[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6757 Engrossed in House (EH)]

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115th CONGRESS
  2d Session
                                H. R. 6757

_______________________________________________________________________

                                 AN ACT


 
To amend the Internal Revenue Code of 1986 to encourage retirement and 
                family savings, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``Family Savings Act 
of 2018''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.
          TITLE I--EXPANDING AND PRESERVING RETIREMENT SAVINGS

Sec. 101. Multiple employer plans; pooled employer plans.
Sec. 102. Rules relating to election of safe harbor 401(k) status.
Sec. 103. Certain taxable non-tuition fellowship and stipend payments 
                            treated as compensation for IRA purposes.
Sec. 104. Repeal of maximum age for traditional IRA contributions.
Sec. 105. Qualified employer plans prohibited from making loans through 
                            credit cards and other similar 
                            arrangements.
Sec. 106. Portability of lifetime income investments.
Sec. 107. Treatment of custodial accounts on termination of section 
                            403(b) plans.
Sec. 108. Clarification of retirement income account rules relating to 
                            church-controlled organizations.
Sec. 109. Exemption from required minimum distribution rules for 
                            individuals with certain account balances.
Sec. 110. Clarification of treatment of certain retirement plan 
                            contributions picked up by governmental 
                            employers for new or existing employees.
Sec. 111. Elective deferrals by members of the Ready Reserve of a 
                            reserve component of the Armed Forces.
                 TITLE II--ADMINISTRATIVE IMPROVEMENTS

Sec. 201. Plan adopted by filing due date for year may be treated as in 
                            effect as of close of year.
Sec. 202. Modification of nondiscrimination rules to protect older, 
                            longer service participants.
Sec. 203. Fiduciary safe harbor for selection of lifetime income 
                            provider.
                  TITLE III--OTHER SAVINGS PROVISIONS

Sec. 301. Universal Savings Accounts.
Sec. 302. Expansion of section 529 plans.
Sec. 303. Penalty-free withdrawals from retirement plans for 
                            individuals in case of birth of child or 
                            adoption.
                      TITLE IV--BUDGETARY EFFECTS

Sec. 401. Budgetary effects.

          TITLE I--EXPANDING AND PRESERVING RETIREMENT SAVINGS

SEC. 101. MULTIPLE EMPLOYER PLANS; POOLED EMPLOYER PLANS.

    (a) Qualification Requirements.--
            (1) In general.--Section 413 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(e) Application of Qualification Requirements for Certain 
Multiple Employer Plans With Pooled Plan Providers.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        a defined contribution plan to which subsection (c) applies--
                    ``(A) is maintained by employers which have a 
                common interest other than having adopted the plan, or
                    ``(B) in the case of a plan not described in 
                subparagraph (A), has a pooled plan provider,
        then the plan shall not be treated as failing to meet the 
        requirements under this title applicable to a plan described in 
        section 401(a) or to a plan that consists of individual 
        retirement accounts described in section 408 (including by 
        reason of subsection (c) thereof), whichever is applicable, 
        merely because one or more employers of employees covered by 
        the plan fail to take such actions as are required of such 
        employers for the plan to meet such requirements.
            ``(2) Limitations.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any plan unless the terms of the plan provide that in 
                the case of any employer in the plan failing to take 
                the actions described in paragraph (1)--
                            ``(i) the assets of the plan attributable 
                        to employees of such employer (or beneficiaries 
                        of such employees) will be transferred to a 
                        plan maintained only by such employer (or its 
                        successor), to an eligible retirement plan as 
                        defined in section 402(c)(8)(B) for each 
                        individual whose account is transferred, or to 
                        any other arrangement that the Secretary 
                        determines is appropriate, unless the Secretary 
                        determines it is in the best interests of the 
                        employees of such employer (and the 
                        beneficiaries of such employees) to retain the 
                        assets in the plan, and
                            ``(ii) such employer (and not the plan with 
                        respect to which the failure occurred or any 
                        other employer in such plan) shall, except to 
                        the extent provided by the Secretary, be liable 
                        for any liabilities with respect to such plan 
                        attributable to employees of such employer (or 
                        beneficiaries of such employees).
                    ``(B) Failures by pooled plan providers.--If the 
                pooled plan provider of a plan described in paragraph 
                (1)(B) does not perform substantially all of the 
                administrative duties which are required of the 
                provider under paragraph (3)(A)(i) for any plan year, 
                the Secretary may provide that the determination as to 
                whether the plan meets the requirements under this 
                title applicable to a plan described in section 401(a) 
                or to a plan that consists of individual retirement 
                accounts described in section 408 (including by reason 
                of subsection (c) thereof), whichever is applicable, 
                shall be made in the same manner as would be made 
                without regard to paragraph (1).
            ``(3) Pooled plan provider.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `pooled plan provider' means, with respect to 
                any plan, a person who--
                            ``(i) is designated by the terms of the 
                        plan as a named fiduciary (within the meaning 
                        of section 402(a)(2) of the Employee Retirement 
                        Income Security Act of 1974), as the plan 
                        administrator, and as the person responsible to 
                        perform all administrative duties (including 
                        conducting proper testing with respect to the 
                        plan and the employees of each employer in the 
                        plan) which are reasonably necessary to ensure 
                        that--
                                    ``(I) the plan meets any 
                                requirement applicable under the 
                                Employee Retirement Income Security Act 
                                of 1974 or this title to a plan 
                                described in section 401(a) or to a 
                                plan that consists of individual 
                                retirement accounts described in 
                                section 408 (including by reason of 
                                subsection (c) thereof), whichever is 
                                applicable, and
                                    ``(II) each employer in the plan 
                                takes such actions as the Secretary or 
                                such person determines are necessary 
                                for the plan to meet the requirements 
                                described in subclause (I), including 
                                providing to such person any 
                                disclosures or other information which 
                                the Secretary may require or which such 
                                person otherwise determines are 
                                necessary to administer the plan or to 
                                allow the plan to meet such 
                                requirements,
                            ``(ii) registers as a pooled plan provider 
                        with the Secretary, and provides such other 
                        information to the Secretary as the Secretary 
                        may require, before beginning operations as a 
                        pooled plan provider,
                            ``(iii) acknowledges in writing that such 
                        person is a named fiduciary (within the meaning 
                        of section 402(a)(2) of the Employee Retirement 
                        Income Security Act of 1974), and the plan 
                        administrator, with respect to the plan, and
                            ``(iv) is responsible for ensuring that all 
                        persons who handle assets of, or who are 
                        fiduciaries of, the plan are bonded in 
                        accordance with section 412 of the Employee 
                        Retirement Income Security Act of 1974.
                    ``(B) Audits, examinations and investigations.--The 
                Secretary may perform audits, examinations, and 
                investigations of pooled plan providers as may be 
                necessary to enforce and carry out the purposes of this 
                subsection.
                    ``(C) Aggregation rules.--For purposes of this 
                paragraph, in determining whether a person meets the 
                requirements of this paragraph to be a pooled plan 
                provider with respect to any plan, all persons who 
                perform services for the plan and who are treated as a 
                single employer under subsection (b), (c), (m), or (o) 
                of section 414 shall be treated as one person.
                    ``(D) Treatment of employers as plan sponsors.--
                Except with respect to the administrative duties of the 
                pooled plan provider described in subparagraph (A)(i), 
                each employer in a plan which has a pooled plan 
                provider shall be treated as the plan sponsor with 
                respect to the portion of the plan attributable to 
                employees of such employer (or beneficiaries of such 
                employees).
            ``(4) Guidance.--The Secretary shall issue such guidance as 
        the Secretary determines appropriate to carry out this 
        subsection, including guidance--
                    ``(A) to identify the administrative duties and 
                other actions required to be performed by a pooled plan 
                provider under this subsection,
                    ``(B) which describes the procedures to be taken to 
                terminate a plan which fails to meet the requirements 
                to be a plan described in paragraph (1), including the 
                proper treatment of, and actions needed to be taken by, 
                any employer in the plan and the assets and liabilities 
                of the plan attributable to employees of such employer 
                (or beneficiaries of such employees), and
                    ``(C) identifying appropriate cases to which the 
                rules of paragraph (2)(A) will apply to employers in 
                the plan failing to take the actions described in 
                paragraph (1).
        The Secretary shall take into account under subparagraph (C) 
        whether the failure of an employer or pooled plan provider to 
        provide any disclosures or other information, or to take any 
        other action, necessary to administer a plan or to allow a plan 
        to meet requirements applicable to the plan under section 
        401(a) or 408, whichever is applicable, has continued over a 
        period of time that demonstrates a lack of commitment to 
        compliance.
            ``(5) Model plan.--The Secretary shall publish model plan 
        language which meets the requirements of this subsection and of 
        paragraphs (43) and (44) of section 3 of the Employee 
        Retirement Income Security Act of 1974 and which may be adopted 
        in order for a plan to be treated as a plan described in 
        paragraph (1)(B).''.
            (2) Conforming amendment.--Section 413(c)(2) of such Code 
        is amended by striking ``section 401(a)'' and inserting 
        ``sections 401(a) and 408(c)''.
            (3) Technical amendment.--Section 408(c) of such Code is 
        amended by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) There is a separate accounting for any interest of an 
        employee or member (or spouse of an employee or member) in a 
        Roth IRA.''.
    (b) No Common Interest Required for Pooled Employer Plans.--Section 
3(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1002(2)) is amended by adding at the end the following:
                    ``(C) A pooled employer plan shall be treated as--
                            ``(i) a single employee pension benefit 
                        plan or single pension plan; and
                            ``(ii) a plan to which section 210(a) 
                        applies.''.
    (c) Pooled Employer Plan and Provider Defined.--
            (1) In general.--Section 3 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1002) is amended by 
        adding at the end the following:
            ``(43) Pooled employer plan.--
                    ``(A) In general.--The term `pooled employer plan' 
                means a plan--
                            ``(i) which is an individual account plan 
                        established or maintained for the purpose of 
                        providing benefits to the employees of 2 or 
                        more employers;
                            ``(ii) which is a plan described in section 
                        401(a) of the Internal Revenue Code of 1986 
                        which includes a trust exempt from tax under 
                        section 501(a) of such Code or a plan that 
                        consists of individual retirement accounts 
                        described in section 408 of such Code 
                        (including by reason of subsection (c) 
                        thereof); and
                            ``(iii) the terms of which meet the 
                        requirements of subparagraph (B).
                Such term shall not include a plan maintained by 
                employers which have a common interest other than 
                having adopted the plan.
                    ``(B) Requirements for plan terms.--The 
                requirements of this subparagraph are met with respect 
                to any plan if the terms of the plan--
                            ``(i) designate a pooled plan provider and 
                        provide that the pooled plan provider is a 
                        named fiduciary of the plan;
                            ``(ii) designate one or more trustees 
                        meeting the requirements of section 408(a)(2) 
                        of the Internal Revenue Code of 1986 (other 
                        than an employer in the plan) to be responsible 
                        for collecting contributions to, and holding 
                        the assets of, the plan and require such 
                        trustees to implement written contribution 
                        collection procedures that are reasonable, 
                        diligent, and systematic;
                            ``(iii) provide that each employer in the 
                        plan retains fiduciary responsibility for--
                                    ``(I) the selection and monitoring 
                                in accordance with section 404(a) of 
                                the person designated as the pooled 
                                plan provider and any other person who, 
                                in addition to the pooled plan 
                                provider, is designated as a named 
                                fiduciary of the plan; and
                                    ``(II) to the extent not otherwise 
                                delegated to another fiduciary by the 
                                pooled plan provider and subject to the 
                                provisions of section 404(c), the 
                                investment and management of the 
                                portion of the plan's assets 
                                attributable to the employees of the 
                                employer (or beneficiaries of such 
                                employees);
                            ``(iv) provide that employers in the plan, 
                        and participants and beneficiaries, are not 
                        subject to unreasonable restrictions, fees, or 
                        penalties with regard to ceasing participation, 
                        receipt of distributions, or otherwise 
                        transferring assets of the plan in accordance 
                        with section 208 or paragraph (44)(C)(i)(II);
                            ``(v) require--
                                    ``(I) the pooled plan provider to 
                                provide to employers in the plan any 
                                disclosures or other information which 
                                the Secretary may require, including 
                                any disclosures or other information to 
                                facilitate the selection or any 
                                monitoring of the pooled plan provider 
                                by employers in the plan; and
                                    ``(II) each employer in the plan to 
                                take such actions as the Secretary or 
                                the pooled plan provider determines are 
                                necessary to administer the plan or for 
                                the plan to meet any requirement 
                                applicable under this Act or the 
                                Internal Revenue Code of 1986 to a plan 
                                described in section 401(a) of such 
                                Code or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of such Code 
                                (including by reason of subsection (c) 
                                thereof), whichever is applicable, 
                                including providing any disclosures or 
                                other information which the Secretary 
                                may require or which the pooled plan 
                                provider otherwise determines are 
                                necessary to administer the plan or to 
                                allow the plan to meet such 
                                requirements; and
                            ``(vi) provide that any disclosure or other 
                        information required to be provided under 
                        clause (v) may be provided in electronic form 
                        and will be designed to ensure only reasonable 
                        costs are imposed on pooled plan providers and 
                        employers in the plan.
                    ``(C) Exceptions.--The term `pooled employer plan' 
                does not include--
                            ``(i) a multiemployer plan; or
                            ``(ii) a plan established before the date 
                        of the enactment of the Family Savings Act of 
                        2018 unless the plan administrator elects that 
                        the plan will be treated as a pooled employer 
                        plan and the plan meets the requirements of 
                        this title applicable to a pooled employer plan 
                        established on or after such date.
                    ``(D) Treatment of employers as plan sponsors.--
                Except with respect to the administrative duties of the 
                pooled plan provider described in paragraph (44)(A)(i), 
                each employer in a pooled employer plan shall be 
                treated as the plan sponsor with respect to the portion 
                of the plan attributable to employees of such employer 
                (or beneficiaries of such employees).
            ``(44) Pooled plan provider.--
                    ``(A) In general.--The term `pooled plan provider' 
                means a person who--
                            ``(i) is designated by the terms of a 
                        pooled employer plan as a named fiduciary, as 
                        the plan administrator, and as the person 
                        responsible for the performance of all 
                        administrative duties (including conducting 
                        proper testing with respect to the plan and the 
                        employees of each employer in the plan) which 
                        are reasonably necessary to ensure that--
                                    ``(I) the plan meets any 
                                requirement applicable under this Act 
                                or the Internal Revenue Code of 1986 to 
                                a plan described in section 401(a) of 
                                such Code or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of such Code 
                                (including by reason of subsection (c) 
                                thereof), whichever is applicable; and
                                    ``(II) each employer in the plan 
                                takes such actions as the Secretary or 
                                pooled plan provider determines are 
                                necessary for the plan to meet the 
                                requirements described in subclause 
                                (I), including providing the 
                                disclosures and information described 
                                in paragraph (43)(B)(v)(II);
                            ``(ii) registers as a pooled plan provider 
                        with the Secretary, and provides to the 
                        Secretary such other information as the 
                        Secretary may require, before beginning 
                        operations as a pooled plan provider;
                            ``(iii) acknowledges in writing that such 
                        person is a named fiduciary, and the plan 
                        administrator, with respect to the pooled 
                        employer plan; and
                            ``(iv) is responsible for ensuring that all 
                        persons who handle assets of, or who are 
                        fiduciaries of, the pooled employer plan are 
                        bonded in accordance with section 412.
                    ``(B) Audits, examinations and investigations.--The 
                Secretary may perform audits, examinations, and 
                investigations of pooled plan providers as may be 
                necessary to enforce and carry out the purposes of this 
                paragraph and paragraph (43).
                    ``(C) Guidance.--The Secretary shall issue such 
                guidance as the Secretary determines appropriate to 
                carry out this paragraph and paragraph (43), including 
                guidance--
                            ``(i) to identify the administrative duties 
                        and other actions required to be performed by a 
                        pooled plan provider under either such 
                        paragraph; and
                            ``(ii) which requires in appropriate cases 
                        that if an employer in the plan fails to take 
                        the actions required under subparagraph 
                        (A)(i)(II)--
                                    ``(I) the assets of the plan 
                                attributable to employees of such 
                                employer (or beneficiaries of such 
                                employees) are transferred to a plan 
                                maintained only by such employer (or 
                                its successor), to an eligible 
                                retirement plan as defined in section 
                                402(c)(8)(B) of the Internal Revenue 
                                Code of 1986 for each individual whose 
                                account is transferred, or to any other 
                                arrangement that the Secretary 
                                determines is appropriate in such 
                                guidance; and
                                    ``(II) such employer (and not the 
                                plan with respect to which the failure 
                                occurred or any other employer in such 
                                plan) shall, except to the extent 
                                provided in such guidance, be liable 
                                for any liabilities with respect to 
                                such plan attributable to employees of 
                                such employer (or beneficiaries of such 
                                employees).
                The Secretary shall take into account under clause (ii) 
                whether the failure of an employer or pooled plan 
                provider to provide any disclosures or other 
                information, or to take any other action, necessary to 
                administer a plan or to allow a plan to meet 
                requirements described in subparagraph (A)(i)(II) has 
                continued over a period of time that demonstrates a 
                lack of commitment to compliance. The Secretary may 
                waive the requirements of subclause (ii)(I) in 
                appropriate circumstances if the Secretary determines 
                it is in the best interests of the employees of the 
                employer referred to in such clause (and the 
                beneficiaries of such employees) to retain the assets 
                in the plan with respect to which the employer's 
                failure occurred.
                    ``(D) Aggregation rules.--For purposes of this 
                paragraph, in determining whether a person meets the 
                requirements of this paragraph to be a pooled plan 
                provider with respect to any plan, all persons who 
                perform services for the plan and who are treated as a 
                single employer under subsection (b), (c), (m), or (o) 
                of section 414 of the Internal Revenue Code of 1986 
                shall be treated as one person.''.
            (2) Bonding requirements for pooled employer plans.--The 
        last sentence of section 412(a) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1112(a)) is amended by 
        inserting ``or in the case of a pooled employer plan (as 
        defined in section 3(43))'' after ``section 407(d)(1))''.
            (3) Conforming and technical amendments.--Section 3 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002) is amended--
                    (A) in paragraph (16)(B)--
                            (i) by striking ``or'' at the end of clause 
                        (ii); and
                            (ii) by striking the period at the end and 
                        inserting ``, or (iv) in the case of a pooled 
                        employer plan, the pooled plan provider.''; and
                    (B) by striking the second paragraph (41).
    (d) Pooled Employer and Multiple Employer Plan Reporting.--
            (1) Additional information.--Section 103 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1023) is 
        amended--
                    (A) in subsection (a)(1)(B), by striking 
                ``applicable subsections (d), (e), and (f)'' and 
                inserting ``applicable subsections (d), (e), (f), and 
                (g)''; and
                    (B) by amending subsection (g) to read as follows:
    ``(g) Additional Information With Respect to Pooled Employer and 
Multiple Employer Plans.--An annual report under this section for a 
plan year shall include--
            ``(1) with respect to any plan to which section 210(a) 
        applies (including a pooled employer plan), a list of employers 
        in the plan, a good faith estimate of the percentage of total 
        contributions made by such employers during the plan year, and 
        the aggregate account balances attributable to each employer in 
        the plan (determined as the sum of the account balances of the 
        employees of such employer (and the beneficiaries of such 
        employees)); and
            ``(2) with respect to a pooled employer plan, the 
        identifying information for the person designated under the 
        terms of the plan as the pooled plan provider.''.
            (2) Simplified annual reports.--Section 104(a) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1024(a)) is amended by striking paragraph (2)(A) and inserting 
        the following:
            ``(2)(A) With respect to annual reports required to be 
        filed with the Secretary under this part, the Secretary may by 
        regulation prescribe simplified annual reports for any pension 
        plan that--
                    ``(i) covers fewer than 100 participants; or
                    ``(ii) is a plan described in section 210(a) that 
                covers fewer than 1,000 participants, but only if no 
                single employer in the plan has 100 or more 
                participants covered by the plan.''.
    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2019.
            (2) Rule of construction.--Nothing in the amendments made 
        by subsection (a) shall be construed as limiting the authority 
        of the Secretary of the Treasury or the Secretary's delegate 
        (determined without regard to such amendments) to provide for 
        the proper treatment of a failure to meet any requirement 
        applicable under the Internal Revenue Code of 1986 with respect 
        to one employer (and its employees) in a multiple employer 
        plan.

SEC. 102. RULES RELATING TO ELECTION OF SAFE HARBOR 401(K) STATUS.

    (a) Limitation of Annual Safe Harbor Notice to Matching 
Contribution Plans.--
            (1) In general.--Section 401(k)(12)(A) of the Internal 
        Revenue Code of 1986 is amended by striking ``if such 
        arrangement'' and all that follows and inserting ``if such 
        arrangement--
                            ``(i) meets the contribution requirements 
                        of subparagraph (B) and the notice requirements 
                        of subparagraph (D), or
                            ``(ii) meets the contribution requirements 
                        of subparagraph (C).''.
            (2) Automatic contribution arrangements.--Section 
        401(k)(13)(B) of such Code is amended by striking ``means'' and 
        all that follows and inserting ``means a cash or deferred 
        arrangement--
                            ``(i) which is described in subparagraph 
                        (D)(i)(I) and meets the applicable requirements 
                        of subparagraphs (C) through (E), or
                            ``(ii) which is described in subparagraph 
                        (D)(i)(II) and meets the applicable 
                        requirements of subparagraphs (C) and (D).''.
    (b) Nonelective Contributions.--Section 401(k)(12) of such Code is 
amended by redesignating subparagraph (F) as subparagraph (G), and by 
inserting after subparagraph (E) the following new subparagraph:
                    ``(F) Timing of plan amendment for employer making 
                nonelective contributions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a plan may be amended after the 
                        beginning of a plan year to provide that the 
                        requirements of subparagraph (C) shall apply to 
                        the arrangement for the plan year, but only if 
                        the amendment is adopted--
                                    ``(I) at any time before the 30th 
                                day before the close of the plan year, 
                                or
                                    ``(II) at any time before the last 
                                day under paragraph (8)(A) for 
                                distributing excess contributions for 
                                the plan year.
                            ``(ii) Exception where plan provided for 
                        matching contributions.--Clause (i) shall not 
                        apply to any plan year if the plan provided at 
                        any time during the plan year that the 
                        requirements of subparagraph (B) or paragraph 
                        (13)(D)(i)(I) applied to the plan year.
                            ``(iii) 4-percent contribution 
                        requirement.--Clause (i)(II) shall not apply to 
                        an arrangement unless the amount of the 
                        contributions described in subparagraph (C) 
                        which the employer is required to make under 
                        the arrangement for the plan year with respect 
                        to any employee is an amount equal to at least 
                        4 percent of the employee's compensation.''.
    (c) Automatic Contribution Arrangements.--Section 401(k)(13) of 
such Code is amended by adding at the end the following:
                    ``(F) Timing of plan amendment for employer making 
                nonelective contributions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a plan may be amended after the 
                        beginning of a plan year to provide that the 
                        requirements of subparagraph (D)(i)(II) shall 
                        apply to the arrangement for the plan year, but 
                        only if the amendment is adopted--
                                    ``(I) at any time before the 30th 
                                day before the close of the plan year, 
                                or
                                    ``(II) at any time before the last 
                                day under paragraph (8)(A) for 
                                distributing excess contributions for 
                                the plan year.
                            ``(ii) Exception where plan provided for 
                        matching contributions.--Clause (i) shall not 
                        apply to any plan year if the plan provided at 
                        any time during the plan year that the 
                        requirements of subparagraph (D)(i)(I) or 
                        paragraph (12)(B) applied to the plan year.
                            ``(iii) 4-percent contribution 
                        requirement.--Clause (i)(II) shall not apply to 
                        an arrangement unless the amount of the 
                        contributions described in subparagraph 
                        (D)(i)(II) which the employer is required to 
                        make under the arrangement for the plan year 
                        with respect to any employee is an amount equal 
                        to at least 4 percent of the employee's 
                        compensation.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2018.

SEC. 103. CERTAIN TAXABLE NON-TUITION FELLOWSHIP AND STIPEND PAYMENTS 
              TREATED AS COMPENSATION FOR IRA PURPOSES.

    (a) In General.--Section 219(f)(1) of the Internal Revenue Code of 
1986 is amended by adding at the end the following: ``The term 
`compensation' shall include any amount included in gross income and 
paid to an individual to aid the individual in the pursuit of graduate 
or postdoctoral study.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2018.

SEC. 104. REPEAL OF MAXIMUM AGE FOR TRADITIONAL IRA CONTRIBUTIONS.

    (a) In General.--Section 219(d) of the Internal Revenue Code of 
1986 is amended by striking paragraph (1).
    (b) Conforming Amendment.--Section 408A(c) of the Internal Revenue 
Code of 1986 is amended by striking paragraph (4) and by redesignating 
paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), 
respectively.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made for taxable years beginning after December 
31, 2018.

SEC. 105. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING LOANS THROUGH 
              CREDIT CARDS AND OTHER SIMILAR ARRANGEMENTS.

    (a) In General.--Section 72(p)(2) of the Internal Revenue Code of 
1986 is amended by redesignating subparagraph (D) as subparagraph (E) 
and by inserting after subparagraph (C) the following new subparagraph:
                    ``(D) Prohibition of loans through credit cards and 
                other similar arrangements.--Notwithstanding 
                subparagraph (A), paragraph (1) shall apply to any loan 
                which is made through the use of any credit card or any 
                other similar arrangement.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to loans made after the date of the enactment of this Act.

SEC. 106. PORTABILITY OF LIFETIME INCOME INVESTMENTS.

    (a) In General.--Section 401(a) of the Internal Revenue Code of 
1986 is amended by inserting after paragraph (37) the following new 
paragraph:
            ``(38) Portability of lifetime income investments.--
                    ``(A) In general.--Except as may be otherwise 
                provided by regulations, a trust forming part of a 
                defined contribution plan shall not be treated as 
                failing to constitute a qualified trust under this 
                section solely by reason of allowing--
                            ``(i) qualified distributions of a lifetime 
                        income investment, or
                            ``(ii) distributions of a lifetime income 
                        investment in the form of a qualified plan 
                        distribution annuity contract,
                on or after the date that is 90 days prior to the date 
                on which such lifetime income investment is no longer 
                authorized to be held as an investment option under the 
                plan.
                    ``(B) Definitions.--For purposes of this 
                subsection--
                            ``(i) the term `qualified distribution' 
                        means a direct trustee-to-trustee transfer 
                        described in paragraph (31)(A) to an eligible 
                        retirement plan (as defined in section 
                        402(c)(8)(B)),
                            ``(ii) the term `lifetime income 
                        investment' means an investment option which is 
                        designed to provide an employee with election 
                        rights--
                                    ``(I) which are not uniformly 
                                available with respect to other 
                                investment options under the plan, and
                                    ``(II) which are to a lifetime 
                                income feature available through a 
                                contract or other arrangement offered 
                                under the plan (or under another 
                                eligible retirement plan (as so 
                                defined), if paid by means of a direct 
                                trustee-to-trustee transfer described 
                                in paragraph (31)(A) to such other 
                                eligible retirement plan),
                            ``(iii) the term `lifetime income feature' 
                        means--
                                    ``(I) a feature which guarantees a 
                                minimum 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, 
                                or
                                    ``(II) an annuity payable on behalf 
                                of the employee under which payments 
                                are made in substantially equal 
                                periodic payments (not less frequently 
                                than annually) over the life of the 
                                employee or the joint lives of the 
                                employee and the employee's designated 
                                beneficiary, and
                            ``(iv) the term `qualified plan 
                        distribution annuity contract' means an annuity 
                        contract purchased for a participant and 
                        distributed to the participant by a plan or 
                        contract described in subparagraph (B) of 
                        section 402(c)(8) (without regard to clauses 
                        (i) and (ii) thereof).''.
    (b) Cash or Deferred Arrangement.--
            (1) In general.--Section 401(k)(2)(B)(i) of such Code is 
        amended by striking ``or'' at the end of subclause (IV), by 
        striking ``and'' at the end of subclause (V) and inserting 
        ``or'', and by adding at the end the following new subclause:
                                    ``(VI) except as may be otherwise 
                                provided by regulations, with respect 
                                to amounts invested in a lifetime 
                                income investment (as defined in 
                                subsection (a)(38)(B)(ii)), the date 
                                that is 90 days prior to the date that 
                                such lifetime income investment may no 
                                longer be held as an investment option 
                                under the arrangement, and''.
            (2) Distribution requirement.--Section 401(k)(2)(B) of such 
        Code, as amended by paragraph (1), is amended by striking 
        ``and'' at the end of clause (i), by striking the semicolon at 
        the end of clause (ii) and inserting ``, and'', and by adding 
        at the end the following new clause:
                            ``(iii) except as may be otherwise provided 
                        by regulations, in the case of amounts 
                        described in clause (i)(VI), will be 
                        distributed only in the form of a qualified 
                        distribution (as defined in subsection 
                        (a)(38)(B)(i)) or a qualified plan distribution 
                        annuity contract (as defined in subsection 
                        (a)(38)(B)(iv)),''.
    (c) Section 403(b) Plans.--
            (1) Annuity contracts.--Section 403(b)(11) of such Code is 
        amended by striking ``or'' at the end of subparagraph (B), by 
        striking the period at the end of subparagraph (C) and 
        inserting ``, or'', and by inserting after subparagraph (C) the 
        following new subparagraph:
                    ``(D) except as may be otherwise provided by 
                regulations, with respect to amounts invested in a 
                lifetime income investment (as defined in section 
                401(a)(38)(B)(ii))--
                            ``(i) on or after the date that is 90 days 
                        prior to the date that such lifetime income 
                        investment may no longer be held as an 
                        investment option under the contract, and
                            ``(ii) in the form of a qualified 
                        distribution (as defined in section 
                        401(a)(38)(B)(i)) or a qualified plan 
                        distribution annuity contract (as defined in 
                        section 401(a)(38)(B)(iv)).''.
            (2) Custodial accounts.--Section 403(b)(7)(A) of such Code 
        is amended by striking ``if--'' and all that follows and 
        inserting ``if the amounts are to be invested in regulated 
        investment company stock to be held in that custodial account, 
        and under the custodial account--
                            ``(i) no such amounts may be paid or made 
                        available to any distributee (unless such 
                        amount is a distribution to which section 
                        72(t)(2)(G) applies) before--
                                    ``(I) the employee dies,
                                    ``(II) the employee attains age 
                                59\1/2\,
                                    ``(III) the employee has a 
                                severance from employment,
                                    ``(IV) the employee becomes 
                                disabled (within the meaning of section 
                                72(m)(7)),
                                    ``(V) in the case of contributions 
                                made pursuant to a salary reduction 
                                agreement (within the meaning of 
                                section 3121(a)(5)(D)), the employee 
                                encounters financial hardship, or
                                    ``(VI) except as may be otherwise 
                                provided by regulations, with respect 
                                to amounts invested in a lifetime 
                                income investment (as defined in 
                                section 401(a)(38)(B)(ii)), the date 
                                that is 90 days prior to the date that 
                                such lifetime income investment may no 
                                longer be held as an investment option 
                                under the contract, and
                            ``(ii) in the case of amounts described in 
                        clause (i)(VI), such amounts will be 
                        distributed only in the form of a qualified 
                        distribution (as defined in section 
                        401(a)(38)(B)(i)) or a qualified plan 
                        distribution annuity contract (as defined in 
                        section 401(a)(38)(B)(iv)).''.
    (d) Eligible Deferred Compensation Plans.--
            (1) In general.--Section 457(d)(1)(A) of such Code is 
        amended by striking ``or'' at the end of clause (ii), by 
        inserting ``or'' at the end of clause (iii), and by adding 
        after clause (iii) the following:
                            ``(iv) except as may be otherwise provided 
                        by regulations, in the case of a plan 
                        maintained by an employer described in 
                        subsection (e)(1)(A), with respect to amounts 
                        invested in a lifetime income investment (as 
                        defined in section 401(a)(38)(B)(ii)), the date 
                        that is 90 days prior to the date that such 
                        lifetime income investment may no longer be 
                        held as an investment option under the plan,''.
            (2) Distribution requirement.--Section 457(d)(1) of such 
        Code is amended by striking ``and'' at the end of subparagraph 
        (B), by striking the period at the end of subparagraph (C) and 
        inserting ``, and'', and by inserting after subparagraph (C) 
        the following new subparagraph:
                    ``(D) except as may be otherwise provided by 
                regulations, in the case of amounts described in 
                subparagraph (A)(iv), such amounts will be distributed 
                only in the form of a qualified distribution (as 
                defined in section 401(a)(38)(B)(i)) or a qualified 
                plan distribution annuity contract (as defined in 
                section 401(a)(38)(B)(iv)).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2018.

SEC. 107. TREATMENT OF CUSTODIAL ACCOUNTS ON TERMINATION OF SECTION 
              403(B) PLANS.

    (a) In General.--Section 403(b)(7) of the Internal Revenue Code of 
1986 is amended by adding at the end the following:
                    ``(D) Treatment of custodial account upon plan 
                termination.--
                            ``(i) In general.--If--
                                    ``(I) an employer terminates the 
                                plan under which amounts are 
                                contributed to a custodial account 
                                under subparagraph (A), and
                                    ``(II) the person holding the 
                                assets of the account has demonstrated 
                                to the satisfaction of the Secretary 
                                under section 408(a)(2) that the person 
                                is qualified to be a trustee of an 
                                individual retirement plan,
                        then, as of the date of the termination, the 
                        custodial account shall be deemed to be an 
                        individual retirement plan for purposes of this 
                        title.
                            ``(ii) Treatment as roth ira.--Any 
                        custodial account treated as an individual 
                        retirement plan under clause (i) shall be 
                        treated as a Roth IRA only if the custodial 
                        account was a designated Roth account.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan terminations occurring after December 31, 2018.

SEC. 108. CLARIFICATION OF RETIREMENT INCOME ACCOUNT RULES RELATING TO 
              CHURCH-CONTROLLED ORGANIZATIONS.

    (a) In General.--Section 403(b)(9)(B) of the Internal Revenue Code 
of 1986 is amended by inserting ``(including an employee described in 
section 414(e)(3)(B))'' after ``employee described in paragraph (1)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2008.

SEC. 109. EXEMPTION FROM REQUIRED MINIMUM DISTRIBUTION RULES FOR 
              INDIVIDUALS WITH CERTAIN ACCOUNT BALANCES.

    (a) In General.--Section 401(a)(9) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(H) Exception from required minimum distributions 
                during life of employee where assets do not exceed 
                $50,000.--
                            ``(i) In general.--If on the last day of 
                        any calendar year the aggregate value of an 
                        employee's entire interest under all applicable 
                        eligible retirement plans does not exceed 
                        $50,000, then the requirements of subparagraph 
                        (A) with respect to any distribution relating 
                        to such year shall not apply with respect to 
                        such employee.
                            ``(ii) Applicable eligible retirement 
                        plan.--For purposes of this subparagraph, the 
                        term `applicable eligible retirement plan' 
                        means an eligible retirement plan (as defined 
                        in section 402(c)(8)(B)) other than a defined 
                        benefit plan.
                            ``(iii) Limit on required minimum 
                        distribution.--The required minimum 
                        distribution determined under subparagraph (A) 
                        for an employee under all applicable eligible 
                        retirement plans shall not exceed an amount 
                        equal to the excess of--
                                    ``(I) the aggregate value of an 
                                employee's entire interest under such 
                                plans on the last day of the calendar 
                                year to which such distribution 
                                relates, over
                                    ``(II) the dollar amount in effect 
                                under clause (i) for such calendar 
                                year.
                        The Secretary in regulations or other guidance 
                        may provide how such amount shall be 
                        distributed in the case of an individual with 
                        more than one applicable eligible retirement 
                        plan.
                            ``(iv) Inflation adjustment.--In the case 
                        of any calendar year beginning after 2019, the 
                        $50,000 amount in clause (i) shall be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost of living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year, 
                                determined by substituting `calendar 
                                year 2018' for `calendar year 2016' in 
                                subparagraph (A)(ii) thereof.
                        Any increase determined under this clause shall 
                        be rounded to the next lowest multiple of 
                        $5,000.
                            ``(v) Plan administrator reliance on 
                        employee certification.--An applicable eligible 
                        retirement plan described in clause (iii), 
                        (iv), (v), or (vi) of section 402(c)(8)(B) 
                        shall not be treated as failing to meet the 
                        requirements of this paragraph in the case of 
                        any failure to make a required minimum 
                        distribution for a calendar year if--
                                    ``(I) the aggregate value of an 
                                employee's entire interest under all 
                                applicable eligible retirement plans of 
                                the employer on the last day of the 
                                calendar year to which such 
                                distribution relates does not exceed 
                                the dollar amount in effect for such 
                                year under clause (i), and
                                    ``(II) the employee certifies that 
                                the aggregate value of the employee's 
                                entire interest under all applicable 
                                eligible retirement plans on the last 
                                day of the calendar year to which such 
                                distribution relates did not exceed the 
                                dollar amount in effect for such year 
                                under clause (i).
                            ``(vi) Aggregation rule.--All employers 
                        treated as a single employer under subsection 
                        (b), (c), (m), or (o) of section 414 shall be 
                        treated as a single employer for purposes of 
                        clause (v).''.
    (b) Plan Administrator Reporting.--Section 6047 of such Code is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
    ``(h) Account Balance for Participants Who Have Attained Age 69.--
            ``(1) In general.--Not later than January 31 of each year, 
        the plan administrator (as defined in section 414(g)) of each 
        applicable eligible retirement plan (as defined in section 
        401(a)(9)(H)) shall make a return to the Secretary with respect 
        to each participant of such plan who has attained age 69 as of 
        the end of the preceding calendar year which states--
                    ``(A) the name and plan number of the plan,
                    ``(B) the name and address of the plan 
                administrator,
                    ``(C) the name, address, and taxpayer 
                identification number of the participant, and
                    ``(D) the account balance of such participant as of 
                the end of the preceding calendar year.
            ``(2) Statement furnished to participant.--Every person 
        required to make a return under paragraph (1) with respect to a 
        participant shall furnish a copy of such return to such 
        participant.
            ``(3) Application to individual retirement plans and 
        annuities.--In the case of an applicable eligible retirement 
        plan described in clause (i) or (ii) of section 402(c)(8)(B)--
                    ``(A) any reference in this subsection to the plan 
                administrator shall be treated as a reference to the 
                trustee or issuer, as the case may be, and
                    ``(B) any reference in this subsection to the 
                participant shall be treated as a reference to the 
                individual for whom such account or annuity is 
                maintained.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions required to be made in calendar years beginning 
more than 120 days after the date of the enactment of this Act.

SEC. 110. CLARIFICATION OF TREATMENT OF CERTAIN RETIREMENT PLAN 
              CONTRIBUTIONS PICKED UP BY GOVERNMENTAL EMPLOYERS FOR NEW 
              OR EXISTING EMPLOYEES.

    (a) In General.--Section 414(h)(2) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking ``For purposes of paragraph (1)'' and 
        inserting the following:
                    ``(A) In general.--For purposes of paragraph (1)'', 
                and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Treatment of elections between alternative 
                benefit formulas.--For purposes of subparagraph (A), a 
                contribution shall not fail to be treated as picked up 
                by an employing unit merely because the employee may 
                make an irrevocable election between the application of 
                two alternative benefit formulas involving the same or 
                different levels of employee contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after the date of the enactment of this Act.

SEC. 111. ELECTIVE DEFERRALS BY MEMBERS OF THE READY RESERVE OF A 
              RESERVE COMPONENT OF THE ARMED FORCES.

    (a) In General.--Section 402(g) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(9) Elective deferrals by members of ready reserve.--
                    ``(A) In general.--In the case of a qualified ready 
                reservist for any taxable year, the limitations of 
                subparagraphs (A) and (C) of paragraph (1) shall be 
                applied separately with respect to--
                            ``(i) elective deferrals of such qualified 
                        ready reservist with respect to compensation 
                        described in subparagraph (B), and
                            ``(ii) all other elective deferrals of such 
                        qualified ready reservist.
                    ``(B) Qualified ready reservist.--For purposes of 
                this paragraph, the term `qualified ready reservist' 
                means any individual for any taxable year if such 
                individual received compensation for service as a 
                member of the Ready Reserve of a reserve component (as 
                defined in section 101 of title 37, United States Code) 
                during such taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2018.

                 TITLE II--ADMINISTRATIVE IMPROVEMENTS

SEC. 201. PLAN ADOPTED BY FILING DUE DATE FOR YEAR MAY BE TREATED AS IN 
              EFFECT AS OF CLOSE OF YEAR.

    (a) In General.--Section 401(b) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking ``Retroactive Changes in Plan.--A stock 
        bonus'' and inserting ``Plan Amendments.--
            ``(1) Certain retroactive changes in plan.--A stock 
        bonus'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Adoption of plan.--If an employer adopts a stock 
        bonus, pension, profit-sharing, or annuity plan after the close 
        of a taxable year but before the time prescribed by law for 
        filing the employer's return of tax for the taxable year 
        (including extensions thereof), the employer may elect to treat 
        the plan as having been adopted as of the last day of the 
        taxable year.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plans adopted for taxable years beginning after December 31, 
2018.

SEC. 202. MODIFICATION OF NONDISCRIMINATION RULES TO PROTECT OLDER, 
              LONGER SERVICE PARTICIPANTS.

    (a) In General.--Section 401 of the Internal Revenue Code of 1986 
is amended--
            (1) by redesignating subsection (o) as subsection (p), and
            (2) by inserting after subsection (n) the following new 
        subsection:
    ``(o) Special Rules for Applying Nondiscrimination Rules to Protect 
Older, Longer Service and Grandfathered Participants.--
            ``(1) Testing of defined benefit plans with closed classes 
        of participants.--
                    ``(A) Benefits, rights, or features provided to 
                closed classes.--A defined benefit plan which provides 
                benefits, rights, or features to a closed class of 
                participants shall not fail to satisfy the requirements 
                of subsection (a)(4) by reason of the composition of 
                such closed class or the benefits, rights, or features 
                provided to such closed class, if--
                            ``(i) for the plan year as of which the 
                        class closes and the 2 succeeding plan years, 
                        such benefits, rights, and features satisfy the 
                        requirements of subsection (a)(4) (without 
                        regard to this subparagraph but taking into 
                        account the rules of subparagraph (I)),
                            ``(ii) after the date as of which the class 
                        was closed, any plan amendment which modifies 
                        the closed class or the benefits, rights, and 
                        features provided to such closed class does not 
                        discriminate significantly in favor of highly 
                        compensated employees, and
                            ``(iii) the class was closed before April 
                        5, 2017, or the plan is described in 
                        subparagraph (C).
                    ``(B) Aggregate testing with defined contribution 
                plans permitted on a benefits basis.--
                            ``(i) In general.--For purposes of 
                        determining compliance with subsection (a)(4) 
                        and section 410(b), a defined benefit plan 
                        described in clause (iii) may be aggregated and 
                        tested on a benefits basis with 1 or more 
                        defined contribution plans, including with the 
                        portion of 1 or more defined contribution plans 
                        which--
                                    ``(I) provides matching 
                                contributions (as defined in subsection 
                                (m)(4)(A)),
                                    ``(II) provides annuity contracts 
                                described in section 403(b) which are 
                                purchased with matching contributions 
                                or nonelective contributions, or
                                    ``(III) consists of an employee 
                                stock ownership plan (within the 
                                meaning of section 4975(e)(7)) or a tax 
                                credit employee stock ownership plan 
                                (within the meaning of section 409(a)).
                            ``(ii) Special rules for matching 
                        contributions.--For purposes of clause (i), if 
                        a defined benefit plan is aggregated with a 
                        portion of a defined contribution plan 
                        providing matching contributions--
                                    ``(I) such defined benefit plan 
                                must also be aggregated with any 
                                portion of such defined contribution 
                                plan which provides elective deferrals 
                                described in subparagraph (A) or (C) of 
                                section 402(g)(3), and
                                    ``(II) such matching contributions 
                                shall be treated in the same manner as 
                                nonelective contributions, including 
                                for purposes of applying the rules of 
                                subsection (l).
                            ``(iii) Plans described.--A defined benefit 
                        plan is described in this clause if--
                                    ``(I) the plan provides benefits to 
                                a closed class of participants,
                                    ``(II) for the plan year as of 
                                which the class closes and the 2 
                                succeeding plan years, the plan 
                                satisfies the requirements of section 
                                410(b) and subsection (a)(4) (without 
                                regard to this subparagraph but taking 
                                into account the rules of subparagraph 
                                (I)),
                                    ``(III) after the date as of which 
                                the class was closed, any plan 
                                amendment which modifies the closed 
                                class or the benefits provided to such 
                                closed class does not discriminate 
                                significantly in favor of highly 
                                compensated employees, and
                                    ``(IV) the class was closed before 
                                April 5, 2017, or the plan is described 
                                in subparagraph (C).
                    ``(C) Plans described.--A plan is described in this 
                subparagraph if, taking into account any predecessor 
                plan--
                            ``(i) such plan has been in effect for at 
                        least 5 years as of the date the class is 
                        closed, and
                            ``(ii) during the 5-year period preceding 
                        the date the class is closed, there has not 
                        been a substantial increase in the coverage or 
                        value of the benefits, rights, or features 
                        described in subparagraph (A) or in the 
                        coverage or benefits under the plan described 
                        in subparagraph (B)(iii) (whichever is 
                        applicable).
                    ``(D) Determination of substantial increase for 
                benefits, rights, and features.--In applying 
                subparagraph (C)(ii) for purposes of subparagraph 
                (A)(iii), a plan shall be treated as having had a 
                substantial increase in coverage or value of the 
                benefits, rights, or features described in subparagraph 
                (A) during the applicable 5-year period only if, during 
                such period--
                            ``(i) the number of participants covered by 
                        such benefits, rights, or features on the date 
                        such period ends is more than 50 percent 
                        greater than the number of such participants on 
                        the first day of the plan year in which such 
                        period began, or
                            ``(ii) such benefits, rights, and features 
                        have been modified by 1 or more plan amendments 
                        in such a way that, as of the date the class is 
                        closed, the value of such benefits, rights, and 
                        features to the closed class as a whole is 
                        substantially greater than the value as of the 
                        first day of such 5-year period, solely as a 
                        result of such amendments.
                    ``(E) Determination of substantial increase for 
                aggregate testing on benefits basis.--In applying 
                subparagraph (C)(ii) for purposes of subparagraph 
                (B)(iii)(IV), a plan shall be treated as having had a 
                substantial increase in coverage or benefits during the 
                applicable 5-year period only if, during such period--
                            ``(i) the number of participants 
                        benefitting under the plan on the date such 
                        period ends is more than 50 percent greater 
                        than the number of such participants on the 
                        first day of the plan year in which such period 
                        began, or
                            ``(ii) the average benefit provided to such 
                        participants on the date such period ends is 
                        more than 50 percent greater than the average 
                        benefit provided on the first day of the plan 
                        year in which such period began.
                    ``(F) Certain employees disregarded.--For purposes 
                of subparagraphs (D) and (E), any increase in coverage 
                or value or in coverage or benefits, whichever is 
                applicable, which is attributable to such coverage and 
                value or coverage and benefits provided to employees--
                            ``(i) who became participants as a result 
                        of a merger, acquisition, or similar event 
                        which occurred during the 7-year period 
                        preceding the date the class is closed, or
                            ``(ii) who became participants by reason of 
                        a merger of the plan with another plan which 
                        had been in effect for at least 5 years as of 
                        the date of the merger,
                shall be disregarded, except that clause (ii) shall 
                apply for purposes of subparagraph (D) only if, under 
                the merger, the benefits, rights, or features under 1 
                plan are conformed to the benefits, rights, or features 
                of the other plan prospectively.
                    ``(G) Rules relating to average benefit.--For 
                purposes of subparagraph (E)--
                            ``(i) the average benefit provided to 
                        participants under the plan will be treated as 
                        having remained the same between the 2 dates 
                        described in subparagraph (E)(ii) if the 
                        benefit formula applicable to such participants 
                        has not changed between such dates, and
                            ``(ii) if the benefit formula applicable to 
                        1 or more participants under the plan has 
                        changed between such 2 dates, then the average 
                        benefit under the plan shall be considered to 
                        have increased by more than 50 percent only 
                        if--
                                    ``(I) the total amount determined 
                                under section 430(b)(1)(A)(i) for all 
                                participants benefitting under the plan 
                                for the plan year in which the 5-year 
                                period described in subparagraph (E) 
                                ends, exceeds
                                    ``(II) the total amount determined 
                                under section 430(b)(1)(A)(i) for all 
                                such participants for such plan year, 
                                by using the benefit formula in effect 
                                for each such participant for the first 
                                plan year in such 5-year period, by 
                                more than 50 percent.
                        In the case of a CSEC plan (as defined in 
                        section 414(y)), the normal cost of the plan 
                        (as determined under section 433(j)(1)(B)) 
                        shall be used in lieu of the amount determined 
                        under section 430(b)(1)(A)(i).
                    ``(H) Treatment as single plan.--For purposes of 
                subparagraphs (E) and (G), a plan described in section 
                413(c) shall be treated as a single plan rather than as 
                separate plans maintained by each employer in the plan.
                    ``(I) Special rules.--For purposes of subparagraphs 
                (A)(i) and (B)(iii)(II), the following rules shall 
                apply:
                            ``(i) In applying section 410(b)(6)(C), the 
                        closing of the class of participants shall not 
                        be treated as a significant change in coverage 
                        under section 410(b)(6)(C)(i)(II).
                            ``(ii) 2 or more plans shall not fail to be 
                        eligible to be aggregated and treated as a 
                        single plan solely by reason of having 
                        different plan years.
                            ``(iii) Changes in the employee population 
                        shall be disregarded to the extent attributable 
                        to individuals who become employees or cease to 
                        be employees, after the date the class is 
                        closed, by reason of a merger, acquisition, 
                        divestiture, or similar event.
                            ``(iv) Aggregation and all other testing 
                        methodologies otherwise applicable under 
                        subsection (a)(4) and section 410(b) may be 
                        taken into account.
                The rule of clause (ii) shall also apply for purposes 
                of determining whether plans to which subparagraph 
                (B)(i) applies may be aggregated and treated as 1 plan 
                for purposes of determining whether such plans meet the 
                requirements of subsection (a)(4) and section 410(b).
                    ``(J) Spun-off plans.--For purposes of this 
                paragraph, if a portion of a defined benefit plan 
                described in subparagraph (A) or (B)(iii) is spun off 
                to another employer and the spun-off plan continues to 
                satisfy the requirements of--
                            ``(i) subparagraph (A)(i) or (B)(iii)(II), 
                        whichever is applicable, if the original plan 
                        was still within the 3-year period described in 
                        such subparagraph at the time of the spin off, 
                        and
                            ``(ii) subparagraph (A)(ii) or 
                        (B)(iii)(III), whichever is applicable,
                the treatment under subparagraph (A) or (B) of the 
                spun-off plan shall continue with respect to such other 
                employer.
            ``(2) Testing of defined contribution plans.--
                    ``(A) Testing on a benefits basis.--A defined 
                contribution plan shall be permitted to be tested on a 
                benefits basis if--
                            ``(i) such defined contribution plan 
                        provides make-whole contributions to a closed 
                        class of participants whose accruals under a 
                        defined benefit plan have been reduced or 
                        eliminated,
                            ``(ii) for the plan year of the defined 
                        contribution plan as of which the class 
                        eligible to receive such make-whole 
                        contributions closes and the 2 succeeding plan 
                        years, such closed class of participants 
                        satisfies the requirements of section 
                        410(b)(2)(A)(i) (determined by applying the 
                        rules of paragraph (1)(I)),
                            ``(iii) after the date as of which the 
                        class was closed, any plan amendment to the 
                        defined contribution plan which modifies the 
                        closed class or the allocations, benefits, 
                        rights, and features provided to such closed 
                        class does not discriminate significantly in 
                        favor of highly compensated employees, and
                            ``(iv) the class was closed before April 5, 
                        2017, or the defined benefit plan under clause 
                        (i) is described in paragraph (1)(C) (as 
                        applied for purposes of paragraph 
                        (1)(B)(iii)(IV)).
                    ``(B) Aggregation with plans including matching 
                contributions.--
                            ``(i) In general.--With respect to 1 or 
                        more defined contribution plans described in 
                        subparagraph (A), for purposes of determining 
                        compliance with subsection (a)(4) and section 
                        410(b), the portion of such plans which 
                        provides make-whole contributions or other 
                        nonelective contributions may be aggregated and 
                        tested on a benefits basis with the portion of 
                        1 or more other defined contribution plans 
                        which--
                                    ``(I) provides matching 
                                contributions (as defined in subsection 
                                (m)(4)(A)),
                                    ``(II) provides annuity contracts 
                                described in section 403(b) which are 
                                purchased with matching contributions 
                                or nonelective contributions, or
                                    ``(III) consists of an employee 
                                stock ownership plan (within the 
                                meaning of section 4975(e)(7)) or a tax 
                                credit employee stock ownership plan 
                                (within the meaning of section 409(a)).
                            ``(ii) Special rules for matching 
                        contributions.--Rules similar to the rules of 
                        paragraph (1)(B)(ii) shall apply for purposes 
                        of clause (i).
                    ``(C) Special rules for testing defined 
                contribution plan features providing matching 
                contributions to certain older, longer service 
                participants.--In the case of a defined contribution 
                plan which provides benefits, rights, or features to a 
                closed class of participants whose accruals under a 
                defined benefit plan have been reduced or eliminated, 
                the plan shall not fail to satisfy the requirements of 
                subsection (a)(4) solely by reason of the composition 
                of the closed class or the benefits, rights, or 
                features provided to such closed class if the defined 
                contribution plan and defined benefit plan otherwise 
                meet the requirements of subparagraph (A) but for the 
                fact that the make-whole contributions under the 
                defined contribution plan are made in whole or in part 
                through matching contributions.
                    ``(D) Spun-off plans.--For purposes of this 
                paragraph, if a portion of a defined contribution plan 
                described in subparagraph (A) or (C) is spun off to 
                another employer, the treatment under subparagraph (A) 
                or (C) of the spun-off plan shall continue with respect 
                to the other employer if such plan continues to comply 
                with the requirements of clauses (ii) (if the original 
                plan was still within the 3-year period described in 
                such clause at the time of the spin off) and (iii) of 
                subparagraph (A), as determined for purposes of 
                subparagraph (A) or (C), whichever is applicable.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Make-whole contributions.--Except as 
                otherwise provided in paragraph (2)(C), the term `make-
                whole contributions' means nonelective allocations for 
                each employee in the class which are reasonably 
                calculated, in a consistent manner, to replace some or 
                all of the retirement benefits which the employee would 
                have received under the defined benefit plan and any 
                other plan or qualified cash or deferred arrangement 
                under subsection (k)(2) if no change had been made to 
                such defined benefit plan and such other plan or 
                arrangement. For purposes of the preceding sentence, 
                consistency shall not be required with respect to 
                employees who were subject to different benefit 
                formulas under the defined benefit plan.
                    ``(B) References to closed class of participants.--
                References to a closed class of participants and 
                similar references to a closed class shall include 
                arrangements under which 1 or more classes of 
                participants are closed, except that 1 or more classes 
                of participants closed on different dates shall not be 
                aggregated for purposes of determining the date any 
                such class was closed.
                    ``(C) Highly compensated employee.--The term 
                `highly compensated employee' has the meaning given 
                such term in section 414(q).''.
    (b) Participation Requirements.--Section 401(a)(26) of such Code is 
amended by adding at the end the following new subparagraph:
                    ``(I) Protected participants.--
                            ``(i) In general.--A plan shall be deemed 
                        to satisfy the requirements of subparagraph (A) 
                        if--
                                    ``(I) the plan is amended--
                                            ``(aa) to cease all benefit 
                                        accruals, or
                                            ``(bb) to provide future 
                                        benefit accruals only to a 
                                        closed class of participants,
                                    ``(II) the plan satisfies 
                                subparagraph (A) (without regard to 
                                this subparagraph) as of the effective 
                                date of the amendment, and
                                    ``(III) the amendment was adopted 
                                before April 5, 2017, or the plan is 
                                described in clause (ii).
                            ``(ii) Plans described.--A plan is 
                        described in this clause if the plan would be 
                        described in subsection (o)(1)(C), as applied 
                        for purposes of subsection (o)(1)(B)(iii)(IV) 
                        and by treating the effective date of the 
                        amendment as the date the class was closed for 
                        purposes of subsection (o)(1)(C).
                            ``(iii) Special rules.--For purposes of 
                        clause (i)(II), in applying section 
                        410(b)(6)(C), the amendments described in 
                        clause (i) shall not be treated as a 
                        significant change in coverage under section 
                        410(b)(6)(C)(i)(II).
                            ``(iv) Spun-off plans.--For purposes of 
                        this subparagraph, if a portion of a plan 
                        described in clause (i) is spun off to another 
                        employer, the treatment under clause (i) of the 
                        spun-off plan shall continue with respect to 
                        the other employer.''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date 
        of the enactment of this Act, without regard to whether any 
        plan modifications referred to in such amendments are adopted 
        or effective before, on, or after such date of enactment.
            (2) Special rules.--
                    (A) Election of earlier application.--At the 
                election of the plan sponsor, the amendments made by 
                this section shall apply to plan years beginning after 
                December 31, 2013.
                    (B) Closed classes of participants.--For purposes 
                of paragraphs (1)(A)(iii), (1)(B)(iii)(IV), and 
                (2)(A)(iv) of section 401(o) of the Internal Revenue 
                Code of 1986 (as added by this section), a closed class 
                of participants shall be treated as being closed before 
                April 5, 2017, if the plan sponsor's intention to 
                create such closed class is reflected in formal written 
                documents and communicated to participants before such 
                date.
                    (C) Certain post-enactment plan amendments.--A plan 
                shall not be treated as failing to be eligible for the 
                application of section 401(o)(1)(A), 401(o)(1)(B)(iii), 
                or 401(a)(26) of such Code (as added by this section) 
                to such plan solely because in the case of--
                            (i) such section 401(o)(1)(A), the plan was 
                        amended before the date of the enactment of 
                        this Act to eliminate 1 or more benefits, 
                        rights, or features, and is further amended 
                        after such date of enactment to provide such 
                        previously eliminated benefits, rights, or 
                        features to a closed class of participants, or
                            (ii) such section 401(o)(1)(B)(iii) or 
                        section 401(a)(26), the plan was amended before 
                        the date of the enactment of this Act to cease 
                        all benefit accruals, and is further amended 
                        after such date of enactment to provide benefit 
                        accruals to a closed class of participants. Any 
                        such section shall only apply if the plan 
                        otherwise meets the requirements of such 
                        section and in applying such section, the date 
                        the class of participants is closed shall be 
                        the effective date of the later amendment.

SEC. 203. FIDUCIARY SAFE HARBOR FOR SELECTION OF LIFETIME INCOME 
              PROVIDER.

    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 for 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 such contracts;
                    ``(B) with respect to each insurer identified 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 such consideration, 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 relative cost of the selected 
                        guaranteed retirement income contract as 
                        described in subparagraph (B)(ii) is 
                        reasonable.
            ``(2) Financial capability of the insurer.--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 7 plan years--
                                    ``(I) operates under a certificate 
                                of authority from the insurance 
                                commissioner of its domiciliary State 
                                which 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 which 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;
                            ``(iii) the insurer undergoes, at least 
                        every 5 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 by such commissioner); 
                        and
                            ``(iv) the insurer will notify the 
                        fiduciary of any change in circumstances 
                        occurring after the provision of the 
                        representations in clauses (i), (ii), and (iii) 
                        which would preclude the insurer from making 
                        such representations at the time of issuance of 
                        the guaranteed retirement income contract; and
                    ``(B) after receiving such representations and as 
                of the time of selection, the fiduciary has not 
                received any notice described in subparagraph (A)(iv) 
                and is in possession of no other information which 
                would cause the fiduciary to question the 
                representations provided.
            ``(3) No requirement to select lowest cost.--Nothing in 
        this subsection shall be construed to require a fiduciary to 
        select the lowest cost contract. A fiduciary may consider the 
        value of a contract, including features and benefits of the 
        contract and attributes of the insurer (including, without 
        limitation, the insurer's financial strength) in conjunction 
        with the cost of the contract.
            ``(4) Time of selection.--
                    ``(A) In general.--For purposes of this subsection, 
                the time of selection is--
                            ``(i) the time that the insurer and the 
                        contract are selected for distribution of 
                        benefits to a specific participant or 
                        beneficiary; or
                            ``(ii) if the fiduciary periodically 
                        reviews the continuing appropriateness of the 
                        conclusion described in paragraph (1)(C) with 
                        respect to a selected insurer, taking into 
                        account the considerations described in such 
                        paragraph, the time that the insurer and the 
                        contract are selected to provide benefits at 
                        future dates to participants or beneficiaries 
                        under the plan.
                Nothing in the preceding sentence shall be construed to 
                require the fiduciary to review the appropriateness of 
                a selection after the purchase of a contract for a 
                participant or beneficiary.
                    ``(B) Periodic review.--A fiduciary will be deemed 
                to have conducted the periodic review described in 
                subparagraph (A)(ii) if the fiduciary obtains the 
                written representations described in clauses (i), (ii), 
                and (iii) of paragraph (2)(A) from the insurer on an 
                annual basis, unless the fiduciary receives any notice 
                described in paragraph (2)(A)(iv) or otherwise becomes 
                aware of facts that would cause the fiduciary to 
                question such representations.
            ``(5) Limited liability.--A fiduciary which satisfies the 
        requirements of this subsection 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 subsection--
                    ``(A) Insurer.--The term `insurer' means an 
                insurance company, insurance service, or insurance 
                organization, including affiliates of such companies.
                    ``(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) which provides guaranteed 
                benefits annually (or more frequently) for at least the 
                remainder of the life of the participant or the joint 
                lives of the participant and the participant's 
                designated beneficiary as part of an individual account 
                plan.''.

                  TITLE III--OTHER SAVINGS PROVISIONS

SEC. 301. UNIVERSAL SAVINGS ACCOUNTS.

    (a) In General.--Subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

                 ``PART IX--UNIVERSAL SAVINGS ACCOUNTS

``Sec. 530U. Universal Savings Accounts.

``SEC. 530U. UNIVERSAL SAVINGS ACCOUNTS.

    ``(a) General Rule.--A Universal Savings Account shall be exempt 
from taxation under this subtitle. Notwithstanding the preceding 
sentence, such account shall be subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated business income of 
charitable organizations).
    ``(b) Universal Savings Account.--For purposes of this section, the 
term `Universal Savings Account' means a trust created or organized in 
the United States by an individual for the exclusive benefit of such 
individual and which is designated (in such manner as the Secretary may 
prescribe) at the time of the establishment of the trust as a Universal 
Savings Account, but only if the written governing instrument creating 
the trust meets the following requirements:
            ``(1) Except in the case of a qualified rollover 
        contribution described in subsection (d)--
                    ``(A) no contribution will be accepted unless it is 
                in cash, and
                    ``(B) contributions will not be accepted for the 
                taxable year in excess of the contribution limit 
                specified in subsection (c)(2).
            ``(2) No distribution will be made unless it is--
                    ``(A) cash, or
                    ``(B) property that--
                            ``(i) has a readily ascertainable fair 
                        market value, and
                            ``(ii) is identified by the Secretary in 
                        regulations or other guidance as property to 
                        which this subparagraph applies.
            ``(3) The trustee is a bank (as defined in section 408(n)) 
        or another person who demonstrates to the satisfaction of the 
        Secretary that the manner in which that person will administer 
        the trust will be consistent with the requirements of this 
        section.
            ``(4) No part of the trust assets will be invested in life 
        insurance contracts or collectibles (as defined in section 
        408(m)).
            ``(5) The interest of an individual in the balance of his 
        account is nonforfeitable.
            ``(6) The assets of the trust shall not be commingled with 
        other property except in a common trust fund or common 
        investment fund.
    ``(c) Treatment of Distributions and Contributions.--
            ``(1) Distributions.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any distribution from a Universal 
                Savings Account shall not be includible in gross 
                income.
                    ``(B) Net income attributable to excess 
                contributions.--Any distribution of net income 
                described in section 4973(i)(2) shall be includible in 
                the gross income of the account holder in the taxable 
                year in which the contribution to which such net income 
                relates was made.
            ``(2) Contribution limit.--
                    ``(A) In general.--The aggregate amount of 
                contributions (other than qualified rollover 
                contributions described in subsection (d)) for any 
                taxable year to all Universal Savings Accounts 
                maintained for the benefit of an individual shall not 
                exceed the lesser of--
                            ``(i) $2,500, or
                            ``(ii) an amount equal to the compensation 
                        (within the meaning of section 219) includible 
                        in such individual's gross income for such 
                        taxable year.
                    ``(B) No contributions for dependents.--In the case 
                of an individual who is a dependent of another taxpayer 
                for a taxable year beginning in the calendar year in 
                which such individual's taxable year begins, the dollar 
                amount under subparagraph (A) for such individual's 
                taxable year shall be zero.
                    ``(C) Special rule in case of joint return.--
                            ``(i) In general.--In the case of an 
                        individual to whom this clause applies, the 
                        amount determined under subparagraph (A)(ii) 
                        with respect to such individual for the taxable 
                        year shall not be less than an amount equal to 
                        the sum of--
                                    ``(I) the compensation of such 
                                individual includible in gross income 
                                for the taxable year, plus
                                    ``(II) the compensation of such 
                                individual's spouse includible in gross 
                                income for the taxable year reduced 
                                (but not below zero) by the amount 
                                contributed for the taxable year to all 
                                Universal Savings Accounts maintained 
                                for the benefit of such spouse.
                            ``(ii) Individual to whom clause (i) 
                        applies.--Clause (i) shall apply to any 
                        individual--
                                    ``(I) who files a joint return for 
                                the taxable year, and
                                    ``(II) whose compensation 
                                includible in gross income for the 
                                taxable year is less than the 
                                compensation of such individual's 
                                spouse includible in gross income for 
                                the taxable year.
                    ``(D) Cost-of-living adjustment.--In the case of 
                any taxable year beginning in a calendar year after 
                2019, the $2,500 amount under subparagraph (A)(i) shall 
                be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year, determined by substituting 
                        `calendar year 2018' for `calendar year 2016' 
                        in subparagraph (A)(ii) thereof.
                If any amount after adjustment under the preceding 
                sentence is not a multiple of $100, such amount shall 
                be rounded to the next lower multiple of $100.
    ``(d) Qualified Rollover Contribution.--For purposes of this 
section, the term `qualified rollover contribution' means a 
contribution to a Universal Savings Account from another such account 
of the same individual, but only if such amount is contributed not 
later than the 60th day after the distribution from such other account.
    ``(e) Treatment of Account Upon Death.--Upon death of any account 
holder of a Universal Savings Account--
            ``(1) Spouse.--In the case of the account holder's 
        surviving spouse acquiring such account holder's interest in 
        such account by reason of the death of the account holder, such 
        account shall be treated as if the spouse were the account 
        holder.
            ``(2) Other cases.--In any other case--
                    ``(A) all amounts in such account shall be treated 
                as distributed on the date of such individual's death, 
                and
                    ``(B) such account shall cease to be treated as a 
                Universal Savings Account.
    ``(f) Other Special Rules.--
            ``(1) Community property laws.--This section shall be 
        applied without regard to any community property laws.
            ``(2) Loss of taxation exemption of account where 
        individual engages in prohibited transaction; effect of 
        pledging account as security.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to any 
        Universal Savings Account.
    ``(g) Reports.--The trustee of a Universal Savings Account shall 
make such reports regarding such account to the Secretary and to the 
account holder with respect to contributions, distributions, and such 
other matters as the Secretary may require. Such reports shall be--
            ``(1) filed at such time and in such manner as the 
        Secretary provides, and
            ``(2) furnished to account holders--
                    ``(A) not later than January 31 of the calendar 
                year following the calendar year to which such reports 
                relate, and
                    ``(B) in such manner as the Secretary provides.''.
    (b) Tax on Excess Contributions.--
            (1) In general.--Section 4973(a) of such Code is amended by 
        striking ``or'' at the end of paragraph (5), by inserting 
        ``or'' at the end of paragraph (6), and by inserting after 
        paragraph (6) the following new paragraph:
            ``(7) a Universal Savings Account (as defined in section 
        530U),''.
            (2) Excess contribution.--Section 4973 of such Code is 
        amended by adding at the end the following new subsection:
    ``(i) Excess Contributions to Universal Savings Accounts.--For 
purposes of this section--
            ``(1) In general.--In the case of Universal Savings 
        Accounts (within the meaning of section 530U), the term `excess 
        contributions' means the sum of--
                    ``(A) the amount (if any) by which the amount 
                contributed for the taxable year to such accounts 
                (other than qualified rollover contributions (as 
                defined in section 530U(d))) exceeds the contribution 
                limit under section 530U(c)(2) for such taxable year, 
                and
                    ``(B) the amount determined under this subsection 
                for the preceding taxable year, reduced by the sum of--
                            ``(i) the distributions out of the account 
                        for the taxable year, and
                            ``(ii) the amount (if any) by which the 
                        maximum amount allowable as a contribution 
                        under section 530U(c)(2) for the taxable year 
                        exceeds the amount contributed to the accounts 
                        for the taxable year.
            ``(2) Special rule.--A contribution shall not be taken into 
        account under paragraph (1) if such contribution (together with 
        the amount of net income attributable to such contribution) is 
        distributed to the account holder on or before the due date of 
        the account holder's return of tax for such taxable year.''.
    (c) Tax on Prohibited Transactions.--Section 4975(e)(1) of such 
Code is amended by striking ``or'' at the end of subparagraph (F), by 
striking the period at the end of subparagraph (G) and inserting ``, 
or'', and by adding at the end the following new subparagraph:
                    ``(H) a Universal Savings Account (as defined in 
                section 530U).''.
    (d) Failure to Provide Reports on Universal Savings Accounts.--
Section 6693(a)(2) of such Code is amended by striking ``and'' at the 
end of subparagraph (E), by striking the period at the end of 
subparagraph (F) and inserting ``, and'', and by inserting after 
subparagraph (F) the following new subparagraph:
                    ``(G) section 530U(g) (relating to Universal 
                Savings Accounts).''.
    (e) Conforming Amendment.--The table of parts for subchapter F of 
chapter 1 of such Code is amended by adding at the end the following 
new item:

                ``Part IX. Universal Savings Accounts''.

    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2018.

SEC. 302. EXPANSION OF SECTION 529 PLANS.

    (a) Distributions for Certain Expenses Associated With Registered 
Apprenticeship Programs.--Section 529(c) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new paragraph:
            ``(8) Treatment of certain expenses associated with 
        registered apprenticeship programs.--Any reference in this 
        subsection to the term `qualified higher education expense' 
        shall include a reference to expenses for fees, books, 
        supplies, and equipment required for the participation of a 
        designated beneficiary in an apprenticeship program registered 
        and certified with the Secretary of Labor under section 1 of 
        the National Apprenticeship Act (29 U.S.C. 50).''.
    (b) Distributions for Certain Homeschooling Expenses.--Section 
529(c)(7) of such Code is amended by striking ``include a reference 
to'' and all that follows and inserting ``include a reference to--
                    ``(A) expenses for tuition in connection with 
                enrollment or attendance of a designated beneficiary at 
                an elementary or secondary public, private, or 
                religious school, and
                    ``(B) expenses, with respect to a designated 
                beneficiary, for--
                            ``(i) curriculum and curricular materials,
                            ``(ii) books or other instructional 
                        materials,
                            ``(iii) online educational materials,
                            ``(iv) tuition for tutoring or educational 
                        classes outside of the home (but only if the 
                        tutor or class instructor is not related 
                        (within the meaning of section 152(d)(2)) to 
                        the student),
                            ``(v) dual enrollment in an institution of 
                        higher education, and
                            ``(vi) educational therapies for students 
                        with disabilities,
                in connection with a homeschool (whether treated as a 
                homeschool or a private school for purposes of 
                applicable State law).''.
    (c) Distributions for Qualified Education Loan Repayments.--
            (1) In general.--Section 529(c) of such Code, as amended by 
        subsection (a), is amended by adding at the end the following 
        new paragraph:
            ``(9) Treatment of qualified education loan repayments.--
                    ``(A) In general.--Any reference in this subsection 
                to the term `qualified higher education expense' shall 
                include a reference to amounts paid as principal or 
                interest on any qualified education loan (as defined in 
                section 221(d)) of the designated beneficiary or a 
                sibling of the designated beneficiary.
                    ``(B) Limitation.--The amount of distributions 
                treated as a qualified higher education expense under 
                this paragraph with respect to the loans of any 
                individual shall not exceed $10,000 (reduced by the 
                amount of distributions so treated for all prior 
                taxable years).
                    ``(C) Special rules for siblings of the designated 
                beneficiary.--
                            ``(i) Separate accounting.--For purposes of 
                        subparagraph (B) and subsection (d), amounts 
                        treated as a qualified higher education expense 
                        with respect to the loans of a sibling of the 
                        designated beneficiary shall be taken into 
                        account with respect to such sibling and not 
                        with respect to such designated beneficiary.
                            ``(ii) Sibling defined.--For purposes of 
                        this paragraph, the term `sibling' means an 
                        individual who bears a relationship to the 
                        designated beneficiary which is described in 
                        section 152(d)(2)(B).''.
            (2) Coordination with deduction for student loan 
        interest.--Section 221(e)(1) of such Code is amended by adding 
        at the end the following: ``The deduction otherwise allowable 
        under subsection (a) (prior to the application of subsection 
        (b)) to the taxpayer for any taxable year shall be reduced (but 
        not below zero) by so much of the distributions treated as a 
        qualified higher education expense under section 529(c)(9) with 
        respect to loans of the taxpayer as would be includible in 
        gross income under section 529(c)(3)(A) for such taxable year 
        but for such treatment.''.
    (d) Distributions for Certain Elementary and Secondary School 
Expenses in Addition to Tuition.--Section 529(c)(7)(A), as amended by 
subsection (b), is amended to read as follows:
                    ``(A) expenses described in section 530(b)(3)(A)(i) 
                in connection with enrollment or attendance of a 
                designated beneficiary at an elementary or secondary 
                public, private, or religious school, and''.
    (e) Unborn Children Allowed as Account Beneficiaries.--Section 
529(e) is amended by adding at the end the following new paragraph:
            ``(6) Treatment of unborn children.--
                    ``(A) In general.--Nothing shall prevent an unborn 
                child from being treated as a designated beneficiary or 
                an individual under this section.
                    ``(B) Unborn child.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `unborn child' 
                        means a child in utero.
                            ``(ii) Child in utero.--The term `child in 
                        utero' means a member of the species homo 
                        sapiens, at any stage of development, who is 
                        carried in the womb.''.
    (f) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        distributions made after December 31, 2018.
            (2) Unborn children allowed as account beneficiaries.--The 
        amendment made by subsection (e) shall apply to contributions 
        made after December 31, 2018.

SEC. 303. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
              INDIVIDUALS IN CASE OF BIRTH OF CHILD OR ADOPTION.

    (a) In General.--Section 72(t)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(H) Distributions from retirement plans in case 
                of birth of child or adoption.--
                            ``(i) In general.--Any qualified birth or 
                        adoption distribution.
                            ``(ii) Limitation.--The aggregate amount 
                        which may be treated as qualified birth or 
                        adoption distributions by any individual with 
                        respect to any birth or adoption shall not 
                        exceed $7,500.
                            ``(iii) Qualified birth or adoption 
                        distribution.--For purposes of this 
                        subparagraph--
                                    ``(I) In general.--The term 
                                `qualified birth or adoption 
                                distribution' means any distribution 
                                from an applicable eligible retirement 
                                plan to an individual if made during 
                                the 1-year period beginning on the date 
                                on which a child of the individual is 
                                born or on which the legal adoption by 
                                the individual of an eligible child is 
                                finalized.
                                    ``(II) Eligible child.--The term 
                                `eligible child' means any individual 
                                (other than a child of the taxpayer's 
                                spouse) who has not attained age 18 or 
                                is physically or mentally incapable of 
                                self-support.
                            ``(iv) Treatment of plan distributions.--
                                    ``(I) In general.--If a 
                                distribution to an individual would 
                                (without regard to clause (ii)) be a 
                                qualified birth or adoption 
                                distribution, a plan shall not be 
                                treated as failing to meet any 
                                requirement of this title merely 
                                because the plan treats the 
                                distribution as a qualified birth or 
                                adoption distribution, unless the 
                                aggregate amount of such distributions 
                                from all plans maintained by the 
                                employer (and any member of any 
                                controlled group which includes the 
                                employer) to such individual exceeds 
                                $7,500.
                                    ``(II) Controlled group.--For 
                                purposes of subclause (I), the term 
                                `controlled group' means any group 
                                treated as a single employer under 
                                subsection (b), (c), (m), or (o) of 
                                section 414.
                            ``(v) Amount distributed may be repaid.--
                                    ``(I) In general.--Any individual 
                                who receives a qualified birth or 
                                adoption distribution may make one or 
                                more contributions in an aggregate 
                                amount not to exceed the amount of such 
                                distribution to an applicable eligible 
                                retirement plan of which such 
                                individual is a beneficiary and to 
                                which a rollover contribution of such 
                                distribution could be made under 
                                section 402(c), 403(a)(4), 403(b)(8), 
                                408(d)(3), or 457(e)(16), as the case 
                                may be.
                                    ``(II) Limitation on contributions 
                                to applicable eligible retirement plans 
                                other than IRAs.--The aggregate amount 
                                of contributions made by an individual 
                                under subclause (I) to any applicable 
                                eligible retirement plan which is not 
                                an individual retirement plan shall not 
                                exceed the aggregate amount of 
                                qualified birth or adoption 
                                distributions which are made from such 
                                plan to such individual. Subclause (I) 
                                shall not apply to contributions to any 
                                applicable eligible retirement plan 
                                which is not an individual retirement 
                                plan unless the individual is eligible 
                                to make contributions (other than those 
                                described in subclause (I)) to such 
                                applicable eligible retirement plan.
                                    ``(III) Treatment of repayments of 
                                distributions from applicable eligible 
                                retirement plans other than IRAs.--If a 
                                contribution is made under subclause 
                                (I) with respect to a qualified birth 
                                or adoption distribution from an 
                                applicable eligible retirement plan 
                                other than an individual retirement 
                                plan, then the taxpayer shall, to the 
                                extent of the amount of the 
                                contribution, be treated as having 
                                received such distribution in an 
                                eligible rollover distribution (as 
                                defined in section 402(c)(4)) and as 
                                having transferred the amount to the 
                                applicable eligible retirement plan in 
                                a direct trustee to trustee transfer 
                                within 60 days of the distribution.
                                    ``(IV) Treatment of repayments for 
                                distributions from iras.--If a 
                                contribution is made under subclause 
                                (I) with respect to a qualified birth 
                                or adoption distribution from an 
                                individual retirement plan, then, to 
                                the extent of the amount of the 
                                contribution, such distribution shall 
                                be treated as a distribution described 
                                in section 408(d)(3) and as having been 
                                transferred to the applicable eligible 
                                retirement plan in a direct trustee to 
                                trustee transfer within 60 days of the 
                                distribution.
                            ``(vi) Definition and special rules.--For 
                        purposes of this subparagraph--
                                    ``(I) Applicable eligible 
                                retirement plan.--The term `applicable 
                                eligible retirement plan' means an 
                                eligible retirement plan (as defined in 
                                section 402(c)(8)(B)) other than a 
                                defined benefit plan.
                                    ``(II) Exemption of distributions 
                                from trustee to trustee transfer and 
                                withholding rules.--For purposes of 
                                sections 401(a)(31), 402(f), and 3405, 
                                a qualified birth or adoption 
                                distribution shall not be treated as an 
                                eligible rollover distribution.
                                    ``(III) Taxpayer must include 
                                tin.--A distribution shall not be 
                                treated as a qualified birth or 
                                adoption distribution with respect to 
                                any child or eligible child unless the 
                                taxpayer includes the name, age, and 
                                TIN of such child or eligible child on 
                                the taxpayer's return of tax for the 
                                taxable year.
                                    ``(IV) Distributions treated as 
                                meeting plan distribution 
                                requirements.--Any qualified birth or 
                                adoption distribution shall be treated 
                                as meeting the requirements of sections 
                                401(k)(2)(B)(i), 403(b)(7)(A)(ii), 
                                403(b)(11), and 457(d)(1)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2018.

                      TITLE IV--BUDGETARY EFFECTS

SEC. 401. BUDGETARY EFFECTS.

    (a) Statutory PAYGO Scorecards.--The budgetary effects of this Act 
shall not be entered on either PAYGO scorecard maintained pursuant to 
section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
    (b) Senate PAYGO Scorecards.--The budgetary effects of this Act 
shall not be entered on any PAYGO scorecard maintained for purposes of 
section 4106 of H. Con. Res. 71 (115th Congress).

            Passed the House of Representatives September 27, 2018.

            Attest:

                                                                 Clerk.
115th CONGRESS

  2d Session

                               H. R. 6757

_______________________________________________________________________

                                 AN ACT

To amend the Internal Revenue Code of 1986 to encourage retirement and 
                family savings, and for other purposes.