[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4067 Introduced in House (IH)]

<DOC>






114th CONGRESS
  1st Session
                                H. R. 4067

  To amend the Internal Revenue Code of 1986 to encourage retirement 
savings by modifying requirements with respect to employer-established 
                     IRAs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 18, 2015

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

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to encourage retirement 
savings by modifying requirements with respect to employer-established 
                     IRAs, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Businesses 
Add Value for Employees Act of 2015'' or the ``SAVE Act of 2015''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Elimination of restriction on SIMPLE IRA rollovers.
Sec. 3. Allowing mid-year SIMPLE IRA plan termination.
Sec. 4. Elimination of higher penalty on early SIMPLE IRA 
                            distributions.
Sec. 5. Increase in contributions allowed for SIMPLE IRA.
Sec. 6. SIMPLE 401(k) parity for additional nonelective employer 
                            contributions.
Sec. 7. Automatic deferral IRAs.
Sec. 8. Modification of automatic enrollment safe harbor.
Sec. 9. Secure deferral arrangements.
Sec. 10. Credit for employers with respect to modified safe harbor 
                            requirements.
Sec. 11. Modification of regulations.
Sec. 12. Limited transfer of unused balance in flexible spending 
                            arrangement.
Sec. 13. Prior years compensation taken into account in determining 
                            maximum retirement savings deduction.
Sec. 14. Expanding small employer pension plan startup cost credit.
Sec. 15. Financial education.
Sec. 16. Small employer plans.
Sec. 17. Modification of ERISA rules relating to multiple employer 
                            defined contribution plans.
Sec. 18. Clarification of treatment of individual retirement plans with 
                            payroll deduction.
Sec. 19. Disclosure regarding lifetime income.
Sec. 20. Lifetime income safe harbor.

SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA ROLLOVERS.

    (a) In General.--Section 408(d)(3) of the Internal Revenue Code of 
1986 is amended by striking subparagraph (G).
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions in taxable years beginning after the date of the 
enactment of this Act.

SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMINATION.

    (a) In General.--Section 408(p) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(11) Special rules relating to mid-year termination.--
                    ``(A) In general.--An employer may elect to 
                terminate (in such form and manner as the Secretary may 
                provide) the qualified salary reduction arrangement of 
                the employer at any time during the year.
                    ``(B) Proration and application of qualified plan 
                limitation.--In the case of a year during which an 
                employer terminates a qualified salary reduction 
                arrangement before the end of such year--
                            ``(i) the applicable dollar amount 
                        determined under paragraph (2)(E) for such year 
                        and the applicable dollar amount determined 
                        under section 414(v)(2)(B)(ii) for such year 
                        shall both be prorated to the date of such 
                        termination,
                            ``(ii) for purposes of determining the 
                        compensation of an employee for such 
                        arrangement for such year, the year of such 
                        termination shall be treated as ending on the 
                        date of such termination, and
                            ``(iii) subparagraph (D) of paragraph (2) 
                        shall not apply with respect to a qualified 
                        plan maintained in such year only after the 
                        date of such termination.
                    ``(C) Matching contribution.--Termination of an 
                arrangement under subparagraph (A) shall not be 
                construed to modify the requirement of subparagraph 
                (A)(iii) (with respect to any elective employer 
                contributions) or (B) (with respect to nonelective 
                contributions) of paragraph (2) made by the employer on 
                behalf of an employee during the portion of such year 
                the qualified salary reduction arrangement is in 
                effect.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after the date of the enactment of this Act.

SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIMPLE IRA 
              DISTRIBUTIONS.

    (a) In General.--Section 72(t) of the Internal Revenue Code of 1986 
is amended by striking paragraph (6).
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions in taxable years beginning after the date of the 
enactment of this Act.

SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIMPLE IRA.

    (a) Additional Nonelective Employer Contributions Allowed.--
            (1) In general.--Section 408(p)(2)(A) of the Internal 
        Revenue Code of 1986 is amended by striking ``and'' at the end 
        of clause (iii), by redesignating clause (iv) as clause (v), 
        and by inserting after clause (iii) the following new clause:
                            ``(iv) the employer may make, in addition 
                        to any other contribution under this paragraph, 
                        nonelective contributions which meet the 
                        requirements of subparagraph (F), and''.
            (2) Requirements relating to additional nonelective 
        contributions.--Section 408(p)(2) of such Code is amended by 
        adding at the end the following new subparagraph:
                    ``(F) Requirements relating to additional 
                nonelective contributions under subparagraph (A)(iv).--
                            ``(i) In general.--Nonelective 
                        contributions meet the requirements of this 
                        subparagraph if--
                                    ``(I) such contributions do not 
                                exceed more than 10 percent of 
                                compensation (subject to the limitation 
                                described in subparagraph (B)(ii)) for 
                                each employee who is eligible to 
                                participate in the arrangement and who 
                                has at least $5,000 of compensation 
                                from the employer for the year, and
                                    ``(II) such contributions are made 
                                either as a uniform percentage of 
                                compensation or a uniform dollar amount 
                                for all participants.
                            ``(ii) Permitted disparity rules not 
                        applicable.--Section 401(l) shall not apply for 
                        purposes of determining whether the 
                        requirements of clause (i) are met.''.
            (3) Conforming amendment.--Section 408(p)(2)(A)(v) of such 
        Code, as redesignated by this section, is amended by striking 
        ``clause (i) or (iii)'' and inserting ``clause (i), (iii), or 
        (iv)''.
    (b) Increase in Elective Contribution Limitation.--Section 
408(p)(2)(E) is amended to read as follows:
                    ``(E) Applicable dollar amount.--For purposes of 
                subparagraph (A)(ii), the applicable dollar amount 
                shall be the applicable dollar amount in effect under 
                section 402(g)(1).''.
    (c) SIMPLE IRA Subject to Defined Contribution Plan Limitation.--
Section 408(p) of such Code, as amended by section 3, is amended by 
adding at the end the following new paragraph:
            ``(12) Subject to defined contribution plan limitation.--An 
        arrangement shall not be treated as a qualified salary 
        reduction arrangement for any year if contributions with 
        respect to any employee for the year exceed the limitation of 
        paragraph (1) of section 415(c) (relating to limitation for 
        defined contribution plans).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2015.

SEC. 6. SIMPLE 401(K) PARITY FOR ADDITIONAL NONELECTIVE EMPLOYER 
              CONTRIBUTIONS.

    (a) In General.--Section 401(k)(11)(B) of such Code is amended by 
adding at the end the following new clause:
                            ``(iv) Special rule for additional 
                        nonelective employer contributions.--An 
                        arrangement shall not be treated as failing to 
                        meet the requirements of this subparagraph 
                        merely because under such arrangement the 
                        employer makes, in addition to any other 
                        contribution under this subparagraph, 
                        nonelective contributions of not more than 10 
                        percent of compensation for each employee who 
                        is eligible to participate in the arrangement 
                        and who has at least $5,000 of compensation 
                        from the employer for the year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2015.

SEC. 7. AUTOMATIC DEFERRAL IRAS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 408A the following new section:

``SEC. 408B. AUTOMATIC DEFERRAL IRAS.

    ``(a) In General.--An automatic deferral IRA shall be treated for 
purposes of this title in the same manner as an individual retirement 
plan. An automatic deferral IRA may also be treated as a Roth IRA for 
purposes of this title if it meets the requirements of section 408A.
    ``(b) Automatic Deferral IRA.--For purposes of this section, the 
term `automatic deferral IRA' means an individual retirement plan (as 
defined in section 7701(a)(37)) with respect to which contributions are 
made under an arrangement which satisfies the requirements of 
paragraphs (1) through (4) of subsection (c).
    ``(c) Automatic Deferral IRA Arrangements.--
            ``(1) Enrollment.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if each employee eligible to 
                participate in the arrangement is treated as having 
                elected to have the employer make payments as elective 
                contributions to an automatic deferral IRA on behalf of 
                such employee (which would have otherwise been made to 
                the employee directly in cash) in an amount equal to so 
                much of a qualified percentage of compensation of such 
                employee as does not exceed the deductible amount for 
                such year (within the meaning of section 219(b)).
                    ``(B) Eligibility.--For purposes of subparagraph 
                (A), an employee is eligible to participate if such 
                employee has at least $5,000 of compensation from the 
                employer for the preceding year.
                    ``(C) Election out.--The election treated as having 
                been made under subparagraph (A) shall cease to apply 
                with respect to any employee who makes an affirmative 
                election--
                            ``(i) to not have such elective 
                        contributions made, or
                            ``(ii) not later than the close of the 30-
                        day period beginning on the date of the first 
                        contribution with respect to such employee, to 
                        make elective contributions at a level 
                        specified in such affirmative election.
                    ``(D) Qualified percentage.--For purposes of this 
                paragraph, the term `qualified percentage' means, with 
                respect to any employee, any percentage determined 
                under the arrangement if such percentage is applied 
                uniformly, does not exceed 15 percent, and is at 
                least--
                            ``(i) 3 percent during the period ending on 
                        the last day of the first plan year which 
                        begins after the date on which the first 
                        elective contribution described in subparagraph 
                        (A) is made with respect to such employee, and
                            ``(ii) during any subsequent plan year, a 
                        percentage equal to--
                                    ``(I) 3 percent, plus
                                    ``(II) 1 percent multiplied by the 
                                number of plan years (but not more than 
                                12) beginning after the plan year 
                                described in clause (i).
            ``(2) Notice.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if, within a reasonable period before 
                the first day an employee is eligible to participate in 
                the arrangement, the employee receives written notice 
                of the employee's rights and obligations under the 
                arrangement which--
                            ``(i) is sufficiently accurate and 
                        comprehensive to apprise the employee of such 
                        rights, and
                            ``(ii) is written in a manner calculated to 
                        be understood by the average employee to whom 
                        the arrangement applies.
                    ``(B) Timing and content.--A notice shall not be 
                treated as meeting the requirements of subparagraph (A) 
                with respect to an employee unless--
                            ``(i) the notice explains the employee's 
                        right to elect not to have elective 
                        contributions made on the employee's behalf (or 
                        to elect to have such contributions made at a 
                        different percentage),
                            ``(ii) the notice explains how 
                        contributions made under the arrangement will 
                        be invested in the absence of any investment 
                        election by the employee, and
                            ``(iii) the employee has a reasonable 
                        period of time after receipt of the notice 
                        described in clauses (i) and (ii) and before 
                        the first elective contribution is made to make 
                        either such election.
            ``(3) Default investment arrangement.--The requirements of 
        this paragraph are met if--
                    ``(A) in the absence of an investment election by 
                the employee with respect to the employee's interest in 
                the trust, such interest is invested as provided in 
                regulations prescribed pursuant to subparagraph (A) of 
                section 404(c)(5) of the Employee Retirement Income 
                Security Act of 1974, and
                    ``(B) the employer provides each employee who has 
                an interest in the trust, notice which meets the 
                requirements of subparagraph (B) of such section.
            ``(4) Administrative requirements.--The requirements of 
        this paragraph are met if--
                    ``(A) an employer must make--
                            ``(i) the elective contributions under 
                        paragraph (1)(A) not later than the close of 
                        the 30-day period following the last day of the 
                        month with respect to which the contributions 
                        are to be made, and
                            ``(ii) a payment of interest at the 
                        overpayment rate (as determined under section 
                        6621(a)) on any such elective contribution made 
                        after the end of the period specified in clause 
                        (i),
                    ``(B) an employee may elect to terminate 
                participation in the arrangement at any time during the 
                year, except that if the employee so terminates, the 
                arrangement may provide that the employee may not elect 
                to resume participation until the beginning of the next 
                year, and
                    ``(C) each employee eligible to participate may 
                elect, during the 30-day period before the beginning of 
                any year, or to modify the amount subject to such 
                arrangement, for such year.''.
    (b) Failure To Make Timely Contributions.--Chapter 43 of such Code 
is amended by adding at the end the following:

``SEC. 4980J. FAILURE TO MAKE TIMELY CONTRIBUTIONS UNDER AUTOMATIC 
              DEFERRAL IRAS.

    ``(a) Initial Tax.--If at any time during any taxable year an 
employer maintains an automatic deferral IRA which is part of a plan to 
which section 408B applies, there is hereby imposed on the employer for 
the taxable year a tax equal to 10 percent of the aggregate required 
contributions to such automatic deferral IRA for all plan years that 
are not paid by the date specified in section 408B(c)(4)(A)(i) and that 
remain unpaid as of the end of any plan year ending with or within the 
taxable year.
    ``(b) Additional Tax.--If a tax is imposed under subsection (a) on 
any unpaid required contribution and such amount remains unpaid as of 
the close of the taxable period, there is hereby imposed a tax equal to 
100 percent of the unpaid required contribution to the extent not so 
paid or corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--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 did not know, and exercising reasonable diligence 
        would not have known, that such failure existed.
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period beginning on the 1st date the employer knew, or 
                exercising reasonable diligence would have known, that 
                such failure existed.
            ``(3) Waiver by secretary.--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 relative to the failure involved.''.
    (c) Preemption of Conflicting State Laws.--Any law of a State shall 
be superseded if it would directly or indirectly prohibit or restrict 
an employer from creating or maintaining an automatic deferral IRA (as 
defined in section 408B of the Internal Revenue Service of 1986).
    (d) Clerical Amendment.--
            (1) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to 408A the 
        following new item:

``Sec. 408B. Automatic deferral IRAs.''.
            (2) The table of sections for chapter 43 of such Code is 
        amended by adding at the end the following new item:

``Sec. 4980J. Failure to make timely contributions under automatic 
                            deferral IRAs.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 8. MODIFICATION OF AUTOMATIC ENROLLMENT SAFE HARBOR.

    (a) In General.--
            (1) Removal of 10 percent cap.--Section 401(k)(13)(C)(iii) 
        of the Internal Revenue Code of 1986 is amended by striking ``, 
        does not exceed 10 percent, and is at least'' and inserting 
        ``and is''.
            (2) Conforming amendments.--
                    (A) Section 401(k)(13)(C)(iii)(I) of such Code is 
                amended by striking ``3 percent'' and inserting ``at 
                least 3 percent, but not greater than 10 percent,''.
                    (B) Section 401(k)(13)(C)(iii)(II) of such Code is 
                amended by striking ``4 percent'' and inserting ``at 
                least 4 percent, but not greater than 15 percent,''.
                    (C) Section 401(k)(13)(C)(iii)(III) of such Code is 
                amended by striking ``5 percent'' and inserting ``at 
                least 5 percent''.
                    (D) Section 401(k)(13)(C)(iii)(IV) of such Code is 
                amended by striking ``6 percent'' and inserting ``at 
                least 6 percent''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after the date of enactment of this Act.

SEC. 9. SECURE DEFERRAL ARRANGEMENTS.

    (a) In General.--Section 401(k) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(14) Alternative method for secure deferral arrangements 
        to meet nondiscrimination requirements.--
                    ``(A) In general.--A secure deferral arrangement 
                shall be treated as meeting the requirements of 
                paragraph (3)(A)(ii).
                    ``(B) Secure deferral arrangement.--For purposes of 
                this paragraph, the term `secure deferral arrangement' 
                means any cash or deferred arrangement which meets the 
                requirements of subparagraphs (C), (D), and (E) of 
                paragraph (13), except as modified by this paragraph.
                    ``(C) Qualified percentage.--For purposes of this 
                paragraph, with respect to any employee, the term 
                `qualified percentage' means, in lieu of the meaning 
                given such term in paragraph (13)(C)(iii), any 
                percentage determined under the arrangement if such 
                percentage is applied uniformly and is--
                            ``(i) at least 6 percent, but not greater 
                        than 10 percent, during the period ending on 
                        the last day of the first plan year which 
                        begins after the date on which the first 
                        elective contribution described in paragraph 
                        (13)(C)(i) is made with respect to such 
                        employee,
                            ``(ii) at least 8 percent during the first 
                        plan year following the plan year described in 
                        clause (i), and
                            ``(iii) at least 10 percent during any 
                        subsequent plan year.
                    ``(D) Matching contributions.--
                            ``(i) In general.--For purposes of this 
                        paragraph, an arrangement shall be treated as 
                        having met the requirements of paragraph 
                        (13)(D)(i) if and only if the employer makes 
                        matching contributions on behalf of each 
                        employee who is not a highly compensated 
                        employee in an amount equal to the sum of--
                                    ``(I) 100 percent of the elective 
                                contributions of the employee to the 
                                extent that such contributions do not 
                                exceed 1 percent of compensation,
                                    ``(II) 50 percent of so much of 
                                such contributions as exceed 1 percent 
                                but do not exceed 6 percent of 
                                compensation, plus
                                    ``(III) 25 percent of so much of 
                                such contributions as exceed 6 percent 
                                but do not exceed 10 percent of 
                                compensation.
                            ``(ii) Application of rules for matching 
                        contributions.--The rules of clause (ii) of 
                        paragraph (12)(B) and clauses (iii) and (iv) of 
                        paragraph (13)(D) shall apply for purposes of 
                        clause (i) but the rule of clause (iii) of 
                        paragraph (12)(B) shall not apply for such 
                        purposes. The rate of matching contribution for 
                        each incremental deferral must be at least as 
                        high as the rate specified in clause (i), and 
                        may be higher, so long as such rate does not 
                        increase as an employee's rate of elective 
                        contributions increases.''.
    (b) Matching Contributions and Employee Contributions.--Section 
401(m) of the Internal Revenue Code of 1986 is amended by redesignating 
paragraph (13) as paragraph (14) and by inserting after paragraph (12) 
the following new paragraph:
            ``(13) Alternative method for secure deferral 
        arrangements.--A defined contribution plan shall be treated as 
        meeting the requirements of paragraph (2) with respect to 
        matching contributions and employee contributions if the plan--
                    ``(A) is a secure deferral arrangement (as defined 
                in subsection (k)(14)),
                    ``(B) meets the requirements of clauses (ii) and 
                (iii) of paragraph (11)(B), and
                    ``(C) provides that matching contributions on 
                behalf of any employee may not be made with respect to 
                an employee's contributions or elective deferrals in 
                excess of 10 percent of the employee's compensation.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2015.

SEC. 10. CREDIT FOR EMPLOYERS WITH RESPECT TO MODIFIED SAFE HARBOR 
              REQUIREMENTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45S. CREDIT FOR SMALL EMPLOYERS WITH RESPECT TO MODIFIED SAFE 
              HARBOR REQUIREMENTS FOR AUTOMATIC CONTRIBUTION 
              ARRANGEMENTS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
small employer, the safe harbor adoption credit determined under this 
section for any taxable year is the amount equal to the total of the 
employer's matching contributions under section 401(k)(14)(D) during 
the taxable year on behalf of employees who are not highly compensated 
employees, subject to the limitations of subsection (b).
    ``(b) Limitations.--
            ``(1) Limitation with respect to compensation.--The credit 
        determined under subsection (a) with respect to contributions 
        made on behalf of an employee who is not a highly compensated 
        employee shall not exceed 2 percent of the compensation of such 
        employee for the taxable year.
            ``(2) Limitation with respect to years of participation.--
        Credit shall be determined under subsection (a) with respect to 
        contributions made on behalf of an employee who is not a highly 
        compensated employee only during the first 5 years such 
        employee participates in the qualified automatic contribution 
        arrangement.
    ``(c) Definitions.--
            ``(1) In general.--Any term used in this section which is 
        also used in section 401(k)(14) shall have the same meaning as 
        when used in such section.
            ``(2) Small employer.--The term `small employer' means an 
        eligible employer (as defined in section 408(p)(2)(C)(i)).
    ``(d) Denial of Double Benefit.--No deduction shall be allowable 
under this title for any contribution with respect to which a credit is 
allowed under this section.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended--
            (1) by striking ``plus'' at the end of paragraph (35),
            (2) by striking the period at the end of paragraph (36) and 
        inserting ``, plus'', and
            (3) by adding at the end the following new paragraph:
            ``(37) the safe harbor adoption credit determined under 
        section 45S.''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding after the item relating to section 45R the 
following new item:

``Sec. 45S. Credit for small employers with respect to modified safe 
                            harbor requirements for automatic 
                            contribution arrangements.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years that include any portion of a plan year 
beginning after December 31, 2015.

SEC. 11. MODIFICATION OF REGULATIONS.

    The Secretary of the Treasury shall promulgate regulations or other 
guidance that--
            (1) simplify and clarify the rules regarding the timing of 
        participant notices required under section 401(k)(13)(E) of the 
        Internal Revenue Code of 1986, with specific application to--
                    (A) plans that allow employees to be eligible for 
                participation immediately upon beginning employment, 
                and
                    (B) employers with multiple payroll and 
                administrative systems, and
            (2) simplify and clarify the automatic escalation rules 
        under sections 401(k)(13)(C)(iii) and 401(k)(14)(C) of the 
        Internal Revenue Code of 1986 in the context of employers with 
        multiple payroll and administrative systems.
Such regulations or guidance shall address the particular case of 
employees within the same plan who are subject to different notice 
timing and different percentage requirements, and provide assistance 
for plan sponsors in managing such cases.

SEC. 12. LIMITED TRANSFER OF UNUSED BALANCE IN FLEXIBLE SPENDING 
              ARRANGEMENT.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
is amended by redesignating subsections (k) and (l) as subsections (l) 
and (m), respectively, and by inserting after subsection (h) the 
following new subsection:
    ``(k) Special Rule for Unused Benefits in Flexible Spending 
Arrangements.--
            ``(1) In general.--For purposes of this title, a plan or 
        other arrangement shall not fail to be treated as a cafeteria 
        plan or flexible spending arrangement merely because such 
        arrangement provides for qualified retirement distributions.
            ``(2) Qualified retirement distribution.--
                    ``(A) In general.--For purposes of this section, 
                the term `qualified retirement distribution' means any 
                distribution to an individual of all or a portion of 
                the employee's account under such arrangement, but only 
                to the extent--
                            ``(i) the amount does not exceed the lesser 
                        of--
                                    ``(I) $250, or
                                    ``(II) the unused benefits with 
                                respect to the arrangement, and
                            ``(ii) the amount received is paid in the 
                        form of a direct trustee-to-trustee transfer to 
                        a qualified retirement plan (as defined in 
                        section 4974(c)), or an eligible deferred 
                        compensation plan (as defined in section 
                        457(b)) of an eligible employer described in 
                        section 457(e)(1)(A), maintained by the same 
                        employer as the employer maintaining the 
                        cafeteria plan or flexible spending arrangement 
                        of the individual.
                    ``(B) Unused benefits.--For purposes of this 
                paragraph, the term `unused benefits' means, with 
                respect to an employee, the excess of--
                            ``(i) the maximum amount of reimbursement 
                        allowable to the employee during a plan year 
                        under a flexible spending arrangement, over
                            ``(ii) the actual amount of reimbursement 
                        during such year under such arrangement.
                    ``(C) Special rules for treatment of contributions 
                to retirement plans.--For purposes of this title, 
                qualified retirement distributions--
                            ``(i) shall be treated as elective 
                        deferrals (as defined in section 402(g)(3)) 
                        under an annuity contract described in section 
                        403(b),
                            ``(ii) shall be treated as elective 
                        deferrals (as so defined) in the case of 
                        contributions to a qualified cash or deferred 
                        arrangement (as defined in section 401(k)) 
                        under a plan which is described in section 
                        401(a) which includes a trust which is exempt 
                        from tax under section 501(a),
                            ``(iii) shall be treated as deferred 
                        compensation in the case of contributions to an 
                        eligible deferred compensation plan (as defined 
                        in section 457(b)) maintained by an employer 
                        described in section 457(e)(1)(A), and
                            ``(iv) shall be treated in the manner 
                        designated for purposes of section 408 or 408A 
                        in the case of contributions to an individual 
                        retirement plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years ending after the date of the enactment of this Act.

SEC. 13. PRIOR YEARS COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING 
              MAXIMUM RETIREMENT SAVINGS DEDUCTION.

    (a) In General.--Section 219(b)(1)(B) of the Internal Revenue Code 
of 1986 is amended by inserting ``or the preceding taxable year'' after 
``such taxable year''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 14. EXPANDING SMALL EMPLOYER PENSION PLAN STARTUP COST CREDIT.

    (a) In General.--
            (1) Including startup costs for employer-established 
        iras.--Section 45E(d)(2) of the Internal Revenue Code of 1986 
        is amended by striking ``means a qualified employer plan'' and 
        all that follows and inserting: ``means--
                    ``(A) a qualified employer plan within the meaning 
                of section 4972(d), and
                    ``(B) a plan of which an automatic deferral IRA 
                described in section 408B is a part.''.
            (2) Additional credit amount.--
                    (A) In general.--Section 45E(a) of such Code is 
                amended by striking ``50 percent of'' and all that 
                follows and inserting ``the sum of--
            ``(1) the applicable percentage of the qualified startup 
        costs paid or incurred by the taxpayer during the taxable year, 
        plus
            ``(2) $25 multiplied by the number of employees of the 
        employer who participate in any eligible employer plan of the 
        employer for the first time in such taxable year.''.
                    (B) Applicable percentage.--Section 45E(d) of such 
                Code is amended by adding at the end the following new 
                paragraph:
            ``(4) Applicable percentage.--The applicable percentage 
        is--
                    ``(A) in the case of a plan described in subsection 
                (d)(2)(A), 75 percent, or
                    ``(B) in the case of a plan described in subsection 
                (d)(2)(B), 50 percent.''.
                    (C) Conforming amendment.--Section 45E(c)(2) of 
                such Code is amended--
                            (i) by striking ``qualified employer plan'' 
                        in each place it appears and inserting 
                        ``eligible employer plan'', and
                            (ii) by striking ``qualified'' in the 
                        heading thereof and inserting ``eligible''.
            (3) Increased limitation.--Section 45E(b)(1) of such Code 
        is amended by striking ``$500'' and inserting ``$750 ($2,000 in 
        the case of qualified startup costs attributable to a plan 
        described in subsection (d)(2)(A))''.
    (b) Effective Date.--The amendment made by this section shall apply 
to costs paid or incurred in taxable years beginning after the date of 
the enactment of this Act.

SEC. 15. FINANCIAL EDUCATION.

    (a) Retirement Plan Education for Small Businesses.--Not later than 
6 months after the date of the enactment of this Act--
            (1) the Department of the Treasury Office of Financial 
        Education, in consultation with the Department of Labor, shall 
        develop and implement an outreach plan to educate small 
        businesses on the types of retirement plans available and the 
        benefits and requirements of such plans, and
            (2) the Secretary of the Treasury and the Secretary of 
        Labor shall develop recommendations for small businesses in 
        order to improve retirement outcomes. Such recommendations 
        shall take into account established behavioral trends of 
        employee investment and the effect of default design features 
        such as auto escalation, expansion of auto rollovers, auto 
        diversification for near retirees, and automatic forms of 
        distribution.
    (b) Financial Literacy.--
            (1) In general.--Not later than 1 year after the date of 
        the enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Education, shall develop 
        sample age-appropriate curricula to be made available for 
        financial literacy education in elementary and secondary 
        schools.
            (2) Content of curricula.--Such curricula shall include the 
        following:
                    (A) How to balance a checkbook, read a credit card 
                statement, and calculate interest rates.
                    (B) What a pay stub is and why Federal and State 
                income taxes and Social Security and Medicare taxes are 
                withheld from wages.
                    (C) The differences between various types of bank 
                accounts.
                    (D) The significance of a credit score and how to 
                read credit reports.
                    (E) The marketing techniques frequently used by 
                individuals and businesses to attract patrons.
                    (F) The importance of saving for college and 
                retirement, including the various methods for saving 
                such as traditional pensions, 401(k)s, and IRAs.

SEC. 16. SMALL EMPLOYER PLANS.

    (a) In General.--Section 401(k)(11) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(E) Deferral only small employer plan.--
                            ``(i) In general.--In the case of a plan 
                        described in clause (ii)--
                                    ``(I) the amount described in 
                                subparagraph (B)(i)(I) shall be 
                                $10,000, in lieu of the amount in 
                                effect under section 408(p)(2)(A)(ii),
                                    ``(II) such $10,000 amount shall, 
                                in the case years beginning after 
                                December 31, 2016, be adjusted as 
                                described in section 408(p)(2)(E)(ii) 
                                except that the base period taken into 
                                account shall be the calendar quarter 
                                beginning July 1, 2015,
                                    ``(III) subclause (II) of 
                                subparagraph (B)(i) and clause (ii) of 
                                subparagraph (B) shall not apply, and
                                    ``(IV) section 414(v) shall not 
                                apply.
                            ``(ii) Plan described.--A plan is described 
                        in this clause if the plan satisfies the 
                        following requirements:
                                    ``(I) Such plan satisfies the 
                                requirements of this paragraph, as 
                                modified by clause (i).
                                    ``(II) The plan includes a 
                                qualified automatic contribution 
                                arrangement, as defined in paragraph 
                                (13), except that subparagraph (D) of 
                                paragraph (13) shall not apply and the 
                                qualified percentage shall be 
                                determined by reference to subclauses 
                                (I), (II), (III), and (IV) of paragraph 
                                (13)(C)(iii).
                                    ``(III) The plan does not permit 
                                any participant or beneficiary to 
                                receive or maintain a loan from the 
                                plan.
                                    ``(IV) The plan does not permit 
                                hardship distributions described in 
                                paragraph (2)(B)(i)(IV) except to the 
                                extent any such distribution is deemed, 
                                under regulations prescribed by the 
                                Secretary, to be on account of an 
                                immediate and heavy financial need of 
                                the employee and necessary to satisfy 
                                an immediate and heavy financial need 
                                of the employee.
                                    ``(V) The plan is maintained 
                                pursuant to a model plan document 
                                published by the Secretary.''.
    (b) Simplification.--
            (1) Model plan.--Within one year of the date of the 
        enactment of this Act, the Secretary of the Treasury shall 
        publish a model plan that may be used to satisfy the 
        requirement of section 401(k)(11)(E)(ii)(V) of the Internal 
        Revenue Code of 1986.
            (2) Protection against loss.--Within 120 days of the date 
        of the enactment of this Act, the Secretary of Labor shall 
        amend Department of Labor Regulation section 2550.404c-
        5(e)(4)(iv)(B) so that, in the case of a plan described in 
        section 401(k)(11)(E) of such Code ``four years'' shall be 
        substituted for ``120 days''.
            (3) Clarifying duties and reducing burdens for multiple 
        employer plans.--Within one year of the date of the enactment 
        of this Act, the Secretary of Labor shall--
                    (A) publish rules clarifying the extent to which 
                the fiduciary duties, if any, of a participating 
                employer fiduciary with respect to a plan described in 
                section 413(c) of such Code are limited to--
                            (i) the selection and monitoring of the 
                        named fiduciary, and
                            (ii) the investment and management of the 
                        portion of the plan's assets attributable to 
                        employees of the employer to the extent not 
                        otherwise delegated to another fiduciary, and
                    (B) prescribe interim final regulations providing 
                simplified means by which plans described in section 
                413(c) of such Code may satisfy the requirements of 
                sections 102, 103, and 105 of the Employee Retirement 
                Income Security Act of 1974.
        For purposes of this paragraph, the term ``participating 
        employer fiduciary'' means the participating employer, any 
        employee of such participating employer that serves as 
        fiduciary, any committee of such employees, and any other 
        person whose fiduciaries duties with respect to the plan relate 
        solely to the participating employer and not to the operation 
        of the plan with respect to all participating employers.
            (4) Elimination of disincentive to pooling.--Not later than 
        one year after the date of the enactment of this Act, the 
        Secretary of the Treasury shall prescribe final regulations 
        under which a plan described in section 413(c) of such Code may 
        be treated as satisfying the qualification requirements of 
        section 401(a) of such Code despite the violation of such 
        requirements with respect to one or more participating 
        employers without regard to whether such violation continues. 
        Solely for this purpose, a plan shall be treated as violating 
        the qualification requirements of section 401(a) of such Code 
        with respect to a participating employer if such employer has 
        failed to provide the plan sponsor with the information needed 
        to comply with such requirements and such failure has continued 
        over a period of time that clearly demonstrates a lack of 
        commitment to compliance. Such rules may require that the 
        portion of the plan attributable to such participating 
        employers be spun off to plans maintained by such employers.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 2015.
            (2) Exception.--Subsection (b) shall apply as of the date 
        of the enactment of this Act.

SEC. 17. MODIFICATION OF ERISA RULES RELATING TO MULTIPLE EMPLOYER 
              DEFINED CONTRIBUTION PLANS.

    (a) In General.--
            (1) Requirement of common interest.--Section 3(2) of the 
        Employee Retirement Income Security Act of 1974 is amended by 
        adding at the end the following:
            ``(C)(i) A qualified multiple employer plan shall not fail 
        to be treated as an employee pension benefit plan or pension 
        plan solely because the employers maintaining the plan share no 
        common interest.
            ``(ii) For purposes of this subparagraph, the term 
        `qualified multiple employer plan' means a plan described in 
        section 413(c) of the Internal Revenue Code of 1986 which--
                    ``(I) is an individual account plan with respect to 
                which the requirements of clauses (iii), (iv), and (v) 
                are met, and
                    ``(II) includes in its annual report required to be 
                filed under section 104(a) the name and identifying 
                information of each employer maintaining the plan.
            ``(iii) The requirements of this clause are met if, under 
        the plan, each employer maintaining the plan retains fiduciary 
        responsibility for--
                    ``(I) the selection and monitoring of the named 
                fiduciary, and
                    ``(II) the investment and management of the portion 
                of the plan's assets attributable to employees of the 
                employer to the extent not otherwise delegated to 
                another fiduciary.
            ``(iv) The requirements of this clause are met if, under 
        the plan, an employer maintaining the plan is not subject to 
        unreasonable restrictions, fees, or penalties by reason of 
        ceasing to maintain, or otherwise transferring assets from, the 
        plan.
            ``(v) The requirements of this clause are met if each 
        employer maintaining the plan is an eligible employer as 
        defined in section 408(p)(2)(C)(i) of the Internal Revenue Code 
        of 1986, applied--
                    ``(I) by substituting `500' for `100' in subclause 
                (I) thereof,
                    ``(II) by substituting `5' for `2' each place it 
                appears in subclause (II) thereof, and
                    ``(III) without regard to the last sentence of 
                subclause (II) thereof.''.
            (2) Simplified reporting for small multiple employer 
        plans.--Section 104(a) of such Act (29 U.S.C. 1024(a)) is 
        amended by adding at the end the following:
    ``(7)(A) In the case of any eligible small multiple employer plan, 
the Secretary may by regulation waive the requirement under section 
103(a)(3) to engage an independent qualified public accountant in cases 
where the Secretary determines it appropriate.
    ``(B) For purposes of this paragraph, the term `eligible small 
multiple employer plan' means, with respect to any plan year--
            ``(i) a qualified multiple employer plan, as defined in 
        section 3(2)(C)(ii), or
            ``(ii) any other plan described in section 413(c) of the 
        Internal Revenue Code of 1986 that satisfies the requirements 
        of clause (v) of section 3(2)(C).''.
    (b) Conforming Amendment.--Section 3(2)(A) of such Act is amended 
by striking ``Except as provided in subparagraph (B)'' and inserting 
``Except as provided in subparagraphs (B) and (C)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2015.

SEC. 18. CLARIFICATION OF TREATMENT OF INDIVIDUAL RETIREMENT PLANS WITH 
              PAYROLL DEDUCTION.

    (a) In General.--Section 3(2) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(2)), as amended by this Act, is 
amended by adding at the end the following new subparagraph:
    ``(E) Neither an individual retirement plan (as defined in section 
7701(a)(37) of the Internal Revenue Code of 1986) nor an automatic 
deferral IRA arrangement (as described in section 408B of such Code) 
maintained in connection with any such individual retirement plan shall 
be considered a pension plan merely because an employer establishes a 
payroll deduction program for the purpose of enabling employees to make 
voluntary contributions to such account or annuity.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 19. DISCLOSURE REGARDING LIFETIME INCOME.

    (a) In General.--Section 105(a)(2)(B) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1025(a)(2)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii), by striking ``diversification.'' and 
        inserting ``diversification, and''; and
            (3) by inserting at the end the following:
                            ``(iii) the lifetime income disclosure 
                        described in subparagraph (D)(i).
                In the case of pension benefit statements described in 
                clause (i) of paragraph (1)(A), a lifetime income 
                disclosure under clause (iii) of this subparagraph 
                shall only be required to be included in one pension 
                benefit statement during any one 12-month period.''.
    (b) Lifetime Income.--Section 105(a)(2) of such Act (29 U.S.C. 
1025(a)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Lifetime income disclosure.--
                            ``(i) In general.--
                                    ``(I) Disclosure.--A lifetime 
                                income disclosure shall set forth the 
                                lifetime income stream equivalent of 
                                the total benefits accrued with respect 
                                to the participant or beneficiary.
                                    ``(II) Lifetime income stream 
                                equivalent of the total benefits 
                                accrued.--For purposes of this 
                                subparagraph, the term `lifetime income 
                                stream equivalent of the total benefits 
                                accrued' means the amount of monthly 
                                payments the participant or beneficiary 
                                would receive if the total accrued 
                                benefits of such participant or 
                                beneficiary were used to provide 
                                lifetime income streams described in 
                                subclause (III), based on assumptions 
                                specified in rules prescribed by the 
                                Secretary.
                                    ``(III) Lifetime income streams.--
                                The lifetime income streams described 
                                in this subclause are a qualified joint 
                                and survivor annuity (as defined in 
                                section 205(d)), based on assumptions 
                                specified in rules prescribed by the 
                                Secretary, including the assumption 
                                that the participant or beneficiary has 
                                a spouse of equal age, and a single 
                                life annuity. Such lifetime income 
                                streams may have a term certain or 
                                other features to the extent permitted 
                                under rules prescribed by the 
                                Secretary.
                            ``(ii) Model disclosure.--Not later than 1 
                        year after the date of the enactment of the 
                        Lifetime Income Disclosure Act, the Secretary 
                        shall issue a model lifetime income disclosure, 
                        written in a manner so as to be understood by 
                        the average plan participant, that--
                                    ``(I) explains that the lifetime 
                                income stream equivalent is only 
                                provided as an illustration;
                                    ``(II) explains that the actual 
                                payments under the lifetime income 
                                stream described in clause (i)(III) 
                                that may be purchased with the total 
                                benefits accrued will depend on 
                                numerous factors and may vary 
                                substantially from the lifetime income 
                                stream equivalent in the disclosures;
                                    ``(III) explains the assumptions 
                                upon which the lifetime income stream 
                                equivalent was determined; and
                                    ``(IV) provides such other similar 
                                explanations as the Secretary considers 
                                appropriate.
                            ``(iii) Assumptions and rules.--Not later 
                        than 1 year after the date of the enactment of 
                        the Lifetime Income Disclosure Act, the 
                        Secretary shall--
                                    ``(I) prescribe assumptions that 
                                administrators of individual account 
                                plans may use in converting total 
                                accrued benefits into lifetime income 
                                stream equivalents for purposes of this 
                                subparagraph; and
                                    ``(II) issue interim final rules 
                                under clause (i).
                        In prescribing assumptions under subclause (I), 
                        the Secretary may prescribe a single set of 
                        specific assumptions (in which case the 
                        Secretary may issue tables or factors that 
                        facilitate such conversions), or ranges of 
                        permissible assumptions. To the extent that an 
                        accrued benefit is or may be invested in a 
                        lifetime income stream described in clause 
                        (i)(III), the assumptions prescribed under 
                        subclause (I) shall, to the extent appropriate, 
                        permit administrators of individual account 
                        plans to use the amounts payable under such 
                        lifetime income stream as a lifetime income 
                        stream equivalent.
                            ``(iv) Limitation on liability.--No plan 
                        fiduciary, plan sponsor, or other person shall 
                        have any liability under this title solely by 
                        reason of the provision of lifetime income 
                        stream equivalents which are derived in 
                        accordance with the assumptions and rules 
                        described in clause (iii) and which include the 
                        explanations contained in the model lifetime 
                        income disclosure described in clause (ii). 
                        This clause shall apply without regard to 
                        whether the provision of such lifetime income 
                        stream equivalent is required by subparagraph 
                        (B)(iii).
                            ``(v) Effective date.--The requirement in 
                        subparagraph (B)(iii) shall apply to pension 
                        benefit statements furnished more than 12 
                        months after the latest of the issuance by the 
                        Secretary of--
                                    ``(I) interim final rules under 
                                clause (i);
                                    ``(II) the model disclosure under 
                                clause (ii); or
                                    ``(III) the assumptions under 
                                clause (iii).''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 20. LIFETIME INCOME SAFE HARBOR.

    Section 404 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1104) is amended by adding at the end the following:
    ``(e) Safe Harbor for Annuity Selection.--
            ``(1) In general.--With respect to the selection of an 
        insurer and a guaranteed retirement income contract, the 
        requirements of subsection (a)(1)(B) will be deemed to be 
        satisfied if a fiduciary--
                    ``(A) engages in an objective, thorough and 
                analytical search for the purpose of identifying 
                insurers from which to purchase guaranteed retirement 
                income contracts;
                    ``(B) with respect to each insurer identified by 
                the fiduciary under subparagraph (A)--
                            ``(i) considers the financial capability of 
                        such insurer to satisfy its obligations under 
                        the guaranteed retirement income contract; and
                            ``(ii) considers the cost (including fees 
                        and commissions) of the guaranteed retirement 
                        income contract offered by the insurer in 
                        relation to the benefits and product features 
                        of the contract and administrative services to 
                        be provided under such contract; and
                    ``(C) on the basis of the foregoing, concludes 
                that--
                            ``(i) at the time of the selection, the 
                        insurer is financially capable of satisfying 
                        its obligations under the guaranteed retirement 
                        income contract; and
                            ``(ii) the cost (including fees and 
                        commissions) of the selected guaranteed 
                        retirement income contract is reasonable in 
                        relation to the benefits and product features 
                        of the contract and the administrative services 
                        to be provided under such contract.
            ``(2) Financial capability of the insurer.--For purposes of 
        this section, a fiduciary will be deemed to satisfy the 
        requirements of paragraphs (1)(B)(i) and (1)(C)(i) if--
                    ``(A) the fiduciary obtains written representations 
                from the insurer that--
                            ``(i) the insurer is licensed to offer 
                        guaranteed retirement income contracts;
                            ``(ii) the insurer, at the time of 
                        selection and for each of the immediately 
                        preceding seven years--
                                    ``(I) operates under a certificate 
                                of authority from the Insurance 
                                Commissioner of its domiciliary State 
                                that has not been revoked or suspended;
                                    ``(II) has filed audited financial 
                                statements in accordance with the laws 
                                of its domiciliary State under 
                                applicable statutory accounting 
                                principles;
                                    ``(III) maintains (and has 
                                maintained) reserves that satisfies all 
                                the statutory requirements of all 
                                States where the insurer does business; 
                                and
                                    ``(IV) is not operating under an 
                                order of supervision, rehabilitation, 
                                or liquidation; and
                            ``(iii) the insurer undergoes, at least 
                        every five years, a financial examination 
                        (within the meaning of the law of its 
                        domiciliary State) by the Insurance 
                        Commissioner of the domiciliary State (or 
                        representative, designee, or other party 
                        approved thereby);
                    ``(B) if, following the issuance of the 
                representations described in clauses (i) through (iii) 
                of subparagraph (A), there is any change that would 
                preclude the insurer from making the same 
                representations at the time of issuance of the 
                guaranteed retirement income contract, the insurer 
                shall notify the fiduciary, in advance of the issuance 
                of any guaranteed retirement income contract, that the 
                fiduciary can no longer rely on one or more of the 
                representations; and
                    ``(C) the fiduciary has not received the 
                notification described in subparagraph (B) and has no 
                other facts that would cause it to question the 
                representations described in clauses (i) through (iii) 
                of subparagraph (A).
            ``(3) Nothing herein shall be construed to require a 
        fiduciary to select the lowest cost contract. Accordingly, a 
        fiduciary may consider the value, including features and 
        benefits of the contract and attributes of the insurer in 
        conjunction with the contract's cost. Attributes of the insurer 
        that may be considered may include, without limitation, the 
        issuer's financial strength.
            ``(4) Time of selection.--
                    ``(A) For purposes of paragraph (1), the `time of 
                selection' may be either--
                            ``(i) the time that the insurer and 
                        contract are selected for distribution of 
                        benefits to a specific participant or 
                        beneficiary; or
                            ``(ii) the time that the insurer and 
                        contract are selected to provide benefits at 
                        future dates to participants or beneficiaries, 
                        provided that the selecting fiduciary 
                        periodically reviews the continuing 
                        appropriateness of the conclusion described in 
                        paragraph (1)(C), taking into account the 
                        considerations described in paragraph (1).
                For purposes of this paragraph, a fiduciary is not 
                required to review the appropriateness of this 
                conclusion following the purchase of any contract(s) 
                for specific participants or beneficiaries.
                    ``(B) For purposes of paragraph (4)(A)(ii), a 
                fiduciary will be deemed to have conducted a periodic 
                review of the financial capability of the insurer if 
                the fiduciary obtains the written representations 
                described in clauses (i) through (iii) of paragraph 
                (2)(A) on an annual basis, unless, in the interim, the 
                fiduciary has received the notice described in 
                paragraph (2)(B) or otherwise becomes aware of facts 
                that would cause it to question the such 
                representations.
            ``(5) Limited liability.--A fiduciary that is deemed to 
        satisfy the requirements of this section shall not be liable 
        following the distribution of any benefit or the investment by 
        or on behalf of a participant or beneficiary pursuant to the 
        selected guaranteed retirement income contract for any losses 
        that may result to the participant or beneficiary due to an 
        insurer's inability to satisfy its financial obligations under 
        the terms of such contract.
            ``(6) Definitions.--For purposes of this section--
                    ``(A) Insurer.--The term `insurer' means an 
                insurance company, insurance service or insurance 
                organization qualified to do business in a State; and 
                includes affiliates of such companies to the extent the 
                affiliate is licensed to offer guaranteed retirement 
                income contracts.
                    ``(B) Guaranteed retirement income contract.--The 
                term `guaranteed retirement income contract' means an 
                annuity contract for a fixed term or a contract (or 
                provision or feature thereof) designed to provide a 
                participant guaranteed benefits annually (or more 
                frequently) for at least the remainder of the life of 
                the participant or joint lives of the participant or 
                the participant's designated beneficiary as part of an 
                individual account plan. This section sets forth an 
                optional means by which a plan fiduciary will be 
                considered to satisfy the responsibilities set forth in 
                section 404(a)(1)(B) with respect to the selection of 
                insurers and guaranteed retirement income contracts. 
                This section does not establish minimum requirements or 
                the exclusive means for satisfying these 
                responsibilities.''.
                                 <all>