1.Short title; amendment of 1986 Code; table
of contents
(a)This Act may be cited as the
Women's Retirement Security Act of
2007
.
(b)Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference shall
be considered to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c)The table of contents for this Act is as
follows:
Sec. 1. Short title;
amendment of 1986 Code; table of contents.
TITLE I—Provisions to increase retirement savings
Subtitle A—Employee access to retirement savings at
work
Sec. 101. Employees not covered by qualified retirement plans
or arrangements entitled to participate in payroll deposit IRA
arrangements.
Sec. 102. Credit for small employers maintaining payroll
deposit IRA arrangements.
Sec. 103. Establishment of automatic IRAs.
Sec. 104. Establishment of TSP II Board.
Subtitle B—Other provisions
Sec. 111. Modifications to computation of saver's credit;
saver's credit made refundable.
Sec. 112. Qualified cash or deferred arrangements must allow
long-term employees working more than 500 but less than 1,000 hours per year to
participate.
Sec. 113. Transfers of unused benefits of health flexible
spending arrangement to certain retirement plans.
Sec. 114. Computation of limits on IRA and Roth IRA
contributions.
TITLE II—Provisions providing for preservation of
income
Sec. 201. Exclusion of certain qualified annuity
payments.
Sec. 202. Exclusion for lifetime annuity payments.
Sec. 203. Joint study of application of spousal consent rules
to defined contribution plans.
Sec. 204. Facilitating longevity insurance.
TITLE III—Provisions ensuring equity in divorce
Sec. 301. Special rules relating to treatment of qualified
domestic relations orders.
Sec. 302. Elimination of current connection requirement under
Railroad Retirement Act for certain survivors.
Sec. 303. Permitting divorced spouses and widows and widowers
to remarry after turning 60 without a penalty under Railroad Retirement
Act.
Sec. 304. Repeal of jurisdictional requirement for court to
treat military retirement pay as property of the military member and
spouse.
Sec. 305. Modification of reductions in disposable retired pay
for payments in compliance with court orders.
TITLE IV—Provisions to improve financial literacy
Sec. 401. Grants to community-based taxpayer clinics to provide
retirement savings advice.
Sec. 402. Treatment of qualified retirement planning
services.
Sec. 403. Retirement handbook and retirement readiness
checklist.
TITLE V—Incentives for small businesses to establish and maintain
retirement plans for employees
Sec. 501. Credit for qualified pension plan contributions of
small employers.
Sec. 502. Deduction for pension contributions allowed in
computing net earnings from self-employment.
Sec. 503. Exemption of deferral-only qualified cash or deferred
arrangements from top-heavy plan rules.
Sec. 504. Extension of time for small pension plans to adopt
required plan qualification amendments.
<enum>I</enum><header display-inline="yes-display-inline">Provisions to increase retirement
savings</header>
<subtitle commented="no" id="id6E73884FA1B7491EA8F64CD621B110F2" level-type="subsequent" style="OLC"><enum>A</enum><header display-inline="yes-display-inline">Employee access to retirement savings at
work</header>
<section commented="no" display-inline="no-display-inline" id="id4A53DD3D87224181A7C6198869833143" section-type="subsequent-section"><enum>101.</enum><header display-inline="yes-display-inline">Employees not covered by qualified
retirement plans or arrangements entitled to participate in payroll deposit IRA
arrangements</header>
<subsection commented="no" display-inline="no-display-inline" id="id49EBAAE79C9047AF8E5F8F286C92CFF4"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subpart A of part I of subchapter A of
chapter 1 (relating to pension, profit-sharing, stock bonus plans, etc.) is
amended by inserting after section 408A the following new section:</text>
<quoted-block display-inline="no-display-inline" id="H80FAA2D0F1AA437B81BA13686F779963" style="OLC">
<section commented="no" display-inline="no-display-inline" id="H5A7A10CB81E04174BB95866038D49CB8" section-type="subsequent-section"><enum>408B.</enum><header display-inline="yes-display-inline">Right to payroll deposit IRA arrangements
at work</header>
<subsection commented="no" display-inline="no-display-inline" id="HE86B57B1454F48C8BA55C8207D5344BA"><enum>(a)</enum><header display-inline="yes-display-inline">Requirement To provide payroll deposit IRA
arrangement</header><text display-inline="yes-display-inline">Each employer
(other than an employer described in subsection (e)) shall provide to each
applicable employee of the employer for any calendar year the opportunity to
participate in a payroll deposit IRA arrangement which meets the requirements
of this section.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HD7656DF1FC0343AC8843CA8200FB03A"><enum>(b)</enum><header display-inline="yes-display-inline">Payroll deposit IRA
arrangement</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H2383031EAE6B4B179E82A7F6E86C1E"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>payroll deposit IRA
arrangement</term> means a written arrangement of an employer—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HD8821F8AC80347B08FD51200634586FC"><enum>(A)</enum><text display-inline="yes-display-inline">under which an applicable employee eligible
to participate in the arrangement may elect to contribute to an individual
retirement plan established by or on behalf of the employee by having the
employer make periodic direct deposit or other payroll deposit payments
(including electronic payments) to the plan by payroll deduction, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HF1BED65C2C6A4F7599D87E005596D409"><enum>(B)</enum><text display-inline="yes-display-inline">which meets the requirements of paragraph
(2).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H2BCE1F3E724E45518D4B52CDA7CDA700"><enum>(2)</enum><header display-inline="yes-display-inline">Administrative requirements</header><text display-inline="yes-display-inline">The requirements of this paragraph are met
with respect to any payroll deposit IRA arrangement if—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HE6F5A577AC3D4925B09E8542722CE92D"><enum>(A)</enum><text display-inline="yes-display-inline">the employer must make the payments elected
under paragraph (1)(A) on or before the later of—</text>
<clause commented="no" display-inline="no-display-inline" id="H0B64AAB6CC5D4FFABA00E339B5A16E94"><enum>(i)</enum><text display-inline="yes-display-inline">the due date for the deposit of tax
required to be deducted and withheld under chapter 24 (relating to collection
of income tax at source on wages) for the payroll period to which such payments
relate, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H315C57EF38984F0990ADA9549058EE3"><enum>(ii)</enum><text display-inline="yes-display-inline">the 30th day following the last day of the
month with respect to which the payments are to be made,</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HD039A5620B5B4C3FA6CDE2AE37E242C1"><enum>(B)</enum><text display-inline="yes-display-inline">subject to a requirement for reasonable
notice, an employee may elect to terminate participation in the arrangement at
any time during a calendar year, except that if an employee so terminates, the
arrangement may provide that the employee may not elect to resume participation
until the beginning of the next calendar year,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H13E1D0C27ED9478100F7D8906FA1C126"><enum>(C)</enum><text display-inline="yes-display-inline">each employee eligible to participate may
elect, during the 60-day period or other period specified by the Secretary
before the beginning of any calendar year (and during the 60-day period or
other period specified by the Secretary before the first day the employee is
eligible to participate), to participate in the arrangement, or to modify the
employee's election under the arrangement (including the amounts subject to the
arrangement and the manner in which such amounts are invested), for such
year,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HE9938E74D67C466CB9193CEF002C6075"><enum>(D)</enum><text display-inline="yes-display-inline">the employer provides—</text>
<clause commented="no" display-inline="no-display-inline" id="H94595836A15B41A98D6F6857DE9543AC"><enum>(i)</enum><text display-inline="yes-display-inline">immediately before the beginning of each
period described in subparagraph (C), a notice to each employee of the
employee’s opportunity to make the election and the maximum amount which may be
contributed to an individual retirement plan on an annual basis, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H67929F59A974454B8D5F48DCF76B669E"><enum>(ii)</enum><text display-inline="yes-display-inline">if the arrangement includes an automatic
enrollment arrangement, the notices required under subsection (h) with respect
to the automatic enrollment arrangement,</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H9CB81710126C4ABF89A090E59DFFE6"><enum>(E)</enum><text display-inline="yes-display-inline">subject to subsection (f), the arrangement
provides that an employee may elect to have contributions made to any
individual retirement plan specified by the employee, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HE0B12A79C8094A66A2C99E3B7196008E"><enum>(F)</enum><text display-inline="yes-display-inline">if the arrangement does not include an
automatic enrollment arrangement—</text>
<clause commented="no" display-inline="no-display-inline" id="HCA60AFDC42234404A3DDF5222919E1B"><enum>(i)</enum><text display-inline="yes-display-inline">the arrangement requires the employer to
take all reasonable actions to solicit from all employees eligible to
participate in the arrangement an explicit election to either participate or
not to participate in the arrangement, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HE7E2BBFC730B40B486CFED6981B55676"><enum>(ii)</enum><text display-inline="yes-display-inline">the arrangement provides that if an
employee fails to make an explicit election under clause (i) within the time
prescribed under the arrangement, the employee will be treated as having made
an election to participate in the arrangement (and amounts shall be invested on
behalf of the participant) in the same manner as if the arrangement had
included an automatic enrollment arrangement under subsection (g).</text>
</clause></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H5A094F7C2D5F4D06B418C9A48E1266F9"><enum>(c)</enum><header display-inline="yes-display-inline">Applicable employee defined; related
definitions and rules</header><text display-inline="yes-display-inline">For
purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H79F22F4314FF468A9F65FF22132B1258"><enum>(1)</enum><header display-inline="yes-display-inline">Applicable employee</header>
<subparagraph commented="no" display-inline="no-display-inline" id="H8EE017C8DB7E4093965C5BB027B1D136"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>applicable employee</term>
means, with respect to any calendar year, any employee—</text>
<clause commented="no" display-inline="no-display-inline" id="HA4BA561159B54CA78EFC0082E5A078C4"><enum>(i)</enum><text display-inline="yes-display-inline">who was not eligible under a qualified plan
or arrangement maintained by the employer for service for the preceding
calendar year, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H6460CABCCCC1410B83BC6D557499BFB1"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to whom it is reasonable to
expect that the employee will not be eligible during the calendar year under
such a qualified plan or arrangement.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H89747D539DC44C75B70000AD40002E86"><enum>(B)</enum><header display-inline="yes-display-inline">Special rules</header><text display-inline="yes-display-inline">For purposes of subparagraph (A)(i)—</text>
<clause commented="no" display-inline="no-display-inline" id="H9109BB7EAB454C8791C5412E1988E787"><enum>(i)</enum><header display-inline="yes-display-inline">Eligibility</header><text display-inline="yes-display-inline">An employee shall be treated as eligible
under a plan for a preceding calendar year if, as of the last day of the last
plan year ending in the preceding calendar year, the employee has satisfied the
plan's eligibility requirements.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HEC3252CD29AC470C9BC704004E10652B"><enum>(ii)</enum><header display-inline="yes-display-inline">Excluded
plans</header><text display-inline="yes-display-inline">A qualified plan or
arrangement shall not be taken into account under this paragraph if—</text>
<subclause commented="no" display-inline="no-display-inline" id="HE881B8B062CD4F92A8AABFBAEC929C7"><enum>(I)</enum><text display-inline="yes-display-inline">the plan or arrangement is frozen as of the
first day of the preceding calendar year, or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="H809CC5670D654718A8D6BB008CA01698"><enum>(II)</enum><text display-inline="yes-display-inline">in the case of a plan or arrangement under
which the only contributions are discretionary on the part of the sponsor,
there has not been an employer contribution made to the plan or arrangement for
the 2-plan-year period ending with the last plan year ending in the second
preceding calendar year and it is not reasonable to assume that an employer
contribution will be made for the plan year ending in the preceding calendar
year.</text>
</subclause></clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HD5DC2D8D5EC941A3AEE27CF6926B2FE"><enum>(2)</enum><header display-inline="yes-display-inline">Excludable employees</header><text display-inline="yes-display-inline">An employer may elect to exclude from
treatment as applicable employees under paragraph (1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H3F1C1F42B1D1493C8D5BA51E7FB65B"><enum>(A)</enum><text display-inline="yes-display-inline">employees described in section
410(b)(3),</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HF8822A9E068F4133ADE9F4AC02E4CF5C"><enum>(B)</enum><text display-inline="yes-display-inline">employees who have not attained the age of
18 before the beginning of the calendar year,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HFC060F335C2B4728A6B5656BBE05396"><enum>(C)</enum><text display-inline="yes-display-inline">employees who have not completed at least 3
months of service with the employer,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H6CF9AA4B0DBC4354B86EA0DEA6B7F80"><enum>(D)</enum><text display-inline="yes-display-inline">in the case of an employer that maintains a
qualified plan or arrangement which generally excludes employees who have not
satisfied the eligibility requirements described in section 410(a)(1)(A)
(without regard to section 410(a)(1)(B)), employees who have not yet satisfied
such requirements,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H54CF2750C912421A00B58768FA004D00"><enum>(E)</enum><text display-inline="yes-display-inline">employees who are eligible to make salary
reduction contributions under an arrangement which meets the requirements of
section 403(b), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HD3BBD863800E469E99B53359CAA7C4E3"><enum>(F)</enum><text display-inline="yes-display-inline">all employees of the employer if the
employer maintains an arrangement described in section 408(p).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HBBE0DF8BB8F24930B9B17DDF25D3C6C4"><enum>(3)</enum><header display-inline="yes-display-inline">Qualified plan or arrangement</header><text display-inline="yes-display-inline">The term <term>qualified plan or
arrangement</term> means a plan, contract, pension, or trust described in
section 219(g)(5).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H945CC08228604B2B8F20990151848B66"><enum>(4)</enum><header display-inline="yes-display-inline">Exception for employees of governments and
churches</header><text display-inline="yes-display-inline">The term
<term>applicable employee</term> shall not include an employee of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H79C987199A744D649833AB179BF3929B"><enum>(A)</enum><text display-inline="yes-display-inline">a government or entity described in section
414(d), or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H569FCA574F6B4B1695227EE7FA115BC9"><enum>(B)</enum><text display-inline="yes-display-inline">a church or a convention or association of
churches which is exempt from tax under section 501, including any employee
described in section 414(e)(3)(B).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H5238C47B220249CABB2D4645B66005BE"><enum>(5)</enum><header display-inline="yes-display-inline">Designation of applicable
employees</header><text display-inline="yes-display-inline">The Secretary shall
issue guidelines for determining the class or classes of employees to be
covered by a payroll deposit IRA arrangement. Such guidelines shall provide
that if an employer elects under paragraph (2) to exclude employees from the
arrangement, the employer shall specify the classification or categories of
employees who are not so covered.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H12EE2A29FB6A455784953F4385B60845"><enum>(d)</enum><header display-inline="yes-display-inline">Payroll deposit IRA contributions treated
like other contributions to individual retirement plans</header>
<paragraph commented="no" display-inline="no-display-inline" id="H401B89AA972E4397A9DC8038B056BA75"><enum>(1)</enum><header display-inline="yes-display-inline">Tax treatment unaffected</header><text display-inline="yes-display-inline">The fact that a contribution to an
individual retirement plan is made on behalf of an employee under a payroll
deposit IRA arrangement instead of being made directly by the employee shall
not affect the deductibility or other tax treatment of the contribution or of
other amounts under this title.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HA510C76932A24DE9B63B16BDF0BDF847"><enum>(2)</enum><header display-inline="yes-display-inline">Payroll savings contributions taken into
account</header><text display-inline="yes-display-inline">Any contribution made
on behalf of an employee under a payroll deposit IRA arrangement shall be taken
into account in applying the limitations on contributions to individual
retirement plans and the other provisions of this title applicable to
individual retirement plans as if the contribution had been made directly by
the employee.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HD0D850407ECD4878B90065C53E3E5862"><enum>(e)</enum><header display-inline="yes-display-inline">Exception for certain small and new
employers</header>
<paragraph commented="no" display-inline="no-display-inline" id="H0D5B81376DF349258940DB7359FE9E9B"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The requirements of this section shall not
apply for any calendar year to an employer if—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H8E7FB5340A714180AB7E00D957A7B067"><enum>(A)</enum><text display-inline="yes-display-inline">the employer did not have more than 10
employees who received at least $5,000 of compensation from the employer for
the preceding calendar year, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H810B15B8EFE9411096C7D9D42750055C"><enum>(B)</enum><text display-inline="yes-display-inline">was not in existence at all times during
the 2 preceding calendar years and did not have more than 100 employees who
received at least $5,000 of compensation from the employer on any day during
either of the 2 preceding calendar years.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H6DA61CEC00E54CC1BDD1FF7F5D072549"><enum>(2)</enum><header display-inline="yes-display-inline">Operating rules</header><text display-inline="yes-display-inline">In determining the number of employees for
purposes of this subsection—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HB79D218948F54A22A4864DB24C8846D1"><enum>(A)</enum><text display-inline="yes-display-inline">any rule applicable in determining the
number of employees for purposes of section 408(p)(2)(C) shall be applicable
under this subsection,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HD73D5AD849D3429ABE5EB60A207AD39"><enum>(B)</enum><text display-inline="yes-display-inline">all members of the same family (within the
meaning of section 318(a)(1)) shall be treated as 1 individual, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H802F2FF7512844E4B4680083535249BB"><enum>(C)</enum><text display-inline="yes-display-inline">any reference to an employer shall include
a reference to any predecessor employer.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H3D7FA6B965DA42640096B1CAAF19F7FF"><enum>(f)</enum><header display-inline="yes-display-inline">Deposits to individual retirement plans
other than those selected by employee</header>
<paragraph commented="no" display-inline="no-display-inline" id="HC6732737AB62448B99FE801E339F1F00"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">An employer shall not be treated as failing
to satisfy the requirements of this section or any other provision of this
title merely because the employer makes all contributions (or all contributions
on behalf of employees who do not specify an individual retirement plan,
trustee, or issuer to receive the contributions) to individual retirement plans
specified in paragraph (2) or (4).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF885F0A1A95A4C53B0F549AC78E7C5E8"><enum>(2)</enum><header display-inline="yes-display-inline">Plans of a designated trustee or
issuer</header><text display-inline="yes-display-inline">An employer may elect
to have contributions for all applicable employees participating in a payroll
deposit IRA arrangement made to individual retirement plans of a designated
trustee or issuer under the arrangement. The preceding sentence shall not apply
unless each participant is notified in writing that the participant’s balance
may be transferred without cost or penalty to another individual retirement
plan established by or on behalf of the participant.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF69DF7C3AF8744AAA420EE8FC7B6337E"><enum>(3)</enum><header display-inline="yes-display-inline">Payroll tax deposit procedure</header><text display-inline="yes-display-inline">The Secretary, in consultation with the TSP
II Board, shall establish a procedure under which an employer—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H17BDAFF6484F43BFA7A29B00E900819C"><enum>(A)</enum><text display-inline="yes-display-inline">may include with each deposit of tax
required to be deducted and withheld under chapter 24 the aggregate amounts,
for the period covered by the deposit, which applicable employees have
designated under subsection (b)(1)(A) (or are deemed to have designated under
subsection (b)(2)(F)(ii) or under an automatic enrollment arrangement described
in subsection (g)) for contribution to individual retirement plans, established
on behalf of the employees under paragraph (4), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HB66BE3C261574784A2FBAA7007C004E"><enum>(B)</enum><text display-inline="yes-display-inline">specifies, in such manner as the Secretary
may prescribe, the following information for each applicable employee for whom
a contribution is to be made:</text>
<clause commented="no" display-inline="no-display-inline" id="H0020FF0F5B4F489DBABA5B182FFEA246"><enum>(i)</enum><text display-inline="yes-display-inline">The employee's name and TIN.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HC92EA27A99C842FB88B5E33C7D81E499"><enum>(ii)</enum><text display-inline="yes-display-inline">The amount of the contribution.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H98574F40838549D5A324B6313736E800"><enum>(iii)</enum><text display-inline="yes-display-inline">The investment options selected by the
employee (or deemed to have been selected by the employee under such automatic
enrollment arrangement) and the amount of the contribution allocated to each
option.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H8C702EB262CC43AFBC372218F175B7B9"><enum>(4)</enum><header display-inline="yes-display-inline">Establishment and maintenance of accounts
under payroll tax deposit procedure</header>
<subparagraph commented="no" display-inline="no-display-inline" id="H0BCA4AB88D124FBABBA3C2BD832D6FE0"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subject to the provisions of this section
and section 408C, the TSP II Board shall provide for the establishment and
maintenance of individual retirement plans (including automatic IRAs) into
which contributions may be deposited under paragraph (3). To the maximum extent
practicable, the TSP II Board shall—</text>
<clause commented="no" display-inline="no-display-inline" id="H3DD9C110CF364300BD91A48844789600"><enum>(i)</enum><text display-inline="yes-display-inline">enter into contracts with persons eligible
to be trustees of individual retirement plans under section 408 to establish
such plans, to provide the investment funds and investment management, and to
provide notice, record keeping, and other administrative services, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HDAE70C37CF1F47E0AD20C478CB2BB996"><enum>(ii)</enum><text display-inline="yes-display-inline">ensure that the costs of investment
management and administration are kept to a minimum, including through
consideration of the use of investments which involve passive management and
which seek to replicate the performance of a portion of the market.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H673EDC563DB843219D58AF2B61FA9D88"><enum>(B)</enum><header display-inline="yes-display-inline">Payroll deposit features</header><text display-inline="yes-display-inline">The TSP II Board shall establish procedures
so that contributions may be made to individual retirement plans (including
automatic IRAs) under paragraph (3) without undue administrative or paperwork
requirements on participating employers. Such procedures shall ensure that only
1 such plan may be established for each TIN.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H3BF25F4754234276AD8850442993071F"><enum>(C)</enum><header display-inline="yes-display-inline">Limitation on rollovers</header><text display-inline="yes-display-inline">If—</text>
<clause commented="no" display-inline="no-display-inline" id="H297749FE3E16404F002FCDAEF08F2EF1"><enum>(i)</enum><text display-inline="yes-display-inline">any amount is paid or distributed out of an
individual retirement plan established under this paragraph, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HC51EAB9F8389483187FECECB682CA749"><enum>(ii)</enum><text display-inline="yes-display-inline">such amount is paid into an individual
retirement plan which was not established under this paragraph,</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">the payment described in clause
(ii) shall be treated as a rollover contribution for purposes of section
408(d)(3) if and only if the balance to the credit of the individual in such
individual retirement plan or arrangement immediately before the payment
described in clause (i) was at least $15,000.</continuation-text></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H02AA0C701EE0414A83FDEC7206CBF11"><enum>(g)</enum><header display-inline="yes-display-inline">Coordination with automatic enrollment and
other default election provisions</header>
<paragraph commented="no" display-inline="no-display-inline" id="HA10E9599A7784CD1A36FE4A546787900"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Contributions under a payroll deposit IRA
arrangement may be made pursuant to an automatic enrollment arrangement.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H55421CEE2C374F5C967152B7FA173DDC"><enum>(2)</enum><header display-inline="yes-display-inline">Automatic enrollment
arrangement</header><text display-inline="yes-display-inline">The term
<term>automatic enrollment arrangement</term> means an arrangement under a
payroll deposit IRA arrangement and subject to rules prescribed by the
Secretary—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HCA59A622695E496FB67C85F7E9B8E2F"><enum>(A)</enum><text display-inline="yes-display-inline">under which an individual may elect to have
the employer make payments as contributions to an individual account plan on
behalf of the individual, or to the individual directly in cash,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H92A8048D6B02445D829203F667B3CED8"><enum>(B)</enum><text display-inline="yes-display-inline">under which the individual is treated as
having elected to have the employer make such contributions in an amount equal
to a specified percentage of compensation or dollar amount until the individual
specifically elects not to have such contributions made (or specifically elects
to have such contributions made at a different percentage or in a different
amount), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HEDBE56FC73ED477BAAE66023598F641C"><enum>(C)</enum><text display-inline="yes-display-inline">which meets notice requirements
substantially similar to those described in section 414(w)(4).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HD4D84DFA15244D01B37463F333112BDA"><enum>(3)</enum><header display-inline="yes-display-inline">Default investments</header><text display-inline="yes-display-inline">If an employee is deemed under an automatic
enrollment arrangement to have made an election to participate in a payroll
deposit IRA arrangement—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HBB2C8F282D9B468CB8A50050072D1308"><enum>(A)</enum><text display-inline="yes-display-inline">the employee shall be deemed to have made
an election to make contributions in the amount specified in paragraph
(4),</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H0873BC9AD9EF4E89BA4199AEE1EAAFF"><enum>(B)</enum><text display-inline="yes-display-inline">such contributions shall be transferred
to—</text>
<clause commented="no" display-inline="no-display-inline" id="H9C3153FA044C405DA0B23971ED6E27BD"><enum>(i)</enum><text display-inline="yes-display-inline">an automatic IRA, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HB140ACE7553444818CA4CC3FB2C5C8E"><enum>(ii)</enum><text display-inline="yes-display-inline">if the employer has made an election under
subsection (f)(2), to an individual retirement plan of the designated trustee
or issuer but only if the requirements of subparagraph (C) are met with respect
to such individual retirement plan, and</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HB9880F214EC044C794D5D08870D3B2F0"><enum>(C)</enum><text display-inline="yes-display-inline">such contributions shall be invested as
provided in paragraph (5).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF54A9954566440D2B717B134BD9DB9FC"><enum>(4)</enum><header display-inline="yes-display-inline">Amount of contributions</header>
<subparagraph commented="no" display-inline="no-display-inline" id="HB1C8E86EB8FA4C18A12403AD5A52903"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amount specified in this paragraph is 3
percent of compensation.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H603C3A2EBBEF48CD94AB9BBF17599100"><enum>(B)</enum><header display-inline="yes-display-inline">Authority of board to provide for annual
increases</header><text display-inline="yes-display-inline">The TSP II Board
may by regulation provide for annual increases in the percentage of
compensation an employee is deemed to have elected under paragraph (2) but in
no event shall the percentage of compensation an employee is deemed to have
elected exceed 8 percent.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HD5AC8C273E2B4F2998901200B62CB677"><enum>(C)</enum><header display-inline="yes-display-inline">Contribution limit</header><text display-inline="yes-display-inline">The contributions under paragraph (2) on
behalf of an employee for any calendar year shall not exceed the dollar limits
applicable to the employee for the calendar year under section 219 or
408A.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF94855ADBC6442ED8E4D159BD0F24E57"><enum>(5)</enum><header display-inline="yes-display-inline">Investment in life cycle fund or other
investments specified by the board</header><text display-inline="yes-display-inline">Amounts contributed under paragraph (3)
shall be invested in—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HCF55EB13C82A46BC9320EA313DECAAA0"><enum>(A)</enum><text display-inline="yes-display-inline">a life cycle fund similar to the life cycle
funds offered under the Thrift Savings Fund established under subchapter III of
chapter 84 of title 5, United States Code, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H6465F724F3F9439FBD6219007C763200"><enum>(B)</enum><text display-inline="yes-display-inline">such other investment or investments as the
TSP II Board specifies in regulations (which shall be promulgated after taking
into account, but not necessarily conforming to, regulations prescribed by the
Secretary of Labor under section 404(c)(5) of the Employee Retirement Income
Security Act of 1974) and which entails asset allocation and extensive
diversification.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="H59D81B237CD1470E950315248349AE62"><enum>(6)</enum><header display-inline="yes-display-inline">Coordination with withholding</header><text display-inline="yes-display-inline">The Secretary shall modify the withholding
exemption certificate under section 3402(f) so that any notice and election
requirements with respect to an automatic enrollment arrangement which is part
of a payroll deposit IRA arrangement may be met through the use of such
certificate.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H1A3492A058444749008112D25340397F"><enum>(h)</enum><header display-inline="yes-display-inline">Model notice</header><text display-inline="yes-display-inline">The Secretary, in consultation with the TSP
II Board, shall—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H9EF02C12C5B04AB6BD2242F96E87E25E"><enum>(1)</enum><text display-inline="yes-display-inline">provide a model notice, written in a manner
calculated to be understandable to the average worker, that is simple for
employers to use—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H74CA7D573FD94A4BA15600C115825CEE"><enum>(A)</enum><text display-inline="yes-display-inline">to notify employees of the requirement
under this section for the employer to provide certain employees with the
opportunity to participate in a payroll deposit IRA arrangement, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HA08712B0AF8E47A4BDF5CF41450DB19"><enum>(B)</enum><text display-inline="yes-display-inline">to satisfy the requirements of subsection
(b)(2)(D),</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="HBB1B144CF87B4D3495BFF00EF31CD00"><enum>(2)</enum><text display-inline="yes-display-inline">provide uniform forms for enrollment,
including automatic enrollment, in a payroll deposit IRA arrangement,
and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HAA5A1C99F0F64CD08B517031973329C2"><enum>(3)</enum><text display-inline="yes-display-inline">establish a web site or other electronic
means for small employers to access and use to obtain information on payroll
deposit IRA arrangements and to obtain required notices and forms.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HEF6726EA8FD24FB198FEF05EC0F01D00"><enum>(i)</enum><header display-inline="yes-display-inline">Cross reference</header><text display-inline="yes-display-inline">For provision preempting conflicting State
laws, see section 2(g) of the <short-title>Women's
Retirement Security Act of
2007</short-title>.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idA1E846CFEA6943C2A0F3BA04C4E96CED"><enum>(b)</enum><header display-inline="yes-display-inline">Notice of availability of investment
guidelines</header><text display-inline="yes-display-inline">Section 408(i)
(relating to reports) is amended by adding at the end the following new
sentence: <quote>Any report furnished under paragraph (2) to an individual
shall include notice of the availability of, and methods of acquiring, the
basic investment guidelines prepared by the Secretary of Labor.</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id5F376E2957974D4EB5EB6AF689B32577"><enum>(c)</enum><header display-inline="yes-display-inline">Development of basic investment
guidelines</header>
<paragraph commented="no" display-inline="no-display-inline" id="idA428421751144F20B057A256DC244D59"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The Secretary of Labor shall, in
consultation with the Secretary of Treasury, develop and publish basic
guidelines for investing for retirement. Except as otherwise provided by the
Secretary of Labor, such guidelines shall include—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id95598A5261A14CC3B9D71A5864FB593B"><enum>(A)</enum><text display-inline="yes-display-inline">information on the benefits of
diversification,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id66680B14C0574A3888F5ED880FB6A6E8"><enum>(B)</enum><text display-inline="yes-display-inline">information on the essential differences,
in terms of risk and return, between various pension plan investments,
including stocks, bonds, mutual funds, and money market investments,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idE641F55300AD4ED4890400C6F09F4BCC"><enum>(C)</enum><text display-inline="yes-display-inline">information on how an individual’s pension
plan investment allocations may differ depending on the individual’s age and
years to retirement and on other factors determined by the Secretary of
Labor,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idCF5804A3BD7D42AB81C224C50360F5A3"><enum>(D)</enum><text display-inline="yes-display-inline">sources of information where individuals
may learn more about pension rights, individual investing, and investment
advice, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id242DEEDC9A994D9EB335636E86C54542"><enum>(E)</enum><text display-inline="yes-display-inline">such other information related to
individual investing as the Secretary of Labor determines appropriate.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBEC913134EC042A6BD0E3B8C9BF618E6"><enum>(2)</enum><header display-inline="yes-display-inline">Calculation information</header><text display-inline="yes-display-inline">The guidelines under paragraph (1) shall
include addresses for Internet sites and worksheets which a participant or
beneficiary in a pension plan may use to calculate—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id5DE4E015E9F54CA1A5263C22A5762011"><enum>(A)</enum><text display-inline="yes-display-inline">the retirement age value of the
participant’s or beneficiary’s nonforfeitable pension benefits under the plan
(expressed as an annuity amount and determined by reference to varied
historical annual rates of return and annuity interest rates), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id867DA47FF0024449870F8A60C7B4554A"><enum>(B)</enum><text display-inline="yes-display-inline">other important amounts relating to
retirement savings, including the amount which a participant or beneficiary
would be required to save annually to provide a retirement income equal to
various percentages of their current salary (adjusted for expected growth prior
to retirement).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id94266F1BED414575838063BFEF037ED3"><enum>(3)</enum><header display-inline="yes-display-inline">Public
comment</header><text display-inline="yes-display-inline">The Secretary of
Labor shall provide at least 90 days for public comment on proposed guidelines
before publishing the final guidelines.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idF554A286312B4DB4BACC2167CDDF48EE"><enum>(4)</enum><header display-inline="yes-display-inline">Rules relating to guidelines</header><text display-inline="yes-display-inline">The guidelines under paragraph (1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id9AD7D61FDCAA4352B4B82527BBC8E110"><enum>(A)</enum><text display-inline="yes-display-inline">shall be written in a manner calculated to
be understood by the average plan participant, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8C52D31DB0DA4EEE892BB58C300CD744"><enum>(B)</enum><text display-inline="yes-display-inline">may be delivered in written, electronic, or
other appropriate manner to the extent such manner would ensure that the
guidelines are reasonably accessible to participants and beneficiaries.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id894AED8E6302419CB3E3C98BC8AFA044"><enum>(d)</enum><header display-inline="yes-display-inline">Penalty for failure To provide access to
payroll savings arrangements</header><text display-inline="yes-display-inline">Chapter 43 (relating to qualified pension,
etc., plans) is amended by adding at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id9D8AD3C3624C4CF897D9DCCF0C264AE0" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id1CDDFB0259104DCFA736FDEF9405106B" section-type="subsequent-section"><enum>4980H.</enum><header display-inline="yes-display-inline">Requirements for employers to provide
employees access to payroll deposit IRA arrangements</header>
<subsection commented="no" display-inline="no-display-inline" id="id939E1FD603684026853315FA6FE3338C"><enum>(a)</enum><header display-inline="yes-display-inline">General rule</header><text display-inline="yes-display-inline">There is hereby imposed a tax on any
failure by an employer to meet the requirements of subsection (d) for a
calendar year.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE821CD47578D4CB88737CFCB74E6FEFE"><enum>(b)</enum><header display-inline="yes-display-inline">Amount</header>
<paragraph commented="no" display-inline="no-display-inline" id="id511E7FAF5F804EA88FCCEE98FA2AD76E"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amount of the tax imposed by subsection
(a) on any failure for any calendar year shall be $100 with respect to each
employee to whom such failure relates.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id286AA34037C9444A9CA26CB10CDDB64A"><enum>(2)</enum><header display-inline="yes-display-inline">Tax not to apply where failure not
discovered and reasonable diligence exercised</header><text display-inline="yes-display-inline">No tax shall be imposed by subsection (a)
on any failure during any period for which it is established to the
satisfaction of the Secretary that the employer subject to liability for the
tax did not know that the failure existed and exercised reasonable diligence to
meet the requirements of subsection (d). In no event shall the tax be imposed
with respect to any failure that ends before the expiration of 90 days after
the employer has responded or has had a reasonable opportunity to respond to a
request for confirmation of compliance under subsection (c).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id1340C45D65724FE0864EDAE54D282638"><enum>(3)</enum><header display-inline="yes-display-inline">Tax not to apply to failures corrected
within 30 days</header><text display-inline="yes-display-inline">No tax shall
be imposed by subsection (a) on any failure if—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id2C246677E808406D889C982D167C1064"><enum>(A)</enum><text display-inline="yes-display-inline">the employer subject to liability for the
tax under subsection (a) exercised reasonable diligence to meet the
requirements of subsection (d), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9ADEDD1A564C4C48A5ABC8C3899643FF"><enum>(B)</enum><text display-inline="yes-display-inline">the employer provides the payroll deposit
IRA arrangement described in section 408B to each employee eligible to
participate in the arrangement by the end of the 30-day period beginning on the
first date the employer knew, or exercising reasonable diligence would have
known, that such failure existed.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7FF1E28E2BFA4B3B9F30AAA182DFAED8"><enum>(4)</enum><header display-inline="yes-display-inline">Waiver by Secretary</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="id1F0A0002012A4AD7AF6B164D3714B8DA"><enum>(c)</enum><header display-inline="yes-display-inline">Procedures for notice</header><text display-inline="yes-display-inline">Not later than 6 months after the date of
the enactment of this section, the Secretary shall prescribe and implement
procedures for obtaining from employers confirmation that such employers are in
compliance with the requirements of subsection (d). The Secretary, in the
Secretary’s discretion, may prescribe that the confirmation shall be obtained
on an annual or less frequent basis, and may use for this purpose the annual
report or quarterly report for employment taxes, or such other means as the
Secretary may deem advisable.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idB14E86CC61FF47CAB33E8459CAE5ABDB"><enum>(d)</enum><header display-inline="yes-display-inline">Requirement To provide employee access to
payroll deposit IRA arrangements</header><text display-inline="yes-display-inline">The requirements of this subsection are met
if the employer meets the requirements of section
408B.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id68D81CAF31CB4A2BAC05EF60B4FFD933"><enum>(e)</enum><header display-inline="yes-display-inline">Coordination with ERISA fiduciary
duties</header><text display-inline="yes-display-inline">Section 404(c)(2) of
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(2)) is
amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id8F4CB0BD847340739FC7E12802D57DDE"><enum>(1)</enum><text display-inline="yes-display-inline">by inserting <quote>or an individual
retirement plan designated by the employer under section 408B of such
Code</quote> after <quote>1986</quote>,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idA38C881CB22B447B8B665FA9692D83F4"><enum>(2)</enum><text display-inline="yes-display-inline">by inserting <quote>(7 days after notice
has been given to an employee that an individual retirement plan has been
established on behalf of the employee under section 408B of such Code)</quote>
after <quote>established</quote> in subparagraph (C), and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC34824C6EEA84E91B087259BB29D530D"><enum>(3)</enum><text display-inline="yes-display-inline">by inserting <quote>or with respect to an
individual retirement plan designated by an employer under section 408B of such
Code</quote> after <quote>arrangement</quote> in the last sentence.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id405A3EDA1CCC42E88E887A0F94A3C7FC"><enum>(f)</enum><header display-inline="yes-display-inline">Conforming amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="id228CC88E9A824D4E93AD982D1C515FC5"><enum>(1)</enum><text display-inline="yes-display-inline">The table of sections for subpart A of part
I of subchapter A of chapter 1 is amended by inserting after the item relating
to section 408A the following new item:</text>
<quoted-block display-inline="no-display-inline" id="id187E2688BB6A414EA60A34A46FB0C9AB" style="OLC">
<toc>
<toc-entry bold="off" idref="id8FF1994FAB1A4CC48AB96F5CD5208B50" level="section">Sec. 408B. Right to payroll deposit IRA arrangements at
work.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID90D183B61BC44317B1FD46631E376539"><enum>(2)</enum><text display-inline="yes-display-inline">The table of sections for chapter 43 is
amended by adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="IDA868C8F0DA6B432ABC59403585F653C8" style="USC">
<toc regeneration="no-regeneration">
<toc-entry bold="off" level="section">Sec. 4980H. Requirements for
employers to provide employees access to payroll deposit IRA
arrangements.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H0370F1617AB54F7F9067FFDFF3F45736"><enum>(g)</enum><header display-inline="yes-display-inline">Preemption of conflicting State
laws</header><text display-inline="yes-display-inline">The amendments made by
this section shall supersede any law of a State that would directly or
indirectly prohibit or restrict the establishment or operation of a payroll
deposit IRA arrangement meeting the requirements of section 408B of the
Internal Revenue Code of 1986 (including the inclusion in any such arrangement
of an automatic enrollment arrangement as defined in section 408B(g) of such
Code).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id1D90EB2304054CD6A617CC5AB00E9AB7"><enum>(h)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to calendar years beginning after December 31,
2008.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id2576507F91334ED4B91AC77CA4C3DE22" section-type="subsequent-section"><enum>102.</enum><header display-inline="yes-display-inline">Credit for small employers maintaining
payroll deposit IRA arrangements</header>
<subsection commented="no" display-inline="no-display-inline" id="id89E71B95A1E545F28480F517EF57F58F"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits) is amended by adding at the
end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id6563B2B5D2D5444C821E181E6D7F70A2" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id1B16679584A64CDEBDBCDE06EA91D7A2" section-type="subsequent-section"><enum>45O.</enum><header display-inline="yes-display-inline">Small employer payroll deposit IRA
arrangement costs</header>
<subsection commented="no" display-inline="no-display-inline" id="idFAB42458FF324910B9E015FA46383638"><enum>(a)</enum><header display-inline="yes-display-inline">General rule</header><text display-inline="yes-display-inline">For purposes of section 38, in the case of
an eligible employer maintaining a payroll deposit IRA arrangement meeting the
requirements of section 408B (without regard to whether or not the employer is
required to maintain the arrangement), the small employer payroll deposit IRA
arrangement cost credit determined under this section for any taxable year is
the amount determined under subsection (b).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idAB269CF83BDF4AA7ADA6CA0CECC22681"><enum>(b)</enum><header display-inline="yes-display-inline">Amount of credit</header>
<paragraph commented="no" display-inline="no-display-inline" id="idBF7B911701A043669433CE52533736F5"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amount of the credit determined under
this section for any taxable year with respect to an eligible employer shall be
equal to the lesser of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id411F722101D94526A37B13F7FDD30487"><enum>(A)</enum><text display-inline="yes-display-inline">$25 multiplied by the number of applicable
employees (within the meaning of section 408B(c)) for whom contributions are
made under the payroll deposit IRA arrangement referred to in subsection (a)
for the calendar year in which the taxable year begins, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA6697161862746EEB43A25571ADF0D13"><enum>(B)</enum><text display-inline="yes-display-inline">$250.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idA451AD4D47D949469FBFB48B3A381A5E"><enum>(2)</enum><header display-inline="yes-display-inline">Duration of credit</header><text display-inline="yes-display-inline">No credit shall be determined under this
section for any taxable year other than a taxable year which begins in the
first 2 calendar years in which the eligible employer maintains a payroll
deposit IRA arrangement meeting the requirements of section 408B.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB289BD5E7D10445AAFABDA994937718F"><enum>(3)</enum><header display-inline="yes-display-inline">Coordination with small employer startup
credit</header><text display-inline="yes-display-inline">No credit shall be
allowed under this section for any taxable year if a credit is determined under
section 45E for the taxable year.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id2ED1C2B566A54BE9B46CF473CDF3F648"><enum>(c)</enum><header display-inline="yes-display-inline">Eligible employer</header><text display-inline="yes-display-inline">For purposes of this section, the term
<term>eligible employer</term> means, with respect to any calendar year in
which the taxable year begins, an employer which maintains a payroll deposit
IRA arrangement meeting the requirements of section 408B and which, on each day
during the preceding calendar year, had no more than 100
employees.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idD89D9EF0457C4F4FB1C3B651A33D6029"><enum>(b)</enum><header display-inline="yes-display-inline">Credit allowed as part of general business
credit</header><text display-inline="yes-display-inline">Section 38(b)
(defining current year business credit) is amended by striking
<quote>plus</quote> at the end of paragraph (30), by striking the period at the
end of paragraph (31) and inserting <quote>, plus</quote>, and by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idB9CE69FCB2D84C12A9E041CA41388BEE" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id2F6871FF389841128375A71488DD2B93"><enum>(32)</enum><text display-inline="yes-display-inline">in the case of an eligible employer (as
defined in section 45O(c)) maintaining a payroll deposit IRA arrangement
meeting the requirements of section 408B, the small employer payroll deposit
IRA arrangement cost credit determined under section
45O(a).</text>
</paragraph><after-quoted-block></after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id2A52AD6784294F248000A300A24DC9DA"><enum>(c)</enum><header display-inline="yes-display-inline">Clerical amendment</header><text display-inline="yes-display-inline">The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by adding at the end the following
new item:</text>
<quoted-block display-inline="no-display-inline" id="idBD8422EEB0214F2C8A2B8EC4A08026B0" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry bold="off" level="section">Sec. 45O. Small employer
payroll deposit IRA arrangement costs.</toc-entry>
</toc>
<after-quoted-block>.
</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id61BF0580E8A64FAAB03748716EF24FA4"><enum>(d)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2008.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id9BB7855827044E00BD3AA3B969A2B635" section-type="subsequent-section"><enum>103.</enum><header display-inline="yes-display-inline">Establishment of automatic IRAs</header>
<subsection commented="no" display-inline="no-display-inline" id="id75693BBE3A4943098C686E3059909CA7"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subpart A of part I of subchapter A of
chapter 1 (relating to pension, profit-sharing, stock bonus plans, etc.), as
amended by section 101, is amended by inserting after section 408B the
following new section:</text>
<quoted-block display-inline="no-display-inline" id="id5C92D96E69CE4899B78B453BEB67922B" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id8FF1994FAB1A4CC48AB96F5CD5208B50" section-type="subsequent-section"><enum>408C.</enum><header display-inline="yes-display-inline">Automatic IRAs</header>
<subsection commented="no" display-inline="no-display-inline" id="idBF75AEA8AC1D417F90C54FAEEFD33837"><enum>(a)</enum><header display-inline="yes-display-inline">General rule</header><text display-inline="yes-display-inline">An automatic IRA shall be treated for
purposes of this title in the same manner as an individual retirement plan. An
automatic IRA may also be treated as a Roth IRA for purposes of this title if
it meets the requirements of section 408A.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id41C77156429E4938B702704852BF9136"><enum>(b)</enum><header display-inline="yes-display-inline">Automatic IRA</header><text display-inline="yes-display-inline">For purposes of this section, the term
<term>automatic IRA</term> means an individual retirement plan (as defined in
section 7701(a)(37)) which meets the investment and fee requirements under the
regulations under subsection (c).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idFF5EAB697716426AAF9BDE12BFF0CE11"><enum>(c)</enum><header display-inline="yes-display-inline">Investment and fee requirements</header>
<paragraph commented="no" display-inline="no-display-inline" id="id434C8FEA92804746861F1238D27BB130"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The TSP II Board, in consultation with the
Secretary and the Secretary of Labor, shall, not later than 1 year after the
date of the enactment of this section, prescribe regulations which set forth
the requirements of this subsection which an individual retirement plan must
meet in order to be treated as an automatic IRA.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id8721022EE0314D288231960887A1EEF9"><enum>(2)</enum><header display-inline="yes-display-inline">Investment options</header><text display-inline="yes-display-inline">The regulations under paragraph (1) shall
provide that an automatic IRA shall allow the individual on whose behalf the
individual retirement plan is established to invest contributions to, and
earnings of, the plan in all of the following investment options:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idADB47B59F644414DA58BF04AA015BC86"><enum>(A)</enum><text display-inline="yes-display-inline">Options which are similar to all investment
options which are available (at the time the plan is established) to a
participant in the Thrift Savings Fund established under subchapter III of
chapter 84 of title 5, United States Code.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id0D910ECC8DEC4716968D0565267CF97A"><enum>(B)</enum><text display-inline="yes-display-inline">Any other investment option specified in
the regulations.</text>
</subparagraph><continuation-text commented="no" continuation-text-level="paragraph">Such regulations shall specify which
of the investment options shall be treated as default investment options for
purposes of section 408B(g)(5).</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD6D40545A5134073BB776271DD625107"><enum>(3)</enum><header display-inline="yes-display-inline">Investment fees</header>
<subparagraph commented="no" display-inline="no-display-inline" id="idB6D4E5C68C644CEB94405486BBE545CB"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The regulations under paragraph (1) shall
provide that an automatic IRA shall not charge any investment fees which, in
the aggregate, are not reasonable (as determined under such
regulations).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id99A448EF5B9B4B4797AFD46A992BB598"><enum>(B)</enum><header display-inline="yes-display-inline">Investment fees</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term
<term>investment fees</term> includes any fee, commission, asset management
fee, compensation for services, or any other charge or fee specified in the
regulations under paragraph (1) which is imposed with respect to the automatic
IRA.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id2DDBEA1991844EBB8FCACF11594DDB12"><enum>(b)</enum><header display-inline="yes-display-inline">Studies of spousal consent requirements and
promotion of certain lifetime income arrangements</header>
<paragraph commented="no" display-inline="no-display-inline" id="id613992BB2FF6425ABFDC397E72ED7BAB"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The Secretary of the Treasury and the
Secretary of Labor shall jointly conduct a separate study of the feasibility
and desirability of each of the following:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id9298D782D7FF4A1BA813C7C850499A2B"><enum>(A)</enum><text display-inline="yes-display-inline">Extending to automatic IRAs spousal consent
requirements similar to, or based on, those that apply under the Federal
employees’ Thrift Savings Plan, including consideration of whether
modifications of such requirements are necessary to apply them to automatic
IRAs.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idE7E1FD74A31C414CB1954DA79420A11A"><enum>(B)</enum><text display-inline="yes-display-inline">Promoting the use of low-cost annuities,
longevity insurance, or other guaranteed lifetime income arrangements in
automatic IRAs, including consideration of—</text>
<clause commented="no" display-inline="no-display-inline" id="idFE4368FDB6A04857A8B06AF8F2ADA786"><enum>(i)</enum><text display-inline="yes-display-inline">appropriate means of arranging for, or
encouraging, individuals to receive at least a portion of their distributions
in some form of low-cost guaranteed lifetime income, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id4039AC331A354FA4AC3A6D70019D95A8"><enum>(ii)</enum><text display-inline="yes-display-inline">issues presented by possible additional
differences in, or uniformity of, provisions governing different IRAs.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id8F3EFF0429674F1C8D62063DFDCE9F74"><enum>(2)</enum><header display-inline="yes-display-inline">Report</header><text display-inline="yes-display-inline">Not later than 18 months after the date of
the enactment of this Act, the Secretaries shall report the results of each
study conducted under subsection (a), together with any recommendations for
legislative changes, to the Committees on Finance and Health, Education, Labor,
and Pensions of the Senate and the Committees on Ways and Means and Education
and Labor of the House of Representatives.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id5E658A1B681741FD9372137743A5EA96"><enum>(c)</enum><header display-inline="yes-display-inline">Mandatory transfers</header><text display-inline="yes-display-inline">Section 401(a)(31)(B) is amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id8B6361231B044576BA7AEF0A419FEF3F"><enum>(1)</enum><text display-inline="yes-display-inline">by inserting <quote>(including an automatic
IRA)</quote> after <quote>individual retirement plan</quote> each place it
appears, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id55EBC084C6774327B178FAE80995D4B4"><enum>(2)</enum><text display-inline="yes-display-inline">by adding at the end the following new
sentence: <quote>Any amount so transferred (and any earnings thereon) shall be
invested in a default investment described in section
408B(g)(5).</quote></text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID9EAA8ACDDAEA4BCBA1F4EE48ACB47BB8"><enum>(d)</enum><header display-inline="yes-display-inline">Clerical amendment</header><text display-inline="yes-display-inline">The table of sections for subpart A of part
I of subchapter A of chapter 1 is amended by inserting after the item relating
to section 408B the following new item:</text>
<quoted-block display-inline="no-display-inline" id="idF872B7A61FFF4FE58880B60D9F9736C6" style="OLC">
<toc>
<toc-entry bold="off" idref="id8FF1994FAB1A4CC48AB96F5CD5208B50" level="section">Sec. 408C. Automatic
IRAs.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID9736BD155EC547AFB41F9CC43C299500"><enum>(e)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to calendar years beginning on or after the date on
which proposed and temporary or final regulations described in section 408C(c)
of the Internal Revenue Code of 1986 (as added by this Act) are issued.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id46C978E43051425C891F50D3927CF172" section-type="subsequent-section"><enum>104.</enum><header display-inline="yes-display-inline">Establishment of TSP II Board</header>
<subsection commented="no" display-inline="no-display-inline" id="idF68D40D57E2D4B78848794392985DFE2"><enum>(a)</enum><header display-inline="yes-display-inline">Establishment</header><text display-inline="yes-display-inline">There is established in the executive
branch of the Government a TSP II Board. The board shall be established and
maintained in the same manner as the Federal Retirement Thrift Investment Board
under subchapter VII of chapter 84 of title 5, United States Code.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id9F9BF65803E04EA9AF1892D820599942"><enum>(b)</enum><header display-inline="yes-display-inline">Executive director</header><text display-inline="yes-display-inline">The TSP II Board shall appoint an Executive
Director in a similar manner and with similar functions as the Executive
Director of the Federal Retirement Thrift Investment Board under section 8474
of title 5, United States Code.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idEE89DE7FA3614B12AF139EEC756CE7A6"><enum>(c)</enum><header display-inline="yes-display-inline">Duties of board</header><text display-inline="yes-display-inline">The TSP II Board shall establish policies
and procedures for—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idDDEBBE5157654F6D990C717183B47AAC"><enum>(1)</enum><text display-inline="yes-display-inline">establishment and maintenance of individual
retirement plans under section 408B(f)(3) of the Internal Revenue Code of
1986,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idBB92B3E6666D4A82AE60C44A7E90CF33"><enum>(2)</enum><text display-inline="yes-display-inline">the investment and management of
contributions to such individual retirement plans,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB9023B0E254340F69EF620A46BCC198E"><enum>(3)</enum><text display-inline="yes-display-inline">the amount of contributions, and the
investment of such contributions, under automatic contribution arrangements
under section 408B(g) of such Code, including the designation of investment
funds in which such contributions may be invested, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id662B65E8133F48598B32C58FA22D715A"><enum>(4)</enum><text display-inline="yes-display-inline">the establishment of automatic IRAs under
section 408C of such Code, including the issuance of regulations under
subsection (c) of such section.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idFCB2BBFD00774F06A1446D9E8875F601"><enum>(d)</enum><header display-inline="yes-display-inline">Best
practices</header><text display-inline="yes-display-inline">The TSP II Board
shall, on a continual basis, prescribe and encourage best practices (including
cost efficiencies and innovations) in enrollment, investment, distribution, and
other procedures or arrangements relating to retirement savings and investment.
In carrying out its responsibilities under this section, the TSP II Board may
implement (by contract or otherwise) pilot projects to help assess the efficacy
and workability of specific practices and arrangements.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idA59BC2634DD54C9EADCD2D796760DD8C"><enum>(e)</enum><header display-inline="yes-display-inline">Expansion of use of IRAs by self-employed
and other individuals</header><text display-inline="yes-display-inline">The TSP
II Board shall establish procedures to disseminate information (through use of
the Internet and other appropriate means) to facilitate and encourage—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idAFF68ED5378C4D0A878A20C839734E10"><enum>(1)</enum><text display-inline="yes-display-inline">the use by self-employed and other
individuals of automatic debit and similar arrangements for investment in
individual retirement plans, including automatic IRAs,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idE6A6D3EAFF3F4E7C906C3135205D633D"><enum>(2)</enum><text display-inline="yes-display-inline">efforts by voluntary associations to
promote savings in individual retirement plans, including automatic IRAs, by
their members and others, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idDBA779AA05E34FADB548DAC84930F734"><enum>(3)</enum><text display-inline="yes-display-inline">the direct deposit of Federal and State
income tax refunds in individual retirement plans, including automatic
IRAs.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idFA402CC38C34417BA967F7074402AE16"><enum>(f)</enum><header display-inline="yes-display-inline">Exclusive interest</header><text display-inline="yes-display-inline">The members of the TSP II Board shall
discharge their responsibilities solely in the interest of participants and
beneficiaries under individual retirement plans described in section 408B of
the Internal Revenue Code of 1986.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id4BBC0E3EB3EE4DF8A91ED72CF3F88B56"><enum>(g)</enum><header display-inline="yes-display-inline">Other provisions made
applicable</header><text display-inline="yes-display-inline">The provisions of
subsections (f)(3), (g), (i), and (j) of section 8472 of title 5, United States
Code, shall apply to the TSP II Board.</text>
</subsection></section></subtitle><subtitle commented="no" id="idE4C997F2DAD742BEAE9739ABA51F0E06" level-type="subsequent" style="OLC"><enum>B</enum><header display-inline="yes-display-inline">Other provisions</header>
<section commented="no" display-inline="no-display-inline" id="id7503769689FA407F9F6EB6086DEC7D31" section-type="subsequent-section"><enum>111.</enum><header display-inline="yes-display-inline">Modifications to computation of saver's
credit; saver's credit made refundable</header>
<subsection commented="no" display-inline="no-display-inline" id="id9C25C0FD0C7547A68B3A7ACC2328B0D9"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 25B(b) (defining applicable
percentage), as amended by section 833 of the Pension Protection Act of 2006,
is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id1D150AF51A934CDA85DAF9B7DFB6DF6E" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID497B8E32EE67457A8DE684C4466EC73D"><enum>(b)</enum><header display-inline="yes-display-inline">Applicable Percentage</header><text display-inline="yes-display-inline">For purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="ID75FB2AC017D54BA0B5C5FF32CB222E6A"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The applicable percentage is 50 percent
reduced (but not below zero) by 1 percentage point for each phaseout amount by
which the taxpayer’s adjusted gross income for the taxable year exceeds the
threshold amount.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDF54746B510CE4EE688B13E668566D3E2"><enum>(2)</enum><header display-inline="yes-display-inline">Phaseout amount; threshold
amount</header><text display-inline="yes-display-inline">The phaseout amount
and the threshold amount shall be determined as follows:</text>
<table align-to-level="section" blank-lines-after="0" blank-lines-before="1" frame="topbot" line-rules="hor-ver" rule-weights="4.4.4.4.0.0" subformat="S6211" table-type="3-Generic:-1-text,-2-num">
<ttitle></ttitle>
<tgroup cols="3" grid-typeface="1.1" thead-tbody-ldg-size="10.10.12" ttitle-size="10"><colspec align="left" coldef="txt" colname="col1" colsep="1" colwidth="310" min-data-value="200"></colspec><colspec align="right" coldef="fig" colname="col2" colsep="1" colwidth="93" min-data-value="10"></colspec><colspec align="right" coldef="fig" colname="col3" colsep="1" colwidth="93" min-data-value="10" rowsep="0"></colspec>
<thead>
<row><entry align="left" colname="col1" rowsep="0"><bold>In the
case of:</bold></entry><entry align="right" colname="col2" rowsep="0"><bold>The
phaseout amount is:</bold></entry><entry align="right" colname="col3" leader-modify="force-ldr" rowsep="0"><bold>The threshold amount
is:</bold></entry>
</row>
</thead>
<tbody>
<row><entry align="left" colname="col1" leader-modify="force-ldr" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">A joint
return</entry><entry align="right" colname="col2" leader-modify="clr-ldr" rowsep="0">$200</entry><entry align="right" colname="col3" leader-modify="clr-ldr" rowsep="0">$50,000</entry>
</row>
<row><entry align="left" colname="col1" leader-modify="force-ldr" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">A head of household
return</entry><entry align="right" colname="col2" leader-modify="clr-ldr" rowsep="0">$150</entry><entry align="right" colname="col3" leader-modify="clr-ldr" rowsep="0">$37,500</entry>
</row>
<row><entry align="left" colname="col1" leader-modify="force-ldr" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Any other
return</entry><entry align="right" colname="col2" leader-modify="clr-ldr" rowsep="0">$100</entry><entry align="right" colname="col3" leader-modify="clr-ldr" rowsep="0">$25,000.</entry>
</row>
</tbody>
</tgroup>
</table>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H789EA7C14D1C4E6E99F700AF38B72371"><enum>(3)</enum><header display-inline="yes-display-inline">Inflation adjustment</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id39220420679046CEB27BD3A51842F2EF"><enum>(A)</enum><header display-inline="yes-display-inline">Joint returns</header><text display-inline="yes-display-inline">In the case of any taxable year beginning
in a calendar year after 2008, the $50,000 amount under paragraph (2) shall be
increased by an amount equal to—</text>
<clause commented="no" display-inline="no-display-inline" id="H7C8A2EFC5879446382A6CFAA9EA6FE7"><enum>(i)</enum><text display-inline="yes-display-inline">such dollar amount, multiplied by</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HE0E2A28CF29148FCAD73C6557200827D"><enum>(ii)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting <quote>calendar year 2007</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">Any increase determined under the
preceding sentence shall be rounded to the nearest multiple of $500.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB4006B9269324600BF87AA31A8B439C9"><enum>(B)</enum><header display-inline="yes-display-inline">Other returns</header><text display-inline="yes-display-inline">In the case of any taxable year for which
there is an increase under subparagraph (A)—</text>
<clause commented="no" display-inline="no-display-inline" id="id9D0768841AF747D69942A6A3EBA65D74"><enum>(i)</enum><text display-inline="yes-display-inline">the $37,500 under paragraph (2) shall be
increased to an amount equal to 75 percent of the amount determined under
subparagraph (A), and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id90547F27FFF64D4E9C1EF17F9F798E2B"><enum>(ii)</enum><text display-inline="yes-display-inline">the $25,000 amount under paragraph (2)
shall be increased to an amount equal to 50 percent of the amount determined
under subparagraph
(A).</text>
</clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID4CE486C717104868BEDCB167EA238542"><enum>(b)</enum><header display-inline="yes-display-inline">Credit made refundable</header>
<paragraph commented="no" display-inline="no-display-inline" id="id6FD64D1BE06F4FA0BF919D0FCF2AEF55"><enum>(1)</enum><header display-inline="yes-display-inline">Transfer of credit to refundable
credits</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDD5DFFD3A03344BFFB330997C4F56BD69"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 25B, as amended by subsection (a),
is hereby moved to subpart C of part IV of subchapter A of chapter 1 (relating
to refundable credits) and inserted after section 35.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID33E9CD7F5862493FB090FAA4DBF809B8"><enum>(B)</enum><header display-inline="yes-display-inline">Conforming amendments</header>
<clause commented="no" display-inline="no-display-inline" id="ID913E3FF409704A068B804F27E8949FAC"><enum>(i)</enum><text display-inline="yes-display-inline">Section 24(b)(3)(B) is amended by striking
<quote>and 25B</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDC770B0767FE84D80BFD9E27A9D908C6B"><enum>(ii)</enum><text display-inline="yes-display-inline">Section 25(e)(1)(C)(ii) is amended by
striking <quote>, 25B</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idB5557EB1A71D4EC3804422F968DB18D5"><enum>(iii)</enum><text display-inline="yes-display-inline">Section 25D(c)(2) is amended by striking
<quote>24, and 25B</quote> and inserting <quote>and 24</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID451C7B3E65154F1996CC7FD01204555D"><enum>(iv)</enum><text display-inline="yes-display-inline">Section 26(a)(1) is amended by striking
<quote>24, and 25B</quote> and inserting <quote>and 24</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID0E58FCD66992414DBD7DEE012AC4F484"><enum>(v)</enum><text display-inline="yes-display-inline">Section 25B, as moved by subparagraph (A),
is redesignated as section 36.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID060C4E56E70F4E749CA1E26EF2A78A12"><enum>(vi)</enum><text display-inline="yes-display-inline">Section 904(i) is amended by striking
<quote>24, and 25B</quote> and inserting <quote> and 24</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID0F57A8EA82C64FD0B3270E752269B116"><enum>(vii)</enum><text display-inline="yes-display-inline">Section 1400C(d)(2) is amended by striking
<quote>, 25B</quote>.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID325A0FF9375C40B8AF29E0E61A51E622"><enum>(viii)</enum><text display-inline="yes-display-inline">The table of sections for subpart C of part
IV of subchapter A of chapter 1 is amended by striking the item relating to
section 36 and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="IDF6BD660782424AE9AE1CB34CE9E0AAB2" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry bold="off" level="section">Sec. 36. Elective deferrals and
IRA contributions by certain individuals.</toc-entry>
<toc-entry bold="off" level="section">Sec. 37. Overpayments of
tax.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</clause><clause commented="no" display-inline="no-display-inline" id="ID1A9C8F4F0FC04E84A538591A5153D4CE"><enum>(ix)</enum><text display-inline="yes-display-inline">The table of sections for subpart A of part
IV of subchapter A of chapter 1 is amended by striking the item relating to
section 25B.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID00537CF489A64BF9B96E3D9150A624E6"><enum>(x)</enum><text display-inline="yes-display-inline">Section 1324 of title 31, United States
Code, is amended by inserting <quote>, or enacted by the
<short-title>Women's Retirement Security Act of
2007</short-title></quote> before the period at the end.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID3F2D2907003A49B19856C04939AFFEED"><enum>(2)</enum><header display-inline="yes-display-inline">Mandatory deposit into qualified
account</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID7FCD3AC6D3C446B7AD891D341D7D5373"><enum>(A)</enum><header display-inline="yes-display-inline">No reduction of tax</header><text display-inline="yes-display-inline">Subsection (a) of section 36, as moved and
redesignated by paragraph (1), is amended by striking <quote>credit against the
tax imposed by this subtitle</quote> and inserting <quote>tax
credit</quote>.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID39ECC8726E3245E58CC4DA30EE188DBA"><enum>(B)</enum><header display-inline="yes-display-inline">Deposit into qualified
account</header><text display-inline="yes-display-inline">Subsection (g) of
section 36, as moved and redesignated by paragraph (1), is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="ID669FDDF3ABB447C6A1943DF87349F0D5" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID608E3330AE524ED6866C6DDD92A54988"><enum>(g)</enum><header display-inline="yes-display-inline">Deposit Into Qualified Account</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID397D44A398354D56B77CF2998EFD58DF"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Any amount allowed as a tax credit under
subsection (a) shall not be allowed as a credit against any tax imposed by this
subtitle but instead shall be treated as an overpayment under section 6401(b)
and—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID17B9F5DD965847568C66A58CDD614691"><enum>(A)</enum><text display-inline="yes-display-inline">shall be paid on behalf of the individual
taxpayer to an applicable retirement plan designated by the individual to be
invested in a manner designated by the individual, except that in the case of a
joint return, each spouse shall be entitled to designate an applicable
retirement plan and investments with respect to payments attributable to such
spouse, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDCC6A862A6D2241F9B7E3E0BA50094429"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of taxpayer who does not
properly designate an applicable retirement plan in a timely manner or who
designates an applicable retirement plan that does not accept such amount in a
timely manner, shall be paid or credited on behalf of the individual taxpayer
in a manner determined under rules prescribed by the Secretary that provides
treatment comparable to the treatment under subparagraph (A).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDC8878AB447464EBA8D7D619F883A35A6"><enum>(2)</enum><header display-inline="yes-display-inline">Applicable retirement plan</header><text display-inline="yes-display-inline">For purposes of this subsection, the term
<term>applicable retirement plan</term> means a plan that elects to accept
deposits under this subsection and that is described in clause (iii), (iv),
(v), or (vi) of section 402(c)(8)(B) or in section 408A(b).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID08A72E783D6744D2B0458B8D584469D5"><enum>(3)</enum><header display-inline="yes-display-inline">Treatment of direct payments</header><text display-inline="yes-display-inline">All amounts paid under this subsection
shall be treated for purposes of this title as income attributable to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID7060C19E1EEB458DB33779CB5BC33854"><enum>(A)</enum><text display-inline="yes-display-inline">a Roth IRA contribution in the case of a
payments to an individual retirement plan, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDE7B9E6C7CAE44008B9CD52AF01C3E939"><enum>(B)</enum><text display-inline="yes-display-inline">a designated Roth contribution in the case
of a payment to an applicable retirement plan described in section
402A(e).</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idDD507D36B8A149CEB4839D3339815290"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id16AFA72FA79D4916A2A62EC208A34300" section-type="subsequent-section"><enum>112.</enum><header display-inline="yes-display-inline">Qualified cash or deferred arrangements
must allow long-term employees working more than 500 but less than 1,000 hours
per year to participate</header>
<subsection commented="no" display-inline="no-display-inline" id="id33D15840B279464595E6B4EB4E0F560B"><enum>(a)</enum><header display-inline="yes-display-inline">Participation requirement</header>
<paragraph commented="no" display-inline="no-display-inline" id="id1BFAE746D72F45DC8294D927A279FCA0"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subparagraph (D) of section 401(k)(2)
(defining qualified cash or deferred arrangement) is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="idC55E7E7722E24C3280D4483D3C8B7729" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="id0E1EFCB1DC6E4275A8BFE77EB52ECB2C"><enum>(D)</enum><text display-inline="yes-display-inline">which does not require, as a condition of
participation in the arrangement, that an employee complete a period of service
with the employer (or employers) maintaining the plan extending beyond the
close of the earlier of—</text>
<clause commented="no" display-inline="no-display-inline" id="id87CF8E71EA70435BAED73E72F636C6A7"><enum>(i)</enum><text display-inline="yes-display-inline">the period permitted under section
410(a)(1) (determined without regard to subparagraph (B)(i) thereof), or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idD5503F4180624340AF43D947A91AF980"><enum>(ii)</enum><text display-inline="yes-display-inline">subject to the provisions of paragraph
(14), the first period of 3 consecutive 12-month periods during each of which
the employee has at least 500 hours of
service.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id696B503F1CAA4FE4927C44EA1833FF1E"><enum>(2)</enum><header display-inline="yes-display-inline">Special rules</header><text display-inline="yes-display-inline">Section 401(k) (relating to cash or
deferred arrangements), as amended by section 902 of the Pension Protection Act
of 2006, is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id6230ACA798634566856339606DDB8C7F" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id59A1142B8D5D4010A4EC2D255E429199"><enum>(14)</enum><header display-inline="yes-display-inline">Special rules for participation requirement
for long-term, part-time workers</header><text display-inline="yes-display-inline">For purposes of paragraph
(2)(D)(ii)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id37C41D1DB9E94C9DB5D749876EACFE46"><enum>(A)</enum><header display-inline="yes-display-inline">Age requirement must be met</header><text display-inline="yes-display-inline">Paragraph (2)(D)(ii) shall not apply to an
employee unless the employee has met the requirement of section 410(a)(1)(A)(i)
by the close of the last of the 12-month periods described in such
paragraph.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA749CF9F1D4D4B599D39191139D7D523"><enum>(B)</enum><header display-inline="yes-display-inline">Nondiscrimination and top-heavy rules not
to apply</header>
<clause commented="no" display-inline="no-display-inline" id="id428F96E2A6884B4E83BB0122A37E4746"><enum>(i)</enum><header display-inline="yes-display-inline">Nondiscrimination rules</header><text display-inline="yes-display-inline">In the case of employees who are eligible
to participate in the arrangement solely by reason of paragraph
(2)(D)(ii)—</text>
<subclause commented="no" display-inline="no-display-inline" id="idACF8D5B8FF8E422C9C8E130932AD4BA2"><enum>(I)</enum><text display-inline="yes-display-inline">notwithstanding subsection (a)(4), an
employer shall not be required to make nonelective or matching contributions on
behalf of such employees even if such contributions are made on behalf of other
employees eligible to participate in the arrangement, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id9AC6A48B095148D6808D39E1B2AD86DB"><enum>(II)</enum><text display-inline="yes-display-inline">an employer may elect to exclude such
employees from the application of paragraph (3) and subsection (m)(2).</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="id90E73610687647FA97031550DDC41DA6"><enum>(ii)</enum><header display-inline="yes-display-inline">Top-heavy rules</header><text display-inline="yes-display-inline">An employer may elect to exclude all
employees who are eligible to participate in a plan maintained by the employer
solely by reason of paragraph (2)(D)(ii) from—</text>
<subclause commented="no" display-inline="no-display-inline" id="id2A53D7B9C69B44E2AF2FF8BB16B40FC1"><enum>(I)</enum><text display-inline="yes-display-inline">the determination of whether the plan is a
top-heavy plan under section 416, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id4E87615706ED42C99C6BDED3609652B4"><enum>(II)</enum><text display-inline="yes-display-inline">if the plan is a top-heavy plan under such
section, the application of the vesting and benefit requirements under
subsections (b) and (c) of such section.</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="idE7D50D31AB784EFCA2AD1C5E183B0A96"><enum>(iii)</enum><header display-inline="yes-display-inline">Vesting</header><text display-inline="yes-display-inline">For purposes of determining whether an
employee described in clause (i) has a nonforfeitable right to employer
contributions (other than contributions described in paragraph (3)(D)(i)) under
the arrangement, each 12-month period for which the employee has at least 500
hours of service shall be treated as a year of service.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id8416D1F23E074449B25AB1FCDDC13D10"><enum>(iv)</enum><header display-inline="yes-display-inline">Employees who become full-time
employees</header><text display-inline="yes-display-inline">This subparagraph
shall cease to apply to any employee after the date on which the employee meets
the requirements of section 410(a)(1)(A)(ii) without regard to paragraph
(2)(D)(ii).</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD937A2E8EFCC467F81EA4B9F810CA351"><enum>(C)</enum><header display-inline="yes-display-inline">Exception for employees under collectively
bargained plans, etc</header><text display-inline="yes-display-inline">Paragraph (2)(D)(ii) shall not apply to
employees described in section 410(b)(3).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id29A137AE43F34954B48C20B70850396B"><enum>(D)</enum><header display-inline="yes-display-inline">Special rules</header>
<clause commented="no" display-inline="no-display-inline" id="idA430B25EEAF447CDAE82DC8ED4D2C7B5"><enum>(i)</enum><header display-inline="yes-display-inline">Time of participation</header><text display-inline="yes-display-inline">The rules of section 410(a)(4) shall apply
to an employee eligible to participate in an arrangement solely by reason of
paragraph (2)(D)(ii).</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id58BEE8DAEECF4D40A26FDDE061E4F852"><enum>(ii)</enum><header display-inline="yes-display-inline">12-month periods</header><text display-inline="yes-display-inline">12-month periods shall be determined in the
same manner as under the last sentence of section
410(a)(3)(A).</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id1FA91486C81D43288794FFCCAD39BFB7"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to plan years beginning after December 31, 2008,
except that, for purposes of section 401(k)(2)(D)(ii) of the Internal Revenue
Code of 1986 (as added by such amendments), 12-month periods beginning before
January 1, 2009, shall not be taken into account.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idFA02FCC84ED94F01A12887DBAA922FB3" section-type="subsequent-section"><enum>113.</enum><header display-inline="yes-display-inline">Transfers of unused benefits of health
flexible spending arrangement to certain retirement plans</header>
<subsection commented="no" display-inline="no-display-inline" id="IDEC04BAA88DF54922BA5A31830DAAC375"><enum>(a)</enum><header display-inline="yes-display-inline">In General</header><text display-inline="yes-display-inline">Section 125 (relating to cafeteria plans)
is amended by redesignating subsections (h) and (i) as subsections (i) and (j),
respectively, and by inserting after subsection (g) the following:</text>
<quoted-block display-inline="no-display-inline" id="IDD32019D848F640B5A82F4CCFF1B9F9E6" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID71E07D2D62FE438280E01F73F44BD27B"><enum>(h)</enum><header display-inline="yes-display-inline">Contributions of Certain Unused Health
Benefits</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDA0E86DB8A15E46A18288AF21BDC4A969"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of this title, a plan or other
arrangement shall not fail to be treated as a cafeteria plan solely because
qualified benefits of a participant under such plan include a health flexible
spending arrangement under which not more than $500 of unused health benefits
may be contributed on behalf of the participant to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID0CF427CFC5F94254A100F265C8D63CCA"><enum>(A)</enum><text display-inline="yes-display-inline">a qualified retirement plan (as defined in
section 4974(c)), or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID5A4064D4A5294A7EAE2BD1986CB56ED4"><enum>(B)</enum><text display-inline="yes-display-inline">an eligible deferred compensation plan (as
defined in section 457(b)) maintained by an eligible employer described in
section 457(e)(1)(A).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID1BF2C20F81A0447E909403BDCBFAD621"><enum>(2)</enum><header display-inline="yes-display-inline">Treatment of contribution of unused health
benefits</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDB696F39A09104A659920D7802264246D"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of this title, contributions
described in paragraph (1) shall be treated as elective contributions made
pursuant to an election by the participant between such contributions and
compensation which would otherwise be includible in the gross income of the
employee.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID2A1C2AF40C3C43CC8E72CEB94554D240"><enum>(B)</enum><header display-inline="yes-display-inline">Exclusion or deduction</header><text display-inline="yes-display-inline">Contributions described in paragraph (1)
shall be excluded from gross income, or included in gross income and allowed as
a deduction, to the same extent that elective contributions would be so treated
under this title.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID88DB416763184C00A5916E52B1DD9F25"><enum>(3)</enum><header display-inline="yes-display-inline">Health flexible spending
arrangement</header><text display-inline="yes-display-inline">For purposes of
this subsection, the term <term>health flexible spending arrangement</term>
means a flexible spending arrangement (as defined in section 106(c)) which is a
qualified benefit and only permits reimbursement for expenses for medical care
(as defined in section 213(d)(1) without regard to subparagraphs (C) and (D)
thereof).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDE0FF33A254814451AD6CEC4D155419C5"><enum>(4)</enum><header display-inline="yes-display-inline">Unused health benefits</header><text display-inline="yes-display-inline">For purposes of this subsection, the term
<term>unused health benefits</term> means, with respect to a participant, the
excess of—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID883A9E85D62A492E85F050A66C43CFDD"><enum>(A)</enum><text display-inline="yes-display-inline">the maximum amount of reimbursement
allowable to the participant with respect to a plan year under a health
flexible spending arrangement, taking into account any election by the
participant, over</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDD0310683906945D5BE9E11CEE0F6EE89"><enum>(B)</enum><text display-inline="yes-display-inline">the actual amount of reimbursement with
respect to such year under such
arrangement.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDD7A3E39B884E45659329F7DA7D5C367F"><enum>(b)</enum><header display-inline="yes-display-inline">Special Rules</header><text display-inline="yes-display-inline">The Secretary of the Treasury shall
prescribe such rules as are appropriate to carry out the purposes of the
amendments made by this section. Such rules may permit elections by plan
sponsors with respect to the year to which the contributions relate and may
provide for special treatment for purposes of applying the requirements
applicable to such contributions.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDEAA67D346DE0459DABF143E2FD8E113A"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendment made by
subsection (a) shall apply to years beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idC434E37429CF4ACCA96496D5EEC2DFE4" section-type="subsequent-section"><enum>114.</enum><header display-inline="yes-display-inline">Computation of limits on IRA and Roth IRA
contributions</header>
<subsection commented="no" display-inline="no-display-inline" id="id204335E026EB46CEA35AF742E89EB95E"><enum>(a)</enum><header display-inline="yes-display-inline">Certain wage replacement income treated as
compensation</header>
<paragraph commented="no" display-inline="no-display-inline" id="idC2E5646F8EAA493F9A241A32EF48C2C6"><enum>(1)</enum><header display-inline="yes-display-inline">Wage replacement income</header><text display-inline="yes-display-inline">Section 219(f) (relating to other
definitions and special rules) is amended by redesignating paragraph (8) as
paragraph (9) and by inserting after paragraph (7) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id1B110DDB483D414A9636C253A4D94385" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id781FA9F09DD54E33B36A3B2D144776CE"><enum>(8)</enum><header display-inline="yes-display-inline">Treatment of certain wage replacement
income as compensation</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id909496747FF54ACD9A8F4F7C1E2C1336"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Notwithstanding paragraph (1), applicable
wage replacement income not otherwise treated as compensation shall be treated
as compensation for purposes of this section.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id19A4AA3008F24883B3FA388FBDC2A9F0"><enum>(B)</enum><header display-inline="yes-display-inline">Applicable wage replacement
income</header><text display-inline="yes-display-inline">For purposes of this
paragraph, the term <term>applicable wage replacement income</term> means any
amount received by an individual—</text>
<clause commented="no" display-inline="no-display-inline" id="idC177F59145E54217AF8C1030F5FCB8CE"><enum>(i)</enum><text display-inline="yes-display-inline">as the result of the individual having
become disabled,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id0526CC0FB28040338F8207DAB6D44895"><enum>(ii)</enum><text display-inline="yes-display-inline">as unemployment compensation (as defined in
section 85(b)),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id7674A400774440038EC35A5923E186AB"><enum>(iii)</enum><text display-inline="yes-display-inline">under workmen's compensation acts,
or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idB082470A8A364228A2EB7C1C65E541BC"><enum>(iv)</enum><text display-inline="yes-display-inline">which constitutes wage replacement income
under regulations prescribed by the
Secretary.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id6F35C17425DF4A30B5F27E58E7D7C59D"><enum>(2)</enum><header display-inline="yes-display-inline">Certain excludable amounts may be taken
into account for purposes of Roth IRAs</header><text display-inline="yes-display-inline">Section 408A(c)(2) (relating to
contribution limit) is amended by adding at the end the following new flush
sentence:</text>
<quoted-block display-inline="no-display-inline" id="idB041D50CB1774BF8AE1CBFA7D7E9CE0C" style="OLC">
<quoted-block-continuation-text commented="no" quoted-block-continuation-text-level="paragraph">In determining the maximum amount
under subparagraph (A), subsections (b)(1)(B) and (c) of section 219 shall be
applied by taking into account compensation described in section 219(f)(8)
without regard to whether it is includible in gross
income.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idCCDCA225C5464244920B6FEA959F2E4D"><enum>(3)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this subsection shall apply to taxable years beginning after December 31,
2007.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idEFE7761D530C44B19CB1C90E2819D40E"><enum>(b)</enum><header display-inline="yes-display-inline">Computation of maximum IRA deduction for
Roth IRAs using compensation from 2 preceding taxable years</header>
<paragraph commented="no" display-inline="no-display-inline" id="id3D69450C45A14A8995C1703C8275C91D"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 408A(c) (relating to treatment of
contributions) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id54DC3D2EEAAE40F1B099446C50E2E2C0" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="idAC5C9A8E9298450CA884DB57A5B67BA0"><enum>(8)</enum><header display-inline="yes-display-inline">Compensation from preceding 2 years may be
taken into account</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id0E90D92F7FC54500A22A1FE9371E5952"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">A taxpayer may elect for purposes of
paragraph (2) to take into account any unused compensation from the 2 taxable
years immediately preceding the taxable year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id5DE712654D284CA8BBB53954DB2BE8F9"><enum>(B)</enum><header display-inline="yes-display-inline">Unused compensation</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term
<term>unused compensation</term> means with respect to an individual for any
taxable year the compensation includible in the individual's gross income for
the taxable year reduced by the sum of—</text>
<clause commented="no" display-inline="no-display-inline" id="id0DD952B534D647B1B93B7F4727A09DEB"><enum>(i)</enum><text display-inline="yes-display-inline">the amount allowed as a deduction under
219(a) to such individual for such taxable year,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idBFFF9B61EA6E476F928B15AB1AE2F96D"><enum>(ii)</enum><text display-inline="yes-display-inline">the amount of any designated nondeductible
contribution (as defined in section 408(o)) on behalf of such individual for
such taxable year,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id87F4963F3624443A82BE11C7631C5A0D"><enum>(iii)</enum><text display-inline="yes-display-inline">the amount of any contribution on behalf of
such individual to a Roth IRA under this section for such taxable year,
and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idEE04AFC7D0A2421399A60FAF8F0DEE06"><enum>(iv)</enum><text display-inline="yes-display-inline">the amount of compensation includible in
such individual's gross income for such taxable year taken into account under
section 219(c) in determining the limitation under section 219 or paragraph (2)
for the individual's spouse.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA03C7A14385B43F6B09AD3C65B7556F9"><enum>(C)</enum><header display-inline="yes-display-inline">Application to special rule for married
individuals</header><text display-inline="yes-display-inline">Under rules
prescribed by the Secretary, in applying section 219(c) for any taxable year
for purposes of applying paragraph (2)(A), unused compensation of an individual
or an individual's spouse for the 2 taxable years immediately preceding the
taxable year may be taken into
account.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7E224E5EB6C84B108BDE9DCA320379F3"><enum>(2)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this subsection shall apply to taxable years beginning after December 31, 2007,
but unused compensation for taxable years beginning before January 1, 2008, may
be taken into account for taxable years beginning after December 31,
2007.</text>
</paragraph></subsection></section></subtitle><enum>II</enum><header display-inline="yes-display-inline">Provisions providing for preservation of
income</header>
<section commented="no" display-inline="no-display-inline" id="IDF90188684AE440249A53BD49470F60A7" section-type="subsequent-section"><enum>201.</enum><header display-inline="yes-display-inline">Exclusion of certain qualified annuity
payments</header>
<subsection commented="no" display-inline="no-display-inline" id="ID62711EBB57A44A0AAFF93E23173C23DF"><enum>(a)</enum><header display-inline="yes-display-inline">Exclusion</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDB9D614EAF839466489BEA319D7A45CC9"><enum>(1)</enum><header display-inline="yes-display-inline">Qualified plans</header><text display-inline="yes-display-inline">Section 402(e) (relating to exempt trusts)
is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID05CB1914463B4DEC8603AB8EFD345F7A" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="ID0B3695DB41244850AED8161513E6F689"><enum>(7)</enum><header display-inline="yes-display-inline">Exclusion of percentage of lifetime annuity
payments</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDBF118D195BE746B18371424BBB9B785F"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of a lifetime annuity payment
to a qualified distributee from a qualified trust (within the meaning of
subsection (c)(8)(A)) maintained in connection with a defined contribution
plan, gross income shall not include 10 percent of the amount otherwise
includible in gross income (determined without regard to this paragraph). For
purposes of this paragraph, payments from an annuity contract distributed by
the qualified trust shall be treated as payments from the qualified
trust.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID244208D09E404D94AA4BD90237DC091C"><enum>(B)</enum><header display-inline="yes-display-inline">Limitation</header>
<clause commented="no" display-inline="no-display-inline" id="ID05D89A54395C43C5AB099DD33DAC0697"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID3947CE323F6A499AA7574377178A33E5"><enum>(I)</enum><text display-inline="yes-display-inline">the aggregate amount of lifetime annuity
payments to the distributee during the taxable year which are includible in
gross income (determined without regard to this paragraph) and which are
subject to this paragraph or to rules similar to the rules of this paragraph
(other than section 72(b)(5) or 101(d)(4)), exceeds</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID0AB8C9FAF4C048DF841075F5600EE9D7"><enum>(II)</enum><text display-inline="yes-display-inline">50 percent of the applicable amount for the
taxable year under section 415(a),</text>
</subclause><continuation-text commented="no" continuation-text-level="clause">then the aggregate amount otherwise
excludable under subparagraph (A) for the taxable year shall be reduced by 10
percent of the portion of such excess which is allocable under clause (ii) to
payments which are subject to this paragraph.</continuation-text></clause><clause commented="no" display-inline="no-display-inline" id="IDB46E384A627C439DACD219781656AAA4"><enum>(ii)</enum><header display-inline="yes-display-inline">Allocation rule</header><text display-inline="yes-display-inline">Any excess described in clause (i) for any
taxable year shall be allocated ratably among all lifetime annuity payments to
the qualified distributee described in clause (i)(I).</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID09E322717CCF42F9B793CB7D49026C66"><enum>(C)</enum><header display-inline="yes-display-inline">Definitions</header><text display-inline="yes-display-inline">For purposes of this paragraph—</text>
<clause commented="no" display-inline="no-display-inline" id="ID8E67D131BBE34391A6D2340ADD283126"><enum>(i)</enum><header display-inline="yes-display-inline">Lifetime annuity payment</header>
<subclause commented="no" display-inline="no-display-inline" id="ID466A7339DB9840B5AE6BAEC2B58D9B7A"><enum>(I)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Except as provided in this clause, the term
<term>lifetime annuity payment</term> means a distribution from an annuity
contract which is a part of a series of substantially equal periodic payments
(not less frequently than annually) made over the life of the qualified
distributee or the joint lives of the qualified distributee and the qualified
distributee’s designated beneficiary. For purposes of this paragraph, the term
<term>annuity contract</term> means a commercial annuity (as defined in section
3405(e)(6)), other than an endowment or life insurance contract.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID6EAEE002EDE0407FAC607AF4C492EA56"><enum>(II)</enum><header display-inline="yes-display-inline">Certain fluctuating payments</header><text display-inline="yes-display-inline">Annuity payments shall not fail to be
treated as part of a series of substantially equal periodic payments merely
because the amount of the periodic payments may vary in accordance with
investment experience, reallocations among investment options, actuarial gains
or losses, cost of living indices, a constant percentage (not less than zero)
applied not less frequently than annually, or similar fluctuating
criteria.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDD56A9C1DB6DA49CCB4328DE637E3CC3E"><enum>(III)</enum><header display-inline="yes-display-inline">Certain changes in the mode of
payment</header><text display-inline="yes-display-inline">Annuity payments
shall not fail to be treated as part of a series of substantially equal
periodic payments merely because the period between each such payment is
lengthened or shortened, but only if at all times such period is not longer
than 1 year.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID9DA97F4D0110483391839B46F53BE9A3"><enum>(IV)</enum><header display-inline="yes-display-inline">Permitted reductions</header><text display-inline="yes-display-inline">Annuity payments shall not fail to be
treated as part of a series of substantially equal periodic payments merely
because, in the case of an annuity payable over the lives of the qualified
distributee and the qualified distributee’s designated beneficiary, the amounts
paid after the death of the qualified distributee or the qualified
distributee’s designated beneficiary are less than the amounts payable during
their joint lives.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDC4E6F846E8A14AD8BD611C5E84EECA88"><enum>(V)</enum><header display-inline="yes-display-inline">Certain contract benefits</header><text display-inline="yes-display-inline">The availability of a commutation benefit
or other feature permitting acceleration of annuity payments (or a modification
of the period during which such a benefit is available), a minimum period of
payments or a minimum amount to be paid in any event shall not affect the
treatment of a distribution as a lifetime annuity payment.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID0BAE97C12FCA4A55A7CCB54EF2CC5651"><enum>(VI)</enum><header display-inline="yes-display-inline">Trust
payments</header><text display-inline="yes-display-inline">In the case of
lifetime annuity payments being made to a qualified trust, payments by the
qualified trust to a qualified distributee of the entire amount received by the
qualified trust with respect to the qualified distributee shall constitute
lifetime annuity payments if such payments are made within a reasonable period
after receipt by the qualified trust.</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDA207BBF54A29487884B455A18DE997B4"><enum>(VII)</enum><header display-inline="yes-display-inline">Qualified domestic relations
orders</header><text display-inline="yes-display-inline">Annuity payments shall
not fail to be treated as a series of substantially equal periodic payments
merely because the payments are reduced on account of a qualified domestic
relations order (within the meaning of section 414(p)) that becomes effective
after the commencement of the annuity payments.</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="ID3664F7F5D34B453EA91C7E065CC3C071"><enum>(ii)</enum><header display-inline="yes-display-inline">Qualified distributee</header><text display-inline="yes-display-inline">The term <term>qualified distributee</term>
means the employee, the surviving spouse of the employee, and an alternate
payee who is the spouse or former spouse of the employee.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID2B4EAAE29AF54133BDA14E4481BACE21"><enum>(D)</enum><header display-inline="yes-display-inline">Recapture tax</header>
<clause commented="no" display-inline="no-display-inline" id="ID213B4178374645CBB8AEE009B299E1C2"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID55FEA20945644423B13F02F35A6059CE"><enum>(I)</enum><text display-inline="yes-display-inline">an amount is not includible in gross income
by reason of subparagraph (A), and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID5D0A30D19332446E907227261CA2BCE4"><enum>(II)</enum><text display-inline="yes-display-inline">the series of payments of which such
payment is a part is subsequently modified (other than by reason of death or
disability) so that some or all future payments are not lifetime annuity
payments,</text>
</subclause><continuation-text commented="no" continuation-text-level="clause">the qualified distributee’s gross income
for the first taxable year in which such modification occurs shall be increased
by an amount, determined under rules prescribed by the Secretary, equal to the
amount which (but for subparagraph (A)) would have been includible in the
qualified distributee’s gross income if the modification had been in effect at
all times, plus interest for the deferral period at the underpayment rate
established under section 6621.</continuation-text></clause><clause commented="no" display-inline="no-display-inline" id="IDC4E58A530DDB411999FEACCE929433ED"><enum>(ii)</enum><header display-inline="yes-display-inline">Deferral period</header><text display-inline="yes-display-inline">For purposes of this subparagraph, the term
<term>deferral period</term> means, with respect to any amount, the period
beginning with the taxable year in which (without regard to subparagraph (A))
the amount would have been includible in gross income and ending with the
taxable year in which the modification described in clause (i)(II)
occurs.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID1F5111AF5DA94D5D93EA358FB78D1A76"><enum>(E)</enum><header display-inline="yes-display-inline">Investment in the contract</header><text display-inline="yes-display-inline">For purposes of section 72, the investment
in the contract shall be determined without regard to this
paragraph.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDFCC33BCD141D48CE864DFBA651DFC511"><enum>(2)</enum><header display-inline="yes-display-inline">Qualified annuity plans</header><text display-inline="yes-display-inline">Section 403(a) (relating to qualified
annuity plans) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDEAA9AD550FA14F849E5343124F927728" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDD6CC725B3DEF4DC1A91F47E13A88731B"><enum>(6)</enum><header display-inline="yes-display-inline">Exclusion of percentage of lifetime annuity
payments</header><text display-inline="yes-display-inline">Rules similar to the
rules of section 402(e)(7) shall apply to distributions under any annuity
contract to which this subsection
applies.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDC303578574504ACD8E87B0B7B2D52576"><enum>(3)</enum><header display-inline="yes-display-inline">Purchased annuities</header><text display-inline="yes-display-inline">Section 403(b) (relating to purchased
annuities) is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID62E97515D43E47D692A1423FD7113AB3" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDDAE35B43B3B24F85B77A990B87F2C4FD"><enum>(14)</enum><header display-inline="yes-display-inline">Exclusion of percentage of lifetime annuity
payments</header><text display-inline="yes-display-inline">Rules similar to the
rules of section 402(e)(7) shall apply to distributions under any annuity
contract or custodial account to which this subsection
applies.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID53A0C247B56C4CD0950D5B443B9EBFCB"><enum>(4)</enum><header display-inline="yes-display-inline">IRAs</header><text display-inline="yes-display-inline">Section 408(d) (relating to tax treatment
of distributions), as amended by section 1201 of the Pension Protection Act of
2006, is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDE8B8A2DB25114C82B79F5A8AB2210BE5" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDC866453E3C4C4EB0B7F2C8EF90B8D2D6"><enum>(10)</enum><header display-inline="yes-display-inline">Exclusion of percentage of lifetime annuity
payments</header><text display-inline="yes-display-inline">Rules similar to the
rules of section 402(e)(7) shall apply to distributions out of an individual
retirement
plan.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD178D5FF1154411EAD9B7D1CEFAFBBA2"><enum>(5)</enum><header display-inline="yes-display-inline">Section 457 plans</header><text display-inline="yes-display-inline">Section 457(e) (relating to special rules
for deferred compensation plans) is amended by adding at the end the following
new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID12D786ACBCF644648AEDFB361CBDCAC8" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDB9F4B43800D94474840F59F3534F1E92"><enum>(19)</enum><header display-inline="yes-display-inline">Exclusion of percentage of lifetime annuity
payments</header><text display-inline="yes-display-inline">Rules similar to the
rules of section 402(e)(7) shall apply to distributions from an eligible
deferred compensation plan of an eligible employer described in subsection
(e)(1)(A).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID84C2120A90B344929913B01E821F92CC"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to distributions made after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="ID9AEDA2EA6D9B4DAEB735A329E3283671" section-type="subsequent-section"><enum>202.</enum><header display-inline="yes-display-inline">Exclusion for lifetime annuity
payments</header>
<subsection commented="no" display-inline="no-display-inline" id="ID06F94C68AD944CA0964428DA9965D875"><enum>(a)</enum><header display-inline="yes-display-inline">Lifetime Annuity Payments Under Annuity
Contracts</header><text display-inline="yes-display-inline">Section 72(b)
(relating to exclusion ratio) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDBD58104D710743499FAD1577504FF8C0" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="ID8729A4E55738420AB3C95003B7934738"><enum>(5)</enum><header display-inline="yes-display-inline">Exclusion for lifetime annuity
payments</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDDC2655C5F7484A2BA8D31FC419AEBB9B"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of lifetime annuity payments
received as an annuity under 1 or more annuity contracts in any taxable year,
gross income shall not include the lesser of—</text>
<clause commented="no" display-inline="no-display-inline" id="IDA156E31187DF4E5DAF5F97D802BD2678"><enum>(i)</enum><text display-inline="yes-display-inline">50 percent of the portion of the lifetime
annuity payments which (without regard to this paragraph) is includible in
gross income under this section for the taxable year, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDA9AE5186B1FA4955A3C395D535D32DB6"><enum>(ii)</enum><text display-inline="yes-display-inline">$20,000.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID4B03FCD24EC342A99E6B6F25299710BA"><enum>(B)</enum><header display-inline="yes-display-inline">Cost-of-living adjustment</header><text display-inline="yes-display-inline">In the case of taxable years beginning
after December 31, 2008, the $20,000 amount in subparagraph (A)(ii) shall be
increased by an amount equal to—</text>
<clause commented="no" display-inline="no-display-inline" id="IDD41EAD506FD141668315AEB9DEF26154"><enum>(i)</enum><text display-inline="yes-display-inline">such dollar amount, multiplied by</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDC2720E760A4243DC8EED0A3F15D7FBCA"><enum>(ii)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting <quote>calendar year 2007</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">If any amount as increased under
the preceding sentence is not a multiple of $500, such amount shall be rounded
to the next lower multiple of $500.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDB011039E2F7D449B980FC53FBAB84765"><enum>(C)</enum><header display-inline="yes-display-inline">Application of paragraph</header><text display-inline="yes-display-inline">Subparagraph (A) shall not apply to—</text>
<clause commented="no" display-inline="no-display-inline" id="ID41A608CC12D94CC68BB10709FAE14673"><enum>(i)</enum><text display-inline="yes-display-inline">any amount received under an eligible
deferred compensation plan (as defined in section 457(b)) or under a qualified
retirement plan (as defined in section 4974(c)),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDB8A049AC6A6A46D3A953CC7616047FEE"><enum>(ii)</enum><text display-inline="yes-display-inline">any amount paid under an annuity contract
which is received by the beneficiary under the contract—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID4ECCBBE7475543159958C6F418C9FDC4"><enum>(I)</enum><text display-inline="yes-display-inline">after the death of the annuitant in the
case of payments described in subsection (c)(5)(A)(ii)(III), unless the
beneficiary is the surviving spouse of the annuitant, or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDB7D026A04B6949BCBB65F961CEFC135B"><enum>(II)</enum><text display-inline="yes-display-inline">after the death of the annuitant and joint
annuitant in the case of payments described in subsection (c)(5)(A)(ii)(IV),
unless the beneficiary is the surviving spouse of the last to die of the
annuitant and the joint annuitant, or</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="ID90D34C0D625C4D2594A5C681C73ED5C7"><enum>(iii)</enum><text display-inline="yes-display-inline">any annuity contract that is a qualified
funding asset (as defined in section 130(d)), but without regard to whether
there is a qualified assignment.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDDEBBDEC7787846D8A0B3EB84750EB309"><enum>(D)</enum><header display-inline="yes-display-inline">Investment in the contract</header><text display-inline="yes-display-inline">For purposes of this section, the
investment in the contract shall be determined without regard to this
paragraph.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDD539113651B84C129B975D4FD58BAA6E"><enum>(b)</enum><header display-inline="yes-display-inline">Definitions</header><text display-inline="yes-display-inline">Section 72(c) is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDFB8234EAEED545348FD7B7398F43E960" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="ID9589A45607A140399F869617C25950B2"><enum>(5)</enum><header display-inline="yes-display-inline">Lifetime annuity payment</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID2D756EF69BB448978EDE534B810B8A8D"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of subsection (b)(5), the term
<term>lifetime annuity payment</term> means any amount received as an annuity
under any portion of an annuity contract, but only if—</text>
<clause commented="no" display-inline="no-display-inline" id="ID665DA41B1EE043A3ABBED9D9BBB55CD5"><enum>(i)</enum><text display-inline="yes-display-inline">the only person (or persons in the case of
payments described in subclause (II) or (IV) of clause (ii)) legally entitled
(by operation of the contract, a trust, or other legally enforceable means) to
receive such amount during the life of the annuitant or joint annuitant is such
annuitant or joint annuitant, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDD3A6E7A7C0AF4AFF9731F6ED6949DE66"><enum>(ii)</enum><text display-inline="yes-display-inline">such amount is part of a series of
substantially equal periodic payments made not less frequently than annually
over—</text>
<subclause commented="no" display-inline="no-display-inline" id="IDF069CEBE5D6241B9BF50E2226B77088F"><enum>(I)</enum><text display-inline="yes-display-inline">the life of the annuitant,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID1455AC607BF549DAAC5D8F1E9BB0E299"><enum>(II)</enum><text display-inline="yes-display-inline">the lives of the annuitant and a joint
annuitant, but only if the annuitant is the spouse of the joint annuitant as of
the annuity starting date or the difference in age between the annuitant and
joint annuitant is 15 years or less,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID1001D3829D5C470680F273BCB007B124"><enum>(III)</enum><text display-inline="yes-display-inline">the life of the annuitant with a minimum
period of payments or with a minimum amount that must be paid in any event,
or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID787B9D97E1C541A8BFBA66ABC9AC78CB"><enum>(IV)</enum><text display-inline="yes-display-inline">the lives of the annuitant and a joint
annuitant with a minimum period of payments or with a minimum amount that must
be paid in any event, but only if the annuitant is the spouse of the joint
annuitant as of the annuity starting date or the difference in age between the
annuitant and joint annuitant is 15 years or less.</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="IDB95F5D7954EC4F87B205A64C10A91BD8"><enum>(iii)</enum><header display-inline="yes-display-inline">Exceptions</header><text display-inline="yes-display-inline">For purposes of clause (ii), annuity
payments shall not fail to be treated as part of a series of substantially
equal periodic payments—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID8A29BE0E85DC4B01A0773D30E256DB4F"><enum>(I)</enum><text display-inline="yes-display-inline">because the amount of the periodic payments
may vary in accordance with investment experience, reallocations among
investment options, actuarial gains or losses, cost-of-living indices, a
constant percentage (not less than zero) applied not less frequently than
annually, or similar fluctuating criteria,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDF70276FFEAD849718EAEDA381BCE43B9"><enum>(II)</enum><text display-inline="yes-display-inline">due to the existence of, or modification of
the duration of, a provision in the contract permitting a lump-sum withdrawal
after the annuity starting date, or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID6D03487A5F4644D393EE3BB3239D7F75"><enum>(III)</enum><text display-inline="yes-display-inline">because the period between each such
payment is lengthened or shortened, but only if at all times such period is no
longer than 1 calendar year.</text>
</subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID5F0C73499F94476488BB12E9B8E5AE2E"><enum>(B)</enum><header display-inline="yes-display-inline">Annuity contract</header><text display-inline="yes-display-inline">For purposes of subparagraph (A) and
subsections (b)(5) and (x), the term <term>annuity contract</term> means a
commercial annuity (as defined by section 3405(e)(6)), other than an endowment
or life insurance contract.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID543DF4E8BEAF4151AF0948ED6934E15A"><enum>(C)</enum><header display-inline="yes-display-inline">Minimum period of payments</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the
minimum period of payments is a guaranteed term of payments which does not
exceed the greater of—</text>
<clause commented="no" display-inline="no-display-inline" id="ID32333DB81C314FCDAB8225AE589A8401"><enum>(i)</enum><text display-inline="yes-display-inline">10 years, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID785342EA20F644D4BAF9C6700D37048E"><enum>(ii)</enum><text display-inline="yes-display-inline">the life expectancy of—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID18D9EA8876664E97B4FD93EDFC6BDC2C"><enum>(I)</enum><text display-inline="yes-display-inline">the annuitant as of the annuity starting
date, in the case of lifetime annuity payments described in subparagraph
(A)(ii)(III), or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID972F07E1C579447388724AFB78D8CB96"><enum>(II)</enum><text display-inline="yes-display-inline">the annuitant and joint annuitant as of the
annuity starting date, in the case of lifetime annuity payments described in
subparagraph (A)(ii)(IV).</text>
</subclause></clause><continuation-text commented="no" continuation-text-level="subparagraph">For purposes of this subparagraph,
life expectancy shall be computed with reference to the tables prescribed by
the Secretary under paragraph (3). For purposes of subsection (x)(1)(C)(ii),
the permissible minimum period of payments shall be determined as of the
annuity starting date and reduced by one for each subsequent year.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID0AEE96B7158D461EB18A6DF2464DA48B"><enum>(D)</enum><header display-inline="yes-display-inline">Minimum amount that must be paid in any
event</header><text display-inline="yes-display-inline">For purposes of
subparagraph (A), the minimum amount that must be paid in any event is an
amount payable to the designated beneficiary under an annuity contract which is
in the nature of a refund and does not exceed the greater of the amount applied
to produce the lifetime annuity payments under the contract or the amount, if
any, available for withdrawal under the contract on the date of
death.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDC59A2C7B36744996B047BC433BF3C295"><enum>(c)</enum><header display-inline="yes-display-inline">Recapture Tax for Lifetime Annuity
Payments</header><text display-inline="yes-display-inline">Section 72 is
amended by redesignating subsection (x) as subsection (y) and by inserting
after subsection (x) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="IDC92374CDC1854B89B86E6139FF44E260" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID69CAAEB2A6A742A1A4DC07A9F0CB8847"><enum>(x)</enum><header display-inline="yes-display-inline">Recapture Tax for Modifications To or
Reductions In Lifetime Annuity Payments</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID34A6CB6E84374FE8861C537036D1FAD3"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID28E812A4269049E3B51F4D898EB82043"><enum>(A)</enum><text display-inline="yes-display-inline">any amount received under an annuity
contract is excluded from income by reason of subsection (b)(5) (relating to
lifetime annuity payments) for any taxable year, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDBDC97BD3B6A743C7B4245BFFE851C101"><enum>(B)</enum><text display-inline="yes-display-inline">a recapture event described in paragraph
(2) occurs in any subsequent taxable year,</text>
</subparagraph><continuation-text commented="no" continuation-text-level="paragraph">then gross income for the first
taxable year in which the recapture event occurs shall be increased by the
recapture amount.</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDF9301E237D534D749C9C73AE5E76F049"><enum>(2)</enum><header display-inline="yes-display-inline">Recapture event</header><text display-inline="yes-display-inline">For purposes of paragraph (1), a recapture
event occurs if—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="IDC191431EEE024C75AB549FE405582076"><enum>(A)</enum><text display-inline="yes-display-inline">the series of payments under an annuity
contract is subsequently modified so any future payments are not lifetime
annuity payments,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID5EB8F6C532954939AB6F69AC2723FFFA"><enum>(B)</enum><text display-inline="yes-display-inline">after the date of receipt of the first
lifetime annuity payment under the contract an annuitant receives a lump sum
and thereafter is to receive annuity payments in a reduced amount under the
contract, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID95C022B49DBB4ECFA0801C62EB6D1669"><enum>(C)</enum><text display-inline="yes-display-inline">after the date of receipt of the first
lifetime annuity payment under the contract the dollar amount of any subsequent
annuity payment is reduced and a lump sum is not paid in connection with the
reduction, unless such reduction is—</text>
<clause commented="no" display-inline="no-display-inline" id="IDF180A6DC7FCF49FDB49F7C4233370A58"><enum>(i)</enum><text display-inline="yes-display-inline">due to an event described in subsection
(c)(5)(A)(iii), or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDD72C635D08A74E3EA31CD3713D6CC6B3"><enum>(ii)</enum><text display-inline="yes-display-inline">due to the addition of, or increase in, a
minimum period of payments (within the meaning of subsection (c)(5)(C)) or a
minimum amount that must be paid in any event (within the meaning of subsection
(c)(5)(D)).</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID6BDA14F7FAEF495187B081412A837D21"><enum>(3)</enum><header display-inline="yes-display-inline">Recapture amount</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDB10AC33953974FEDA06A17C0A8DC1B8A"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of this subsection, the
recapture amount shall be the amount, determined under rules prescribed by the
Secretary, equal to the amount which (but for subsection (b)(5)) would have
been includible in the taxpayer’s gross income if the modification or reduction
described in subparagraph (A), (B), or (C) of paragraph (2) had been in effect
at all times, plus interest for the deferral period at the underpayment rate
established by section 6621.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID9163B97ACFE9498280C74808E7DC8238"><enum>(B)</enum><header display-inline="yes-display-inline">Deferral period</header><text display-inline="yes-display-inline">For purposes of this subsection, the term
<term>deferral period</term> means, with respect to any amount, the period
beginning with the taxable year in which (without regard to subsection (b)(5))
the amount would have been includible in gross income and ending with the
taxable year in which the modification or reduction described in subparagraph
(A), (B), or (C) of paragraph (2) occurs.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDDC832B695BEE493C89DED17C9C1E20BC"><enum>(4)</enum><header display-inline="yes-display-inline">Exceptions to recapture tax</header><text display-inline="yes-display-inline">Paragraph (1) shall not apply in the case
of any recapture event which occurs because an annuitant—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID509F55D33C944F319C62B9DF75E39446"><enum>(A)</enum><text display-inline="yes-display-inline">dies or becomes disabled (within the
meaning of subsection (m)(7)),</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID352DA59955A743B48240ADA7B77225BC"><enum>(B)</enum><text display-inline="yes-display-inline">becomes a chronically ill individual within
the meaning of section 7702B(c)(2), or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID17FBE9BFD0C74A0298ACE3F1DE5C6234"><enum>(C)</enum><text display-inline="yes-display-inline">encounters
hardship.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID333C8E3600C64690A6F7CEFCA7FD052E"><enum>(d)</enum><header display-inline="yes-display-inline">Lifetime Distributions of Life Insurance
Death Benefits</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID9C0D335DFC5F4F6BBBC1BA8F5D9C4A2F"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 101(d) (relating to payment of life
insurance proceeds at a date later than death) is amended by adding at the end
the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDCC906A1D8E7E42B29955148E7B1CE1D1" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="ID47FA624DC95A411D9B40C7843D11FC80"><enum>(4)</enum><header display-inline="yes-display-inline">Exclusion for lifetime annuity
payments</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDABF6618B04A9493C9F34B44C0EB59318"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of amounts to which this
subsection applies, gross income for any taxable year shall not include the
lesser of—</text>
<clause commented="no" display-inline="no-display-inline" id="IDB79DF78C9FEC45BABEF591646879D06F"><enum>(i)</enum><text display-inline="yes-display-inline">50 percent of the portion of lifetime
annuity payments which (without regard to this paragraph) is includible in
gross income under this section, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID0D5EEE38C63B492DB38E20DB1D07BA99"><enum>(ii)</enum><text display-inline="yes-display-inline">the amount in effect under section
72(b)(5)(A)(ii) for the taxable year.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDBB7BB61A82494151B1D29BE0C7FA67DF"><enum>(B)</enum><header display-inline="yes-display-inline">Rules of section
<enum-in-header>72(b)(5)</enum-in-header> to apply</header><text display-inline="yes-display-inline">For
purposes of this paragraph, rules similar to the rules of section 72(b)(5) and
section 72(x) shall apply, except that the term <term>beneficiary of the life
insurance contract</term> shall be substituted for the term
<term>annuitant</term> each place it appears, and the term <term>life insurance
contract</term> shall be substituted for the term <term>annuity contract</term>
each place it
appears.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID6D88726D79D44BC2AB35B2253B89EECC"><enum>(2)</enum><header display-inline="yes-display-inline">Conforming amendment</header><text display-inline="yes-display-inline">Section 101(d)(1) is amended by inserting
<quote>or paragraph (4)</quote> after <quote>to the extent not excluded by the
preceding sentence</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDD2F573A8232F4C96A39F1456FAE1816A"><enum>(e)</enum><header display-inline="yes-display-inline">Effective Date</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDC728B04423C346109CE20BDEE4B143F0"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amendments made by this section shall
apply to amounts received in calendar years beginning after the date of the
enactment of this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID81ECDE8C77F54A078F91C16C57F7619A"><enum>(2)</enum><header display-inline="yes-display-inline">Special rule for existing
contracts</header><text display-inline="yes-display-inline">In the case of a
contract in force on the date of the enactment of this Act that does not
satisfy the requirements of section 72(c)(5)(A) of the Internal Revenue Code of
1986 (as added by this section), or requirements similar to such section
72(c)(5)(A) in the case of a life insurance contract, any modification to such
contract (including a change in ownership) or to the payments under such
contract that is made to satisfy the requirements of such section (or similar
requirements) shall not result in the recognition of any gain or loss, any
amount being included in gross income, or any addition to tax that otherwise
might result from such modification, but only if the modification is completed
before the date which is 2 years after the date of the enactment of this
Act.</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="ID60E5A30755F04E729EB47489FAF6D254" section-type="subsequent-section"><enum>203.</enum><header display-inline="yes-display-inline">Joint study of application of spousal
consent rules to defined contribution plans</header>
<subsection commented="no" display-inline="no-display-inline" id="ID2D17EA64C628448388AC9D000EE0ED0A"><enum>(a)</enum><header display-inline="yes-display-inline">Study</header><text display-inline="yes-display-inline">The Secretary of Labor and the Secretary of
the Treasury shall jointly conduct a study of the feasibility and desirability
of extending the application of the requirements of section 205 of the
<act-name parsable-cite="ERISA">Employee Retirement Income Security Act of
1974</act-name> and sections 401(a)(11) and 417 of the Internal Revenue Code of
1986 (relating to spousal consent requirements) to defined contribution plans
to which such requirements do not apply. Such study shall include consideration
of any modifications of such requirements that are necessary to apply such
requirements to such plans.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDB4E70C77C7F9409C8EEC5E941D8C2F83"><enum>(b)</enum><header display-inline="yes-display-inline">Report</header><text display-inline="yes-display-inline">Not later than 2 years after the date of
the enactment of this Act, the Secretaries shall report the results of the
study, together with any recommendations for legislative changes, to the
Committees on Finance and Health, Education, Labor, and Pensions of the Senate
and the Committees on Ways and Means and Education and Labor of the House of
Representatives.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id5CF0880F118741FCBC7753111E9A86D8" section-type="subsequent-section"><enum>204.</enum><header display-inline="yes-display-inline">Facilitating longevity insurance</header>
<subsection commented="no" display-inline="no-display-inline" id="ID51762EF17C7E441EA537A480EEFF21B2"><enum>(a)</enum><header display-inline="yes-display-inline">In General</header><text display-inline="yes-display-inline">Paragraph (9) of section 401(a) is amended
by inserting after subparagraph (G) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="ID62018D68CAED4426946FB67B30D681A5" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="IDD82445B04C724EA8A487D7B5EFC009EC"><enum>(H)</enum><header display-inline="yes-display-inline">Longevity insurance</header>
<clause commented="no" display-inline="no-display-inline" id="ID2A86373758CB4E1AB9D3512FFD11B414"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For purposes of this paragraph, any value
attributable to longevity insurance shall be disregarded in determining the
value of an employee’s interest under a plan prior to the first date that
payments are made under the longevity insurance.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID988B2A7157D3430BB38CEF90F860FDC6"><enum>(ii)</enum><header display-inline="yes-display-inline">Longevity insurance defined</header><text display-inline="yes-display-inline">For purposes of this subparagraph, the term
<term>longevity insurance</term> means an annuity payable on behalf of the
employee under which—</text>
<subclause commented="no" display-inline="no-display-inline" id="ID88721A62C98547F2A37D15831D7BB0BF"><enum>(I)</enum><text display-inline="yes-display-inline">payments commence not later than 12 months
following the calendar month in which the employee attains age 85 (or would
have attained age 85),</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID88CC1DE0A809498A90F01F32BDEF9534"><enum>(II)</enum><text display-inline="yes-display-inline">payments are made in substantially equal
periodic payments (not less frequently than annually) over the life of the
employee or the joint lives of the employee and the employee’s designated
beneficiary, taking into account the rules of clause (i) of section
402(e)(7)(D), except as otherwise provided in subclause (III) of such
section,</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDF1D1134E8BE04FB88A9134A6A91C8B39"><enum>(III)</enum><text display-inline="yes-display-inline">prior to the death of the employee, the
annuity does not make available any commutation benefit, cash surrender value,
or other similar feature, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID8CCFB605295340F0A673C64262FA9EE1"><enum>(IV)</enum><text display-inline="yes-display-inline">except as provided in rules prescribed by
the Secretary, in the case of an employee’s death prior to the date that
payments commence, the value of any death benefits paid may not exceed the
premiums paid for such annuity, plus interest compounded annually at 3
percent.</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="IDE79E4F9C99F44877A23D88BD9522C9CD"><enum>(iii)</enum><header display-inline="yes-display-inline">Adjusting age</header><text display-inline="yes-display-inline">For purposes of clause (ii)(I), the
Secretary shall annually increase age 85 to reflect increases in life
expectancy (as determined by the Secretary) that occur on or after January 1,
2006, except that any such increased age which is not a whole number shall be
rounded to the next lower whole
number.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID9E85430B0A6D45DB84A7B54A27118123"><enum>(b)</enum><header display-inline="yes-display-inline">Rules</header><text display-inline="yes-display-inline">Not later than one year after the date of
enactment of this Act, the Secretary of the Treasury shall prescribe rules
under which all or a portion of a participant’s benefits under any plan
described in section 402(c)(8)(B) of the Internal Revenue Code of 1986 may be
treated as longevity insurance under the rules of section 401(a)(9)(H) of such
Code.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id6AFA2AD83FC14A5FA15FA8366BC05EED"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to years beginning after December 31, 2008.</text>
</subsection></section><enum>III</enum><header display-inline="yes-display-inline">Provisions ensuring equity in
divorce</header>
<section commented="no" display-inline="no-display-inline" id="id2F69297E26D54B6ABA7230197C45CA9B" section-type="subsequent-section"><enum>301.</enum><header display-inline="yes-display-inline">Special rules relating to treatment of
qualified domestic relations orders</header>
<subsection commented="no" display-inline="no-display-inline" id="idFDB23FA6F21243CE844898FCF2B19814"><enum>(a)</enum><header display-inline="yes-display-inline">Preservation of assets</header>
<paragraph commented="no" display-inline="no-display-inline" id="idFED1F85E76BC4DE5813EB30AF2C20F6F"><enum>(1)</enum><header display-inline="yes-display-inline">Amendment of 1986 code</header><text display-inline="yes-display-inline">Section 414(p) is amended by redesignating
paragraph (13) as paragraph (14) and by inserting after paragraph (12) the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idDDAFEA2A096A4DC8A13E9A78115CDF3F" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id9C9A8D891DC44340BBF173FD7CDF4923"><enum>(13)</enum><header display-inline="yes-display-inline">Preservation of assets</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id9B869A83DF184B10B1197A347BF8767B"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If a spouse or former spouse of a
participant notifies a plan in writing that—</text>
<clause commented="no" display-inline="no-display-inline" id="idF72FCB164E8943E2B9D4210A4FBC275A"><enum>(i)</enum><text display-inline="yes-display-inline">an action is pending pursuant to a State
domestic relations law (including a community property law), and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idE60C801D2B224947876418CEDF47177F"><enum>(ii)</enum><text display-inline="yes-display-inline">all or a portion of the benefits payable
with respect to the participant under the plan are a subject of such
action,</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">and includes with the notice
evidence of the pendency of the action, the plan administrator shall, during
the segregation period, separately account for 50 percent of such benefits. Any
amounts so separately accounted for may not be distributed by the plan during
the segregation period.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id894B9E318FDC4E6FAE3B5027A32C1798"><enum>(B)</enum><header display-inline="yes-display-inline">Segregation period</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the term
<term>segregation period</term> means the period—</text>
<clause commented="no" display-inline="no-display-inline" id="id35A680D260EC4233B37F17B08572ADC1"><enum>(i)</enum><text display-inline="yes-display-inline">beginning on the date of the receipt of the
notice, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id12788F187E9B453CB53EFE65E30FB5EF"><enum>(ii)</enum><text display-inline="yes-display-inline">ending as of the close of the 90-day period
beginning on such date (or, if earlier, the date of receipt of a domestic
relations order with respect to the participant and the spouse or former spouse
or the date the action is no longer pending).</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">The segregation period shall be
extended for 1 or more additional periods described in the preceding sentence
upon notice by the spouse or former spouse that the action described in
subparagraph (A) is still pending as of the close of any prior segregation
period.</continuation-text></subparagraph></paragraph><after-quoted-block></after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD460348B8684439888486D4A5FA283C1"><enum>(2)</enum><header display-inline="yes-display-inline">Amendment of erisa</header><text display-inline="yes-display-inline">Section 206(d)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1056(d)(3)) is amended by
redesignating subparagraph (N) as subparagraph (O) and by inserting after
subparagraph (M) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id9930E7B5714741AB84BB4FCC0B6D92A8" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="id4679348154E149CC8050F584EC58310E"><enum>(N)</enum><header display-inline="yes-display-inline">Preservation of assets</header>
<clause commented="no" display-inline="no-display-inline" id="id4B2C8518F4C641F6A281A66AFE0BA18F"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">If a spouse or former spouse of a
participant notifies a plan in writing that—</text>
<subclause commented="no" display-inline="no-display-inline" id="idFC9EA7F29798475E871E7681337012B1"><enum>(I)</enum><text display-inline="yes-display-inline">an action is pending pursuant to a State
domestic relations law (including a community property law), and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id6BB951716A364EE19C031F7CB874F95E"><enum>(II)</enum><text display-inline="yes-display-inline">all or a portion of the benefits payable
with respect to the participant under the plan are a subject of such
action,</text>
</subclause><continuation-text commented="no" continuation-text-level="clause">and includes with the notice evidence of
the pendency of the action, the plan administrator shall, during the
segregation period, separately account for 50 percent of such benefits. Any
amounts so separately accounted for may not be distributed by the plan during
the segregation period.</continuation-text></clause><clause commented="no" display-inline="no-display-inline" id="idDC509CB6F11A4CDABC3672C75A1F990D"><enum>(ii)</enum><header display-inline="yes-display-inline">Segregation period</header><text display-inline="yes-display-inline">For purposes of clause (i), the term
<term>segregation period</term> means the period—</text>
<subclause commented="no" display-inline="no-display-inline" id="id43F066087F82455A814FBDF2088D3991"><enum>(I)</enum><text display-inline="yes-display-inline">beginning on the date of the receipt of the
notice, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="id45A633C365DF4636A6F305FE0770CF2B"><enum>(II)</enum><text display-inline="yes-display-inline">ending as of the close of the 90-day period
beginning on such date (or, if earlier, the date of receipt of a domestic
relations order with respect to the participant and the spouse or former spouse
or the date the action is no longer pending).</text>
</subclause><continuation-text commented="no" continuation-text-level="clause">The segregation period shall be extended
for 1 or more additional periods described in the preceding sentence upon
notice by the spouse or former spouse that the action described in clause (i)
is still pending as of the close of any prior segregation
period.</continuation-text></clause></subparagraph><after-quoted-block></after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id99641ECB015D4614920B811EC1E14436"><enum>(b)</enum><header display-inline="yes-display-inline">Penalty for failure To provide information
regarding alternate payees</header><text display-inline="yes-display-inline">Section 502(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended by redesignating
paragraph (8) as paragraph (9) and by inserting after paragraph (7) the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id1AFBDDB3909B4B14A2CCB22AFD4B8D3D" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id5A836B843CB64EE0AC1E6DD628DC08E3"><enum>(8)</enum><header display-inline="yes-display-inline">Failure to provide information regarding
alternate payees</header><text display-inline="yes-display-inline">The
Secretary may assess a civil penalty against any plan administrator of up to
$100 a day from the date of the plan administrator's failure or refusal to
provide the information the plan administrator is required to provide under
regulations under this Act to prospective alternative payees under a domestic
relations order under section 206(d)(3) or to the Secretary or any
representative of a prospective alternative payee in connection with such an
order.</text>
</paragraph><after-quoted-block></after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id0F8847D9C1604E158D6C1BF9C31C2050"><enum>(c)</enum><header display-inline="yes-display-inline">Allocation of plan expenses in complying
with domestic relations orders</header>
<paragraph commented="no" display-inline="no-display-inline" id="id27C002D1064D4993BFF0641A32424E81"><enum>(1)</enum><header display-inline="yes-display-inline">Amendment of 1986 code</header><text display-inline="yes-display-inline">Section 414(p), as amended by subsection
(a), is amended by redesignating paragraph (14) as paragraph (15) and by
inserting after paragraph (13) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idDB1A27D4C31744AEB60F311A9FE55547" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id1F4E2C46C1684F7283DE07A8D38A097D"><enum>(14)</enum><header display-inline="yes-display-inline">Allocation of expenses</header><text display-inline="yes-display-inline">Any expenses incurred by a plan with
respect to compliance with the requirements of this subsection shall not be
allocated to an individual participant but rather shall be allocated among all
participants on the basis of the relative value of each participant's share of
the assets of the plan, on the basis of a flat amount per participant, or on
any other reasonable basis provided for under the
plan..</text>
</paragraph><after-quoted-block></after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD408049C79934408A50CA5DF70564576"><enum>(2)</enum><header display-inline="yes-display-inline">Amendment of erisa</header><text display-inline="yes-display-inline">Section 206(d)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1056(d)(3)), as amended by
subsection (a), is amended by redesignating subparagraph (O) as subparagraph
(P) and by inserting after subparagraph (N) the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id54E2E05E5CE041CDB95DFCAB1FDFA683" style="OLC">
<subparagraph commented="no" display-inline="no-display-inline" id="idF67CBB60187D41AD8EEDC81C7F1D18EA"><enum>(O)</enum><header display-inline="yes-display-inline">Allocation of expenses</header><text display-inline="yes-display-inline">Any expenses incurred by a plan with
respect to compliance with the requirements of this paragraph shall not be
allocated to an individual participant but rather shall be allocated among all
participants on the basis of the relative value of each participant's share of
the assets of the plan, on the basis of a flat amount per participant, or on
any other reasonable basis provided for under the
plan.</text>
</subparagraph><after-quoted-block></after-quoted-block></quoted-block>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="idC8E60CFEC32B4351B51B03CCB7D2A169" section-type="subsequent-section"><enum>302.</enum><header display-inline="yes-display-inline">Elimination of current connection
requirement under Railroad Retirement Act for certain survivors</header>
<subsection commented="no" display-inline="no-display-inline" id="idA270863FF2594300BF93571F0C7E942C"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 2(d)(1) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231a(d)(1)), in the matter preceding paragraph (i), is
amended by inserting <quote>, except with respect to survivors described in
paragraph (i), (ii), or (v),</quote> after <quote>December 31, 1995)
and</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idC4971EE184564C50B4C41064C2591042"><enum>(b)</enum><header display-inline="yes-display-inline">Effective dates</header>
<paragraph commented="no" display-inline="no-display-inline" id="id02A3734579D447FA847CDDE5AED68D55"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id560A4B1E91FC4841B0B983748DDEC93B"><enum>(2)</enum><header display-inline="yes-display-inline">Retroactive application to certain
survivors</header><text display-inline="yes-display-inline">If a survivor of a
deceased employee would be entitled to an annuity by reason of the amendment
made by subsection (a) but for the fact that the employee died before the date
of the enactment of this Act, the survivor shall be entitled to such an annuity
but only with respect to annuity payments for months beginning on or after such
date. Appropriate adjustments shall be made in annuity payments of other
individuals to reflect any annuity payable by reason of this paragraph.</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="id25449423549641DEB9905686F1C113FB" section-type="subsequent-section"><enum>303.</enum><header display-inline="yes-display-inline">Permitting divorced spouses and widows and
widowers to remarry after turning 60 without a penalty under Railroad
Retirement Act</header>
<subsection commented="no" display-inline="no-display-inline" id="id3AC664D633D646DABFEC09EC695DD239"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header>
<paragraph commented="no" display-inline="no-display-inline" id="idC655D1BC4E0E47E9B4C3EFFA58E2B9FF"><enum>(1)</enum><header display-inline="yes-display-inline">Divorced spouse</header><text display-inline="yes-display-inline">Section 2(c)(4) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231a(c)(4) is amended by adding at the end the following
new sentence: <quote>For purposes of paragraph (ii)(B), if a divorced wife
marries after attaining age 60, such marriage shall be deemed not to have
occurred.</quote></text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idADDD56EDE2BC4C908691DE39E88BC32D"><enum>(2)</enum><header display-inline="yes-display-inline">Widows and widowers</header><text display-inline="yes-display-inline">Section 2(d)(1)(v) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231a(d)(1)(v)) is amended by adding at the
end the following new sentence: <quote>For purposes of this paragraph, if a
widow marries after attaining age 60, such marriage shall be deemed not to have
occurred.</quote></text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id3F62B2F01A4C49C1BC0FF5C35B0E29FC"><enum>(b)</enum><header display-inline="yes-display-inline">Effective dates</header>
<paragraph commented="no" display-inline="no-display-inline" id="idC86F19A399124EB5B6835D7ECE2B0CF4"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The amendments made by this section shall
take effect on the date of enactment of this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id97A5CD3EDB444BBA93135A4600C0DB9C"><enum>(2)</enum><header display-inline="yes-display-inline">Retroactive application</header><text display-inline="yes-display-inline">If a divorced wife, widow, or widower would
be entitled to an annuity by reason of the amendments made by this section but
for the fact the individual was married before the date of the enactment of
this Act, the individual shall be entitled to such an annuity but only with
respect to annuity payments for months beginning on or after such date.
Appropriate adjustments shall be made in annuity payments of other individuals
to reflect any annuity payable by reason of this paragraph.</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="ID152A3487CDFE4C6B9C2A03FDC28E7DFB" section-type="subsequent-section"><enum>304.</enum><header display-inline="yes-display-inline">Repeal of jurisdictional requirement for
court to treat military retirement pay as property of the military member and
spouse</header>
<subsection commented="no" display-inline="no-display-inline" id="idD57A7281A75F44C59DAC89B3DBE51D2D"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 1408(c) of title 10, United States
Code, is amended by striking paragraph (4).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id71529CA06948481DB5CEC2608F500C74"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to final decrees issued on or after the date of the
enactment of this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idDEB36108827E4DDCAB70CA7AC76F3850" section-type="subsequent-section"><enum>305.</enum><header display-inline="yes-display-inline">Modification of reductions in disposable
retired pay for payments in compliance with court orders</header>
<subsection commented="no" display-inline="no-display-inline" id="id2A7717B1DC8949EA9CC2E3344BBE843D"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 1408(d) of title 10, United States
Code, is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id2B8C52D4CC894E98B3F8A1B4FD627C63" style="USC">
<paragraph commented="no" display-inline="no-display-inline" id="id3A25A4B1DFF243D399BA62DCA5AF436B"><enum>(8)</enum><text display-inline="yes-display-inline">Notwithstanding subsection (a)(4) or
(e)(1), if the disposable retired pay of a member is reduced under subparagraph
(B) of subsection (a)(4) as a result of a waiver required to receive
compensation under title 38, or is reduced under subparagraph (C) of subsection
(a)(4), the Secretary concerned shall pay (subject to any other limitation
under this section) to the spouse or former spouse the lesser of —</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idD3756E1125C64EF69961F25F1BC2508E"><enum>(A)</enum><text display-inline="yes-display-inline">the amount payable under the final court
order from the disposable retired pay (determined without regard to such
reductions), or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idCF85B4D7CEF24CB6BD914A3FE9722A0B"><enum>(B)</enum><text display-inline="yes-display-inline">100 percent of the disposable retired pay
(determined after such reductions).</text>
</subparagraph></paragraph><after-quoted-block></after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id50A7D1A050994EE79D2353EFCABEB459"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to payments of disposable retired pay attributable to
periods beginning on or after the date of the enactment of this Act with
respect to final court orders issued on, before, or after such date.</text>
</subsection></section><enum>IV</enum><header display-inline="yes-display-inline">Provisions to improve financial
literacy</header>
<section commented="no" display-inline="no-display-inline" id="idEDA21761158A448DA60E337889234A85" section-type="subsequent-section"><enum>401.</enum><header display-inline="yes-display-inline">Grants to community-based taxpayer clinics
to provide retirement savings advice</header>
<subsection commented="no" display-inline="no-display-inline" id="id0C8FE06B4F0D4C36AB2EAEA286F7861F"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 7526 (relating to low-income
taxpayer clinics) is amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id35026D52B84D4754BC5DB244B85BA593" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id77BD9CE1CB8D487992C3CF7AE1214CF5"><enum>(d)</enum><header display-inline="yes-display-inline">Additional grants for retirement savings
advice</header>
<paragraph commented="no" display-inline="no-display-inline" id="id6AF86C22698D47FD944F49CAE9069540"><enum>(1)</enum><header display-inline="yes-display-inline">Making of grants</header><text display-inline="yes-display-inline">The Secretary may, subject to the
availability of appropriated funds, make grants to qualified low-income
taxpayer clinics to provide retirement savings counseling to low-income
taxpayers.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id15BB0EF8E9BA4E7797D3D8B1664741FB"><enum>(2)</enum><header display-inline="yes-display-inline">Use of grant funds</header><text display-inline="yes-display-inline">Grants under paragraph (1) shall be used
to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id4B0C5143630F4875A5AF548D96A7E15A"><enum>(A)</enum><text display-inline="yes-display-inline">develop the infrastructure necessary to
carry out retirement savings counseling for low-income taxpayers, including the
development of software to assist low-income taxpayers in beginning a
retirement savings program, monitoring their savings behavior, and taking
advantage of tax benefits provided under this title to assist in retirement
savings,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id4FC4ECBCFCB045C7941261340E742D62"><enum>(B)</enum><text display-inline="yes-display-inline">develop partnerships with certified
financial planners and other financial experts to assist in carrying out the
retirement savings program, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id861F23DE9DC5407A9D76F4704A811412"><enum>(C)</enum><text display-inline="yes-display-inline">train advisors to assist low-income
taxpayers with retirement savings.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB2D90AB6D14441B8A7DC93FA78CAF67F"><enum>(3)</enum><header display-inline="yes-display-inline">Criteria for awards</header><text display-inline="yes-display-inline">The provisions of subsection (c)(4) shall
apply in determining whether to make a grant under paragraph (1).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC6112FB656434DD79701D6C87AFE4F92"><enum>(4)</enum><header display-inline="yes-display-inline">Limitations and special rules</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id7253D3537CE3437D9E71F9A1641B9F92"><enum>(A)</enum><header display-inline="yes-display-inline">Aggregate limitation</header><text display-inline="yes-display-inline">Unless otherwise provided by specific
appropriations, the Secretary shall not allocate more than $25,000,000 per year
(exclusive of costs of administering the program) to grants under paragraph
(1).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF7273DC5D11648F1BAFF5C1F81541BFE"><enum>(B)</enum><header display-inline="yes-display-inline">Limitation on annual grants to a
clinic</header><text display-inline="yes-display-inline">The aggregate amount
of grants which may be made under paragraph (1) to a clinic for a year shall
not exceed $100,000.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id552AB0F70EA4469AAC23DF6B05345A6A"><enum>(C)</enum><header display-inline="yes-display-inline">Multi-year grants</header><text display-inline="yes-display-inline">The provisions of subsection (c)(3) shall
apply to grants under paragraph (1).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB3AC724B166840A9BA127DB86F160DC6"><enum>(D)</enum><header display-inline="yes-display-inline">Additional amounts</header><text display-inline="yes-display-inline">Grants under paragraph (1) shall be in
addition to any grants under subsection
(a).</text>
</subparagraph></paragraph></subsection><after-quoted-block></after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id74FD3B5E35314687B0311C7F825C765B"><enum>(b)</enum><header display-inline="yes-display-inline">Conforming amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="id83571F12C0C7431FA3CD36B0363A2B91"><enum>(1)</enum><text display-inline="yes-display-inline">Section 7526(c) (relating to special rules
and limitations) is amended by striking <quote>this section</quote> each place
it appears and inserting <quote>subsection (a)</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id041CB556CD714590AD66913AA5A37BA8"><enum>(2)</enum><text display-inline="yes-display-inline">Section 7526(c)(3) is amended by inserting
<quote>under subsection (a)</quote> after <quote>award</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id02C230FB429F4AAE8B8FF0D735C7FCA6"><enum>(c)</enum><header display-inline="yes-display-inline">Authorization of
appropriations</header><text display-inline="yes-display-inline">There is
authorized to be appropriated for each fiscal year beginning after September
30, 2007, $25,000,000 to carry out the provisions of this section.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id19D984667FCE4ED08B286140B8278FD5" section-type="subsequent-section"><enum>402.</enum><header display-inline="yes-display-inline">Treatment of qualified retirement planning
services</header>
<subsection commented="no" display-inline="no-display-inline" id="IDCE443E8A71294B03A9B3CC0BA2C8A479"><enum>(a)</enum><header display-inline="yes-display-inline">In General</header><text display-inline="yes-display-inline">Subsection (m) of section 132 (defining
qualified retirement services) is amended by adding at the end the following
new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID06A6789973B84360B6A9527A0760D97C" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDF018EEE85D124BDF9C3BDC93F595D7B8"><enum>(4)</enum><header display-inline="yes-display-inline">No constructive receipt</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDD76B5FE3569B4CE3B00A613C4D92E4AE"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">No amount shall be included in the gross
income of any employee solely because the employee may choose between any
qualified retirement planning services provided by an eligible investment
advisor and compensation which would otherwise be includible in the gross
income of such employee. The preceding sentence shall apply to highly
compensated employees only if the choice described in such sentence is
available on substantially the same terms to each member of the group of
employees normally provided education and information regarding the employer’s
qualified employer plan.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDA04D655286F84CBC86F31DFDFFE219C4"><enum>(B)</enum><header display-inline="yes-display-inline">Limitation</header><text display-inline="yes-display-inline">The maximum amount which may be excluded
under subparagraph (A) with respect to any employee for any taxable year shall
not exceed $1,000.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID47FBF870755043E483A85EB744BEEDB8"><enum>(C)</enum><header display-inline="yes-display-inline">Eligible investment adviser</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term
<term>eligible investment adviser</term> means, with respect to a plan, a
person—</text>
<clause commented="no" display-inline="no-display-inline" id="IDE025DA3DF3654C85AE655D907F34E29F"><enum>(i)</enum><text display-inline="yes-display-inline">who—</text>
<subclause commented="no" display-inline="no-display-inline" id="IDC0130ED520C340EF999C54C4C73D9103"><enum>(I)</enum><text display-inline="yes-display-inline">is registered as an investment adviser
under the <act-name parsable-cite="IAA40">Investment Advisers Act of
1940</act-name> (15 U.S.C. 80b–1 et seq.),</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID65C865277DA7482CBD8AC800896408E6"><enum>(II)</enum><text display-inline="yes-display-inline">is registered as an investment adviser
under the laws of the State in which such adviser maintains the principal
office and place of business of such adviser, but only if such State laws are
consistent with section 203A of the <act-name parsable-cite="IAA40">Investment
Advisers Act of 1940</act-name> (15 U.S.C. 80b–3a),</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID7E13369562884CA19739813F4A6AC0BD"><enum>(III)</enum><text display-inline="yes-display-inline">is a bank or similar financial institution
referred to in section 408(b)(4),</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID5CE1CCBD07DA49BF85019A9F1E6D3933"><enum>(IV)</enum><text display-inline="yes-display-inline">is an insurance company qualified to do
business under the laws of a State, or</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID41FDE09E2E544957B6B6E335CF72A771"><enum>(V)</enum><text display-inline="yes-display-inline">is any other comparably qualified entity
which satisfies such criteria as the Secretary determines appropriate,
consistent with the purposes of this subsection, and</text>
</subclause></clause><clause commented="no" display-inline="no-display-inline" id="IDBC1AC0A3044D42A8830C0B4ED4119A24"><enum>(ii)</enum><text display-inline="yes-display-inline">who meets the requirements of subparagraph
(D).</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID3D688EFE23CC45F99515CEFF057BFB7A"><enum>(D)</enum><header display-inline="yes-display-inline">Adviser requirements</header><text display-inline="yes-display-inline">The requirements of this subparagraph are
met if every individual employed (or otherwise compensated) by a person
described in subparagraph (C)(i) who provides investment advice on behalf of
such person to any plan participant or beneficiary is—</text>
<clause commented="no" display-inline="no-display-inline" id="ID342F2C4CBAAD444895585769B612F6E0"><enum>(i)</enum><text display-inline="yes-display-inline">an individual described in subclause (I) of
subparagraph (C)(i),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID0F4FCAF247E04463B68101A87714C113"><enum>(ii)</enum><text display-inline="yes-display-inline">an individual described in subclause (II)
of subparagraph (C)(i), but only if such State has an examination requirement
to qualify for registration,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID40FA533C1CB942AD8E198DAFF595179B"><enum>(iii)</enum><text display-inline="yes-display-inline">registered as a broker or dealer under the
<act-name parsable-cite="SEA34">Securities Exchange Act of 1934</act-name> (15
U.S.C. 78a et seq.),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID9C464636DD3E4537AFF2D3DD86A90009"><enum>(iv)</enum><text display-inline="yes-display-inline">a registered representative as described in
section 3(a)(18) of the <act-name parsable-cite="SEA34">Securities Exchange Act
of 1934</act-name> (15 U.S.C. 78c(a)(18)) or section 202(a)(17) of the
<act-name parsable-cite="IAA40">Investment Advisers Act of 1940</act-name> (15
U.S.C. 80b–2(a)(17)), or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDAB1E47CB0276491F903F0DE0B40601D9"><enum>(v)</enum><text display-inline="yes-display-inline">any other comparably qualified individual
who satisfies such criteria as the Secretary determines appropriate, consistent
with the purposes of this paragraph.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID1EC487EF5A424755AAEB387E8929F325"><enum>(E)</enum><header display-inline="yes-display-inline">Termination</header><text display-inline="yes-display-inline">This paragraph shall not apply to taxable
years beginning after December 31,
2012.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDC0A09D5B93174B19AD427AE8E8161DF5"><enum>(b)</enum><header display-inline="yes-display-inline">Conforming Amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDE2F72FE382284B37BA663697A6CC93A8"><enum>(1)</enum><text display-inline="yes-display-inline">Section 403(b)(3)(B) is amended by
inserting <quote>132(m)(4),</quote> after <quote>132(f)(4),</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID487DE259DE6446488F490792E91937F2"><enum>(2)</enum><text display-inline="yes-display-inline">Section 414(s)(2) is amended by inserting
<quote>132(m)(4),</quote> after <quote>132(f)(4),</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD030FB02C4244A42848C3A00D630A7F5"><enum>(3)</enum><text display-inline="yes-display-inline">Section 415(c)(3)(D)(ii) is amended by
inserting <quote>132(m)(4),</quote> after <quote>132(f)(4),</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDB94044803DF7416A94CF91E7F00B5F06"><enum>(c)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id9203D5FC63904CEBBC527BB115A7781D" section-type="subsequent-section"><enum>403.</enum><header display-inline="yes-display-inline">Retirement handbook and retirement
readiness checklist</header>
<subsection commented="no" display-inline="no-display-inline" id="id306A1892D0BC48CC9DEB327DC1F5AA53"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 704 of the Social Security Act is
amended by adding at the end the following new subsection:</text>
<quoted-block act-name="" display-inline="no-display-inline" id="id8E6AD117D8AF4C75BF24A4BBE88ACB3B" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id78A915A3459644DE8EE7680454A80583"><enum>(f)</enum><header display-inline="yes-display-inline">Retirement information</header>
<paragraph commented="no" display-inline="no-display-inline" id="idE58DC9E362D2424090C1C2E6DDA8E18B"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The Commissioner, in consultation with the
Social Security Advisory Board, shall prepare—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idF681EF5DD9A5478AA1EB2215752486F3"><enum>(A)</enum><text display-inline="yes-display-inline">the financial reference handbook described
in paragraph (2), and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id84B3E0B11DAF4CA69C173943AAD3EF46"><enum>(B)</enum><text display-inline="yes-display-inline">the retirement readiness checklist
described in paragraph (3).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idE4BD0566CE11467C98E59F9ED65F77F5"><enum>(2)</enum><header display-inline="yes-display-inline">Financial reference handbook</header><text display-inline="yes-display-inline">The handbook described in this paragraph is
a pamphlet which—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id2A7D209EDD754BBC89C983AD5B7A3B2F"><enum>(A)</enum><text display-inline="yes-display-inline">includes definitions of basic financial
terms,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idD3629FC9837E49E0BFA2EF756122D2BB"><enum>(B)</enum><text display-inline="yes-display-inline">contains a listing of financial issues and
problems facing individuals who are retiring and explanations of methods of
dealing with the issues and problems, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id6553DC4C70A14209B119324217C6CD23"><enum>(C)</enum><text display-inline="yes-display-inline">is in a form readily understandable by the
average retiree.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id3B46F8927C0440EEA6AF27B485DB0F69"><enum>(3)</enum><header display-inline="yes-display-inline">Readiness checklist</header><text display-inline="yes-display-inline">The checklist described in this paragraph
is a list of questions that individuals need to consider in preparation for
retirement, including the following:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id56B99ECC8432457C884D7CD1D132590B"><enum>(A)</enum><text display-inline="yes-display-inline">What annual income will the individual need
in retirement?</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id325C13B2AB5E4EB6B348E564C31EC59B"><enum>(B)</enum><text display-inline="yes-display-inline">How many years will the individual live in
retirement?</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF9C9D739968D4CDD9951B4A50BF282AE"><enum>(C)</enum><text display-inline="yes-display-inline">What will be the cost of Medicare
premiums?</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9DDAF757F2694D64BA13BCAA9B049619"><enum>(D)</enum><text display-inline="yes-display-inline">What will be the cost of insurance
necessary to supplement Medicare?</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF71C4E286E0648F29E2C0F57222E78DC"><enum>(E)</enum><text display-inline="yes-display-inline">How will savings be invested in
retirement?</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id5E777661D338468396A14E86A38814FE"><enum>(F)</enum><text display-inline="yes-display-inline">How will taxes affect your retirement
income?</text>
</subparagraph><continuation-text commented="no" continuation-text-level="paragraph">The checklist will include answers to
the questions or directions as to where information is available to answer the
questions. All information shall be in a form readily understandable to the
average recipient of the checklist.</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idA1A25DD23C8142D9BC2B9A2023039081"><enum>(4)</enum><header display-inline="yes-display-inline">Revisions</header><text display-inline="yes-display-inline">The Commissioner shall periodically revise
and update the handbook and checklist prepared under this subsection.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0E0F0931921045D7B0DDF5641A8EA4DA"><enum>(5)</enum><header display-inline="yes-display-inline">Distribution of materials</header>
<subparagraph commented="no" display-inline="no-display-inline" id="id790635ECDC104CE5B3A71060D9CC44B5"><enum>(A)</enum><header display-inline="yes-display-inline">Handbook</header><text display-inline="yes-display-inline">The financial reference handbook described
in paragraph (2) shall be included with materials provided to an individual
when the individual first applies for benefits under title II and such other
times as the Commissioner determines appropriate.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idE28AB4EC72F345109AEA3A5F3A171318"><enum>(B)</enum><header display-inline="yes-display-inline">Checklist</header><text display-inline="yes-display-inline">The retirement readiness checklist
described in paragraph (3) shall be included with an individual's annual social
security account statement provided under section
1143.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idB01A21D4DB4144158BEBAEFE68185172"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall take effect on the date of the enactment of this Act, but
the handbooks and checklists required to be provided by such amendment shall be
provided on or after January 1, 2009 (or such earlier date as the Commissioner
of Social Security may provide).</text>
</subsection></section><enum>V</enum><header display-inline="yes-display-inline">Incentives for small businesses to
establish and maintain retirement plans for employees</header>
<section commented="no" display-inline="no-display-inline" id="ID56A5226258AB43CFA4AAAF99C296CAC3" section-type="subsequent-section"><enum>501.</enum><header display-inline="yes-display-inline">Credit for qualified pension plan
contributions of small employers</header>
<subsection commented="no" display-inline="no-display-inline" id="ID5B00F1E94331481C907F2E5EF806A20E"><enum>(a)</enum><header display-inline="yes-display-inline">In General</header><text display-inline="yes-display-inline">Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended by section 102, is
amended by adding at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="ID7399E6A09A8A4932B80AADBE8E70D3C5" style="OLC">
<section commented="no" display-inline="no-display-inline" id="ID92A9F90D6DEE41DBA0772ACEADDB3C5A" section-type="subsequent-section"><enum>45P.</enum><header display-inline="yes-display-inline">Small employer pension plan
contributions</header>
<subsection commented="no" display-inline="no-display-inline" id="ID62E11F0C6692404B8605A36CC4113596"><enum>(a)</enum><header display-inline="yes-display-inline">General Rule</header><text display-inline="yes-display-inline">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 employee
who is not a highly compensated employee.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID69260EBA6EF346CF88F0F5AEC6427378"><enum>(b)</enum><header display-inline="yes-display-inline">Credit Limited to 3 Years</header><text display-inline="yes-display-inline">The credit allowable by this section shall
be allowed only with respect to the period of 3 taxable years beginning with
the first taxable year for which a credit is allowable with respect to a plan
under this section.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID5BFC72016EA74EFC9A2A603CC4AC55D8"><enum>(c)</enum><header display-inline="yes-display-inline">Qualified Employer
Contribution</header><text display-inline="yes-display-inline">For purposes of
this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="ID1618023982EB471FBE630FC59C6C9A29"><enum>(1)</enum><header display-inline="yes-display-inline">Defined contribution plans</header><text display-inline="yes-display-inline">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 employee who is not a highly 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 commented="no" display-inline="no-display-inline" id="ID631B72AFC2684BFB9D849958D15AF5F1"><enum>(2)</enum><header display-inline="yes-display-inline">Defined benefit plans</header><text display-inline="yes-display-inline">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 employee who is not a highly
compensated employee to the extent that the accrued benefit of such employee
derived from employer contributions for the year does not exceed the equivalent
(as determined under regulations prescribed by the Secretary and without regard
to contributions and benefits under the <act-name parsable-cite="SSA">Social
Security Act</act-name>) of 3 percent of such employee’s compensation from the
employer for the year.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDF535EE4A37394D4B83780F7BCC76D7EB"><enum>(d)</enum><header display-inline="yes-display-inline">Qualified Retirement Plan</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID9D811D4EBFDD453597170870BAF42C26"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">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), any simplified pension (as defined in
section 408(k)), or any simple retirement account (as defined in section 408(p)
if the following requirements are met with respect to such plan, pension, or
account:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID27CDFCE6AD5B41C4AA9817F31E28E7C7"><enum>(A)</enum><text display-inline="yes-display-inline">The contribution requirements of paragraph
(2).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID97CE3F71C02846C892D8689307E4E795"><enum>(B)</enum><text display-inline="yes-display-inline">The vesting requirements of paragraph
(3).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDAE0D3CEB711D4771A57E4D725A6908C0"><enum>(C)</enum><text display-inline="yes-display-inline">The distribution requirements of paragraph
(4).</text>
</subparagraph><continuation-text commented="no" continuation-text-level="paragraph">The contribution and vesting
requirements of paragraphs (2) and (3) shall be treated as met in the case of a
simple retirement account under a qualified salary reduction arrangement (as
defined in section 408(p)(2)) or a cash or deferred arrangement meeting the
requirements of section 401(k)(11).</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDA079432A0B554F55BB1DA790CA0A5E37"><enum>(2)</enum><header display-inline="yes-display-inline">Contribution requirements</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID692F420FB0A94101A854C0F4DC16F1A3"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The requirements of this paragraph are met
if, under the plan—</text>
<clause commented="no" display-inline="no-display-inline" id="IDFA19A88882754EB3918E15F1FC291DE1"><enum>(i)</enum><text display-inline="yes-display-inline">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 employee who
is not a highly compensated employee who is eligible to participate in the
plan, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID3393BC37818A43E999A4475A3CBA337B"><enum>(ii)</enum><text display-inline="yes-display-inline">allocations of nonelective employer
contributions, in the case of a defined contribution plan, 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 (and an equivalent
requirement is met with respect to a defined benefit plan).</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDAE94AA725FC04A15B0B1B3EEA7BBF9A8"><enum>(B)</enum><header display-inline="yes-display-inline">Compensation limitation</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="ID47016CB085064E3FAD16C98B0830701B"><enum>(3)</enum><header display-inline="yes-display-inline">Vesting requirements</header><text display-inline="yes-display-inline">The requirements of this paragraph are met
if the plan satisfies the requirements of either of the following
subparagraphs:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID4482A525097B421EACD6734721762A66"><enum>(A)</enum><header display-inline="yes-display-inline">3-year
vesting</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="ID35BA060A5954413AAD3BD73ACCB81649"><enum>(B)</enum><header display-inline="yes-display-inline">5-year graded vesting</header><text display-inline="yes-display-inline">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 align-to-level="section" blank-lines-after="0" blank-lines-before="0" frame="none" line-rules="no-gen" rule-weights="0.0.0.4.0.0" subformat="S6211" table-type="subformat-2-Flush/hang:-1-text,-1-num,-bold-hds">
<tgroup cols="2"><colspec coldef="txt" colname="col1" colsep="0" colwidth="275" min-data-value="0"></colspec><colspec coldef="txt" colname="col2" colsep="0" colwidth="100" min-data-value="0"></colspec>
<thead>
<row><entry align="left" colname="I49" rowsep="0"></entry><entry align="right" colname="I50" rowsep="0"><bold>The nonforfeitable</bold></entry>
</row>
<row><entry align="left" colname="I49" rowsep="0"><bold>Years of
service:</bold></entry><entry align="right" colname="I50" rowsep="0"><bold>percentage is:</bold></entry>
</row>
</thead>
<tbody>
<row><entry align="left" colname="I15" rowsep="0" stub-definition="txt-ldr">1</entry><entry align="right" colname="I07" rowsep="0">20</entry>
</row>
<row><entry align="left" colname="I15" rowsep="0" stub-definition="txt-ldr">2</entry><entry align="right" colname="I07" rowsep="0">40</entry>
</row>
<row><entry align="left" colname="I15" rowsep="0" stub-definition="txt-ldr">3</entry><entry align="right" colname="I07" rowsep="0">60</entry>
</row>
<row><entry align="left" colname="I15" rowsep="0" stub-definition="txt-ldr">4</entry><entry align="right" colname="I07" rowsep="0">80</entry>
</row>
<row><entry align="left" colname="I15" rowsep="0" stub-definition="txt-ldr">5</entry><entry align="right" colname="I07" rowsep="0">100.</entry>
</row>
</tbody>
</tgroup>
</table>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID626D9CA510AD4C008A7F7E35F8416C27"><enum>(4)</enum><header display-inline="yes-display-inline">Distribution requirements</header><text display-inline="yes-display-inline">In the case of a profit-sharing or stock
bonus plan, the requirements of this paragraph are met if, under the plan,
qualified employer contributions are distributable only as provided in section
401(k)(2)(B).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID781ED05BD842461FBFCDE54988E24DFD"><enum>(e)</enum><header display-inline="yes-display-inline">Other Definitions</header><text display-inline="yes-display-inline">For purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="ID5E6B10C6D695436F840C095C4E733EFD"><enum>(1)</enum><header display-inline="yes-display-inline">Eligible employer</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID40997EBECE7B4DBB9DEF1CB8DAEE88E7"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>eligible employer</term>
means, with respect to any year, an employer which has no more than 25
employees who received at least $5,000 of compensation from the employer for
the preceding year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID787F9A8B7AEE4E6BB00D4BCDC085D26D"><enum>(B)</enum><header display-inline="yes-display-inline">Requirement for new qualified employer
plans</header><text display-inline="yes-display-inline">Such term shall not
include an employer if, during the 3-taxable year period immediately preceding
the first taxable year for which the credit under this section is otherwise
allowable for a qualified employer plan of the employer, the employer or any
member of any controlled group including the employer (or any predecessor of
either) established or maintained a qualified employer plan with respect to
which contributions were made, or benefits were accrued, for substantially the
same employees as are in the qualified employer plan.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID3AC0F77275684BC0B344E180E5E02F36"><enum>(2)</enum><header display-inline="yes-display-inline">Highly compensated employee</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="IDF7A1D04375544575A7A275D638175784"><enum>(f)</enum><header display-inline="yes-display-inline">Special Rules</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDAA72C85153F4428F8A25528681776A2D"><enum>(1)</enum><header display-inline="yes-display-inline">Disallowance of deduction</header><text display-inline="yes-display-inline">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 commented="no" display-inline="no-display-inline" id="IDC8AC6802C69E4790AE742CF98EAA44ED"><enum>(2)</enum><header display-inline="yes-display-inline">Election not to claim credit</header><text display-inline="yes-display-inline">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><paragraph commented="no" display-inline="no-display-inline" id="ID0156853834F445F998EA986B2410E0A4"><enum>(3)</enum><header display-inline="yes-display-inline">Aggregation rules</header><text display-inline="yes-display-inline">All persons treated as a single employer
under subsection (a) or (b) of section 52, or subsection (n) or (o) of section
414, shall be treated as one person. All eligible employer plans shall be
treated as 1 eligible employer plan.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID2DB668890BC94F07BEB5CBAA8D494ECB"><enum>(g)</enum><header display-inline="yes-display-inline">Recapture of Credit on Forfeited
Contributions</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDE9B845EC559D40A39D7151E78522AAC1"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Except as provided in paragraph (2), 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>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID9EB5562AF4474B76A62E1D6F44441F5B"><enum>(2)</enum><header display-inline="yes-display-inline">Reallocated contributions</header><text display-inline="yes-display-inline">Paragraph (1) shall not apply to any
contribution which is reallocated by the employer under the plan to employees
who are not highly compensated
employees.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID3C80A148F91C4073B503D1B800D70C2C"><enum>(b)</enum><header display-inline="yes-display-inline">Credit Allowed as Part of General Business
Credit</header><text display-inline="yes-display-inline">Section 38(b)
(defining current year business credit) , as amended by section 102, is amended
by striking <quote>and</quote> at the end of paragraph (31), by striking the
period at the end of paragraph (32) and inserting <quote>, and</quote>, and by
adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID2D61D8982876442EA090CC68062BC3FE" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="ID39823A62FF85411E90ED04A2A155BD73"><enum>(33)</enum><text display-inline="yes-display-inline">in the case of an eligible employer (as
defined in section 45P(e)), the small employer pension plan contribution credit
determined under section
45P(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID4B04D617F6644B61BE86CDDBF9624B72"><enum>(c)</enum><header display-inline="yes-display-inline">Conforming Amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID2686735CDD7C44DBB91FD4682ACA881B"><enum>(1)</enum><text display-inline="yes-display-inline">Subsection (c) of section 196 is amended by
striking <quote>and</quote> at the end of paragraph (12), by striking the
period at the end of paragraph (13) and inserting <quote>, and</quote>, and by
adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="ID1CF850D4AFD1443EB0DD9F096D57253B" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDE46A50BB0D4343FF9A294C73DBE6C1C1"><enum>(14)</enum><text display-inline="yes-display-inline">the small employer pension plan
contribution credit determined under section
45P(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID6620F6E11B994CED8C597BA09E51485F"><enum>(2)</enum><text display-inline="yes-display-inline">The table of sections for subpart D of part
IV of subchapter A of chapter 1, as amended by section 102, is amended by
adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="ID96695EFF11F54E368CEA0B734EE8BDB3" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry bold="off" level="section">Sec. 45P. Small employer
pension plan
contributions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID9985E258978642AE805421E83D16AFF2"><enum>(d)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to contributions paid or incurred in taxable years
beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id863E436B49744465A2791051061246BF" section-type="subsequent-section"><enum>502.</enum><header display-inline="yes-display-inline">Deduction for pension contributions allowed
in computing net earnings from self-employment</header>
<subsection commented="no" display-inline="no-display-inline" id="id13D3656E21374B79815B1DF968E3A1B4"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 1402(a) (defining net earnings from
self-employment) is amended by striking <quote>and</quote> at the end of
paragraph (15), by striking the period at the end of paragraph (16) and
inserting <quote>, and</quote>, and by inserting after paragraph (16) the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idA58DDFF5C8C443D7BB4CEC2213C4C08C" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id1E3748ED06B64DA6AC0E77982B0D7474"><enum>(17)</enum><text display-inline="yes-display-inline">any deduction allowed under section 404 by
reason of section 404(a)(8)(C) shall be allowed, except that the amount of such
deduction shall be determined without regard to this
paragraph.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id7F71A189F94F4CACB5A5B73E7A43E133"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id90D40F80E17B4BAC98320FEC226A28C6" section-type="subsequent-section"><enum>503.</enum><header display-inline="yes-display-inline">Exemption of deferral-only qualified cash
or deferred arrangements from top-heavy plan rules</header>
<subsection commented="no" display-inline="no-display-inline" id="idAF2A7D6670D5465E858B698D0FEA7C1B"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 416(g) (defining top-heavy plan) is
amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id65AC09F72F2B4BD1BF7AF430101104FB" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="id76EFF3E1376A43BE99C14EFD860263C1"><enum>(5)</enum><header display-inline="yes-display-inline">Exception for deferral-only cash or
deferred arrangements</header><text display-inline="yes-display-inline">In the
case of a plan which consists solely of a qualified cash or deferred
arrangement (as defined in section 401(k)(2)) under which no amounts may be
contributed other than elective deferrals (as defined in section 402(g)(3)),
such plan shall not be treated as a top-heavy
plan.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id6E76FC2A99A049A18A669EEEB97D0E57"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to years beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idAF83781E3E4849789AFC511E83F65352" section-type="subsequent-section"><enum>504.</enum><header display-inline="yes-display-inline">Extension of time for small pension plans
to adopt required plan qualification amendments</header>
<subsection commented="no" display-inline="no-display-inline" id="idFF16B1616F254EA487B2AD9F6371C72E"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of an eligible small plan for
which a remedial amendment period is established under Internal Revenue
Procedure 2005–66 (or any regulation, revenue ruling, revenue procedure, or
guidance providing for a similar period), no amendment to the plan necessary
for the plan to meet the qualification requirements under the Internal Revenue
Code of 1986 shall be required before the close of such period.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id00CD269DCBFE4B4BBF11B2F7C5450907"><enum>(b)</enum><header display-inline="yes-display-inline">Additional requirements</header><text display-inline="yes-display-inline">Subsection (a) shall not apply to an
eligible small plan unless—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idC3B7C539A4B94EA1A46A436D9925B5A9"><enum>(1)</enum><text display-inline="yes-display-inline">any amendment described in subsection (a)
applies retroactively to the period during which such amendment would otherwise
have been required to be in effect,</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0758FE13334A40AF9E9D8F09A0F9FB46"><enum>(2)</enum><text display-inline="yes-display-inline">the plan is operated during the period
described in paragraph (1) as if the amendment were in effect, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id973AF623846248208D835EFE9ED5EEC0"><enum>(3)</enum><text display-inline="yes-display-inline">the plan meets such requirements as the
Secretary of the Treasury may prescribe to ensure that the Secretary, the
Secretary of Labor, employers maintaining the plan, and participants and
beneficiaries of the plan are adequately notified of the terms of the plan
actually in effect during a plan year.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id4B7E10CE6DCB4E4CBE4D67571749C386"><enum>(c)</enum><header display-inline="yes-display-inline">Eligible small plan</header><text display-inline="yes-display-inline">For purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id8541B64FCF764EFCAC1C662C02BDF755"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>eligible small plan</term>
means a plan which, as of the beginning of a remedial amendment or similar
period described in subsection (a), had 100 or fewer participants. For purposes
of this paragraph, all defined benefit plans which are single-employer plans
and are maintained by the same employer (or any member of such employer’s
controlled group) shall be treated as 1 plan, but only participants with
respect to such employer or member shall be taken into account.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H49C1BCB205E64D7096C2688000C2004E"><enum>(2)</enum><header display-inline="yes-display-inline">Application of certain rules in
determination of plan size</header><text display-inline="yes-display-inline">For purposes of this subsection—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H3108D11EFDD24DDD98DD91011C908085"><enum>(A)</enum><header display-inline="yes-display-inline">Plans not in existence in preceding
year</header><text display-inline="yes-display-inline">In the case of the first
plan year of any plan, subparagraph (B) shall apply to such plan by taking into
account the number of participants that the plan is reasonably expected to have
on days during such first plan year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H158B0608B6D5466F9370D6C78732037"><enum>(B)</enum><header display-inline="yes-display-inline">Predecessors</header><text display-inline="yes-display-inline">Any reference in paragraph (1) to an
employer shall include a reference to any predecessor of such employer.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idDA911FEB826545639FF57F0F3E6DAC8B"><enum>(d)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">This section shall apply
to amendments required to be adopted for plan years beginning after December
31, 2007.</text>
</subsection></section>