount of the elective deferrals made by the participant for the plan year to a qualified cash or deferred arrangement which is part of the defined benefit plan. Matching accruals under the formula may vary with age or other employment-related factors.</text></subparagraph> <subparagraph id="HA39713FFAB2D4203A8E5984401001D00"><enum>(C)</enum><header>Coordinate with employer contributions</header><text>For purposes of paragraph (4), the term <term>employer contributions</term> shall not include any amount contributed by an employer to a defined benefit plan for the purpose of funding any qualified matching accruals.</text></subparagraph> <subparagraph id="HE2C5F0562F674908916D0087712E8DB8"><enum>(D)</enum><header>Safe harbor formula</header><text>A qualified matching accrual formula shall be deemed to satisfy subsection (a)(4) if it satisfies the requirements of clauses (i) and (ii).</text> <clause id="HBDCE1A8A92CC41D58E680003CA74DDAD"><enum>(i)</enum><header>Elective deferrals at or above maximum matchable rate</header><text>For an employee who makes elective deferrals at or above the maximum matchable rate, the qualified matching benefit accrual for the plan year is a hypothetical allocation under a cash balance plan (as defined in section 401(k)(12)(D)(iii)(III)) that equals a percentage (not greater than 4 percent) of compensation (as defined in section 414(s)).</text></clause> <clause id="H71414F16DEE34BB487AF44ADC517A879"><enum>(ii)</enum><header>Elective deferrals below maximum matchable rate</header><text>For employees who make elective deferrals at a rate that is below the maximum matchable rate, the qualified matching benefit accrual for such plan year shall be prorated. The plan may prorate the qualified benefit accrual on the basis of whole percentages, and the plan may require that an employee’s elective deferrals be stated as whole percentages.</text></clause> <clause id="HD5224235BDDB48AC8F05733B31EECBF7"><enum>(iii)</enum><header>Maximum matchable rate</header><text>For purposes of this subparagraph, the maximum matchable rate must be a specified percentage of compensation which does not exceed 4 percent.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H6A2779F5936E40DAB5B36E2834AFF5CA"><enum>(c)</enum><header>Exception to benefit contingency rule</header><text>Subparagraph (A) of section 401(k)(4) of such Code is amended by inserting <quote>or qualified matching accruals (as defined in subsection (m)(12)</quote> after <quote>section 401(m))</quote>.</text></subsection> <subsection id="H8BC58282392D43708829262900D109D3"><enum>(d)</enum><header>Forfeitures by reason of excess deferral</header><text>Subparagraph (G) of section 411(a)(3) of the Code is amended by adding at the end the following: <quote>A rule similar to the rule of the preceding sentence shall apply with respect to qualified matching accruals (as defined in section 401(m)(12)).</quote></text></subsection> <subsection id="HFC824B3BDEB74C989FAAFDD0151D1900"><enum>(e)</enum><header>Accrued benefit requirement with respect to Matching accruals</header><text>Paragraph (1) of section 411(b) of such Code is amended by adding at the end the following new subparagraph:</text> <quoted-block id="HF2323F5946AE448593A2B1060016DE39"> <subparagraph id="HA2289A3B44FC4D1E815D60FC9A487AB"><enum>(J)</enum><text>In the case of qualified matching accruals (as defined in section 401(m)(12)), the requirements for accrued benefits set forth in subparagraphs (A) through (H) of this subsection shall be applied on the basis of the rate of matching accruals available to participants, without regard to the actual elective deferrals made by participants.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HB480CE4FB9314AF7BBD3D1D42603CD6D"><enum>(f)</enum><header>Participation requirements with respect to qualified Matching accruals</header><text>Paragraph (26) of section 401(a) of such Code is amended by redesignating subparagraph (I) as subparagraph (J), and by inserting after subparagraph (H) the following new subparagraph:</text> <quoted-block id="HADDDBE3FEBC14025ADBD004FA59B25F"> <subparagraph id="H794415D416F046740006DB278512AB26"><enum>(I)</enum><header>Special testing rules for qualified Matching accruals</header> <clause id="HF69A0AEA90064477A8C7847C99CA9C28"><enum>(i)</enum><text>If a defined benefit plan includes qualified matching accruals (as defined in section 401(m)(12)), the rules in clauses (ii) and (iii) shall apply.</text></clause> <clause id="H5294C924EA364FAC83FCD4F3DF6F28BC"><enum>(ii)</enum><header>Qualified Matching accruals only benefit formula</header><text>If the only benefit formula in the defined benefit plan is a qualified matching accrual formula, the requirements of this paragraph shall be applied by treating a participant’s annual benefit accrual as the maximum accrual that was available to the participant for the plan year, regardless of whether the maximum matchable elective deferrals were actually made by the participant. If the qualified matching accrual formula applies to elective deferrals in excess of 6 percent of compensation, then the requirements of this paragraph must be applied by taking into account the actual matching accruals earned by participants for the plan year.</text></clause> <clause id="H7FE25ECA17244460BE4F00CE1BD7A8E7"><enum>(iii)</enum><header>Multiple formulas</header><text>If the defined benefit plan includes one or more benefit formulas in addition to a qualified matching accrual formula, the employer may elect to apply clause (ii) to the qualified matching accrual formulas only if the requirements of this paragraph are satisfied separately with respect to the benefit accruals that are determined without regard to the qualified matching accrual formula.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H58616B2D8D224E02A1AF76A108FF7E6B"><enum>(g)</enum><header>Regulations for meeting nondiscrimination requirements</header> <paragraph id="H22B45BAB36D348D59BF15B2114FE0698"><enum>(1)</enum><header>In general</header><text>The Secretary of the Treasury shall prescribe regulations on ways in which qualified matching accruals (as defined by section 401(m)(12) of the the Internal Revenue Code of 1986, as added by this section) that do not satisfy the formula requirements of section 401(m)(12)(D) of such Code (as enacted by subsection (b) of this section) can satisfy the nondiscrimination requirements of section 401(a)(4) of such Code. The regulations may prescribe safe harbor formulas in addition to those prescribed by section 401(m)(12)(D).</text></paragraph> <paragraph id="H252A939775A6431094E8EC0F0A33D49"><enum>(2)</enum><header>Temporary and final form</header><text>The Secretary shall prescribe the regulations required by paragraph (1) in temporary form not later than 6 months after the effective date of this section and in final form not later than 18 months after the effective date of this section.</text></paragraph></subsection> <subsection id="H8787463C8FAB40109980B8FCC86CC8CB"><enum>(h)</enum><header>Plan years beginning before issuance of regulations</header><text>For plan years beginning prior to the date the regulations described in subsection (g) are issued in final form, a plan’s qualified matching accrual formula must satisfy a reasonable, good faith, interpretation of section 401(a)(4) of such Code.</text></subsection> <subsection id="H9A573B833A6544BAAF0080E345921C32"><enum>(i)</enum><header>Effective date</header><text>The amendments made by this section shall be effective for plan years beginning after the effective date of the Act described in section 3(c)(2).</text></subsection></section> <section id="H844C6CE705374B09B4FAC9531D28B772"><enum>504.</enum><header>Limitation on deductions where combination of defined contribution plan and defined benefit plan</header> <subsection id="HFB75A246754240DD85466FEDB6D5883E"><enum>(a)</enum><header>Elective deferrals</header><text>Clause (ii) of <external-xref legal-doc="usc" parsable-cite="usc/26/404">section 404(a)(7)(C)</external-xref> of the Internal Revenue Code of 1986 (relating to elective deferrals) is amended to read as follows:</text> <quoted-block id="H7CDE623BB8104AFE90436D00A3134165"> <clause id="H16CE54F114D443CFADBB193DCD0094ED"><enum>(ii)</enum><header>Elective deferrals</header><text>For purposes of this paragraph, an employee shall not be treated as a beneficiary of a defined contribution plan for a taxable year if the only employer contributions made on behalf of such employee for the taxable year are elective deferrals (as defined in section 402(g)(3)).</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H85999F5538FA43BCA69234A38356E0F7"><enum>(b)</enum><header>Limitation not applicable to defined benefit plans with cash or deferred arrangement</header><text>Subparagraph (C) of section 404(a)(7) is amended by adding at the end the following:</text> <quoted-block id="H8A37649A25794F929177B1E421FDE1C"> <clause id="H1A02447F60FB438CBEEFCB4847A8E826"><enum>(iii)</enum><header>Defined benefit plan with cash or deferred arrangement</header><text>For purposes of this paragraph, an employee shall not be treated as a beneficiary of a defined contribution plan for a taxable year merely because the employee is a beneficiary of a cash or deferred arrangement which is part of a defined benefit plan for such year.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H94ADA573966441259DC6D7A7D93FC6"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to years beginning after December 31, 2005.</text></subsection></section> <section id="H4327C779C45C4D65BEC7D9912E600F8"><enum>505.</enum><header>Conforming amendments to the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name></header> <subsection id="HEF55460B666F4D5B0044C79045963DBC"><enum>(a)</enum><header>Definition</header><text>Section 3 of the Employee Retirement Income Security Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block style="traditional" id="H8E69BFD8FD064796BA9E5800D9126C81" display-inline="no-display-inline"> <paragraph id="H150AE9A9C9AC4C8CAA3DC5967FCF5263" indent="up1"><enum>(42)</enum><text>The term <term>qualified cash or deferred arrangement</term> has the meaning provided such term in <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(k)(2)</external-xref> of the Internal Revenue Code of 1986. </text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H5AB498A2B67441BBAAEAAEF2EA940004"><enum>(b)</enum><header>General rules regarding treatment of pension plans including qualified cash or deferred arrangements</header><text>Section 3(35) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1002">29 U.S.C. 1002(35)</external-xref>) is amended—</text> <paragraph id="H2B854AA1ADF24762807451D08DB73984"><enum>(1)</enum><text>by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;</text></paragraph> <paragraph id="HCE750A8725BD48ECA5D23882C79F21D8"><enum>(2)</enum><text>by inserting <quote>(A)</quote> after <quote>(35)</quote>; and</text></paragraph> <paragraph id="HC83386268D054A7198602053BA010500"><enum>(3)</enum><text>by adding at the end the following new subparagraph:</text> <quoted-block style="traditional" id="H933A0C34837B43058ED5B9663F9C0072" display-inline="no-display-inline"> <subparagraph id="H6CEA36FA9CC44871A42E1772B5EC11B8" indent="up2"><enum>(B)</enum> <clause id="HD3A4E01DB9CB47B7940026B17FF65528" display-inline="yes-display-inline"><enum>(i)</enum><text>Except as provided in this title—</text> <subclause id="HDC7F48A606874022B46218AF83743727"><enum>(I)</enum><text>a pension plan which provides benefits other than benefits described in paragraph (34) shall not be treated as an <quote>individual account plan</quote> or a <quote>defined contribution plan</quote> on the basis of the inclusion in the plan of a qualified cash or deferred arrangement, and</text></subclause> <subclause id="HD62A1794088746B9A7331700C68C6709"><enum>(II)</enum><text>any such pension plan which includes such an arrangement shall be treated as a single plan.</text></subclause></clause> <clause id="H613990BE43BD4C6084FEF5B2111C18DC" indent="up1"><enum>(ii)</enum><text>Any pension plan which provides benefits other than benefits described in paragraph (34) and which includes a qualified cash or deferred arrangement—</text> <subclause id="H7FBB1372BE2447B99DFADC3F2EC3006"><enum>(I)</enum><text>for purposes of section 202, shall be treated as an individual account plan or a defined contribution plan;</text></subclause> <subclause id="H50794458E4FE42E69EBE705DB7804FA1"><enum>(II)</enum><text>for purposes of section 203, shall be treated as an individual account plan or defined contribution plan to the extent benefits are attributable to such arrangement and as a defined benefit plan with respect to the remaining portion of benefits under the plan, and</text></subclause> <subclause id="HC465FDF46F2C4475A4D62267BEBDE913"><enum>(III)</enum><text>for purposes of sections 406, 407, and 408, shall, in any case in which the arrangement (if treated as a separate plan) would be an eligible individual account plan (as defined in section 407(d)(3)), be treated as an individual account plan or defined contribution plan with respect to assets attributable to such arrangement and as a defined benefit plan with respect to the remaining assets of the plan, and shall, in any other case, be treated as a single defined benefit plan.</text></subclause></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H46FFCE4210054616A9613353C139A0AB"><enum>(c)</enum><header>Valuation of benefits attributable to separate accounts</header> <paragraph id="HA164CEA3DF6F427FBA20CFC9B780B064"><enum>(1)</enum><header>Restrictions on immediate distribution</header><text>Section 203(e) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1053">29 U.S.C. 1053(e)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block act-name="Employee Retirement Income Security Act of 1974" id="HE7A3B8C03BFC423D831B9490A5E4FF5"> <paragraph id="H0EC3286CC35940A5B648E0B66EB3E6FF" indent="up1"><enum>(5)</enum><text>In the case of a defined benefit plan which provides a benefit derived from employer contributions (including elective deferrals (as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/402">section 402(g)(3)</external-xref> of the Internal Revenue Code of 1986)) under a qualified cash or deferred arrangement which is maintained under such plan, for purposes of this subsection, the present value of the portion of the benefit attributable to such arrangement shall be deemed to be an amount equal to the fair market value of such arrangement.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H0FF9DF9BB5EA4C8BB28875DA57A6E17D"><enum>(2)</enum><header>Survivor benefits</header><text>Section 205 of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1055">29 U.S.C. 1055</external-xref>) is amended—</text> <subparagraph id="HCD516470BDDC45D7AE6C58AA71F48EF8"><enum>(A)</enum><text>by redesignating subsection (l) as subsection (m); and</text></subparagraph> <subparagraph id="H3C7847883EC042879F111433A5EB9B58"><enum>(B)</enum><text>by inserting after subsection (k) the following new subsection:</text> <quoted-block id="HBEAF3E4EDF9D42FCB8A2E39F083BA3D7"> <subsection id="H26852D686B784215960315C3ABF5ADF7"><enum>(l)</enum><text>In the case of a defined benefit plan which provides a benefit derived from employer contributions (including elective deferrals (as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/402">section 402(g)(3)</external-xref> of the Internal Revenue Code of 1986)) under a qualified cash or deferred arrangement which is maintained under such plan, for purposes of this section, the present value of the portion of the benefit attributable to such arrangement shall be deemed to be an amount equal to the fair market value of such arrangement.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection> <subsection id="HC647EA19DAD945048F9B2B47E1B9C574"><enum>(d)</enum><header>Allowable reductions in rate of benefit accrual</header><text>Section 204(h) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1054">29 U.S.C. 1054(h)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block id="H655D90241D81402D9C707F307512C500"> <paragraph id="H96D80B85429744A7B2D297E4BAC3CB3C" indent="up1"><enum>(10)</enum><text>A plan shall not be treated as failing to meet the requirements of this subsection merely because of a reduction in, or elimination of, any contributions to a qualified cash or deferred arrangement which is part of such plan.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HC3CB6DDE998E40938BCDE8273B0849CD"><enum>(e)</enum><header>Application of minimum funding standard</header> <paragraph id="HB57B32181DDC481198744E9E041F6709"><enum>(1)</enum><header>Exception from standard</header><text>Section 301(a) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1081">29 U.S.C. 1081(a)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block id="H52F887EBCE604593B3D7EF2314B1006E"> <paragraph id="H9E4C73C12D254811B000FBF2A45B8068"><enum>(11)</enum><text>any qualified cash or deferred arrangement which is part of a defined benefit plan.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph> <paragraph id="H38FB7BDDFF2A43D38371429108601F98"><enum>(2)</enum><header>Continued application of standard to other portion of defined benefit plan</header><text>Section 302(c) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1082">29 U.S.C. 1082(c)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block id="H0EE5A880F736483CA8CA9DB2EB94E7D"> <paragraph id="H42326CB9C40D4B4EA68795E7E8DD2F00"><enum>(13)</enum><header>Continued application of standard to other portion of defined benefit plan</header><text>This section shall be applied to a defined benefit plan by disregarding the value of the trust attributable to any qualified cash or deferred arrangement.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H8D5F74A0E6A8408D97DCCD2DCAE51000"><enum>(f)</enum><header>Vesting requirements</header><text>Section 203(a)(3) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1053">29 U.S.C. 1053(a)(3)(F)</external-xref>) is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H7458477C03A24F8A9100F235EBDD229"> <subparagraph id="HAC6F98B6CCD2433EA740A68083696D3" indent="up1"><enum>(G)</enum><header>Faster vesting for accruals under defined benefit plans with cash or deferred arrangements</header><text>In the case of a defined benefit plan which includes a qualified cash or deferred arrangement, the rules described in subparagraph (F) shall be applied to benefit accruals under such plan and to matching contributions and nonelective contributions made under such arrangement.</text></subparagraph><after-quoted-block></after-quoted-block></quoted-block></subsection> <subsection id="H3F904A8189054183BDD776302C641C1D"><enum>(g)</enum><header>Application of accrual rules with regard to qualified matching accruals</header><text>Section 204(b)(1) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1054">29 U.S.C. 1054(b)(1)</external-xref>) is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H76FD2AE54E9C4A21BEB5AFD4E0C58321"> <subparagraph id="H5F3A067B51A84E7090DE9165DAF2A312" indent="up2"><enum>(I)</enum><text>In the case of qualified matching accruals (as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(m)(12)</external-xref> of the Internal Revenue Code of 1986), the requirements for accrued benefits set forth in subparagraphs (A) through (H) of this paragraph shall be applied on the basis of the rate of such qualified matching accruals available to participants, without regard to the actual elective deferrals made by participants.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H0EF28EB91DAA418B87D4CF1ED33F906"><enum>(h)</enum><header>Multiple accrual formulas</header><text>Section 204(b)(1) of such Act (as amended by subsection (g)) is further amended by adding at the end the following new subparagraph:</text> <quoted-block id="HB7561EB430F14829934DCCDE64EB291"> <subparagraph id="H0680776717B04750B4FD7F69BE15B6E0" indent="up2"><enum>(J)</enum> <clause id="H899E89B391104AC491D42309ED5908D" display-inline="yes-display-inline"><enum>(i)</enum><text>If a defined benefit plan contains multiple accrual formulas, the requirements of this paragraph may be satisfied separately for each formula.</text></clause> <clause id="H5A9569EDA6B74FABAB5BE5DCCE00A43E" indent="up1"><enum>(ii)</enum><text>For purposes of this subparagraph, a plan has multiple accrual formulas if a participant’s accrued benefit is determined either as the greater of the benefit determined under two or more separate formulas or as the sum of the benefit determined under two or more separate formulas.</text></clause> <clause id="HBF9993635C0E4227AE65BAE80307A761" indent="up1"><enum>(iii)</enum><text>For purposes of clause (i), the benefit formulas described in section 401(k)(12)(D) and <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(m)(12)</external-xref> of the Internal Revenue Code of 1986 shall be treated as separate from the minimum benefit formula described in section 416(c)(1) of such Code.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H2715256B187E4D4AB279DD7EF21DAF6E"><enum>(i)</enum><header>Forfeitures by reason of excess deferral</header><text>Subparagraph (F) of section 203(a)(3) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/29/1053">29 U.S.C. 1053(a)(3)(F)</external-xref>) is amended by adding at the end the following: <quote>A rule similar to the rule of the preceding sentence shall apply with respect to qualified matching accruals (as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(m)(12)</external-xref> of the Internal Revenue Code of 1986).</quote></text></subsection> <subsection id="H316FF3F7676D417CB842CA2091E9A46C"><enum>(j)</enum><header>Effective date</header><text>The amendments made by this section shall apply to plan years beginning after December 31, 2005.</text></subsection></section> <enum>VI</enum><header>Additional amendments</header> <section id="HF0AEF215E3824D6C8430BDB5387CBAF1" section-type="subsequent-section" display-inline="no-display-inline"><enum>601.</enum><header>Exemption from prohibited transaction rules for certain aborted emergent transactions</header> <subsection id="H16A9C56CF79A40098F5BEFF52F3BA68"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/4975">Section 4975(c)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:</text> <quoted-block act-name="Employee" id="HEA2831EBE28344DF8ED099B8B559C760"> <paragraph id="H6EDBF23AA2EF49FEB1A011EB6726BD9B"><enum>(7)</enum><header>Special rule for certain aborted emergent transactions</header> <subparagraph id="HC0D4F7BC736F446200CF21DF37D50CF"><enum>(A)</enum><header>In general</header><text>Pursuant to regulations issued by the Secretary, if—</text> <clause id="HC2F45B76AC074CE1A59FC8FE1C57218B"><enum>(i)</enum><text>in the case of a qualifying transaction between an employee benefit plan and an eligible person which would, but for this paragraph, be in violation of a restriction imposed by paragraph (1), the eligible person submits to the Secretary, not later than 60 days after the date of the transaction, an application for an exemption under paragraph (2) from such restriction in the case of such transaction,</text></clause> <clause id="H9A4AD1A3D01445F1BD902E00A9E8A1B"><enum>(ii)</enum><text>the Secretary determines not to grant the exemption, and</text></clause> <clause id="H092EF3D269804FE8A1E8169B3DCE6435"><enum>(iii)</enum><text>the transaction is reversed within 60 days after the date of the Secretary’s determination,</text></clause></subparagraph><continuation-text continuation-text-level="subparagraph">then the transaction shall be exempted under paragraph (2) from treatment as a violation of such restriction.</continuation-text> <subparagraph id="HADA406A11B1544DF84BB13A6DC3D896F"><enum>(B)</enum><header>Qualifying transaction</header><text>The term <term>qualifying transaction</term> means, in connection with an eligible person, a transaction between an employee benefit plan and such eligible person constituting the purchase or sale of a financial product, if— </text> <clause id="H46E041B9A6D147C5B6001740D9E346D0"><enum>(i)</enum><text>prior to engaging in the transaction, the plan acquires from the eligible person a sufficient 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),</text></clause> <clause id="HD1718E6A8A1D4FA287B67B8605383EF"><enum>(ii)</enum><text>the eligible person receives in such transaction not more than reasonable compensation,</text></clause> <clause id="H58BA70A3B24547A988CF8D87A0DD9000"><enum>(iii)</enum><text>such transaction is expressly approved by an independent fiduciary who has investment authority with respect to the plan assets involved in the transaction, and</text></clause> <clause id="HEFFDD7D7FEFA4658BCA14612018919FB"><enum>(iv)</enum><text>immediately after the acquisition of the financial product—</text> <subclause id="HBA4DCE87FC4A4B6BADCC2B2C04BA8164"><enum>(I)</enum><text>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</text></subclause> <subclause id="HFCE938CC322546A5ADE8E30500B14CD1"><enum>(II)</enum><text>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.</text></subclause></clause></subparagraph> <subparagraph id="HABD3108543254BAD98B6E370F68C42CC"><enum>(C)</enum><header>Sufficient guarantee</header><text>A guarantee referred to in subparagraph (B) is <quote>sufficient</quote> if such guarantee is irrevocable and, under the terms of the guarantee, 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 the terms of the transaction. A guarantee shall not be treated as failing to be <quote>sufficient</quote> solely because, under the terms of the guarantee, if the Secretary grants the exemption, the guarantee may expire without any payments made to the plan. </text></subparagraph> <subparagraph id="H812D2F7AF9404BC6887F1FC5F60324AD" indent="subparagraph"><enum>(D)</enum><header>Eligible person</header><text>The term <term>eligible person</term> means a person that—</text> <clause id="H4224F1C3ED194140BFFB88220839B29D"><enum>(i)</enum><text>consists of—</text> <subclause id="H33D7522AD83541748160BB0FBC4B56"><enum>(I)</enum><text>a bank as defined in section 202(a)(2) of the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name>,</text></subclause> <subclause id="H4A6D6997A4014B1689A8ED0B956AB83"><enum>(II)</enum><text>an investment adviser registered under the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name>,</text></subclause> <subclause id="HC368D1E1DC914166A740495D9F1BE499"><enum>(III)</enum><text>an insurance company which is qualified to do business in more than one State, or</text></subclause> <subclause id="HF4FC0C42CE54485BAC98DC588D121B00"><enum>(IV)</enum><text>a broker-dealer registered under the <act-name parsable-cite="SEA34">Securities Exchange Act of 1934</act-name>,</text></subclause></clause> <clause id="H5894AF60C38F4C759B97125DC5AF08ED" indent="clause"><enum>(ii)</enum><text>has shareholders’ or partners’ equity in excess of $1,000,000, and</text></clause> <clause id="HDC8A6FCB88AA4D909E8183BC10F60857" indent="clause"><enum>(iii)</enum><text>is not described in section 411 of the Employee Retirement Income Security Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/29/1111">29 U.S.C. 1111</external-xref>).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H016324DA3E76420E93F20077BBEC3C8E"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply with respect to transactions occurring after December 31, 2005.</text></subsection></section> <section id="H64CBFCD041CC4379B60267458000C85F"><enum>602.</enum><header>Loans from retirement plans for health insurance and job training expenses</header> <subsection id="H1C941394995248539BF39C65685B51D3"><enum>(a)</enum><header>Qualification requirement for pension plans</header><text>Paragraph (13) of <external-xref legal-doc="usc" parsable-cite="usc/26/401">section 401(a)</external-xref> of the Internal Revenue Code of 1986 (relating to assignment and alienation) is amended by adding at the end the following new subparagraph:</text> <quoted-block id="H2D86D5C9C26345C700DDCF5337F800"> <subparagraph id="H28F3F387651A4010B7A5252DA59BEF83"><enum>(E)</enum><header>Loans from retirement plans for health insurance and job training expenses</header><text>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—</text> <clause id="H04DE214A00D84075BCBC972B4C005957"><enum>(i)</enum><text>for payments for insurance which constitutes medical care for the taxpayer and the taxpayer’s spouse and dependents, or</text></clause> <clause id="H3520BE207D0B43BE9C47D100C046BCF9"><enum>(ii)</enum><text>for job training expenses.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H091FA2FE6F9A4705AE25369FE546245D"><enum>(b)</enum><header>Prohibited transaction exemption</header><text>Section 4975(d) of such Code (relating to exemptions from tax on prohibited transactions) is amended by striking <quote>or</quote> at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting <quote>; or</quote>, and by inserting after paragraph (15) the following new paragraph:</text> <quoted-block id="H12868A70C4F841B8BF9CDED906C52E56"> <paragraph id="HE83317CFE95C473EB0C3E0ED50B8F475"><enum>(16)</enum><text>any loan—</text> <subparagraph id="H4DD5B50ADA214A1691C399C895D06CFA"><enum>(A)</enum><text>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 of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>), or</text></subparagraph> <subparagraph id="H894715C70A074C10940485F442182CDE"><enum>(B)</enum><text>made by the plan to a disqualified person who is a participant or beneficiary of the plan if such loan—</text> <clause id="HA44F88CE3A3E42B4A9DCA661EC16502E"><enum>(i)</enum><text>is for the payment of health insurance premiums or job training expenses, and</text></clause> <clause id="H920962B749BA4FFA921310BEF824FBB5"><enum>(ii)</enum><text>meets the requirements of section 401(a)(13)(E).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H14A9BC827F5C4468A2BCD3BCFED36BEF"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to loans made after the effective date specified in section 501.</text></subsection></section> <section id="HBD1B04B8E8CF43C4B791AA07003442DF" section-type="subsequent-section" display-inline="no-display-inline"><enum>603.</enum><header>Treatment of unclaimed benefits</header> <subsection id="HB928EC5ABF054B9CA9572D12C192AAAB"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/401">Section 401(a)(34)</external-xref> of the Internal Revenue Code of 1986 (relating to benefits of missing participants) is amended to read as follows:</text> <quoted-block id="H37EFA6994AAA475392252EA4AEE806A2"> <paragraph id="H9A616B8FC4A64FA9994500F1E2E4A5F3"><enum>(34)</enum><header>Unclaimed benefits</header><text>A trust forming part of a plan shall not be treated as failing to constitute a qualified trust under this section merely because the plan of which such trust is a part treats unclaimed benefits in a manner that satisfies the requirements of section 414(w).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HAACED3EDC89F44CEA221CFBABA50EAD0"><enum>(b)</enum><header>Requirements</header><text>Section 414 of such Code (relating to definitions and special rules) is amended by adding at the end the following new subsection:</text> <quoted-block id="H736D7B5C494043E6BC7C4E43707C988D"> <subsection id="H069B4E737DF64A3D953EFBBEDEC83FB"><enum>(w)</enum><header>Unclaimed benefits</header> <paragraph id="HFDD1A0AF3ED847C89640F7B4E6228CA"><enum>(1)</enum><header>In general</header><text>A plan meets the requirements of this subsection only if—</text> <subparagraph id="H3B20FEDA62AB4B0E9D16AD3DB3CD77E"><enum>(A)</enum><header>Ongoing plans</header><text>In the case of an ongoing plan, the plan provides for one or more of the following with respect to unclaimed benefits:</text> <clause id="H2B989F538A1442579DFD889FB5CB989"><enum>(i)</enum><text>In the case of an unclaimed benefit to which section 401(a)(31)(B) applies, a transfer under section 401(a)(31)(B).</text></clause> <clause id="H71C4EF53BC21442A81AD44D3D85BA5BF"><enum>(ii)</enum><text>A transfer to the Pension Benefit Guaranty Corporation, in accordance with section 4050(e) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></clause> <clause id="H351E41196F944C6295DEE00004D87E68"><enum>(iii)</enum><text>Any other treatment permitted under rules prescribed by the Secretary.</text></clause></subparagraph> <subparagraph id="H3EE5A8FCC37F4B01BAC3BB87A86692A6"><enum>(B)</enum><header>Terminated plans</header><text>In the case of a terminated plan, the plan provides for the following with respect to unclaimed benefits:</text> <clause id="H9DD0E8BA7ED244E98ECE54B7F0D8A99E"><enum>(i)</enum><header>Defined benefit plans</header><text>In the case of a defined benefit plan, one or more of the following:</text> <subclause id="H140FC17FD21E49E8001FF5706E27D1E"><enum>(I)</enum><text>In the case of an unclaimed benefit to which section 401(a)(31)(B) applies, a transfer under section 401(a)(31)(B).</text></subclause> <subclause id="H7347495A4F7647FDA6E58674354BD7DA"><enum>(II)</enum><text>A transfer of the unclaimed benefit to another defined benefit plan maintained by the employer.</text></subclause> <subclause id="HE75BD35AD78A4AC987BAB197BACE0368"><enum>(III)</enum><text>The purchase of an annuity contract to provide for an individual’s unclaimed benefit.</text></subclause> <subclause id="HA096A76C2BD9447E80EFF310C97CD014"><enum>(IV)</enum><text>A transfer to the Pension Benefit Guaranty Corporation in accordance with section 4050(a) or 4050(e) (as applicable) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></subclause> <subclause id="HB0AC3495EF054DFFB33B52A4F655B981"><enum>(V)</enum><text>Any other treatment permitted under rules prescribed by the Secretary.</text></subclause></clause> <clause id="HB88F3F1C23B74EE2B001CD66CEFC3D94"><enum>(ii)</enum><header>Defined contribution plans</header><text>In the case of a defined contribution plan, one or more of the following:</text> <subclause id="H0E281B4972D2413DB5C0FF1341F35BE9"><enum>(I)</enum><text>In the case of an unclaimed benefit to which section 401(a)(31)(B) applies, a transfer under section 401(a)(31)(B).</text></subclause> <subclause id="HC6C72138C7B441E78134B704759B5755"><enum>(II)</enum><text>A transfer of the unclaimed benefit to another defined contribution plan maintained by the employer.</text></subclause> <subclause id="H4406BDE8AA4A49F9BCCCB007BCDED19"><enum>(III)</enum><text>The purchase of an annuity contract to provide for an individual’s unclaimed benefit.</text></subclause> <subclause id="HF4823979DBC2437A009C6B3B9770B3AF"><enum>(IV)</enum><text>A transfer to the Pension Benefit Guaranty Corporation in accordance with section 4050(d) or 4050(e) (as applicable) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></subclause> <subclause id="H5376E8DFE7FC4CB2BF3FB4551DC9BC6F"><enum>(V)</enum><text>Any other treatment permitted under rules prescribed by the Secretary.</text></subclause></clause></subparagraph></paragraph> <paragraph id="H2F9F6F5BF01C4E76B62CE994A2D2CCF1"><enum>(2)</enum><header>Treatment of transfers to Pension Benefit Guaranty Corporation</header> <subparagraph id="HBD9CE4DD80A64850A6E6CB1413578B"><enum>(A)</enum><header>Transfers to PBGC</header><text>Amounts transferred from a plan to the Pension Benefit Guaranty Corporation pursuant to paragraph (1) shall be treated as a transfer under section 401(a)(31)(A).</text></subparagraph> <subparagraph id="H0FDB5D1AB8F84F19B00000DB494B3C00"><enum>(B)</enum><header>Distributions from pbgc</header><text>Except as provided in rules prescribed by the Secretary, amounts distributed by the Pension Benefit Guaranty Corporation shall be treated as distributed by an individual retirement plan under section 408(d) (without regard to paragraphs (4), (5) and (7) thereof). Rules similar to the rules of section 402(c)(4) shall apply.</text></subparagraph></paragraph> <paragraph id="H733BD6A3E8354E7089D2168DADAA2D05"><enum>(3)</enum><header>Definitions</header><text>For purposes of this subsection—</text> <subparagraph id="HD05272CB1FF949A2BDA20072DB5FF0ED"><enum>(A)</enum><header>Unclaimed benefit</header><text>The term <term>unclaimed benefit</term> means—</text> <clause id="HA8ED7ABE6F874C52945911C21D2EE660"><enum>(i)</enum><text>any benefit of a participant or beneficiary which is distributable under the terms of the plan to the participant or beneficiary, if the distribution of the benefit has not commenced within 1 year after the later of the date on which the benefit first became so distributable or the participant’s severance from employment;</text></clause> <clause id="HD1F97C41DF934A058E8898A802F80262"><enum>(ii)</enum><text>any benefit or other amount of a participant or beneficiary which is distributable under the terms of the plan with respect to a missing participant, or</text></clause> <clause id="H7D2BC7244D6842068516850582ED0BA"><enum>(iii)</enum><text>any benefit to which section 401(a)(31)(B) applies or would apply if subclause (I) of section 401(a)(31)(B)(i) did not require the distribution to exceed $1,000.</text></clause><continuation-text continuation-text-level="subparagraph">A benefit otherwise described in clause (i) shall not be treated as an unclaimed benefit under clause (i) if the participant or beneficiary elects not to have such treatment apply. Any such participant or beneficiary shall be given reasonable notice of the opportunity to make such an election. If the participant or beneficiary fails to make such an election within a reasonable period specified in the notice, any subsequent election shall not be given effect and the benefit shall be treated as an unclaimed benefit. A notice mailed to the last known address of the participant or beneficiary shall be treated as a notice to the participant or beneficiary for purposes of this paragraph.</continuation-text></subparagraph> <subparagraph id="H19B91E7147A1445A008DDE28EB5365C1"><enum>(B)</enum><header>Ongoing plan</header><text>The term <term>ongoing plan</term> means any plan which has neither terminated nor is in the process of terminating.</text></subparagraph> <subparagraph id="HAA37497DD1B048B4966E00B2FD29ED04"><enum>(C)</enum><header>Terminated plan</header><text>The term <term>terminated plan</term> means any plan which has terminated or is in the process of terminating.</text></subparagraph> <subparagraph id="HF81A347EEE1B495597B9CD13482CCB3F"><enum>(D)</enum><header>Missing participant</header><text>The term <term>missing participant</term> shall have the meaning given to such term by section 4050(b)(1) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H402AC1205DF54028BD430609B9878095"><enum>(c)</enum><header>Conforming amendment</header><text>Subparagraph (B) of section 401(a)(31) of such Code is amended by adding at the end the following:</text> <quoted-block id="H7413789C3D3C4459A2F571D0017832F"> <clause id="H6EBD3F058D764EE09D26100964BD1300"><enum>(iii)</enum><header>Other permitted transfers</header><text>A plan administrator shall be treated as having complied with the requirements of this subparagraph if such plan administrator complies with the requirements of section 414(w).</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section> <section id="HF2753EA01E7344BDBFEF5E29E9B7C9"><enum>604.</enum><header>Income averaging of corrected civil service annuity benefit payments</header> <subsection id="HFBDFF8B0785F4FE3803000D27254EAF4"><enum>(a)</enum><header>In general</header><text>Part I of subchapter Q of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 (relating to income averaging) is amended by inserting after section 1301 the following new section:</text> <quoted-block id="HDFF27A3614B245239F00A8B929C104E8"> <section id="H8BC27E71173C43F8A7E530E300B0B46"><enum>1302.</enum><header>Averaging of corrected civil service annuity benefit payments</header> <subsection id="H74211EBA5AE44099839837E0D2A5AE1B"><enum>(a)</enum><header>In general</header><text>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.</text></subsection> <subsection id="H1C16F70C27084098836091BE65BC639"><enum>(b)</enum><header>Corrected civil service annuity benefit payment</header><text>For purposes of subsection (a), the term <term>corrected civil service annuity benefit payment</term> means with respect to an individual the sum of—</text> <paragraph id="H9828593E1F624D84A9DC35B428176AD"><enum>(1)</enum><text>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 <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/84">chapter 84</external-xref> of title 5, United States Code, or any other provision of law (or any rule or regulation relating thereto), plus</text></paragraph> <paragraph id="H0F7770EAFCDC4CBAA4005C3E6567BD6F"><enum>(2)</enum><text>interest on the amount described in paragraph (1) awarded under <external-xref legal-doc="usc" parsable-cite="usc/5/7704">section 7704</external-xref> of title 5, United States Code.</text></paragraph></subsection> <subsection id="H8E954BA7A8A54660A574AE6C2532DFB4"><enum>(c)</enum><header>Annuity</header><text>For purposes of subsection (b), the term <term>annuity</term> has the meaning given to such term by <external-xref legal-doc="usc" parsable-cite="usc/5/7704">section 7704(c)</external-xref> of title 5, United States Code.</text></subsection> <subsection id="H2C44CC5C667B41029D973CAA46C67345"><enum>(d)</enum><header>Finality of election</header><text>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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HC69C9B08DF3B4FB3B32E462CB051DDBE"><enum>(b)</enum><header>Clerical amendment</header><text>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:</text> <quoted-block style="OLC" id="H205A1C03EA4D4C27858B978631907769"> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 1302. Averaging of corrected civil service annuity benefit payments</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HE47327E2D6944CC8A19B517D6D62A1D8"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to payments received after December 31, 2004.</text></subsection></section> <section id="H3F8DFC8B368F49D3B366F8BD3EF1D2BC"><enum>605.</enum><header>Prohibited transaction exemption for the provision of investment advice</header> <subsection id="H926B3B4C17B34ABE9C67B55572F82CD5"><enum>(a)</enum><header>Prohibited transaction exemption</header><text>Subsection (d) of <external-xref legal-doc="usc" parsable-cite="usc/26/4975">section 4975</external-xref> of the Internal Revenue Code of 1986 (relating to exemptions from tax on prohibited transactions), as amended by this Act, is further amended—</text> <paragraph id="H0FF89CF7E6C44FCAABBC4508EA63D294"><enum>(1)</enum><text>in paragraph (15), by striking <quote>or</quote> at the end,</text></paragraph> <paragraph id="HA48C04D7948A451194FD6DA0CF31B904"><enum>(2)</enum><text>in paragraph (16), by striking the period at the end and inserting <quote>; or</quote>, and</text></paragraph> <paragraph id="H9E0DEC52F7514C898095FB75D668222E"><enum>(3)</enum><text>by adding at the end the following new paragraph:</text> <quoted-block id="H94A70FF8A0EB4C41997C8CD5DB084BC7"> <paragraph id="H26E33DB1DA464074B99832FC9900CC2D"><enum>(17)</enum><text>any transaction described in subsection (f)(7)(A) in connection with the provision of investment advice described in subsection (e)(3)(B), in any case in which—</text> <subparagraph id="H7E9D1FFA892F41A08922234EAE2E1D7C"><enum>(A)</enum><text>the plan provides for individual accounts and permits a participant or beneficiary to exercise control over assets in his or her account,</text></subparagraph> <subparagraph id="HA7F1E44FE6694751BF00A2C5536DE959"><enum>(B)</enum><text>the advice is qualified investment advice provided to a participant or beneficiary of the plan by a fiduciary adviser in connection with any sale, acquisition, or holding of a security or other property for purposes of investment of plan assets, and</text></subparagraph> <subparagraph id="HFECEF435548047AB9F721C7DD277B72C"><enum>(C)</enum><text>the requirements of subsection (f)(7)(B) are met in connection with each instance of the provision of the advice.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H11384525AE7A4DC091EDAF312C8BE600"><enum>(b)</enum><header>Transactions allowed and related requirements</header><text>Subsection (f) of such section 4975 (relating to other definitions and special rules) is amended by adding at the end the following new paragraph:</text> <quoted-block id="HD9B75AF16145483D81AE55C3AB024500"> <paragraph id="H7D1A2D7328AB40BBAB24C5342200F2BF"><enum>(7)</enum><header>Investment advice provided by fiduciary advisers</header> <subparagraph id="HC2B776EF3C0243499F0149A06147B9F9"><enum>(A)</enum><header>Allowable transactions</header><text>The transactions referred to in subsection (d)(16), in connection with the provision of investment advice by a fiduciary adviser, are the following:</text> <clause id="HC13DECA991C140468EF703A7C19E3058"><enum>(i)</enum><text>the provision of the advice to the participant or beneficiary,</text></clause> <clause id="HB74C8525931A4D14A1A561B4C62F73CC"><enum>(ii)</enum><text>the sale, acquisition, or holding of a security or other property (including any lending of money or other extension of credit associated with the sale, acquisition, or holding of a security or other property) pursuant to the advice, and</text></clause> <clause id="H82DC56AA89DF415EBB14D2880073E112"><enum>(iii)</enum><text>the direct or indirect receipt of fees or other compensation by the fiduciary adviser or an affiliate thereof (or any employee, agent, or registered representative of the fiduciary adviser or affiliate) in connection with the provision of the advice.</text></clause></subparagraph> <subparagraph id="H84AF695FB37247D8BCBA9FD4A1E4623F"><enum>(B)</enum><header>Requirements for exemption from prohibited transactions with respect to provision of investment advice</header><text>The requirements of this subparagraph (referred to in subsection (d)(16)(C)) are met in connection with the provision of qualified investment advice provided to a participant or beneficiary of an employee benefit plan by a fiduciary adviser with respect to the plan in connection with any sale, acquisition, or holding of a security or other property for purposes of investment of amounts held by the plan, if the requirements of the following clauses are met:</text> <clause id="H9F4AE4DF31AE4ED2A22998CE418CC7A7"><enum>(i)</enum><header>Written disclosures</header><text>At a time contemporaneous with the provision of the advice in connection with the sale, acquisition, or holding of the security or other property, the fiduciary adviser shall provide to the recipient of the advice a clear and conspicuous notification, written in a manner to be reasonably understood by the average plan participant pursuant to regulations which shall be prescribed by the Secretary (including mathematical examples), of the following:</text> <subclause id="HEE9B8723A8444825B2667C9400207004"><enum>(I)</enum><header>Interests held by the fiduciary adviser</header><text>Any interest of the fiduciary adviser in, or any affiliation or contractual relationship of the fiduciary adviser (or affiliates thereof) with any third party having an interest in, the security or other property.</text></subclause> <subclause id="HF97EF21955EA46FEA650C90000DD9BF"><enum>(II)</enum><header>Related fees or compensation in connection with the provision of the advice</header><text>All fees or other compensation relating to the advice (including fees or other compensation itemized with respect to each security or other property with respect to which the advice is provided) that the fiduciary adviser (or any affiliate thereof) is to receive (including compensation provided by any third party) in connection with the provision of the advice or in connection with the sale, acquisition, or holding of the security or other property.</text></subclause> <subclause id="H92AEE78B16FD4C138E7BA46BD59F003F"><enum>(III)</enum><header>Ongoing fees or compensation in connection with the security or property involved</header><text>All fees or other compensation that the fiduciary adviser (or any affiliate thereof) is to receive, on an ongoing basis, in connection with any security or other property with respect to which the fiduciary adviser gives the advice.</text></subclause> <subclause id="HED0157A43CED475D8C6B866452095992"><enum>(IV)</enum><header>Applicable limitations on scope of advice</header><text>Any limitation placed (in accordance with the requirements of this subsection) on the scope of the advice to be provided by the fiduciary adviser with respect to the sale, acquisition, or holding of the security or other property.</text></subclause> <subclause id="H9810FA02CAB5468E82298DDE48AC37E3"><enum>(V)</enum><header>Types of services generally offered</header><text>The types of services offered by the fiduciary adviser in connection with the provision of qualified investment advice by the fiduciary adviser.</text></subclause> <subclause id="H251BB0D05565416699247DED93ED306B"><enum>(VI)</enum><header>Fiduciary status of the fiduciary adviser</header><text>That the fiduciary advisor is a fiduciary of the plan.</text></subclause></clause> <clause id="H4C6C8FCDA25346A4972BFD98CAEC079"><enum>(ii)</enum><header>Disclosure by fiduciary adviser in accordance with applicable securities laws</header><text>The fiduciary adviser shall provide appropriate disclosure, in connection with the sale, acquisition, or holding of the security or other property, in accordance with all applicable securities laws.</text></clause> <clause id="H1CF5EA2BF5AA4470AEFFABAFF9808EC1"><enum>(iii)</enum><header>Transaction occurring solely at direction of recipient of advice</header><text>The sale, acquisition, or holding of the security or other property shall occur solely at the direction of the recipient of the advice.</text></clause> <clause id="HE68B052B36D64C84AAFFF4D1DF7FF8E"><enum>(iv)</enum><header>Reasonable compensation</header><text>The compensation received by the fiduciary adviser and affiliates thereof in connection with the sale, acquisition, or holding of the security or other property shall be reasonable.</text></clause> <clause id="HCEA89452A53143DCB2A3F7956099F2A2"><enum>(v)</enum><header>Arm’s length transaction</header><text>The terms of the sale, acquisition, or holding of the security or other property shall be at least as favorable to the plan as an arm’s length transaction would be.</text></clause></subparagraph> <subparagraph id="HD765569CEDA0492B820778A1D38FA227"><enum>(C)</enum><header>Continued availability of information for at least 1 year</header><text>The requirements of subparagraph (B)(i) shall be deemed not to have been met in connection with the initial or any subsequent provision of advice described in subparagraph (B) if, at any time during the 1-year period following the provision of the advice, the fiduciary adviser fails to maintain the information described in subclauses (I) through (IV) of subparagraph (B)(i) in currently accurate form or to make the information available, upon request and without charge, to the recipient of the advice.</text></subparagraph> <subparagraph id="H480B09E189EE46FB8CAEACC3874E9388"><enum>(D)</enum><header>Evidence of compliance maintained for at least 6 years</header><text>A fiduciary adviser referred to in subparagraph (B) who has provided advice referred to in such subparagraph shall, for a period of not less than 6 years after the provision of the advice, maintain any records necessary for determining whether the requirements of the preceding provisions of this paragraph and of subsection (d)(16) have been met. A transaction prohibited under subsection (c)(1) shall not be considered to have occurred solely because the records are lost or destroyed prior to the end of the 6-year period due to circumstances beyond the control of the fiduciary adviser.</text></subparagraph> <subparagraph id="H7EFB8807C992409998F020C53D08274E"><enum>(E)</enum><header>Model disclosure forms</header><text>The Secretary shall prescribe regulations setting forth model disclosure forms to assist fiduciary advisers in complying with the disclosure requirements of under this paragraph.</text></subparagraph> <subparagraph id="HE3EB6906F6D047A585DDDB804FA17754"><enum>(F)</enum><header>Annual reviews by the Secretary</header><text>The Secretary shall conduct annual reviews of randomly selected fiduciary advisers providing qualified investment advice to participants and beneficiaries. In the case of each review, the Secretary shall review the following:</text> <clause id="H5A76FBDF49394704A915FD108271B6BB"><enum>(i)</enum><header>Compliance by advice computer models with generally accepted investment management principles</header><text>The extent to which advice computer models employed by the fiduciary adviser comply with generally accepted investment management principles.</text></clause> <clause id="H94A7C2681D994630B673235FE69C821D"><enum>(ii)</enum><header>Compliance with disclosure requirements</header><text>The extent to which disclosures provided by the fiduciary adviser have complied with the requirements of this subsection.</text></clause> <clause id="H01D0A6338ABE4202B929363788C1D1A8"><enum>(iii)</enum><header>Extent of violations</header><text>The extent to which any violations of fiduciary duties have occurred in connection with the provision of the advice.</text></clause> <clause id="H71E5B56A0ABE43839B16DA59D9B02998"><enum>(iv)</enum><header>Extent of reported complaints</header><text>The extent to which complaints to relevant agencies have been made in connection with the provision of the advice.</text></clause><continuation-text continuation-text-level="subparagraph">Any proprietary information obtained by the Secretary shall be treated as confidential.</continuation-text></subparagraph> <subparagraph id="H2E7636920C6B4A938C007EBAE9FB91"><enum>(G)</enum><header>Duty of conflicted fiduciary adviser to provide for alternative independent advice</header> <clause id="HE4D72E5A8BE54E868CFA6325B40047B6"><enum>(i)</enum><header>In general</header><text>In connection with any qualified investment advice provided by a fiduciary adviser to a participant or beneficiary regarding any security or other property, if the fiduciary adviser—</text> <subclause id="H0D7B75C458BE4875BB49CF2F51007821"><enum>(I)</enum><text>has an interest in the security or other property, or</text></subclause> <subclause id="HFD105DECB4994FA0843D9B00F2C324DA"><enum>(II)</enum><text>has an affiliation or contractual relationship with any third party that has an interest in the security or other property,</text></subclause><continuation-text continuation-text-level="clause">the requirements of subparagraph (B) shall be treated as not met in connection with the advice unless the fiduciary adviser has arranged, as an alternative to the advice that would otherwise be provided by the fiduciary advisor, for qualified investment advice with respect to the security or other property provided by at least one alternative investment adviser meeting the requirements of clause (ii).</continuation-text></clause> <clause id="HAF561133413446400097573458CEC96D"><enum>(ii)</enum><header>Independence and qualifications of alternative investment adviser</header><text>Any alternative investment adviser whose qualified investment advice is arranged for by a fiduciary adviser pursuant to clause (i)—</text> <subclause id="H7FB4079D09A3415793FBE77084B1E300"><enum>(I)</enum><text>shall have no material interest in, and no material affiliation or contractual relationship with any third party having a material interest in, the security or other property with respect to which the investment adviser is providing the advice, and</text></subclause> <subclause id="H61DFCC9297464699BC2777EE625DB09B"><enum>(II)</enum><text>shall meet the requirements of a fiduciary adviser under subparagraph (H)(i), except that an alternative investment adviser may not be a fiduciary of the plan other than in connection with the provision of the advice.</text></subclause></clause> <clause id="H92409A8236074CE99F52BC5DD1385CA"><enum>(iii)</enum><header>Scope and fees of alternative investment advice</header><text>Any qualified investment advice provided pursuant to this subparagraph by an alternative investment adviser shall be of the same type and scope, and provided under the same terms and conditions (including no additional charge to the participant or beneficiary), as apply with respect to the qualified investment advice to be provided by the fiduciary adviser.</text></clause></subparagraph> <subparagraph id="H1B83FBF39225423780CBA3249919E43B"><enum>(H)</enum><header>Fiduciary adviser defined</header><text>For purposes of this paragraph and subsection (d)(16)—</text> <clause id="H6EFB6CC850D34D19B3558300C4677F17"><enum>(i)</enum><header>In general</header><text>The term <term>fiduciary adviser</term> means, with respect to a plan, a person who—</text> <subclause id="HF0403AC29D854A7F8B87A29F582BCA03"><enum>(I)</enum><text>is a fiduciary of the plan by reason of the provision of qualified investment advice by such person to a participant or beneficiary,</text></subclause> <subclause id="H7B0BCD97D4C24A199392F96F93DFC506"><enum>(II)</enum><text>meets the qualifications of clause (ii), and</text></subclause> <subclause id="H9B96D451252F413BB6C130D694CE27A3"><enum>(III)</enum><text>meets the additional requirements of clause (iii).</text></subclause></clause> <clause id="H06C0DFBD342443B886216D36C600CF08"><enum>(ii)</enum><header>Qualifications</header><text>A person meets the qualifications of this clause if such person—</text> <subclause id="H98B84D9449F74670BBF0EED3FBE06498"><enum>(I)</enum><text>is registered as an investment adviser under the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>),</text></subclause> <subclause id="H2FCF011D5C0540F0B000AD7CB9853801"><enum>(II)</enum><text>if not registered as an investment adviser under such Act by reason of section 203A(a)(1) of such Act (15 U.S.C. 80b–3a(a)(1)), is registered under the laws of the State in which the fiduciary maintains its principal office and place of business, and, at the time the fiduciary last filed the registration form most recently filed by the fiduciary with such State in order to maintain the fiduciary’s registration under the laws of such State, also filed a copy of such form with the Secretary,</text></subclause> <subclause id="HAA66FB9CED6445FCAA90DFBFBE00815E"><enum>(III)</enum><text>is registered as a broker or dealer under the <act-name parsable-cite="SEA34">Securities Exchange Act of 1934</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>),</text></subclause> <subclause id="H2616E0C0C56E4332BA005BB38D1B681"><enum>(IV)</enum><text>is a bank or similar financial institution referred to in subsection (d)(4),</text></subclause> <subclause id="HC6A8CB10BE614C35BF2F3D7B531BEC70"><enum>(V)</enum><text>is an insurance company qualified to do business under the laws of a State, or</text></subclause> <subclause id="H95804F6A3A044D4C00BDFCCAF31F001D"><enum>(VI)</enum><text>is any other comparable entity which satisfies such criteria as the Secretary determines appropriate.</text></subclause></clause> <clause id="HC7FD2E6EBF734E90BF1667A5BF6234AC"><enum>(iii)</enum><header>Additional requirements with respect to certain employees or other agents of certain advisers</header><text>A person meets the additional requirements of this clause if every individual who is employed (or otherwise compensated) by such person and whose scope of duties includes the provision of qualified investment advice on behalf of such person to any participant or beneficiary is—</text> <subclause id="H6146865A127145169ECED5687C0F8A5"><enum>(I)</enum><text>a registered representative of such person,</text></subclause> <subclause id="H65B79636F2FE44E882792B7F8C869C3C"><enum>(II)</enum><text>an individual described in subclause (I), (II), or (III) of clause (ii), or</text></subclause> <subclause id="H31BF2554CB7B48FE8845C13B46A9D077"><enum>(III)</enum><text>such other comparable qualified individual as may be designated in regulations of the Secretary.</text></subclause> <subclause indent="up2" id="HE39AD5A18E5D4B6E8959AC097D56FFD3"><enum>(I)</enum><header>Additional definitions</header><text>For purposes of this paragraph and subsection (d)(16)—</text></subclause></clause> <clause id="H62F4906067E64FD9802447AB22FB3133"><enum>(i)</enum><header>Qualified investment advice</header><text>The term <term>qualified investment advice</term> means, in connection with a participant or beneficiary, investment advice referred to in subsection (e)(3)(B) which—</text> <subclause id="H5644CA204DB242E7A19F35B001C88DA9"><enum>(I)</enum><text>consists of an individualized recommendation to the participant or beneficiary with respect to the purchase, sale, or retention of securities or other property for the individual account of the participant or beneficiary, in accordance with generally accepted investment management principles, and</text></subclause> <subclause id="HC390700C75594E98A344408FC0F6F241"><enum>(II)</enum><text>takes into account all investment options under the plan.</text></subclause></clause> <clause id="H5BF0CBB5A96C4873A1E298018753848F"><enum>(ii)</enum><header>Affiliate</header><text>The term <term>affiliate</term> of another entity means an affiliated person of such entity (as defined in section 2(a)(3) of the <act-name parsable-cite="ICA40">Investment Company Act of 1940</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)(3)</external-xref>)).</text></clause> <clause id="H04CBED90C3FD47DDA7BF750870BCFC87"><enum>(iii)</enum><header>Registered representative</header><text>The term <term>registered representative</term> of another entity means a person described in section 3(a)(18) of the <act-name parsable-cite="SEA34">Securities Exchange Act of 1934</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(18)</external-xref>) (substituting such entity for the broker or dealer referred to in such section) or a person described in section 202(a)(17) of the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)(17)</external-xref>) (substituting such entity for the investment adviser referred to in such section).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H39F22984837C4BB0A36245B92574CCD"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply with respect to advice referred to in <external-xref legal-doc="usc" parsable-cite="usc/26/4975">section 4975(e)(3)(B)</external-xref> of the Internal Revenue Code of 1986 provided on or after January 1, 2005.</text></subsection></section> <section id="HF1840E6266664991BC315DD80C73F5E" section-type="subsequent-section" display-inline="no-display-inline"><enum>606.</enum><header>Increase in deductible contributions to single-employer defined benefit plan upon payment of increased premium to the Pension Benefit Guaranty Corporation</header> <subsection id="HEC0175E90418494C9FCC76A5B1164DB3"><enum>(a)</enum><header>Increase in deductible contributions</header><text>Paragraph (1) of <external-xref legal-doc="usc" parsable-cite="usc/26/404">section 404(a)</external-xref> of the Internal Revenue Code of 1986 (relating to deduction for contributions to pension trusts) is amended—</text> <paragraph id="HCEB07DF2AB8948B289C4B2842475E9AE"><enum>(1)</enum><text>by redesignating subparagraph (E) as subparagraph (F); and</text></paragraph> <paragraph id="H7224DD941370437789004893BC304B01"><enum>(2)</enum><text>by inserting after subparagraph (D) the following new subparagraph:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="H5DFCF98DD4C64FAEB3E6C9E3F9592E00"> <subparagraph id="HF19E0B19625542BF8E9D53B8AB0253D9"><enum>(E)</enum><header>Special rule in the event of payment of increased PBGC premium with respect to single-employer defined benefit plan</header><text>In any case in which the Secretary—</text> <clause id="H239F4E9785A849DC883949DF00E8919"><enum>(i)</enum><text>receives certification by the plan administrator of a single-employer defined benefit plan that the increased premium authorized under section 4006(a)(3)(F) of the Employee Retirement Income Security Act of 1974 has been paid for any plan year, and</text></clause> <clause id="H7F3434EA1AA5478D83D2126587C2BF2"><enum>(ii)</enum><text>receives certification of such payment from the Pension Benefit Guaranty Corporation,</text></clause><continuation-text continuation-text-level="subparagraph"> the maximum amount deductible under the limitations of this paragraph for such plan year shall not be less than 150 percent of current liability determined under section 412(l).</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="H57A4E1D4116E4D8394AB29C9C1452E81"><enum>(b)</enum><header>Election of payment of increased premium</header><text>Section 4006(a)(3) of the Employee Retirement Income Security Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/29/1306">29 U.S.C. 1306(a)(3)</external-xref>) is amended by adding at the end the following new subparagraph:</text> <quoted-block style="traditional" display-inline="no-display-inline" id="H975C46CACF9944F8BD6DE62FAE1ED481"> <subparagraph id="HE3539EEF6F3F42F0A11EA6D016E4E432" indent="up2"><enum>(F)</enum><text>The corporation shall provide for payment of the premium for any plan year for basic benefits guaranteed under this title with respect to a single-employer plan for any plan year at an increased annual rate equal to $24.70 in any case in which such payment is accompanied by certification by the contributing sponsor or plan administrator that such payment is made for purposes of increased deductibility of contributions for such plan year under <external-xref legal-doc="usc" parsable-cite="usc/26/404">section 404(a)(1)(E)</external-xref> of the Internal Revenue Code of 1986. The Corporation shall promptly certify receipt of any premium at the increased annual rate provided for under this subparagraph to the Secretary of the Treasury.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> </section> <section id="H7311003451884A5FB43E1F91FD173B08" section-type="subsequent-section" display-inline="no-display-inline"><enum>607.</enum><header>Exemption from prohibited transaction rules for certain aborted emergent transactions</header> <subsection id="H43F13062ED864FA9BF1C1DA51685F0AF"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/4975">Section 4975(c)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:</text> <quoted-block act-name="Employee" id="H4713A2AEBBB84C138245E6785FF1B936"> <paragraph id="H2A7F0469061042B2ACEB50E142EC64EA"><enum>(7)</enum><header>Special rule for certain aborted emergent transactions</header> <subparagraph id="HDBA147DE33104FD99CE09E77FCEAD9E7"><enum>(A)</enum><header>In general</header><text>Pursuant to regulations issued by the Secretary, if—</text> <clause id="H6798AC00B13744E5910775546E9873EE"><enum>(i)</enum><text>in the case of a qualifying transaction between an employee benefit plan and an eligible person which would, but for this paragraph, be in violation of a restriction imposed by paragraph (1), the eligible person submits to the Secretary, not later than 60 days after the date of the transaction, an application for an exemption under paragraph (2) from such restriction in the case of such transaction,</text></clause> <clause id="H196A0863C77441B89973B1FD572003D"><enum>(ii)</enum><text>the Secretary determines not to grant the exemption, and</text></clause> <clause id="H6C5732F1484F4A658300911741D9C6B8"><enum>(iii)</enum><text>the transaction is reversed within 60 days after the date of the Secretary’s determination,</text></clause></subparagraph><continuation-text continuation-text-level="subparagraph">then the transaction shall be exempted under paragraph (2) from treatment as a violation of such restriction.</continuation-text> <subparagraph id="H3A9D3D535ADF4F03A39BEBB4F4F64C"><enum>(B)</enum><header>Qualifying transaction</header><text>The term <term>qualifying transaction</term> means, in connection with an eligible person, a transaction between an employee benefit plan and such eligible person constituting the purchase or sale of a financial product, if— </text> <clause id="H41F339FAC9AF4189A163C91CE225C3B0"><enum>(i)</enum><text>prior to engaging in the transaction, the plan acquires from the eligible person a sufficient 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),</text></clause> <clause id="HBD30A8F6673F446F813D9D6CE392AA57"><enum>(ii)</enum><text>the eligible person receives in such transaction not more than reasonable compensation,</text></clause> <clause id="H1117A7DA218B4FC0B5BE68D9DBC55E28"><enum>(iii)</enum><text>such transaction is expressly approved by an independent fiduciary who has investment authority with respect to the plan assets involved in the transaction, and</text></clause> <clause id="HF0C7C3345F054A4F811F59D4C92888C8"><enum>(iv)</enum><text>immediately after the acquisition of the financial product—</text> <subclause id="H619C704326224D6AA4B56DE392815C3C"><enum>(I)</enum><text>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</text></subclause> <subclause id="H132413FE4AB44E5FAAADB381485FEF6"><enum>(II)</enum><text>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.</text></subclause></clause></subparagraph> <subparagraph id="HB3FAB833F09A43E2A67636202DDAF407"><enum>(C)</enum><header>Sufficient guarantee</header><text>A guarantee referred to in subparagraph (B) is <quote>sufficient</quote> if such guarantee is irrevocable and, under the terms of the guarantee, 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 the terms of the transaction. A guarantee shall not be treated as failing to be <quote>sufficient</quote> solely because, under the terms of the guarantee, if the Secretary grants the exemption, the guarantee may expire without any payments made to the plan. </text></subparagraph> <subparagraph id="HE751A5DF34BA4883A0A100394933EF43" indent="subparagraph"><enum>(D)</enum><header>Eligible person</header><text>The term <term>eligible person</term> means a person that—</text> <clause id="H805CFF5CA041493B9B0291EB95975797"><enum>(i)</enum><text>consists of—</text> <subclause id="H002430B111E1463B99FDDBF5CE7003B"><enum>(I)</enum><text>a bank as defined in section 202(a)(2) of the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name>,</text></subclause> <subclause id="HCA515F758D5740A6AD186842C5FD364D"><enum>(II)</enum><text>an investment adviser registered under the <act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name>,</text></subclause> <subclause id="H5F1B8C0EE0B54AAD9B342D8628008687"><enum>(III)</enum><text>an insurance company which is qualified to do business in more than one State, or</text></subclause> <subclause id="HE7B316761B574C9EBDF3A7724F3869F2"><enum>(IV)</enum><text>a broker-dealer registered under the <act-name parsable-cite="SEA34">Securities Exchange Act of 1934</act-name>,</text></subclause></clause> <clause id="HDDC8C200CC7A4D97A61EBCDB4CF46CDE" indent="clause"><enum>(ii)</enum><text>has shareholders’ or partners’ equity in excess of $1,000,000, and</text></clause> <clause id="HE0EA8FF9AF384B3097B414CB17C7CDCE" indent="clause"><enum>(iii)</enum><text>is not described in section 411 of the Employee Retirement Income Security Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/29/1111">29 U.S.C. 1111</external-xref>).</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HAE2410EA6F004EAB9BBEF3560E7F8C"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply with respect to transactions occurring after December 31, 2005.</text></subsection></section> <section id="H5F85647FE2944AEA8990964EB4041C91"><enum>608.</enum><header>Pension benefit information</header> <subsection id="H44EA85B0ECD24BD8004B06FC4FCDAF"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/43">Chapter 43</external-xref> of the Internal Revenue Code of 1986 (relating to qualified pension, etc., plans) is amended by adding at the end the following new section:</text> <quoted-block id="H9B1788D02D8B41DF8178B93D2695EDC5" style="OLC"> <section id="H5643C620999F41C9902B20F5A7618736"><enum>4980G.</enum><header>Failure of applicable plans to provide notice of generally accepted investment principles</header> <subsection id="H2ED0EF305A39432BB324CED9500557B0"><enum>(a)</enum><header>Imposition of tax</header><text>There is hereby imposed a tax on the failure of any applicable pension plan to meet the requirements of subsection (e) with respect to any applicable individual.</text></subsection> <subsection id="HACEECEEC94C34A56BA93EAFC53B4C368"><enum>(b)</enum><header>Amount of tax</header><text>The amount of the tax imposed by subsection (a) on any failure with respect to any applicable individual shall be $100 for each day in the noncompliance period with respect to such failure.</text></subsection> <subsection id="HD899816A007542FE9FE0AD3BE7238B4"><enum>(c)</enum><header>Limitations on amount of tax</header> <paragraph id="H53DBEDCAF90C40C9B183CCBCD76F4FD7"><enum>(1)</enum><header>Tax not to apply to failures corrected within 30 days</header><text>No tax shall be imposed by subsection (a) on any failure if—</text> <subparagraph id="H143086EE29804D0E85B1842C680092FF"><enum>(A)</enum><text>any person subject to liability for the tax under subsection (d) exercised reasonable diligence to meet the requirements of subsection (e), and</text></subparagraph> <subparagraph id="H0097D63082024758AD440084EE2E5B61"><enum>(B)</enum><text>such person provides the notice described in subsection (e) during the 30-day period beginning on the first date such person knew, or exercising reasonable diligence should have known, that such failure existed.</text></subparagraph></paragraph> <paragraph id="H61C10458E164458F836F48AC6CAE9F8"><enum>(2)</enum><header>Overall limitation for unintentional failures</header> <subparagraph id="H7E8E87B3DD4C4BFDAA1CA4535D4E4B94"><enum>(A)</enum><header>In general</header><text>If the person subject to liability for tax under subsection (d) exercised reasonable diligence to meet the requirements of subsection (e) and paragraph (1) is not otherwise applicable, the tax imposed by subsection (a) for failures during the taxable year of the employer (or, in the case of a multiemployer plan, the taxable year of the trust forming part of the plan) shall not exceed $500,000. For purposes of the preceding sentence, all multiemployer plans of which the same trust forms a part shall be treated as 1 plan.</text></subparagraph> <subparagraph id="H946FFC0160BA47179FD400306B06ECE1"><enum>(B)</enum><header>Taxable years in the case of certain controlled groups</header><text>For purposes of this paragraph, if all persons who are treated as a single employer for purposes of this section do not have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561.</text></subparagraph></paragraph> <paragraph id="H026E48D879354D4D00C6B75B5784A48C"><enum>(3)</enum><header>Waiver by secretary</header><text>In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive or otherwise inequitable relative to the failure involved.</text></paragraph></subsection> <subsection id="H8CD6B56409484C95A9407FB82D2EB692"><enum>(d)</enum><header>Liability for tax</header><text>The following shall be liable for the tax imposed by subsection (a):</text> <paragraph id="H1B9FDE26D1E344E3899196DBE651D5D"><enum>(1)</enum><text>In the case of a plan other than a multiemployer plan, the employer.</text></paragraph> <paragraph id="H2B7B9E8EA0234A6CBA91952FCCB1815D"><enum>(2)</enum><text>In the case of a multiemployer plan, the plan.</text></paragraph></subsection> <subsection id="HCA88B75E9BCC46B3A84938CC0514AF07"><enum>(e)</enum><header>Notice of generally accepted investment principles</header> <paragraph id="HB7DFCF48A8094B8CB2D74BBB391526E"><enum>(1)</enum><header>In general</header><text>The plan administrator of an applicable pension plan shall provide notice of generally accepted investment principles, including principles of risk management and diversification, to each applicable individual.</text></paragraph> <paragraph id="H3BF37EC3A6614F10B84220ED91D3DED6"><enum>(2)</enum><header>Notice</header><text>The notice required by paragraph (1) shall be written in a manner calculated to be understood by the average plan participant and shall provide sufficient information (as determined in accordance with rules or other guidance adopted by the Secretary) to allow applicable individuals to understand generally accepted investment principles, including principles of risk management and diversification.</text></paragraph> <paragraph id="HA87BABA2024544379FDFF157F0FDAD41"><enum>(3)</enum><header>Timing of notice</header><text>The notice required by paragraph (1) shall be provided upon enrollment of the applicable individual in such plan and at least once per plan year thereafter.</text></paragraph> <paragraph id="H63312A4F2CB545F7B74F5111C0805192"><enum>(4)</enum><header>Form and manner of notice</header><text>The notice required by paragraph (1) shall be in writing, except that such notice may be in electronic or other form to the extent that such form is reasonably accessible to the applicable individual.</text></paragraph></subsection> <subsection id="H360F761543BA44E1AA505EDBD700CDB5"><enum>(f)</enum><header>Definitions and special rules</header><text>For purposes of this section—</text> <paragraph id="H664E5DA97659443B9700AFA8E038378F"><enum>(1)</enum><header>Applicable individual</header><text>The term <term>applicable individual</term> means with respect to an applicable pension plan—</text> <subparagraph id="H750DF3A1BD144E01AF0848DCEDE30228"><enum>(A)</enum><text>any participant in the applicable pension plan,</text></subparagraph> <subparagraph id="H8B0DD4618D46473E9B069600B81FC0C1"><enum>(B)</enum><text>any beneficiary who is an alternate payee (within the meaning of section 414(p)(8)) under an applicable qualified domestic relations order (within the meaning of section 414(p)(1)(A)), and</text></subparagraph> <subparagraph id="HC20A765DB4484B2ABCAA6415B5DE836F"><enum>(C)</enum><text>any beneficiary of a deceased participant or alternate payee described in subparagraph (A) or (B), as the case may be,</text></subparagraph><continuation-text continuation-text-level="paragraph">who has an accrued benefit under the plan and who is entitled to direct the investment (or hypothetical investment) of some or all of such accrued benefit.</continuation-text></paragraph> <paragraph id="HED110C06B0E04ECFA364CAAFC9333B44"><enum>(2)</enum><header>Applicable pension plan</header><text>The term <term>applicable pension plan</term> means—</text> <subparagraph id="H08633A107B6E4B41AC50A9637897CAF9"><enum>(A)</enum><text>a plan described in section 219(g)(5)(A) (other than in clause (iii) thereof), and</text></subparagraph> <subparagraph id="H0EC242B52C0E45A681EB76B53D2998B8"><enum>(B)</enum><text>an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A),</text></subparagraph><continuation-text continuation-text-level="paragraph">which permits any participant to direct the investment of some or all of his account in the plan or under which the accrued benefit of any participant depends in whole or in part on hypothetical investments directed by the participant.</continuation-text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HECDB91EBC79042019ECAC4D993F9A28B"><enum>(b)</enum><header>Clerical amendment</header><text>The table of sections for chapter 43 of such Code is amended by adding at the end the following new item:</text> <quoted-block style="OLC" id="HEE7BA6BFC6354471B9CEF8C58ED447F8" display-inline="no-display-inline"> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 4980G. Failure of applicable plans to provide notice of generally accepted investment principles</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="HF8B4E239F2934017B51B421BC4A3D956"><enum>(c)</enum><header>Effective date</header> <paragraph id="HFCB7ED468074403BAF5BEFFA95CB3B84"><enum>(1)</enum><header>In general</header><text>The amendments made by this section shall take effect 60 days after the adoption of rules or other guidance to carry out the amendments made by this section, which shall include a model notice of generally accepted investment principles, including principles of risk management and diversification.</text></paragraph> <paragraph id="H05397CEE8BBE4456A284505F83331C7B"><enum>(2)</enum><header>Model investment principles</header><text>For purposes of paragraph (1), not later than 120 days after the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Labor, shall issue rules or other guidance and a model notice which meets the requirements of <external-xref legal-doc="usc" parsable-cite="usc/26/4980G">section 4980G</external-xref> of the Internal Revenue Code of 1986 (as added by this section).</text></paragraph></subsection></section> <section section-type="subsequent-section" id="H43E760EA3A9646D3936E80A4154FF300" display-inline="no-display-inline"><enum>609.</enum><header>Permanency of transition rule in Retirement Protection Act of 1994</header> <subsection id="H6365121641D347D49B25D9B900F6EE54"><enum>(a)</enum><header>Transition rule made permanent</header><text>Section 769(c) of the Retirement Protection Act of 1994 (<external-xref legal-doc="usc" parsable-cite="usc/26/412">26 U.S.C. 412</external-xref> note) is amended—</text> <paragraph id="H218BE07C3C2747AC9C4F6E96C0730448"><enum>(1)</enum><text>in the heading, by striking <quote><header-in-text level="subsection">Transition</header-in-text></quote>; and</text></paragraph> <paragraph id="H58448A92D1114FF380CBC7E44FF04300"><enum>(2)</enum><text>in paragraph (1), by striking <quote>transition</quote> and by striking <quote>for any plan year beginning after 1996 and before 2010</quote>.</text></paragraph></subsection> <subsection id="HF36EF98D366E4C6E86A5BA14D6B2CA78"><enum>(b)</enum><header>Special rules</header><text>Paragraph (2) of section 769(c) of the Retirement Protection Act of 1994 is amended to read as follows:</text> <quoted-block id="H8FED0F0709484675BB6FD007AFE56D14"> <paragraph id="H86BA31100A0148D39268420164AEC9E1"><enum>(2)</enum><header>Special rules</header><text>The rules described in this paragraph are as follows:</text> <subparagraph id="H18172377D04D43F5BEF0816DEA6240C5"><enum>(A)</enum><text>For purposes of <external-xref legal-doc="usc" parsable-cite="usc/26/412">section 412(l)(9)(A)</external-xref> of the Internal Revenue Code of 1986 and section 302(d)(9)(A) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>, the funded current liability percentage for any plan year shall be treated as not less than 90 percent.</text></subparagraph> <subparagraph id="H3D5622490E9044358C1C7D89F3DFB056"><enum>(B)</enum><text>For purposes of <external-xref legal-doc="usc" parsable-cite="usc/26/412">section 412(m)</external-xref> of the Internal Revenue Code of 1986 and section 302(e) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>, the funded current liability percentage for any plan year shall be treated as not less than 100 percent.</text></subparagraph> <subparagraph id="H64F772F3870F427D85ECBB5DC5E1E03"><enum>(C)</enum><text>For purposes of determining unfunded vested benefits under section 4006(a)(3)(E)(iii) of the <act-name parsable-cite="ERISA">Employee Retirement Income Security Act of 1974</act-name>, the mortality table shall be the mortality table used by the plan.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H5C5D27DC10D0489E9B706F554B133789"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to plan years beginning after December 31, 2004.</text></subsection></section> <enum>VII</enum><header>General provisions</header> <section id="H4DF1E24CFB6A47948D3FB0DE08136053"><enum>701.</enum><header>General effective date</header> <subsection id="H9F9A86B8BA5841C695A2CF6180902972"><enum>(a)</enum><header>In general</header><text>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, 2005.</text></subsection> <subsection id="H4D3B26342D6D441FA408979100D1F5AD"><enum>(b)</enum><header>Special rule for collectively bargained plans</header><text>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 <quote>January 1, 2005</quote> the date of the commencement of the first plan year beginning on or after the earlier of—</text> <paragraph id="HBFF7A2CFAF7E40819666A85B480192C0"><enum>(1)</enum><text>the later of—</text> <subparagraph id="H9C5BD41A8B5140E28461EFBDF1D4A540"><enum>(A)</enum><text>January 1, 2006, or</text></subparagraph> <subparagraph id="HC6F40A95A0CF4D8C8EC467C93801D127"><enum>(B)</enum><text>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</text></subparagraph></paragraph> <paragraph id="HD70AB3152ADF46759F0453D8E78F4536"><enum>(2)</enum><text>January 1, 2007.</text></paragraph></subsection></section> <section id="H8BDE0C21366748110081A6B6CA1C1E55"><enum>702.</enum><header>Plan amendments</header><text display-inline="no-display-inline">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, 2007, if—</text> <paragraph id="H8246BC7562244525A5D003700ADC67"><enum>(1)</enum><text>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</text></paragraph> <paragraph id="H9C1907B1F95A4039A5ECCBBB3350003"><enum>(2)</enum><text>such plan amendment applies retroactively to the period after such amendment made by this Act takes effect and such first plan year.</text></paragraph></section>