[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 245 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                 S. 245

 To amend the Internal Revenue Code of 1986 to expand personal saving 
 and retirement savings coverage by enabling employees not covered by 
 qualifying retirement plans to save for retirement through automatic 
               IRA arrangements, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 22, 2015

Mr. Whitehouse introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to expand personal saving 
 and retirement savings coverage by enabling employees not covered by 
 qualifying retirement plans to save for retirement through automatic 
               IRA arrangements, 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; REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Automatic IRA Act 
of 2015''.
    (b) Amendment of 1986 Code.--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.

SEC. 2. EMPLOYEES NOT COVERED BY QUALIFYING RETIREMENT PLANS OR 
              ARRANGEMENTS ENTITLED TO PARTICIPATE IN AUTOMATIC IRA 
              ARRANGEMENTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to pension, profit-sharing, stock bonus plans, etc.) is 
amended by inserting after section 408A the following new section:

``SEC. 408B. RIGHT TO AUTOMATIC IRA ARRANGEMENTS AT WORK.

    ``(a) Requirement To Provide Automatic IRA Arrangement.--Each 
covered employer shall make available to each qualifying employee of 
the employer for the calendar year an automatic IRA arrangement.
    ``(b) Covered Employer.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection or subsection (c)(2), the term `covered employer' 
        means, with respect to any year, an employer which does not 
        maintain a qualifying plan or arrangement described in section 
        219(g)(5) for the calendar year.
            ``(2) Excluded plans.--A qualifying plan or arrangement 
        shall not be taken into account for purposes of paragraph (1) 
        if--
                    ``(A) the plan or arrangement is frozen as of the 
                first day of the preceding calendar year, or
                    ``(B) in the case of a plan or arrangement under 
                which the only contributions are discretionary on the 
                part of the employer or other plan sponsor, no employer 
                contribution has been 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 last plan year ending 
                in the preceding calendar year.
            ``(3) Exception for certain small and new employers.--
                    ``(A) In general.--The term `covered employer' does 
                not include an employer for a calendar year if the 
                employer either--
                            ``(i) did not employ more than 10 employees 
                        who received at least $5,000 of compensation 
                        (as defined in section 3401(a)) from the 
                        employer for the preceding calendar year,
                            ``(ii) did not normally employ more than 10 
                        employees on a typical business day of the 
                        preceding calendar year, or
                            ``(iii) was not in existence at all times 
                        during the calendar year and the preceding 
                        calendar year.
                    ``(B) Operating rules.--In determining the number 
                of employees for purposes of subparagraph (A)--
                            ``(i) rules consistent with any rules 
                        applicable in determining the number of 
                        employees for purposes of section 408(p)(2)(C) 
                        and section 4980B(d) shall apply,
                            ``(ii) all members of the same family 
                        (within the meaning of section 318(a)(1)) shall 
                        be treated as 1 individual, and
                            ``(iii) any reference to an employer shall 
                        include a reference to any predecessor 
                        employer.
            ``(4) Exception for governments and churches.--The term 
        `covered employer' does not include--
                    ``(A) a government or entity described in section 
                414(d), or
                    ``(B) a church or a convention or association of 
                churches which is exempt from tax under section 501.
            ``(5) Aggregation rule.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 or 
        subsection (m) or (o) of section 414 shall be treated as a 
        single employer.
    ``(c) Qualifying Employee.--For purposes of this section--
            ``(1) In general.--The term `qualifying employee' means any 
        employee of the employer who is not an excluded employee.
            ``(2) Plan sponsor's employees.--If--
                    ``(A) an employer maintains one or more qualifying 
                plans or arrangements described in section 219(g)(5), 
                and
                    ``(B) the employees of a subsidiary, division, or 
                other major business unit are generally not eligible to 
                participate in any such qualifying plan or arrangement,
        then, for purposes of this section, the employer shall be 
        treated as a covered employer with respect to such employees 
        (other than excluded employees), and such employees (other than 
        excluded employees) shall be treated as qualifying employees, 
        but only if there are 50 or more ineligible employees of such 
        subsidiary, division or other major business unit constituting 
        at least 10 percent of the employees of the employer (other 
        than excludable employees).
            ``(3) Excluded employees.--
                    ``(A) In general.--The term `excluded employee' 
                means an employee of the employer who is an excludable 
                employee and who is in a class or category that the 
                employer excludes from treatment as qualifying 
                employees.
                    ``(B) Excludable employee.--The term `excludable 
                employee' means--
                            ``(i) any employee described in section 
                        410(b)(3),
                            ``(ii) any employee who has not attained 
                        the age of 18 before the beginning of the 
                        calendar year,
                            ``(iii) any employee who has not completed 
                        at least 3 months of service with the employer,
                            ``(iv) in the case of an employer that 
                        maintains a qualifying plan or arrangement 
                        which excludes employees who have not satisfied 
                        the minimum age and service requirements for 
                        participation in the plan, any employee who has 
                        not satisfied such requirements,
                            ``(v) in the case of an employer that 
                        maintains a section 403(b) annuity contract 
                        (including a custodial account or retirement 
                        income account), any employee who is permitted 
                        to be excluded from any salary reduction 
                        arrangement under the contract pursuant to 
                        section 403(b)(12),
                            ``(vi) in the case of an employer that 
                        maintains an arrangement described in section 
                        408(p), any employee who is not required to be 
                        eligible to participate in the arrangement 
                        under section 408(p)(4), and
                            ``(vii) in the case of an employer that 
                        maintains a simplified employee pension 
                        described in section 408(k), any employee who 
                        is permitted to be excluded from participation 
                        under section 408(k)(2).
            ``(4) Guidance.--The Secretary shall issue regulations or 
        other guidance to carry out this subsection, including--
                    ``(A) guidelines for determining the classes or 
                categories of employees to be covered by an automatic 
                IRA arrangement,
                    ``(B) if an employer excludes employees from the 
                automatic IRA arrangement, guidelines providing that 
                the employer shall specify the classification or 
                categories of employees who are so excluded, and
                    ``(C) rules to prevent avoidance of the 
                requirements of this section.
    ``(d) Automatic IRA Arrangement.--For purposes of this section--
            ``(1) In general.--The term `automatic IRA arrangement' 
        means an arrangement of an employer (determined without regard 
        to whether the employer is required to maintain the 
        arrangement)--
                    ``(A) which covers each qualifying employee of the 
                covered employer for the calendar year,
                    ``(B) under which a qualifying employee--
                            ``(i) may elect--
                                    ``(I) to contribute to an 
                                individual retirement plan, or to 
                                purchase a qualified retirement bond on 
                                behalf of the employee, by having the 
                                employer deposit payroll deduction 
                                amounts or make other periodic direct 
                                deposits (including electronic 
                                payments) to the plan or to be invested 
                                in retirement bonds (whether to the 
                                Secretary of the Treasury or to a 
                                designated trustee or other agent for 
                                that purpose), or
                                    ``(II) to have such payments paid 
                                to the employee directly in cash,
                            ``(ii) is treated as having made the 
                        election under clause (i)(I) in the amount 
                        specified in paragraph (4) until the individual 
                        specifically elects not to have such 
                        contributions or purchases made (or 
                        specifically elects to have such contributions 
                        or purchases made at a different percentage or 
                        in a different amount), and
                            ``(iii) may elect to modify the manner in 
                        which such amounts are invested for such year,
                    ``(C) which meets the administrative requirements 
                of paragraph (2), including the notice requirement of 
                paragraph (2)(C), and
                    ``(D) which does not charge unreasonable additional 
                fees solely on the basis that the balance in an 
                automatic IRA is small.
            ``(2) Administrative requirements.--
                    ``(A) Payments.--The requirements of this paragraph 
                are met with respect to any automatic IRA arrangement 
                if the employer makes the payments elected or treated 
                as elected under paragraph (1)(B)--
                            ``(i) on or before the last day of the 
                        month following the month in which the 
                        compensation otherwise would have been payable 
                        to the employee in cash, or
                            ``(ii) before such later deadline 
                        prescribed by the Secretary for making such 
                        payments, but not later than 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.
                    ``(B) Termination of employee participation.--
                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.
                    ``(C) Notice of election period.--The requirements 
                of this paragraph shall not be treated as met with 
                respect to any year unless the employer notifies each 
                employee eligible to participate, within a reasonable 
                period of time before the 30th day before the beginning 
                of such year (and, for the first year the employee is 
                so eligible, the 30th day before the first day such 
                employee is so eligible), of--
                            ``(i) the payments that may be elected or 
                        treated as elected under paragraph (1)(B),
                            ``(ii) the opportunity to make the election 
                        to terminate participation in the arrangement 
                        under paragraph (2)(B),
                            ``(iii) the opportunity to make the 
                        election under paragraph (1)(B)(ii) to have 
                        contributions or purchases made at a different 
                        percentage or in a different amount, and
                            ``(iv) the opportunity under paragraph 
                        (1)(B)(iii) to modify the manner in which such 
                        amounts are invested for such year.
                    ``(D) Employer may permit employees to choose 
                ira.--Subject to subsection (f), if the employer so 
                elects, the arrangement provides that an employee may 
                elect to have contributions made to any individual 
                retirement plan specified by the employee.
                    ``(E) Employer may permit employees to choose 
                retirement bond.--Subject to subsection (f), if the 
                employer so elects, the arrangement provides that an 
                employee may elect to have payments applied toward the 
                purchase of retirement bonds.
            ``(3) Default investments.--If an employee is treated under 
        clause (ii) of paragraph (1)(B) as having made an election to 
        participate in an automatic IRA arrangement--
                    ``(A) the employee shall be deemed to have made an 
                election to make contributions and payments in the 
                amount determined under such clause,
                    ``(B) such contributions shall--
                            ``(i) if the employer has made an election 
                        under subsection (f)(2), be transferred to an 
                        individual retirement plan of the designated 
                        trustee or issuer but only if the contributions 
                        are invested as provided in paragraph (5), or
                            ``(ii) be applied toward the purchase of a 
                        retirement bond.
            ``(4) Amount of contributions and payments.--
                    ``(A) In general.--The amount specified in this 
                paragraph is--
                            ``(i) 3 percent of compensation, or
                            ``(ii) such other percentage of 
                        compensation as is specified in regulations 
                        prescribed by the Secretary which is not less 
                        than 2 percent or more than 6 percent.
                    ``(B) Authority to provide for periodic 
                increases.--In the case of qualifying employees under 
                an automatic IRA arrangement for 2 or more consecutive 
                years, the Secretary may by regulation provide for 
                periodic (not more frequent than annual) increases in 
                the percentage of compensation an employee is deemed to 
                have elected under subparagraph (A). The considerations 
                the Secretary shall take into account in issuing any 
                regulations under this subparagraph and subparagraph 
                (A) shall include the potential effects on lower-income 
                employees as well as on adequacy of savings.
                    ``(C) Permitted additional procedures to limit 
                contributions.--An employer--
                            ``(i) shall have no responsibility for any 
                        calendar year for determining whether, or 
                        ensuring that, the contributions with respect 
                        to any employee do not exceed the deductible 
                        amount in effect for taxable years beginning in 
                        the calendar year under section 219(b)(5) 
                        (determined without regard to subparagraph (B) 
                        thereof), and
                            ``(ii) shall not be treated as failing to 
                        satisfy the requirements of this section or any 
                        other provision of this title merely because 
                        the employer chooses to limit the contributions 
                        under this subsection on behalf of a qualifying 
                        employee for any calendar year in a manner 
                        reasonably designed to avoid exceeding such 
                        deductible amount.
            ``(5) Required investments.--
                    ``(A) In general.--Amounts contributed under 
                paragraph (3)(B)(i) shall be invested only in the class 
                of assets or funds described in subparagraph (B) unless 
                the employer elects a class of assets or funds 
                described in subparagraph (C), (D), (E), or (F).
                    ``(B) Target date/lifecycle option.--The class of 
                assets or funds described in this subparagraph is the 
                class of assets or funds that constitutes a qualified 
                default investment alternative under Department of 
                Labor regulation section 2550.404c-5(e)(4)(i).
                    ``(C) Principal preservation.--The class of assets 
                or funds described in this subparagraph is the class of 
                assets or funds that is designed to protect the 
                principal of the individual on an ongoing basis, 
                including passbook savings, certificates of deposit, 
                insurance contracts, mutual funds, United States 
                savings bonds (which may be indexed for inflation), and 
                similar assets specified in regulations.
                    ``(D) Balanced option.--The class of assets or 
                funds described in this subparagraph is the class of 
                assets or funds that constitutes a qualified default 
                investment alternative under Department of Labor 
                regulation section 2550.404c-5(e)(4)(ii).
                    ``(E) Guaranteed lifetime income option or 
                equivalent.--The class of assets or funds described in 
                this subparagraph is the class of assets or funds that 
                is designed to provide an employee with the right to 
                elect to receive distributions as a defined level of 
                income annually (or more frequently) for at least the 
                remainder of the life of the employee or the joint 
                lives of the employee and the employee's designated 
                beneficiary. No later than 12 months after the date of 
                enactment of this Act, the Secretary of Labor and the 
                Secretary shall issue guidance defining a guaranteed 
                lifetime income or equivalent.
                    ``(F) Other.--Any other class of assets or funds 
                determined by the Secretary to be a qualified 
                investment for purposes of this section.
            ``(6) Coordination with withholding.--The Secretary shall 
        modify the withholding exemption certificate under section 
        3402(f) so that, in the case of any qualifying employee covered 
        under an automatic IRA arrangement, any notice and election 
        requirements with respect to the arrangement may be met through 
        the use of an attachment to such certificate or other 
        modifications of the withholding exemption procedures.
            ``(7) Treatment as ira.--A qualifying employee for whom an 
        automatic IRA is established under paragraph (1) may elect, at 
        such time and in such manner and form as the Secretary may 
        prescribe, whether to treat the individual retirement plan as 
        described, or not described, in section 408A. If no such 
        election is made, the plan shall be treated as described in 
        section 408A and shall meet the requirements of section 408A.
            ``(8) Employer's option to obtain affirmative elections 
        from employees instead of automatic enrollment.--As an 
        alternative to automatic enrollment, an employer may choose to 
        comply with paragraph (1)(B)(ii) by notifying employees that 
        the employer wishes to obtain from each qualifying employee an 
        affirmative election either to contribute or not to contribute 
        to an automatic IRA, provided that any qualifying employee who 
        fails to make such an election is treated in the manner 
        provided under paragraph (1)(B)(ii).
    ``(e) Automatic IRA Contributions and Retirement Bond Purchases 
Treated Like Other Contributions to Individual Retirement Plans.--
            ``(1) Tax treatment unaffected.--The fact that a 
        contribution to an individual retirement plan or purchase of a 
        retirement bond is made on behalf of an employee under an 
        automatic 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.
            ``(2) Payroll savings contributions taken into account.--
        Any contribution to an individual retirement plan or purchase 
        of a retirement bond made on behalf of an employee under an 
        automatic 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 or purchase had been made directly by the 
        employee.
    ``(f) Deposits to Plans of a Designated Trustee or Issuer and for 
Retirement Bonds.--
            ``(1) In general.--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 to the Secretary or his 
        agent for the purchase of retirement bonds specified in 
        paragraph (3).
            ``(2) Individual retirement plans other than those selected 
        by employee.--An employer may elect to have contributions for 
        all qualifying employees participating in an automatic IRA 
        arrangement made to individual retirement plans of a trustee or 
        issuer under the arrangement that has been designated by the 
        employer. 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.
            ``(3) Retirement bonds.--
                    ``(A) In general.--The Secretary shall provide that 
                contributions deposited under subparagraph (B) shall be 
                applied to the purchase of a retirement bond in the 
                name of each applicable employee.
                    ``(B) Payroll deposit features.--The Secretary 
                shall establish procedures so that contributions may be 
                applied to the purchase of retirement bonds without 
                undue administrative or paperwork requirements on 
                participating employers. Such procedures shall ensure 
                that only 1 such retirement bond of each type 
                (traditional or Roth) is issued for each TIN.
            ``(4) Payroll tax deposit procedure.--The procedures the 
        Secretary shall establish may include a procedure under which 
        an employer--
                    ``(A) 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 qualifying employees have designated 
                under clause (i)(I) of subsection (d)(1)(B) (or are 
                deemed to have designated under clause (ii) of such 
                subsection) as contributions to purchase retirement 
                bonds on behalf of the employees under paragraph (3), 
                and
                    ``(B) specifies, in such manner as the Secretary 
                may prescribe, information needed to purchase 
                retirement bonds on behalf of each applicable employee 
                for whom a contribution is to be made, including--
                            ``(i) the employee's name and TIN, and
                            ``(ii) the amount of the contribution.
            ``(5) Purposes.--The purposes of the retirement bond 
        program established under this subsection and subsection (g) 
        include--
                    ``(A) providing new savers a convenient, low-cost 
                investment option suitable for the initial accumulation 
                of small automatic IRA contributions,
                    ``(B) to reflect the intent that the long-term 
                investment of automatic IRA funds for most savers be in 
                the private market rather than in retirement bonds, 
                encouraging and assisting individuals who accumulate 
                larger amounts in retirement bonds to transfer those 
                funds to individual retirement plans in the private 
                market, while
                    ``(C) permitting individuals to remain invested in 
                retirement bonds if they choose to do so.
            ``(6) Regulations.--The Secretary may issue such 
        regulations as are necessary to carry out the purposes of this 
        subsection and subsection (g), including--
                    ``(A) establishment of procedures to communicate to 
                individuals the importance of investment 
                diversification and the transfer option described in 
                subparagraph (B),
                    ``(B) simplified procedures under which holders of 
                retirement bonds may periodically choose to have the 
                bonds or their proceeds transferred to available 
                individual retirement plans, and
                    ``(C) means by which individuals may elect (or be 
                treated as electing) whether to have retirement bonds 
                or their proceeds so transferred.
        Any such transfer shall be treated as a rollover contribution 
        for purposes of section 408(d)(3) (other than subparagraph (B) 
        thereof).
    ``(g) Retirement Bond.--
            ``(1) Retirement bond.--The term `retirement bond' means a 
        bond issued under chapter 31 of title 31, which by its terms, 
        or by regulations prescribed by the Secretary under such 
        chapter--
                    ``(A) provides for interest to be credited at rates 
                that take into account the expected duration of the 
                funds invested in retirement bonds and at rates 
                determined or adjusted in a manner and with sufficient 
                frequency to provide substantial protection from 
                inflation,
                    ``(B) is not transferable, and
                    ``(C) is designed for investment for retirement 
                under automatic IRA arrangements or other savings 
                vehicles.
            ``(2) Individual retirement plan rules applicable.--The 
        provisions of this title applicable to an individual retirement 
        plan (as defined in section 7701(a)(37)), including provisions 
        relating to contributions, holding and distributions, shall 
        apply to a retirement bond, except as determined by the 
        Secretary.
            ``(3) Annual statement.--As soon as practicable after the 
        close of the calendar year, the Secretary shall make available 
        an annual statement to each participant setting forth--
                    ``(A) payments made by or on behalf of the 
                participant for the retirement bond,
                    ``(B) amounts earned by the retirement bond,
                    ``(C) the value of the account as of the close of 
                such calendar year,
                    ``(D) the importance of diversifying retirement 
                savings,
                    ``(E) the benefits of a well-balanced and 
                diversified investment portfolio,
                    ``(F) a notice of the internet website of the 
                Department of Labor for sources of information on 
                individual investing and diversification,
                    ``(G) the procedures for redeeming a retirement 
                bond and directly transferring the redeemed amount into 
                an individual retirement plan,
                    ``(H) other factors affecting retirement savings 
                decisions, and
                    ``(I) such other information as the Secretary 
                determines necessary or appropriate.
    ``(h) Model Notice.--The Secretary shall--
            ``(1) provide a model notice, written in a manner 
        calculated to be understandable to the average worker, that is 
        simple for employers to use--
                    ``(A) to notify employees of the requirement under 
                this section for the employer to provide certain 
                employees with the opportunity to participate in an 
                automatic IRA arrangement, and
                    ``(B) to satisfy the requirements of subsection 
                (d)(2)(C),
            ``(2) provide uniform forms for enrollment, including 
        automatic enrollment, in an automatic IRA arrangement, and
            ``(3) establish a website or other electronic means that 
        small employers can access and use to obtain information on 
        automatic IRA arrangements and to obtain required notices and 
        forms.
        The information referred to in paragraph (3) shall be provided 
        in a manner designed to assist employers and providers by 
        facilitating the identification by employers of private-sector 
        providers of individual retirement plans and associated 
        investment options that are appropriate for use in automatic 
        IRA arrangements.
    ``(i) Cross Reference.--For provision preempting conflicting State 
laws, see section 2(k) of the Automatic IRA Act of 2015.''.
    (b) Mandatory Transfers.--Section 401(a)(31)(B) is amended--
            (1) by inserting ``(including an automatic IRA 
        arrangement)'' after ``individual retirement plan'' each place 
        it appears, and
            (2) by adding at the end the following new sentence: ``Any 
        amount so transferred (and any earnings thereon) shall be 
        invested in a default investment described in section 
        408B(d)(5).''.
    (c) Penalty for Failure To Timely Remit Contributions to Automatic 
IRA Arrangements.--Section 4975(c) is amended by adding at the end the 
following new paragraph:
            ``(7) Special rule for automatic ira arrangements.--For 
        purposes of paragraph (1), if an employer is required under an 
        automatic IRA arrangement under section 408B to deposit amounts 
        withheld from an employee's compensation into an automatic IRA 
        or toward the purchase of a retirement bond but fails to do so 
        within the time prescribed under section 408B(d)(2)(A), such 
        amounts shall be treated as assets of the automatic IRA.''.
    (d) Coordination With Employee Retirement Income Security Act of 
1974.--
            (1) Exemption.--
                    (A) In general.--Section 3(2) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1002(2)) is amended--
                            (i) by inserting ``or (C)'' after 
                        ``subparagraph (B)'' in subparagraph (A), and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(C) An automatic IRA arrangement described in 
                section 408B(d) of the Internal Revenue Code of 1986 
                shall not be treated as an employee pension benefit 
                plan or pension plan if, under the arrangement, 
                contributions are to be made to an automatic IRA the 
                provider of which is included in the website list 
                established under section 408B(h)(3) of such Code, are 
                to be made to an individual retirement plan designated 
                by the employee, or are to be invested in retirement 
                bonds (whether to the Secretary of the Treasury or to a 
                designated trustee or other agent for that purpose).''.
                    (B) Customer identification program.--
                Notwithstanding the amendment made by subparagraph (A), 
                an individual retirement plan established pursuant to 
                an automatic IRA arrangement described in section 
                408B(d) of the Internal Revenue Code of 1986 shall, for 
                purposes of any customer identification program 
                established under section 5318(l) of title 31, United 
                States Code, be treated as an account opened for the 
                purpose of participating in an employee benefit plan 
                established under the Employee Retirement Income 
                Security Act of 1974.
            (2) Fiduciary duties.--Section 404(c)(2) of such Act is 
        amended--
                    (A) by inserting before the last sentence the 
                following: ``In the case of an automatic IRA under 
                section 408B of such Code that is not exempt under 
                section 3(2)(C), a participant or beneficiary shall, 
                for purposes of paragraph (1), be treated as exercising 
                control over the assets in the account on and after the 
                7th day after notice has been given to an employee that 
                such automatic IRA has been established on behalf of 
                the employee.'', and
                    (B) by inserting ``or with respect to an automatic 
                IRA under section 408B of such Code'' after 
                ``arrangement'' in the last sentence.
    (e) Notice of Availability of Investment Guidelines.--
            (1) In general.--Section 408(i) (relating to reports) is 
        amended by adding at the end the following new sentence: ``Any 
        report furnished under paragraph (2) to an individual shall 
        include notice of the Internet website of the Department of 
        Labor for sources of information on individual investing and 
        diversification.''.
            (2) Update information.--Such information shall be modified 
        (or updated) by the Secretary of Labor in consultation with the 
        Secretary of the Treasury and the Chairman of the Securities 
        and Exchange Commission to address needed changes due to the 
        creation of automatic IRAs.
    (f) Failure To Provide Access to Payroll Savings Arrangements.--
Chapter 43 (relating to qualified pension, etc., plans) is amended by 
adding at the end the following new section:

``SEC. 4980J. REQUIREMENTS FOR COVERED EMPLOYERS TO PROVIDE EMPLOYEES 
              ACCESS TO AUTOMATIC IRA ARRANGEMENTS.

    ``(a) General Rule.--There is hereby imposed a tax on any failure 
by a covered employer (as defined in section 408B) to meet the 
requirements of subsection (d) for a calendar year.
    ``(b) Amount.--
            ``(1) In general.--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.
            ``(2) Tax not to apply where failure not discovered and 
        reasonable diligence exercised.--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).
            ``(3) Tax not to apply to failures corrected within 90 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) the employer subject to liability for the tax 
                under subsection (a) exercised reasonable diligence to 
                meet the requirements of subsection (d), and
                    ``(B) the employer provides the automatic IRA 
                arrangement described in section 408B to each employee 
                eligible to participate in the arrangement by the end 
                of the 90-day period beginning on the first date the 
                employer knew, or exercising reasonable diligence would 
                have known, that such failure existed.
            ``(4) 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 or otherwise inequitable relative to the failure 
        involved.
    ``(c) Procedures for Notice.--The Secretary may prescribe and 
implement procedures for obtaining confirmation that 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.
    ``(d) Requirement To Provide Employee Access to Automatic IRA 
Arrangements.--The requirements of this subsection are met if the 
employer meets the requirements of section 408B.''.
    (g) Waiver of Early Withdrawal Penalty for Certain Distributions 
Following Initial Election To Participate in Automatic IRA 
Arrangement.--Section 72(t) is amended by adding at the end the 
following new paragraph:
            ``(11) Distribution following initial election to 
        participate in automatic ira arrangement.--Paragraph (1) shall 
        not apply in the case of a distribution to a qualifying 
        employee made not later than 90 days after the initial election 
        under section 408B(d)(1)(B)(ii).''.
    (h) Bankruptcy.--Section 522 of title 11, United States Code, is 
amended--
            (1) in subsection (d)(12) by inserting ``408B,'' after 
        ``408A,'', and
            (2) in subsection (n) by inserting ``, or in an automatic 
        IRA arrangement described in section 408B,''.
    (i) Automatic IRA Advisory Group.--
            (1) In general.--Not later than 60 days after the date of 
        the enactment of this Act, the Secretary of the Treasury and 
        the Secretary of Labor shall jointly establish an Automatic IRA 
        Advisory Group (in this subsection referred to as the 
        ``Advisory Group''). The purpose of the Advisory Group shall be 
        to make recommendations regarding the automatic IRA investment 
        options described in section 408B(d)(5) of the Internal Revenue 
        Code of 1986 and the website described in section 408B(h)(3) of 
        such Code, including, with respect to automatic IRA 
        arrangements, the disclosure of information regarding fees and 
        expenses, the use of low-cost investment options, the 
        appropriate use of electronic methods to provide notice and 
        disclosure, and such other related matters as may be determined 
        by the Secretaries.
            (2) Membership.--The Advisory Group shall consist of not 
        more than 15 members and shall be composed of--
                    (A) such persons as the Secretaries of the Treasury 
                and Labor may consider appropriate to provide expertise 
                regarding investments for retirement, including 
                providers of individual retirement accounts and 
                individual retirement annuities described in section 
                408 or 408A of such Code, and
                    (B) one or more representatives of the Department 
                of Labor and of the Department of the Treasury.
            (3) Compensation.--The members of the Advisory Group shall 
        serve without compensation.
            (4) Administrative support.--The Department of the Treasury 
        and the Department of Labor shall jointly provide appropriate 
        administrative support to the Advisory Group, including 
        technical assistance. The Advisory Group may use the services 
        and facilities of such Departments, with or without 
        reimbursement, as jointly determined by such Departments.
            (5) Report by advisory group.--Not later than 12 months 
        after the date of the enactment of this Act, the Advisory Group 
        shall submit to the Secretary of Labor and the Secretary of the 
        Treasury a report containing its recommendations. The 
        Secretaries may request that the Advisory Group submit 
        subsequent reports.
    (j) Conforming Amendments.--
            (1) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 408A the following new item:

``Sec. 408B. Right to automatic IRA arrangements at work.''.
            (2) The table of sections for chapter 43 is amended by 
        adding at the end the following new item:

``Sec. 4980J. Requirements for employers to provide employees access to 
                            automatic IRA arrangements.''.
    (k) Preemption of Conflicting State Laws.--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 an 
automatic IRA arrangement meeting the requirements of section 408B of 
the Internal Revenue Code of 1986. Nothing in such amendments shall be 
construed to impair or supersede any State law to the extent it 
provides a remedy for the failure to make payroll deposit payments 
under any such automatic IRA arrangement within the period required 
under such section 408B.
    (l) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2016.

SEC. 3. CREDIT FOR SMALL EMPLOYERS MAINTAINING AUTOMATIC IRA 
              ARRANGEMENTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 45S. SMALL EMPLOYER AUTOMATIC IRA ARRANGEMENT.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer maintaining an automatic IRA arrangement meeting the 
requirements of section 408B (without regard to whether the employer is 
required to maintain the arrangement), the small employer automatic IRA 
arrangement credit determined under this section for any taxable year 
is the amount determined under subsection (b).
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this section for any taxable year with respect to an 
        eligible employer shall be the sum of--
                    ``(A) $25 multiplied by the number of qualifying 
                employees (within the meaning of section 408B(c)) for 
                whom contributions are made under the automatic IRA 
                arrangement referred to in subsection (a) for the 
                calendar year in which the taxable year begins, plus
                    ``(B) $500 for the taxable year which begins in the 
                first calendar year, and $250 for the taxable year 
                which begins in the second calendar year, in which the 
                eligible employer maintains an automatic IRA 
                arrangement meeting the requirements of section 408B.
            ``(2) Limitation.--No more than 10 qualifying employees may 
        be taken into account under paragraph (1)(A) for a taxable 
        year.
            ``(3) Duration of credit.--The credit described in 
        paragraph (1)(A) shall apply only for a taxable year which 
        begins in the first 6 calendar years in which the eligible 
        employer maintains an automatic IRA arrangement meeting the 
        requirements of section 408B.
            ``(4) Coordination with small employer startup credit.--
                    ``(A) No credit shall be allowed under this section 
                to the employer for any taxable year if a credit is 
                determined under section 45E with respect to the 
                employer for the taxable year.
                    ``(B) If the eligible employer maintains an 
                automatic IRA arrangement meeting the requirements of 
                section 408B with respect to any of the first three 
                calendar years for which the employer could adopt such 
                an arrangement and subsequently adopts an eligible 
                employer plan for its employees for any of those years 
                which it maintains for such third taxable year, then 
                section 45E(b)(1) shall be applied with respect to the 
                eligible employer by replacing `2 taxable years' with 
                `3 taxable years'.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means, with respect to any calendar year in which 
the taxable year begins, an employer which--
            ``(1) maintains an automatic IRA arrangement meeting the 
        requirements of section 408B,
            ``(2) on each day during the preceding calendar year, had 
        no more than 100 employees, and
            ``(3) did not maintain a qualifying plan or arrangement 
        (described in section 408B(b)) during the portion of the 
        calendar year preceding the adoption of the automatic IRA 
        arrangement and the 2 preceding calendar years.
    ``(d) Other Rules.--For purposes of this section, the rules of 
section 45E(e) shall apply.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) is amended by striking ``plus'' at the end of paragraph (35), by 
striking the period at the end of paragraph (36) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(37) in the case of an eligible employer (as defined in 
        section 45S(c)) maintaining an automatic IRA arrangement 
        meeting the requirements of section 408B, the small employer 
        automatic IRA arrangement credit determined under section 
        45S(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45S. Small employer automatic IRA arrangement.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 4. STUDIES.

    (a) In General.--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:
            (1) Extending to automatic IRA arrangements 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 IRA arrangements.
            (2) Establishing procedures under which amounts saved by 
        employees in retirement bonds would be automatically 
        transferred into alternative diversified investments provided 
        by the private sector when employees' automatic IRA balances 
        reach a certain dollar level as well as procedures facilitating 
        employees' ability to transfer into such private sector 
        investments.
    (b) Study of Consolidation of Individual Retirement Plans.--The 
Secretary of the Treasury and the Secretary of Labor shall jointly 
conduct a separate study of the feasibility and desirability of--
            (1) using data submitted on investments in individual 
        retirement accounts and annuities to enable individuals with 
        multiple such accounts and annuities that include very small 
        amounts to receive periodic notices informing them about the 
        location of these accounts and how such accounts and annuities 
        might be consolidated, and
            (2) using investment arrangements associated with automatic 
        IRAs to assist in addressing the problem of abandoned accounts.
    (c) Report.--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 this section, 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 the Workforce of the House of 
Representatives.

SEC. 5. ELIMINATING BARRIERS TO USE OF MULTIPLE EMPLOYER PLANS.

    By December 31, 2015, the Secretaries of the Treasury and Labor 
shall--
            (1) prescribe administrative guidance establishing 
        conditions under which an employer participating in a plan 
        described in section 413(c) of the Internal Revenue Code of 
        1986 shall not have any liability under title I of the Employee 
        Retirement Income Security Act of 1974 with respect to the acts 
        or omissions of one or more other participating employers, 
        which regulations may require that the portion of the plan 
        attributable to such participating employers be spun off to 
        plans maintained by such employers,
            (2) prescribe administrative guidance establishing 
        conditions under which a plan described in section 413(c) of 
        such Code may be treated as satisfying the qualification 
        requirements of sections 401(a) and 413(c) of such Code despite 
        the violation of such requirements by one or more participating 
        employers, including requiring, if appropriate, that the 
        portion of the plan attributable to such participating 
        employers be spun off to plans maintained by such employers, 
        and
            (3) prescribe administrative guidance providing simplified 
        means by which plans described in section 413(c) of such Code 
        may satisfy the requirements of section 103 of the Employee 
        Retirement Income Security Act of 1974.

SEC. 6. INCREASE IN CREDIT LIMITATION FOR SMALL EMPLOYER PENSION PLAN 
              STARTUP COSTS.

    (a) In General.--Section 45E(b)(1) is amended to read as follows:
            ``(1) for the first credit year and each of the 2 taxable 
        years immediately following the first credit year, the greater 
        of--
                    ``(A) $500, or
                    ``(B) the lesser of--
                            ``(i) $250 for each employee of the 
                        eligible employer who is not a highly 
                        compensated employee (as defined in section 
                        415(q)) and who is eligible to participate in 
                        the eligible employer plan maintained by the 
                        eligible employer, or
                            ``(ii) $5,000, and''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2015.
                                 <all>