[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1431 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 1431
To amend the Internal Revenue Code of 1986 to reform retirement
provisions, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 13, 2019
Mr. Portman (for himself and Mr. Cardin) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reform retirement
provisions, 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 ``Retirement
Security and Savings Act of 2019''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title, etc.
TITLE I--EXPANDING COVERAGE AND INCREASING RETIREMENT SAVINGS
Sec. 101. Secure deferral arrangements.
Sec. 102. Facilitating automatic enrollment.
Sec. 103. Credit for employers with respect to modified safe harbor
requirements.
Sec. 104. Expansion of saver's credit.
Sec. 105. Qualified cash or deferred arrangements must allow long-term
employees working more than 500 but less
than 1,000 hours per year to participate.
Sec. 106. Separate application of top heavy rules to defined
contribution plans covering part-time
employees.
Sec. 107. 60-day rollover to inherited individual retirement plan of
nonspouse beneficiary.
Sec. 108. Increase in age for required beginning date for mandatory
distributions.
Sec. 109. Updating of mortality tables for minimum required
distributions.
Sec. 110. Increase in credit limitation for small employer pension plan
startup costs of certain employers.
Sec. 111. Credit for re-enrollment.
Sec. 112. Treatment of student loan payments as elective deferrals for
purposes of matching contributions.
Sec. 113. Treatment of qualified retirement planning services.
Sec. 114. Allow additional nonelective contributions to simple plans.
Sec. 115. Reform of the minimum participation rule.
Sec. 116. Expansion of Employee Plans Compliance Resolution System.
Sec. 117. Enhancement of 403(b) plans.
Sec. 118. Eligibility for participation in retirement plans.
Sec. 119. Small immediate financial incentives for contributing to a
plan.
Sec. 120. Indexing IRA catch-up limit.
Sec. 121. Higher catch-up limit to apply at age 60.
TITLE II--PRESERVATION OF INCOME
Sec. 201. Qualifying longevity annuity contracts.
Sec. 202. Remove required minimum distribution barriers for life
annuities.
Sec. 203. Eliminating a penalty on partial annuitization.
Sec. 204. Insurance-dedicated exchange-traded funds.
TITLE III--SIMPLIFICATION AND CLARIFICATION OF RETIREMENT PLAN RULES
Sec. 301. Review and report to the Congress relating to reporting and
disclosure requirements.
Sec. 302. Consolidation of defined contribution plan notices.
Sec. 303. Performance benchmarks for asset allocation funds.
Sec. 304. Permit nonspousal beneficiaries to roll assets to plans.
Sec. 305. Deferral agreements.
Sec. 306. Simplifying 402(f) notices.
Sec. 307. Treatment of custodial accounts on termination of section
403(b) plans.
Sec. 308. Permit plans to use base pay or rate of pay calculation.
Sec. 309. Roth SIMPLE IRAs.
Sec. 310. Reduction in excise tax on certain accumulations in qualified
retirement plans.
Sec. 311. Clarification of catch-up contributions with respect to
separate lines of business.
Sec. 312. Clarification of substantially equal periodic payment rule.
Sec. 313. Clarification of treatment of distributions of annuity
contracts.
Sec. 314. Clarification regarding elective deferrals.
Sec. 315. Tax treatment of certain nontrade or business SEP
contributions.
Sec. 316. Allow certain plan transfers and mergers.
Sec. 317. Exception from required distributions where aggregate
retirement savings do not exceed $100,000.
Sec. 318. Hardship rules for 403(b) plans.
Sec. 319. IRA preservation.
Sec. 320. Elimination of additional tax on certain distributions.
Sec. 321. Distributions to firefighters.
Sec. 322. Eliminating unnecessary plan requirements related to
unenrolled participants.
TITLE IV--DEFINED BENEFIT PLAN REFORMS
Sec. 401. Cash balance.
Sec. 402. Aligning use of lookback months to determine interest rates.
Sec. 403. Corrections of mortality tables.
Sec. 404. Cease double-indexing the variable rate premium.
Sec. 405. Enhancing retiree health benefits in pension plans.
TITLE V--REFORMING PLAN RULES TO HARMONIZE WITH IRA RULES
Sec. 501. Roth plan distribution rules.
Sec. 502. Distributions for charitable purposes.
Sec. 503. Surviving spouse election to be treated as employee.
Sec. 504. Rollovers from Roth IRAs to plans.
TITLE VI--ADMINISTRATIVE PROVISIONS
Sec. 601. Provisions relating to plan amendments.
TITLE I--EXPANDING COVERAGE AND INCREASING RETIREMENT SAVINGS
SEC. 101. SECURE DEFERRAL ARRANGEMENTS.
(a) In General.--Subsection (k) of section 401, as amended by
Public Law 115-123, is further amended by adding at the end the
following new paragraph:
``(15) Alternative method for secure deferral arrangements
to meet nondiscrimination requirements.--
``(A) In general.--A secure deferral arrangement
shall be treated as meeting the requirements of
paragraph (3)(A)(ii).
``(B) Secure deferral arrangement.--For purposes of
this paragraph, the term `secure deferral arrangement'
means any cash or deferred arrangement which meets the
requirements of subparagraphs (C), (D), and (E) of
paragraph (13), except as modified by this paragraph.
``(C) Qualified percentage.--For purposes of this
paragraph, with respect to any employee, the term
`qualified percentage' means, in lieu of the meaning
given such term in paragraph (13)(C)(iii), any
percentage determined under the arrangement if such
percentage is applied uniformly and is--
``(i) at least 6 percent, but not greater
than 10 percent, during the period ending on
the last day of the first plan year which
begins after the date on which the first
elective contribution described in paragraph
(13)(C)(i) is made with respect to such
employee,
``(ii) at least 7 percent during the first
plan year following the plan year described in
clause (i),
``(iii) at least 8 percent during the
second plan year following the plan year
described in clause (i),
``(iv) at least 9 percent during the third
plan year following the plan year described in
clause (i), and
``(v) at least 10 percent during any
subsequent plan year.
``(D) Matching contributions.--
``(i) In general.--For purposes of this
paragraph, an arrangement shall be treated as
having met the requirements of paragraph
(13)(D)(i) if and only if the employer makes
matching contributions on behalf of each
employee who is not a highly compensated
employee in an amount equal to the sum of--
``(I) 100 percent of the elective
contributions of the employee to the
extent such contributions do not exceed
2 percent of compensation,
``(II) 50 percent of so much of
such contributions as exceed 2 percent
but do not exceed 6 percent of
compensation, plus
``(III) 20 percent of so much of
such contributions as exceed 6 percent
but do not exceed 10 percent of
compensation.
``(ii) Application of rules for matching
contributions.--The rules of clause (ii) of
paragraph (12)(B) and clauses (iii) and (iv) of
paragraph (13)(D) shall apply for purposes of
clause (i), but the rule of clause (iii) of
paragraph (12)(B) shall not apply for such
purposes. The rate of matching contribution for
each incremental deferral must be at least as
high as the rate specified in clause (i), and
may be higher, so long as such rate does not
increase as an employee's rate of elective
contributions increases.''.
(b) Matching Contributions and Employee Contributions.--Subsection
(m) of section 401 is amended by redesignating paragraph (13) as
paragraph (14) and by inserting after paragraph (12) the following new
paragraph:
``(13) Alternative method for secure deferral
arrangements.--A defined contribution plan shall be treated as
meeting the requirements of paragraph (2) with respect to
matching contributions and employee contributions if the plan--
``(A) is a secure deferral arrangement (as defined
in subsection (k)(15)),
``(B) meets the requirements of clauses (ii) and
(iii) of paragraph (11)(B), and
``(C) provides that matching contributions on
behalf of any employee may not be made with respect to
an employee's contributions or elective deferrals in
excess of 10 percent of the employee's compensation.''.
(c) Conforming Amendments.--Subparagraph (H) of section 416(g)(4)
is amended--
(1) in clause (i), by striking ``section 401(k)(12) or
401(k)(13)'' and inserting ``paragraph (12), (13), or (15) of
section 401(k)'', and
(2) in clause (ii), by striking ``section 401(m)(11) or
401(m)(12)'' and inserting ``paragraph (11), (12), or (13) of
section 401(m)''.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2019.
SEC. 102. FACILITATING AUTOMATIC ENROLLMENT.
The Secretary of the Treasury (or the Secretary's delegate) shall
promulgate regulations or other guidance which--
(1) simplifies and clarifies the rules regarding the timing
of participant notices required under the Internal Revenue Code
of 1986 with respect to an eligible automatic enrollment
contribution arrangement (within the meaning of section
414(w)(3) of the Internal Revenue Code of 1986) or required
under section 336(c)(3) of the Consolidated Appropriations Act,
2016 with respect to an automatic contribution arrangement
(within the meaning of section 336(c)(2) of such Act), with
specific application to--
(A) plans which allow employees to be eligible for
participation immediately upon beginning employment;
and
(B) employers with multiple payroll and
administrative systems; and
(2) simplifies and clarifies the application of automatic
escalation features under arrangements described in paragraph
(1) in the context of employers with multiple payroll and
administrative systems.
Such regulations or guidance shall address the particular case of
employees within the same plan who are subject to different notice
timing and different percentage requirements, and provide assistance
for plan sponsors in managing such cases.
SEC. 103. CREDIT FOR EMPLOYERS WITH RESPECT TO MODIFIED SAFE HARBOR
REQUIREMENTS.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
is amended by adding at the end the following new section:
``SEC. 45T. CREDIT FOR SMALL EMPLOYERS WITH RESPECT TO MODIFIED SAFE
HARBOR REQUIREMENTS FOR AUTOMATIC CONTRIBUTION
ARRANGEMENTS.
``(a) General Rule.--For purposes of section 38, in the case of a
small employer, the safe harbor adoption credit determined under this
section for any taxable year is the amount equal to the total of the
employer's matching contributions under section 401(k)(15)(D) during
the taxable year on behalf of employees who are not highly compensated
employees.
``(b) Limitations.--
``(1) Limitation with respect to compensation.--The credit
determined under subsection (a) with respect to contributions
made on behalf of any employee shall not exceed 2 percent of
the compensation of such employee for the taxable year.
``(2) Limitation with respect to years of participation.--
Credit shall be determined under subsection (a) with respect to
contributions made on behalf of any employee only during the
first 5 years such employee participates in the qualified
automatic contribution arrangement.
``(c) Definitions.--
``(1) In general.--Any term used in this section which is
also used in section 401(k)(15) shall have the same meaning as
when used in such section.
``(2) Small employer.--The term `small employer' means an
eligible employer (as defined in section 408(p)(2)(C)(i)).
``(d) Denial of Double Benefit.--No deduction shall be allowable
under this title for any contribution with respect to which a credit is
allowed under this section.''.
(b) Credit To Be Part of General Business Credit.--Subsection (b)
of section 38 is amended by striking ``plus'' at the end of paragraph
(31), by striking the period at the end of paragraph (32) and inserting
``, plus'', and by adding at the end the following new paragraph:
``(33) the safe harbor adoption credit determined under
section 45T.''.
(c) Conforming Amendment.--Paragraph (2) of section 3511(d) is
amended--
(1) by redesignating subparagraphs (F), (G), and (H) as
subparagraphs (G), (H), and (I), respectively, and
(2) by inserting after subparagraph (E) the following new
subparagraph:
``(F) section 45T (safe harbor adoption credit),''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding after the
item relating to section 45S the following new item:
``Sec. 45T. Credit for small employers with respect to modified safe
harbor requirements for automatic
contribution arrangements.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years which include any portion of a plan year
beginning after December 31, 2019.
SEC. 104. EXPANSION OF SAVER'S CREDIT.
(a) Expansion.--Paragraph (1) of section 25B(b) is amended by
striking ``$32,500'' both places it appears in subparagraphs (B) and
(C) of paragraph (1) and inserting ``$40,000''.
(b) Testing Period.--Subparagraph (B) of section 25B(d)(2) is
amended to read as follows:
``(B) Testing period.--For purposes of subparagraph
(A), the testing period, with respect to a taxable
year, is the period which includes--
``(i) such taxable year, and
``(ii) the 3 preceding taxable years.''.
(c) Treatment as Refundable.--
(1) Credit moved to subpart relating to refundable
credits.--
(A) In general.--The Internal Revenue Code of 1986
is amended--
(i) by redesignating section 25B, as
amended by this Act, as section 36C; and
(ii) by moving such section, as so
redesignated, from subpart A of part IV of
subchapter A of chapter 1 to the location
immediately before section 37 in subpart C of
part IV of subchapter A of chapter 1.
(B) Technical amendments.--
(i) The table of sections for subpart A of
part IV of subchapter A of chapter 1 is amended
by striking the item relating to section 25B.
(ii) The table of sections for subpart C of
part IV of subchapter A of chapter 1 is amended
by inserting after the item relating to section
36B the following new item:
``Sec. 36C. Elective deferrals and IRA contributions by certain
individuals.''.
(2) Mandatory deposit into qualified account.--
(A) No reduction of tax.--Subsection (a) of section
36C, as moved and redesignated by paragraph (1), is
amended by striking ``against the tax imposed by this
subtitle''.
(B) Deposit into qualified account.--Section 36C,
as so moved and redesignated, is amended by adding at
the end the following new subsection:
``(g) Deposit Into Qualified Account.--
``(1) In general.--Any amount allowed as a credit under
subsection (a) shall not be allowed as a credit against any tax
imposed by this subtitle but instead shall be treated as an
overpayment under section 6401(b) and--
``(A) shall be paid on behalf of the individual
taxpayer to a Roth IRA or a designated Roth account
(within the meaning of section 402A) under an
applicable retirement plan designated by the individual
to be invested in a manner designated by the
individual, except that in the case of a joint return
each spouse shall be entitled to designate an
applicable retirement plan and investments with respect
to payments attributable to such spouse, or
``(B) in the case of a taxpayer who does not
properly designate an applicable retirement plan in a
timely manner or who designates an applicable
retirement plan which does not accept such amount in a
timely manner, shall be paid or credited on behalf of
the individual taxpayer in a manner determined under
rules prescribed by the Secretary which provides
treatment comparable to the treatment under
subparagraph (A) and which--
``(i) is designed to maintain fees and
other charges at an appropriately low level
taking into account the size of the account
balance, and
``(ii) utilizes, to the extent appropriate,
private sector services.
``(2) Applicable retirement plan.--For purposes of this
subsection, the term `applicable retirement plan' means a plan
which elects to accept deposits under this subsection and which
is described in clause (iii), (iv), (v), or (vi) of section
402(c)(8)(B) or in section 408A(b).
``(3) Treatment of payments.--In the case of any payment
under this subsection--
``(A) except as otherwise provided in this section
or by the Secretary under regulations, such payment
shall be treated in the same manner as a payment made
by the individual on whose behalf such payment was
made,
``(B) such payment shall not be treated as income
to the taxpayer, and
``(C) such payment shall not be taken into account
with respect to any applicable limitation under section
402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 408A(c)(2),
414(v)(2), 415(c), or 457(b)(2).
``(4) Treatment of qualified plans, etc.--A plan or
arrangement to which a payment is made under this subsection
shall not be treated as violating any requirement under section
401, 403, 408, or 457 solely by reason of accepting such
payment.
``(5) Erroneous credits.--If any payment is erroneously
paid under this subsection, the amount of such erroneous
payment shall be treated as an underpayment of tax.''.
(d) Regulation and Promotion.--The Secretary of the Treasury (or
the Secretary's delegate) shall take such steps as the Secretary (or
delegate) determines are necessary and appropriate to increase public
awareness of the credit provided under section 36C of the Internal
Revenue Code of 1986 (as amended and redesignated by this section).
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 105. QUALIFIED CASH OR DEFERRED ARRANGEMENTS MUST ALLOW LONG-TERM
EMPLOYEES WORKING MORE THAN 500 BUT LESS THAN 1,000 HOURS
PER YEAR TO PARTICIPATE.
(a) Participation Requirement.--
(1) In general.--Subparagraph (D) of section 401(k)(2) is
amended to read as follows:
``(D) which does not require, as a condition of
participation in the arrangement, that an employee
complete a period of service with the employer (or
employers) maintaining the plan extending beyond the
close of the earlier of--
``(i) the period permitted under section
410(a)(1) (determined without regard to
subparagraph (B)(i) thereof), or
``(ii) subject to the provisions of
paragraph (16), the first period of 2
consecutive 12-month periods during each of
which the employee has at least 500 hours of
service.''.
(2) Special rules.--Section 401(k), as amended by this Act,
is further amended by adding at the end the following new
paragraph:
``(16) Special rules for participation requirement for
long-term, part-time workers.--For purposes of paragraph
(2)(D)(ii)--
``(A) Age requirement must be met.--Paragraph
(2)(D)(ii) shall not apply to an employee unless the
employee has met the requirement of section
410(a)(1)(A)(i) by the close of the last of the 12-
month periods described in such paragraph.
``(B) Nondiscrimination and top-heavy rules not to
apply.--
``(i) Nondiscrimination rules.--In the case
of employees who are eligible to participate in
the arrangement solely by reason of paragraph
(2)(D)(ii)--
``(I) notwithstanding subsection
(a)(4), an employer shall not be
required to make nonelective or
matching contributions on behalf of
such employees even if such
contributions are made on behalf of
other employees eligible to participate
in the arrangement, and
``(II) an employer may elect to
exclude such employees from the
application of paragraphs (3), (11),
(12), (13), and (15), subsection
(a)(4), paragraphs (2), (10), (11),
(12), and (13) of subsection (m), and
section 410(b).
``(ii) Top-heavy rules.--An employer may
elect to exclude all employees who are eligible
to participate in a plan maintained by the
employer solely by reason of paragraph
(2)(D)(ii) from the application of the vesting
and benefit requirements under subsections (b)
and (c) of section 416.
``(iii) Vesting.--For purposes of
determining whether an employee described in
clause (i) has a nonforfeitable right to
employer contributions (other than
contributions described in paragraph (3)(D)(i))
under the arrangement, each 12-month period for
which the employee has at least 500 hours of
service shall be treated as a year of service.
``(iv) Employees who become full-time
employees.--This subparagraph shall cease to
apply to any employee as of the first plan year
beginning after the plan year in which the
employee meets the requirements of section
410(a)(1)(A)(ii) without regard to paragraph
(2)(D)(ii) of this subsection.
``(C) Exception for employees under collectively
bargained plans, etc.--Paragraph (2)(D)(ii) shall not
apply to employees described in section 410(b)(3).
``(D) Special rules.--
``(i) Time of participation.--The rules of
section 410(a)(4) shall apply to an employee
eligible to participate in an arrangement
solely by reason of paragraph (2)(D)(ii).
``(ii) 12-month periods.--12-month periods
shall be determined in the same manner as under
the last sentence of section 410(a)(3)(A).''.
(3) Conforming amendment.--Paragraph (1) of section 413(c)
is amended by striking ``Section 410(a)'' and inserting
``Sections 401(k)(2)(D)(ii) and 410(a)''.
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2019, except that, for
purposes of section 401(k)(2)(D)(ii) of the Internal Revenue Code of
1986 (as added by such amendments), 12-month periods beginning before
January 1, 2020, shall not be taken into account.
SEC. 106. SEPARATE APPLICATION OF TOP HEAVY RULES TO DEFINED
CONTRIBUTION PLANS COVERING PART-TIME EMPLOYEES.
(a) In General.--Paragraph (2) of section 416(c) is amended by
adding at the end the following:
``(C) Separate application to employees not meeting
age and service requirements.--If employees not meeting
the age or service requirements of section 410(a)(1)
(without regard to subparagraph (B) thereof) are
covered under a plan of the employer which meets the
requirements of paragraphs (A) and (B) separately with
respect to such employees, such employees may be
excluded from consideration in determining whether any
plan of the employer meets the requirements of
subparagraphs (A) and (B).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to plan years beginning after the date of the enactment of this
Act.
SEC. 107. 60-DAY ROLLOVER TO INHERITED INDIVIDUAL RETIREMENT PLAN OF
NONSPOUSE BENEFICIARY.
(a) In General.--Section 402(c)(11) is amended by redesignating
subparagraph (B) as subparagraph (C) and by striking subparagraph (A)
and inserting the following:
``(A) In general.--If--
``(i) any portion of a distribution
attributable to an employee is paid after the
death of the employee to an individual who is a
designated beneficiary (as defined by section
401(a)(9)(E)) of the employee and who is not
the surviving spouse of the employee, and
``(ii) such portion is transferred or paid
to an individual retirement plan in a transfer
or payment meeting the requirements of
subparagraph (B),
the preceding provisions of this subsection shall apply
to such distribution in the same manner as if the
designated beneficiary were the employee.
``(B) Requirements for transfer of distribution.--
The requirements of this subparagraph are met with
respect to the portion of any distribution if--
``(i) such portion is transferred or paid
to an individual retirement plan described in
clause (i) or (ii) of paragraph (8)(B)
established for the purposes of receiving the
distribution on behalf of the designated
beneficiary,
``(ii) such individual retirement plan is
established as an inherited individual
retirement account or individual retirement
annuity (within the meaning of section
408(d)(3)(C)), whichever is applicable, and
``(iii) notice is provided to the trustee,
insurance company, or other provider of the
individual retirement plan that such individual
retirement plan is being established as an
inherited individual retirement account or
individual retirement annuity.
Section 401(a)(9)(B) (other than clause (iv) thereof)
shall apply to such individual retirement plan.''.
(b) Rollover Treatment for Inherited Accounts.--Section
408(d)(3)(C) is amended by adding at the end the following:
``(iii) Exception for qualified transfers
to another inherited account.--Clause (i) shall
not apply to any portion of a distribution from
an inherited individual retirement account or
inherited individual retirement annuity if such
portion is paid to another such individual
retirement plan or annuity, but only if the
requirements of subparagraphs (A), (B), and (E)
of this paragraph and the requirements of
section 402(c)(11)(B) are met with respect to
such transfer or payment.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made after December 31, 2019.
SEC. 108. INCREASE IN AGE FOR REQUIRED BEGINNING DATE FOR MANDATORY
DISTRIBUTIONS.
(a) Increase in Age for Required Beginning Date.--
(1) In general.--Subclause (I) of section 401(a)(9)(C)(i)
is amended to read as follows:
``(I) the first calendar year in
which the employee attains the
applicable age for such calendar year,
or''.
(2) Special rule for owners.--Subclause (I) of section
401(a)(9)(C)(ii) is amended by striking ``in which the employee
attains age 70\1/2\'' and inserting ``described in clause
(i)(I) with respect to the employee''.
(b) Mandatory Distribution Age.--Paragraph (9) of section 401(a) is
amended by inserting at the end the following new subparagraph:
``(H) Applicable age.--For purposes of this
paragraph--
``(i) In general.--The applicable age is--
``(I) for calendar years before
2023, age 70\1/2\,
``(II) for calendar years 2023,
2024, 2025, 2026, 2027, 2028, and 2029,
age 72, and
``(III) for calendar years after
2029, age 75.
``(ii) Transition rule.--If, as of a
calendar year, an employee has not attained the
applicable age with respect to such year, such
employee shall be treated as not having
attained the applicable age under this
paragraph for such year without regard to
whether, in a previous calendar year, the
employee had attained the applicable age with
respect to such previous calendar year.''.
(c) Spouse Beneficiaries.--Subclause (I) of section
401(a)(9)(B)(iv) is amended by striking ``age 70\1/2\'' and inserting
``the applicable age''.
(d) Conforming Amendment.--Subsection (b) of section 408 is amended
by striking ``age 70\1/2\'' and inserting ``the applicable age
determined under section 401(a)(9)(H) with respect to such
individual''.
(e) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2019.
SEC. 109. UPDATING OF MORTALITY TABLES FOR MINIMUM REQUIRED
DISTRIBUTIONS.
Section 401(a)(9), as amended by this Act, is further amended by
adding at the end the following new subparagraph:
``(I) Mortality tables.--
``(i) Initial update.--Not later than 1
year after the date of the enactment of this
subparagraph, the Secretary shall either
update, or provide new tables to replace, the
mortality tables used as of such date for
purposes of this paragraph.
``(ii) Periodic revision.--The Secretary
shall (at least every 10 years) make revisions
in, or provide new tables to replace, any table
in effect under this subparagraph to reflect
the actual experience of pension plans and
projected trends in such experience.
``(iii) Effective date.--Any table
prescribed under this subparagraph shall apply
to plan years beginning after the date which is
1 year after publication of the final table.''.
SEC. 110. INCREASE IN CREDIT LIMITATION FOR SMALL EMPLOYER PENSION PLAN
STARTUP COSTS OF CERTAIN EMPLOYERS.
(a) In General.--Subsection (a) of section 45E is amended by
inserting before the period at the end the following: ``(75 percent of
such costs in the case of an eligible employer, as determined by
substituting `25' for `100' in section 408(p)(2)(C)(i))''.
(b) Increase.--Paragraph (1) of section 45E(b) is amended to read
as follows:
``(1) for the first credit year and each of the 2 taxable
years immediately following the first credit year, the greater
of--
``(A) $500, or
``(B) the lesser of--
``(i) $250 for each employee of the
eligible employer who is not a highly
compensated employee (as defined in section
415(q)) and who is eligible to participate in
the eligible employer plan maintained by the
eligible employer, or
``(ii) $5,000, and''.
(c) Conforming Amendment.--Paragraph (2) of section 3511(d), as
amended by this Act, is further amended--
(1) by redesignating subparagraphs (E), (F), (G), (H), and
(I) as subparagraphs (F), (G), (H), (I), and (J), respectively,
and
(2) by inserting after subparagraph (D) the following new
subparagraph:
``(E) section 45E (small employer pension plan
startup cost credit),''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 111. CREDIT FOR RE-ENROLLMENT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1,
as amended by this Act, is further amended by adding at the end the
following new section:
``SEC. 45U. CREDIT FOR RE-ENROLLMENT PROVISIONS IN PLANS PROVIDED BY
SMALL EMPLOYERS.
``(a) In General.--For purposes of section 38, in the case of an
eligible employer, the retirement re-enrollment credit determined under
this section for any taxable year is an amount equal to--
``(1) $500 for any taxable year occurring during the credit
period, and
``(2) zero for any other taxable year.
``(b) Credit Period.--For purposes of subsection (a)--
``(1) In general.--The credit period with respect to any
eligible employer is the 3-taxable-year period beginning with
the first taxable year for which the employer includes a re-
enrollment provision in an eligible automatic contribution
arrangement (as defined in section 414(w)(3)) in a qualified
employer plan (as defined in section 4972(d)) maintained by the
employer.
``(2) Maintenance of arrangement.--No taxable year with
respect to an employer shall be treated as occurring within the
credit period unless the provision described in paragraph (1)
is included in the plan for such year.
``(c) Eligible Employer.--For purposes of this section, the term
`eligible employer' has the meaning given such term in section
408(p)(2)(C)(i).
``(d) Re-Enrollment Provision.--For purposes of this section, the
term `re-enrollment provision' means a provision of an eligible
automatic contribution arrangement under which--
``(1) In general.--Each employee eligible to participate in
the arrangement who is not contributing or is contributing less
than the percentage applicable to an eligible employee in the
first year of eligibility is treated as being in such first
year of eligibility in each applicable year with respect to the
employee.
``(2) Election out.--The election treated as having been
made under paragraph (1) shall cease to apply with respect to
any employee if such employee makes an affirmative election--
``(A) to not have such contributions made, or
``(B) to make elective contributions at a level
specified in such affirmative election.
``(3) Applicable year every third year.--
``(A) In general.--For purposes of this section,
the term `applicable year' means, with respect to an
employee, such employee's first plan year of
eligibility under the arrangement, and all subsequent
plan years of eligibility.
``(B) Exception.--Following any applicable year of
an employee (determined after the application of this
subparagraph), the plan may elect to treat the next 1
or 2 plan years as not being applicable years with
respect to such employee.''.
(b) Credit To Be Part of General Business Credit.--Subsection (b)
of section 38, as amended by this Act, is further amended by striking
``plus'' at the end of paragraph (32), by striking the period at the
end of paragraph (33) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(34) in the case of an eligible employer (as defined in
section 45U(c)), the retirement re-enrollment credit determined
under section 45U(a).''.
(c) Conforming Amendment.--Paragraph (2) of section 3511(d), as
amended by this Act, is further amended--
(1) by redesignating subparagraphs (H), (I), and (J) as
subparagraphs (I), (J), and (K), respectively, and
(2) by inserting after subparagraph (G) the following new
subparagraph:
``(H) section 45U (retirement re-enrollment
credit),''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 45T the following new item:
``Sec. 45U. Credit for re-enrollment provisions in plans provided by
small employers.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 112. TREATMENT OF STUDENT LOAN PAYMENTS AS ELECTIVE DEFERRALS FOR
PURPOSES OF MATCHING CONTRIBUTIONS.
(a) In General.--Subparagraph (A) of section 401(m)(4) is amended
by striking ``and'' at the end of clause (i), by striking the period at
the end of clause (ii) and inserting ``, and'', and by adding at the
end the following new clause:
``(iii) subject to the requirements of
paragraph (14), any employer contribution made
to a defined contribution plan on behalf of an
employee on account of a qualified student loan
payment.''.
(b) Qualified Student Loan Payment.--Paragraph (4) of section
401(m) is amended by adding at the end the following new subparagraph:
``(D) Qualified student loan payment.--The term
`qualified student loan payment' means a payment made
by an employee in repayment of a qualified education
loan (as defined in section 221(d)(1)) incurred to pay
qualified higher education expenses of the employee,
but only--
``(i) to the extent such payments in the
aggregate for the year do not exceed an amount
equal to--
``(I) the limitation applicable
under section 402(g) for the year (or,
if lesser, the employee's compensation
(as defined in section 415(c)(3)) for
the year), reduced by
``(II) the elective deferrals made
by the employee for such year, and
``(ii) if the employee certifies to the
employer making the matching contribution under
this paragraph that such payment has been made
on such loan.
For purposes of this subparagraph, the term `qualified
higher education expenses' means the cost of attendance
(as defined in section 472 of the Higher Education Act
of 1965, as in effect on the day before the date of the
enactment of the Taxpayer Relief Act of 1997) at an
eligible educational institution (as defined in section
221(d)(2)).''.
(c) Matching Contributions for Qualified Student Loan Payments.--
Subsection (m) of section 401, as amended by this Act, is further
amended by redesignating paragraph (14) as paragraph (15), and by
inserting after paragraph (13) the following new paragraph:
``(14) Matching contributions for qualified student loan
payments.--
``(A) In general.--For purposes of paragraph
(4)(A)(iii), an employer contribution made to a defined
contribution plan on account of a qualified student
loan payment shall be treated as a matching
contribution for purposes of this title if--
``(i) the plan provides matching
contributions on account of elective deferrals
at the same rate as contributions on account of
qualified student loan payments,
``(ii) the plan provides matching
contributions on account of qualified student
loan payments only on behalf of employees
otherwise eligible to make elective deferrals,
and
``(iii) under the plan, all employees
eligible to receive matching contributions on
account of elective deferrals are eligible to
receive matching contributions on account of
qualified student loan payments.
``(B) Treatment for purposes of nondiscrimination
rules, etc.--
``(i) Nondiscrimination rules.--For
purposes of subparagraph (A)(iii), subsection
(a)(4), and section 410(b), matching
contributions described in paragraph
(4)(A)(iii) shall not fail to be treated as
available to an employee solely because such
employee does not have debt incurred under a
qualified education loan (as defined in section
221(d)(1)).
``(ii) Student loan payments not treated as
plan contribution.--Except as provided in
clause (iii), a qualified student loan payment
shall not be treated as a contribution to a
plan under this title.
``(iii) Matching contribution rules.--
Solely for purposes of meeting the requirements
of paragraph (11)(B), (12), or (13) of this
subsection, or paragraph (11)(B)(i)(II),
(12)(B), (13)(D), or (15)(D) of subsection (k),
a plan may treat a qualified student loan
payment as an elective deferral or an elective
contribution, whichever is applicable.''.
(d) Simple Retirement Accounts.--Paragraph (2) of section 408(p) is
amended by adding at the end the following new subparagraph:
``(F) Matching contributions for qualified student
loan payments.--
``(i) In general.--Subject to the rules of
clause (iii), an arrangement shall not fail to
be treated as meeting the requirements of
subparagraph (A)(iii) solely because under the
arrangement, solely for purposes of such
subparagraph, qualified student loan payments
are treated as amounts elected by the employee
under subparagraph (A)(i)(I) to the extent such
payments do not exceed--
``(I) the applicable dollar amount
under subparagraph (E) (after
application of section 414(v)) for the
year (or, if lesser, the employee's
compensation (as defined in section
415(c)(3)) for the year), reduced by
``(II) any other amounts elected by
the employee under subparagraph
(A)(i)(I) for the year.
``(ii) Qualified student loan payment.--For
purposes of this subparagraph--
``(I) In general.--The term
`qualified student loan payment' means
a payment made by an employee in
repayment of a qualified education loan
(as defined in section 221(d)(1))
incurred to pay qualified higher
education expenses of the employee, but
only if the employee certifies to the
employer making the matching
contribution that such payment has been
made on such a loan.
``(II) Qualified higher education
expenses.--The term `qualified higher
education expenses' has the same
meaning as when used in section
401(m)(4)(D).
``(iii) Applicable rules.--Clause (i) shall
apply to an arrangement only if, under the
arrangement--
``(I) matching contributions on
account of qualified student loan
payments are provided only on behalf of
employees otherwise eligible to elect
contributions under subparagraph
(A)(i)(I), and
``(II) all employees otherwise
eligible to participate in the
arrangement are eligible to receive
matching contributions on account of
qualified student loan payments.''.
(e) 403(b) Plans.--Subparagraph (A) of section 403(b)(12) is
amended by adding at the end the following: ``The fact that the
employer offers matching contributions on account of qualified student
loan payments as described in section 401(m)(14) shall not be taken
into account in determining whether the arrangement satisfies the
requirements of clause (ii) (and any regulation thereunder).''.
(f) 457(b) Plans.--Subsection (b) of section 457 of the Internal
Revenue Code of 1986 is amended by adding at the end the following: ``A
plan which is established and maintained by an employer which is
described in subsection (e)(1)(A) shall not be treated as failing to
meet the requirements of this subsection solely because the plan, or
another plan maintained by the employer which meets the requirements of
section 401(a), provides for matching contributions on account of
qualified student loan payments as described in section 401(m)(14).''.
(g) Regulatory Authority.--The Secretary shall prescribe
regulations for purposes of implementing the amendments made by this
section, including regulations--
(1) permitting a plan to make matching contributions for
qualified student loan payments, as defined in sections
401(m)(4)(D) and 408(p)(2)(F) of the Internal Revenue Code of
1986, as added by this section, at a different frequency than
matching contributions are otherwise made under the plan,
provided that the frequency is not less than annually,
(2) permitting employers to establish reasonable procedures
to claim matching contributions for such qualified student loan
payments under the plan, including an annual deadline (not
earlier than 3 months after the close of each plan year) by
which a claim must be made, and
(3) promulgating model amendments which plans may adopt to
implement matching contributions on such qualified student loan
payments for purposes of sections 401(m), 408(p), 403(b), and
457(b) of the Internal Revenue Code of 1986.
(h) Effective Date.--The amendments made by this section shall
apply to contributions made for years beginning after December 31,
2019.
SEC. 113. TREATMENT OF QUALIFIED RETIREMENT PLANNING SERVICES.
(a) In General.--Subsection (m) of section 132 is amended by adding
at the end the following new paragraph:
``(4) No constructive receipt.--No amount shall be included
in the gross income of any employee solely because the employee
may choose between any qualified retirement planning services
and compensation which would otherwise be includible in the
gross income of such employee. The preceding sentence shall
apply to highly compensated employees only if the choice
described in such sentence is available on substantially the
same terms to each member of the group of employees normally
provided education and information regarding the employer's
qualified employer plan.''.
(b) Definition.--Paragraph (1) of section 132(m) is amended by
inserting before the period the following: ``, including--
``(A) advice regarding investments in any
arrangement described in section 219(g)(5) (without
regard to the last sentence thereof), and
``(B) retirement advice regarding investments held
outside such an arrangement.''.
(c) Conforming Amendments.--
(1) Section 403(b)(3)(B) is amended by inserting
``132(m)(4),'' after ``132(f)(4),''.
(2) Section 414(s)(2) is amended by inserting
``132(m)(4),'' after ``132(f)(4),''.
(3) Section 415(c)(3)(D)(ii) is amended by inserting
``132(m)(4),'' after ``132(f)(4),''.
(d) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2019.
SEC. 114. ALLOW ADDITIONAL NONELECTIVE CONTRIBUTIONS TO SIMPLE PLANS.
(a) In General.--
(1) Modification to definition.--Subparagraph (A) of
section 408(p)(2) is amended by striking ``and'' at the end of
clause (iii), by redesignating clause (iv) as clause (v), and
by inserting after clause (iii) the following new clause:
``(iv) the employer may make nonelective
contributions of a uniform percentage (up to 10
percent) of compensation for each employee who
is eligible to participate in the arrangement
and who has at least $5,000 of compensation
from the employer for the year, and''.
(2) Limitation.--Subparagraph (A) of section 408(p)(2) is
amended by adding at the end the following: ``The compensation
taken into account under clause (iv) for any year shall not
exceed the limitation in effect for such year under section
401(a)(17).''.
(3) Overall dollar limit on contributions.--Paragraph (8)
of section 408(p) is amended to read as follows:
``(8) Coordination with maximum limitation under subsection
(a).--In the case of any simple retirement account, subsections
(a)(1) and (b)(2) shall be applied by substituting for `the
dollar amount in effect under section 219(b)(1)(A)' the
following: `the sum (but not to exceed 50 percent of the amount
in effect under section 415(c)(1)(A) (except as provided in
section 414(v))) of the dollar amount in effect under paragraph
(2)(A)(ii) of this subsection; the employer contribution
required under paragraph (2)(A)(iii) or (2)(B)(i) of this
subsection, whichever is applicable; and the employer
contribution made on behalf of the employee under paragraph
(2)(A)(iv) of this subsection'.''.
(b) Conforming Amendments.--
(1) Section 408(p)(2)(A)(v), as redesignated by subsection
(a), is amended by striking ``or (iii)'' and inserting ``,
(iii), or (iv)''.
(2) Paragraph (8) of section 408(p) is amended by inserting
``, the employer contribution actually made under paragraph
(2)(A)(iv) of this subsection,'' after ``paragraph (2)(A)(ii)
of this subsection''.
(3) Section 401(k)(11)(B)(i) is amended by striking ``and''
at the end of subclause (II), by redesignating subclause (III)
as subclause (V), and by inserting after subclause (II) the
following new subclauses:
``(III) the employer may make
nonelective contributions of a uniform
percentage (up to 10 percent) of
compensation for each employee who is
eligible to participate in the
arrangement and who has at least $5,000
of compensation from the employer for
the year,
``(IV) contributions on behalf of
any employee for any year may not
exceed 50 percent of the amount in
effect under section 415(c)(1)(A)
(except as provided in section 414(v)),
and''.
(4) Section 401(k)(11)(B)(i)(V), as redesignated by
paragraph (3), is amended by striking ``or (II)'' and inserting
``, (II), or (III)''.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2019.
SEC. 115. REFORM OF THE MINIMUM PARTICIPATION RULE.
(a) In General.--Subparagraph (H) of section 401(a)(26) is amended
by adding at the end the following: ``Not later than December 31, 2020,
the Secretary shall issue final regulations under which this paragraph
may be applied separately to bona fide separate subsidiaries or
divisions.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.
SEC. 116. EXPANSION OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.
(a) In General.--Except as otherwise provided in regulations
prescribed by the Secretary of the Treasury or the Secretary's delegate
(referred to in this section as the ``Secretary''), any inadvertent
failure to comply with the rules applicable under section 401(a),
403(a), 403(b), 408(p), or 408(k) of the Internal Revenue Code of 1986
may be self-corrected under the Employee Plans Compliance Resolution
System (as described in Revenue Procedure 2019-19 or any successor
guidance), except to the extent that such failure was identified by the
Secretary prior to any actions which demonstrate a commitment to
implement a self-correction. Revenue Procedure 2019-19 is deemed
amended as of the date of the enactment of this Act to provide that the
correction period under section 9.02 of such Revenue Procedure (or any
successor provision) for an inadvertent failure is indefinite and has
no last day, other than with respect to failures identified by the
Secretary prior to any self-correction as described in the preceding
sentence.
(b) Loan Error.--The Secretary of Labor shall treat any loan error
corrected pursuant to subsection (a) as meeting the requirements of the
Voluntary Fiduciary Correction Program of the Department of Labor.
(c) EPCRS for IRAs.--The Secretary shall expand the Employee Plans
Compliance Resolution System to allow custodians of individual
retirement plans to address inadvertent failures for which the owner of
an individual retirement plan was not at fault, including (but not
limited to)--
(1) waivers of the excise tax which would otherwise apply
under section 4974 of the Internal Revenue Code of 1986;
(2) under the self-correction component of the Employee
Plans Compliance Resolution System, waivers of the 60-day
deadline for a rollover where the deadline is missed for
reasons beyond the reasonable control of the account owner; and
(3) rules permitting a nonspouse beneficiary to return
distributions to an inherited individual retirement plan
described in section 408(d)(3)(C) of the Internal Revenue Code
of 1986 in a case where, due to an inadvertent error by a
service provider, the beneficiary had reason to believe that
the distribution could be rolled over without inclusion in
income of any part of the distributed amount.
(d) Required Minimum Distribution Corrections.--The Secretary shall
expand the Employee Plans Compliance Resolution System to allow plans
to which such system applies and custodians and owners of individual
retirement plans to self-correct, without an excise tax, any
inadvertent failures pursuant to which a distribution is made no more
than 180 days after it was required to be made.
(e) Additional Safe Harbors.--The Secretary shall expand the
Employee Plans Compliance Resolution System (as described in Revenue
Procedure 2019-19 or any successor guidance) to provide additional safe
harbor means of correcting inadvertent failures described in subsection
(a), including safe harbor means of calculating the earnings which must
be restored to a plan in cases where plan assets have been depleted by
reason of an inadvertent failure.
(f) Definitions and Special Rules.--
(1) Inadvertent failure.--For purposes of this section--
(A) In general.--Except as provided in subparagraph
(B), the term ``inadvertent failure'' means a failure
that occurs despite the existence of practices and
procedures which--
(i) satisfy the standards set forth in
section 4.04 of Revenue Procedure 2019-19 (or
any successor provision); or
(ii) satisfy similar standards in the case
of an individual retirement plan.
(B) Correction by owner of individual retirement
plan.--In the case of a correction by an owner of an
individual retirement plan under subsection (d), the
term ``inadvertent failure'' means a failure due to
reasonable cause.
(2) Plan loan corrections.--In the case of an inadvertent
failure relating to a loan to a participant from a plan, such
failure may be self-corrected under subsection (a) according to
the rules of section 6.07 of Revenue Procedure 2019-19 (or any
successor provision), including the provisions related to
whether a deemed distribution must be reported on Form 1099-R.
SEC. 117. ENHANCEMENT OF 403(B) PLANS.
(a) In General.--
(1) Permitted investments.--Clause (i) of section
403(b)(7)(A) is amended to read as follows:
``(i) the amounts to be held in that
custodial account are invested in regulated
investment company stock or a group trust
intended to satisfy the requirements of
Internal Revenue Service Revenue Ruling 81-100
(or any successor guidance), and''.
(2) Conforming amendment.--The heading of paragraph (7) of
section 403(b) is amended by striking ``for regulated
investment company stock''.
(3) Effective date.--The amendments made by this subsection
shall apply to amounts invested after December 31, 2019.
(b) Amendments to the Investment Company Act of 1940.--Section
3(c)(11) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(11))
is amended to read as follows:
``(11) Any--
``(A) employee's stock bonus, pension, or profit-
sharing trust which meets the requirements for
qualification under section 401 of the Internal Revenue
Code of 1986;
``(B) custodial account meeting the requirements of
section 403(b)(7) of such Code;
``(C) governmental plan described in section
3(a)(2)(C) of the Securities Act of 1933;
``(D) collective trust fund maintained by a bank
consisting solely of assets of one or more of such
trusts, government plans, or church plans, companies or
accounts that are excluded from the definition of an
investment company under paragraph (14) of this
subsection;
``(E) plan which meets the requirements of section
403(b) of the Internal Revenue Code of 1986 if--
``(i) such plan is subject to title I of
the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1001 et seq.);
``(ii) any employer making such plan
available agrees to serve as a fiduciary for
the plan with respect to the selection of the
plan's investments among which participants can
choose; or
``(iii) such plan is a governmental plan
(as defined in section 414(d) of such Code); or
``(F) separate account the assets of which are
derived solely from--
``(i) contributions under pension or
profit-sharing plans which meet the
requirements of section 401 of the Internal
Revenue Code of 1986 or the requirements for
deduction of the employer's contribution under
section 404(a)(2) of such Code;
``(ii) contributions under governmental
plans in connection with which interests,
participations, or securities are exempted from
the registration provisions of section 5 of the
Securities Act of 1933 by section 3(a)(2)(C) of
such Act;
``(iii) advances made by an insurance
company in connection with the operation of
such separate account; and
``(iv) contributions to a plan described in
subparagraph (E).''.
(c) Amendments to the Securities Act of 1933.--Section 3(a)(2) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is amended--
(1) by striking ``or (D)'' and inserting ``(D) a plan which
meets the requirements of section 403(b) of such Code if (i)
such plan is subject to title I of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et seq.), (ii) any
employer making such plan available agrees to serve as a
fiduciary for the plan with respect to the selection of the
plan's investments among which participants can choose, or
(iii) such plan is a governmental plan (as defined in section
414(d) of such Code); or (E)'';
(2) by striking ``(C), or (D)'' and inserting ``(C), (D),
or (E)''; and
(3) by striking ``(iii) which is a plan funded'' and
inserting ``(iii) in the case of a plan not described in
subparagraph (D), which is a plan funded''.
(d) Amendments to the Securities Exchange Act of 1934.--Section
3(a)(12)(C) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(12)(C)) is amended--
(1) by striking ``or (iv)'' and inserting ``(iv) a plan
which meets the requirements of section 403(b) of such Code if
(I) such plan is subject to title I of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et seq.), (II) any
employer making such plan available agrees to serve as a
fiduciary for the plan with respect to the selection of the
plan's investments among which participants can choose, or
(III) such plan is a governmental plan (as defined in section
414(d) of such Code), or (v)'';
(2) by striking ``(ii), or (iii)'' and inserting ``(ii),
(iii), or (iv)''; and
(3) by striking ``(II) is a plan funded'' and inserting
``(II) in the case of a plan not described in clause (iv), is a
plan funded''.
SEC. 118. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.
An individual shall not be precluded from participating in an
eligible deferred compensation plan by reason of having received a
distribution under section 457(e)(9) of the Internal Revenue Code of
1986, as in effect prior to the enactment of the Small Business Job
Protection Act of 1996.
SEC. 119. SMALL IMMEDIATE FINANCIAL INCENTIVES FOR CONTRIBUTING TO A
PLAN.
(a) In General.--Subparagraph (A) of section 401(k)(4) is amended
by inserting ``(other than a de minimis financial incentive)'' after
``any other benefit''.
(b) Section 403(b) Plans.--Subparagraph (A) of section 403(b)(12),
as amended by this Act, is further amended by adding at the end the
following: ``A plan shall not fail to satisfy clause (ii) solely by
reason of the offering of a de minimis financial incentive for
employees to elect to have the employer make contributions pursuant to
a salary reduction agreement.''.
(c) Exemption From Prohibited Transaction Rules.--Subsection (d) of
section 4975 is amended by striking ``or'' at the end of paragraph
(22), by striking the period at the end of paragraph (23) and inserting
``, or'', and by adding at the end the following new paragraph:
``(24) the provision of a de minimis financial incentive
described in section 401(k)(4)(A) or 403(b)(12)(A).''.
(d) Amendment of Employee Retirement Income Security Act of 1974.--
Subsection (b) of section 408 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1108(b)) is amended by adding at the
end the following new paragraph:
``(21) The provision of a de minimis financial incentive
described in section 401(k)(4)(A) or 403(b)(12)(A) of the
Internal Revenue Code of 1986.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after the date of enactment
of this Act.
SEC. 120. INDEXING IRA CATCH-UP LIMIT.
(a) In General.--Subparagraph (C) of section 219(b)(5) is amended
by adding at the end the following new clause:
``(iii) Indexing of catch-up limitation.--
In the case of any taxable year beginning in a
calendar year after 2020, the $1,000 amount
under subparagraph (B)(ii) 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 in which
the taxable year begins, determined by
substituting `calendar year 2019' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
If any amount after adjustment under the
preceding sentence is not a multiple of $200,
such amount shall be rounded to the next lower
multiple of $200.''.
(b) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2020.
SEC. 121. HIGHER CATCH-UP LIMIT TO APPLY AT AGE 60.
(a) In General.--
(1) Plans other than simple plans.--Section 414(v)(2)(B)(i)
is amended by inserting the following before the period:
``($10,000, in the case of an eligible participant who has
attained age 60 before the close of the taxable year)''.
(2) Simple plans.--Section 414(v)(2)(B)(ii) is amended by
inserting the following before the period: ``($5,000, in the
case of an eligible participant who has attained age 60 before
the close of the taxable year)''.
(b) Cost-of-Living Adjustments.--Subparagraph (C) of section
414(v)(2) is amended by adding at the end the following: ``In the case
of a year beginning after December 31, 2020, the Secretary shall adjust
annually the $10,000 amount in subparagraph (B)(i) and the $5,000
amount in subparagraph (B)(ii) for increases in the cost-of-living at
the same time and in the same manner as adjustments under the preceding
sentence; except that the base period taken into account shall be the
calendar quarter beginning July 1, 2019.''.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 2019.
TITLE II--PRESERVATION OF INCOME
SEC. 201. QUALIFYING LONGEVITY ANNUITY CONTRACTS.
(a) In General.--Not later than the date which is 1 year after the
date of the enactment of this Act, the Secretary of the Treasury (or
the Secretary's delegate) shall amend the regulation issued by the
Department of the Treasury relating to ``Longevity Annuity Contracts''
(79 Fed. Reg. 37633 (July 2, 2014)), as follows:
(1) Repeal 25-percent premium limit.--The Secretary (or
delegate) shall amend Q&A-17(b)(3) of Treas. Reg. section
1.401(a)(9)-6 and Q&A-12(b)(3) of Treas. Reg. section 1.408-8
to eliminate the requirement that premiums for qualifying
longevity annuity contracts be limited to 25 percent of an
individual's account balance, and to make such corresponding
changes to the regulations and related forms as are necessary
to reflect the elimination of this requirement.
(2) Increase dollar limitation.--
(A) In general.--The Secretary (or delegate) shall
amend Q&A-17(b)(2)(i) of Treas. Reg. section
1.401(a)(9)-6 and Q&A-12(b)(2)(i) of Treas. Reg.
section 1.408-8 to increase the dollar limitation on
premiums for qualifying longevity annuity contracts
from $125,000 to $200,000, and to make such
corresponding changes to the regulations and related
forms as are necessary to reflect this increase in the
dollar limitation.
(B) Adjustments for inflation.--The Secretary (or
delegate) shall amend Q&A-17(d)(2)(i) of Treas. Reg.
section 1.401(a)(9)-6 to provide that, in the case of
calendar years beginning on or after January 1 of the
second year following the year of enactment of this
Act, the $200,000 dollar limitation (as increased by
subparagraph (A)) will be adjusted at the same time and
in the same manner as the limits are adjusted under
section 415(d) of the Internal Revenue Code of 1986,
except that the base period shall be the calendar
quarter beginning July 1 of the year of enactment of
this Act, and any increase to such dollar limitation
which is not a multiple of $10,000 will be rounded to
the next lowest multiple of $10,000.
(3) Facilitate joint and survivor benefits.--The Secretary
(or delegate) shall amend Q&A-17(c) of Treas. Reg. section
1.401(a)(9)-6, and make such corresponding changes to the
regulations and related forms as are necessary, to provide
that, in the case of a qualifying longevity annuity contract
which was purchased with joint and survivor annuity benefits
for the individual and the individual's spouse which were
permissible under the regulations at the time the contract was
originally purchased, a divorce occurring after the original
purchase and before the annuity payments commence under the
contract will not affect the permissibility of the joint and
survivor annuity benefits or other benefits under the contract,
or require any adjustment to the amount or duration of benefits
payable under the contract, provided that any qualified
domestic relations order (within the meaning of section 414(p)
of the Internal Revenue Code of 1986) or any divorce or
separation instrument (within the meaning of section 71(b)(2)
of the Internal Revenue Code of 1986)--
(A) provides that the former spouse is entitled to
the survivor benefits under the contract;
(B) does not modify the treatment of the former
spouse as the beneficiary under the contract who is
entitled to the survivor benefits; or
(C) does not modify the treatment of the former
spouse as the measuring life for the survivor benefits
under the contract.
(4) Permit short free look period.--The Secretary (or
delegate) shall amend Q&A-17(a)(4) of Treas. Reg. section
1.401(a)(9)-6 to ensure that such Q&A does not preclude a
contract from including a provision under which an employee may
rescind the purchase of the contract within a period not
exceeding 90 days from the date of purchase.
(5) Facilitate indexed and variable contracts with
guaranteed benefits.--The Secretary (or delegate) shall amend
Q&A-17(d)(4) of Treas. Reg. section 1.401(a)(9)-6, and make
such corresponding changes to the regulations and related forms
as are necessary, to provide that an annuity contract is not
treated as a contract described in such Q&A-17(a)(7) to the
extent that the contract--
(A) either--
(i) is a variable contract under section
817(d) of the Internal Revenue Code of 1986; or
(ii) is an indexed contract;
(B) provides for the possibility of annuity payment
increases (but not decreases) based on the investment
return and market value of 1 or more segregated asset
accounts (in the case of a variable contract) or based
on the performance of 1 or more specified indexes (in
the case of an indexed contract);
(C) provides for a guaranteed minimum level of
annuity payments irrespective of such investment
return, market value, or performance; and
(D) in the event of death before the annuity
starting date, provides that any death benefit that is
payable in a lump sum is equal to the premiums paid,
without reduction for investment return, market value,
index performance, surrender charges, market value
adjustments, or any other amounts.
For purposes of the preceding sentence, a downward adjustment
to the dollar amount of annuity payments shall not be treated
as an impermissible reduction in such payments, provided that
the adjustment is made to reflect a change in annuitant that is
required or permitted under the Internal Revenue Code of 1986
or regulations and the adjustment is based on reasonable
actuarial assumptions.
(b) Effective Dates, Enforcement, and Interpretations.--
(1) Effective dates.--
(A) Paragraphs (1), (2), and (5) of subsection (a)
shall be effective with respect to contracts purchased
or received in an exchange on or after the date of the
enactment of this Act.
(B) Paragraphs (3) and (4) of subsection (a) shall
be effective with respect to contracts purchased or
received in an exchange on or after July 2, 2014.
(2) Enforcement and interpretations.--Prior to the date on
which the Secretary of the Treasury issues final regulations
pursuant to subsection (a)--
(A) the Secretary (or delegate) shall administer
and enforce the law in accordance with subsection (a)
and the effective dates in paragraph (1) of this
subsection; and
(B) taxpayers may rely upon their reasonable good
faith interpretations of subsection (a).
SEC. 202. REMOVE REQUIRED MINIMUM DISTRIBUTION BARRIERS FOR LIFE
ANNUITIES.
(a) In General.--Paragraph (9) of section 401(a), as amended by
this Act, is further amended by adding at the end the following new
subparagraph:
``(J) Certain increases in payments under a
commercial annuity.--Nothing in this section shall
prohibit a commercial annuity (within the meaning of
section 3405(e)(6)) which is issued in connection with
any eligible retirement plan (within the meaning of
section 402(c)(8)(B)) from providing 1 or more of the
following types of payments on or after the annuity
starting date:
``(i) Annuity payments which increase by a
constant percentage, applied not less
frequently than annually, at a rate which is
less than 5 percent per year.
``(ii) A lump sum payment which--
``(I) results in a shortening of
the payment period with respect to an
annuity or a full or partial
commutation of the future annuity
payments, provided that such lump sum
is determined using reasonable
actuarial methods and assumptions, as
determined in good faith by the issuer
of the contract, or
``(II) accelerates the receipt of
annuity payments which are scheduled to
be received within the ensuing 12
months, regardless of whether such
acceleration shortens the payment
period with respect to the annuity,
reduces the dollar amount of benefits
to be paid under the contract, or
results in a suspension of annuity
payments during the period being
accelerated.
``(iii) An amount which is in the nature of
a dividend or similar distribution, provided
that the issuer of the contract determines such
amount based on a reasonable comparison of the
actuarial factors assumed when calculating the
initial annuity payments and the issuer's
experience with respect to those factors.
``(iv) A final payment upon death which
does not exceed the excess of--
``(I) the total amount of the
consideration paid for the annuity
payments, over
``(II) the aggregate amount of
prior distributions or payments from or
under the contract.''.
(b) Regulations and Enforcement.--
(1) Regulations.--Not later than the date which is 1 year
after the date of the enactment of this Act, the Secretary of
the Treasury (or the Secretary's delegate) shall amend the
regulation issued by the Department of the Treasury relating to
``Required Distributions from Retirement Plans'' (69 Fed. Reg.
33288 (June 15, 2004)), and make any necessary corresponding
amendments to other regulations, in order to--
(A) conform such regulations to the amendments made
by subsection (a), including by eliminating the types
of payments described in section 401(a)(9)(J) of the
Internal Revenue Code of 1986, as added by subsection
(a), from the scope of the requirement in Q&A-14(c) of
Treas. Reg. section 1.401(a)(9)-6 that the total future
expected payments must exceed the total value being
annuitized;
(B) amend Q&A-14(c) of such section 1.401(a)(9)-6
to provide that a commercial annuity which provides an
initial payment which is at least equal to the initial
payment which would be required from an individual
account pursuant to Treas. Reg. section 1.401(a)(9)-5
will be deemed to satisfy the requirement in Q&A-14(c)
of such section 1.401(a)(9)-6 that the total future
expected payments must exceed the total value being
annuitized; and
(C) amend Q&A-14(e)(3) of Treas. Reg. section
1.401(a)(9)-6 to provide that the total future expected
payments under a commercial annuity are determined
using the tables or other actuarial assumptions which
the issuer of the contract actually uses in pricing the
premiums and benefits with respect to the contract,
provided that such tables or other actuarial
assumptions are reasonable.
(2) Effective date.--The modifications and amendments
required under paragraph (1) shall be deemed to have been made
as of the date of the enactment of this Act, and as of such
date the Secretary of the Treasury (or the Secretary's
delegate) shall administer and enforce the law with respect to
plan years beginning before, on, or after the date of the
enactment of this Act in accordance with the amendments made by
subsection (a) and as though the actions which the Secretary is
required to take under paragraph (1) had been taken.
SEC. 203. ELIMINATING A PENALTY ON PARTIAL ANNUITIZATION.
(a) Eliminating a Penalty on Partial Annuitization.--The Secretary
of the Treasury (or the Secretary's delegate) shall amend the
regulations under section 401(a)(9) of the Internal Revenue Code of
1986 to provide that if an employee's benefit is in the form of an
individual account under a defined contribution plan, the plan may
allow the employee to elect to have the amount required to be
distributed from such account under such section for a year to be
calculated as the excess of the total required amount for such year
over the annuity amount for such year.
(b) Definitions.--For purposes of this section--
(1) Total required amount.--The term ``total required
amount'', with respect to a year, means the amount which would
be required to be distributed under Treas. Reg. section
1.401(a)(9)-5 for the year, determined by treating the account
balance as of the last valuation date in the immediately
preceding calendar year as including the value on that date of
all annuity contracts which were purchased with a portion of
the account and from which payments are made in accordance with
Treas. Reg. section 1.401(a)(9)-6.
(2) Annuity amount.--The term ``annuity amount'', with
respect to a year, is the total amount distributed in the year
from all annuity contracts described in paragraph (1).
(c) Conforming Regulatory Amendments.--The Secretary of the
Treasury (or the Secretary's delegate) shall amend the regulations
under sections 403(b)(10), 408(a)(6), 408(b)(3), and 457(d)(2) of the
Internal Revenue Code of 1986 to conform to the amendments described in
subsection (a). Such conforming amendments shall treat all individual
retirement plans (as defined in section 7701(a)(37) of such Code) which
an individual holds as the owner, or which an individual holds as a
beneficiary of the same decedent, as one such plan for purposes of the
amendments described in subsection (a). Such conforming amendments
shall also treat all contracts described in section 403(b) of such Code
which an individual holds as an employee, or which an individual holds
as a beneficiary of the same decedent, as one such contract for such
purposes.
(d) Effective Date.--The modifications and amendments required
under subsections (a) and (c) shall be deemed to have been made as of
the date of the enactment of this Act, and as of such date all
applicable laws shall be applied in all respects as though the actions
which the Secretary of the Treasury (or the Secretary's delegate) is
required to take under such subsections had been taken.
SEC. 204. INSURANCE-DEDICATED EXCHANGE-TRADED FUNDS.
(a) In General.--Not later than the date which is 1 year after the
date of the enactment of this Act, the Secretary of the Treasury (or
the Secretary's delegate) shall amend the regulation issued by the
Department of the Treasury relating to ``Income Tax; Diversification
Requirements for Variable Annuity, Endowment, and Life Insurance
Contracts'', 54 Fed. Reg. 8728 (March 2, 1989), and make any necessary
corresponding amendments to other regulations, in order to facilitate
the use of exchange-traded funds as investment options under variable
contracts within the meaning of section 817(d) of the Internal Revenue
Code of 1986, in accordance with subsections (b) and (c) of this
section.
(b) Designate Certain Authorized Participants and Market Makers as
Eligible Investors.--The Secretary of the Treasury (or the Secretary's
delegate) shall amend Treas. Reg. section 1.817-5(f)(3) to provide that
satisfaction of the requirements in Treas. Reg. section 1.817-
5(f)(2)(i) with respect to an exchange-traded fund shall not be
prevented by reason of beneficial interests in such a fund being held
by 1 or more authorized participants or market makers.
(c) Confirm That Similarities to Other Funds Are Irrelevant.--The
Secretary of the Treasury (or the Secretary's delegate) shall amend
Treas. Reg. section 1.817-5(f) to confirm that, for Federal income tax
purposes, a regulated investment company, partnership, or trust
(including an exchange-traded fund) that satisfies the requirements of
Treas. Reg. section 1.817-5(f) (2) and (3) shall not be treated as
owned by the holder of a variable contract pursuant to the principles
of Rev. Rul. 81-225, 1981-2 C.B. 12, merely because another regulated
investment company, partnership, trust, or similar investment vehicle
follows the same investment strategy, has the same investment manager,
or holds the same investments.
(d) Define Relevant Terms.--In amending Treas. Reg. section 1.817-
5(f)(3) in accordance with subsections (b) and (c) of this section, the
Secretary of the Treasury (or the Secretary's delegate) shall provide
definitions consistent with the following:
(1) Exchange-traded fund.--The term ``exchange-traded
fund'' means a regulated investment company, partnership, or
trust--
(A) that is registered with the Securities and
Exchange Commission as an open-end investment company
or a unit investment trust;
(B) the shares of which can be purchased or
redeemed directly from the fund only by an authorized
participant; and
(C) the shares of which are traded throughout the
day on a national stock exchange at market prices that
may or may not be the same as the net asset value of
the shares.
(2) Authorized participant.--The term ``authorized
participant'' means a financial institution that is a member or
participant of a clearing agency registered under section
17A(b) of the Securities Exchange Act of 1934 that enters into
a contractual relationship with an exchange-traded fund
pursuant to which the financial institution is permitted to
purchase and redeem shares directly from the fund and to sell
such shares to third parties, but only if the contractual
arrangement or applicable law precludes the financial
institution from--
(A) purchasing the shares for its own investment
purposes rather than for the exclusive purpose of
creating and redeeming such shares on behalf of third
parties; and
(B) selling the shares to third parties who are not
market makers or otherwise described in Treas. Reg.
section 1.817-5(f) (1) and (3).
(3) Market maker.--The term ``market maker'' means a
financial institution that is a registered broker or dealer
under section 15(b) of the Securities Exchange Act of 1934 that
maintains liquidity for an exchange-traded fund on a national
stock exchange by being always ready to buy and sell shares of
such fund on the market, but only if the financial institution
is contractually or legally precluded from selling or buying
such shares to or from persons who are not authorized
participants or otherwise described in Treas. Reg. section
1.817-5(f) (2) and (3).
(e) Effective Dates, Enforcement, and Interpretations.--
(1) Effective dates.--
(A) Subsection (b), and the definitions under
subsection (d), shall apply to segregated asset account
investments made on or after the date of enactment of
this Act.
(B) Subsection (c) shall apply to taxable years
beginning after December 31, 1983.
(2) Enforcement and interpretations.--Prior to the date
that the Secretary of the Treasury (or the Secretary's
delegate) issues final regulations pursuant to this section--
(A) the Secretary (or delegate) shall administer
and enforce the law in accordance with this section and
the effective dates in paragraph (1) of this
subsection; and
(B) taxpayers may rely upon their reasonable good
faith interpretations of the preceding subsections of
this section.
TITLE III--SIMPLIFICATION AND CLARIFICATION OF RETIREMENT PLAN RULES
SEC. 301. REVIEW AND REPORT TO THE CONGRESS RELATING TO REPORTING AND
DISCLOSURE REQUIREMENTS.
(a) Study.--As soon as practicable after the date of the enactment
of this Act, the Secretary of Labor, the Secretary of the Treasury, and
the Director of the Pension Benefit Guaranty Corporation (or their
delegates) shall review the reporting and disclosure requirements of--
(1) title I of the Employee Retirement Income Security Act
of 1974, as applicable to pension plans (as defined in section
3(2) of such Act); and
(2) the Internal Revenue Code of 1986, as applicable to
qualified retirement plans (as defined in section 4974(c) of
such Code, without regard to paragraphs (4) and (5) thereof).
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary of Labor, the Secretary of the
Treasury, and the Director of the Pension Benefit Guaranty Corporation
(or their delegates), jointly, shall make such recommendations as may
be appropriate to the appropriate committees of the Congress to
consolidate, simplify, standardize, and improve the applicable
reporting and disclosure requirements so as to simplify reporting for
plans described in subsection (a) and ensure that necessary,
comprehensible information is provided to participants and
beneficiaries of such plans.
SEC. 302. CONSOLIDATION OF DEFINED CONTRIBUTION PLAN NOTICES.
Not later than 18 months after the date of the enactment of this
Act, the Secretary of Labor and the Secretary of the Treasury (or such
Secretaries' delegates) shall adopt regulations providing that a plan
may, but is not required to, consolidate 2 or more of the notices
required under sections 404(c)(5)(B) and 514(e)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(5)(B) and 29
U.S.C. 1144(e)(3)) and sections 401(k)(12)(D), 401(k)(13)(E), and
414(w)(4) of the Internal Revenue Code of 1986 into a single notice so
long as the combined notice includes the required content, clearly
identifies the issues addressed therein, is provided at the time and
with the frequency required for each such notice, and is presented in a
manner that is understandable and does not obscure or fail to highlight
important points for participants and beneficiaries.
SEC. 303. PERFORMANCE BENCHMARKS FOR ASSET ALLOCATION FUNDS.
(a) In General.--Not later than 6 months after the date of the
enactment of this Act, the Secretary of Labor (or the Secretary's
delegate) shall modify the regulations under section 404 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104) to
provide that, in the case of a designated investment alternative which
contains a mix of asset classes, a plan administrator may, but is not
required to, use a benchmark which is a blend of different broad-based
securities market indices if--
(1) the blend is reasonably representative of the asset
class holdings of the designated investment alternative;
(2) for purposes of determining the blend's returns for 1-,
5-, and 10-calendar-year periods (or for the life of the
alternative, if shorter), the blend is modified at least once
per year to reflect changes in the asset class holdings of the
designated investment alternative;
(3) the blend is presented to participants and
beneficiaries in a manner that is reasonably designed to be
understandable and helpful; and
(4) each securities market index which is used for an
associated asset class would separately satisfy the
requirements of such regulations for such asset class.
(b) Study.--Not later than December 31, 2020, the Secretary of
Labor (or the Secretary's delegate) shall deliver a report to the
Committees on Ways and Means and Education and Labor of the House of
Representatives and the Committees on Finance and Health, Education,
Labor, and Pensions of the Senate regarding the effectiveness of the
benchmarking requirements under section 2550.404a-5 of title 29, Code
of Federal Regulations.
SEC. 304. PERMIT NONSPOUSAL BENEFICIARIES TO ROLL ASSETS TO PLANS.
(a) In General.--Section 402(c) is amended by adding at the end the
following new paragraph:
``(12) Distributions to qualified plan of nonspouse
beneficiary.--If, with respect to any portion of a distribution
from an eligible retirement plan described in clause (iii),
(iv), (v), or (vi) of paragraph (8)(B) of a deceased employee,
a direct trustee-to-trustee transfer is made to another such
plan of an individual who is a designated beneficiary (as
defined by section 401(a)(9)(E)) of the employee and who is not
the surviving spouse of the employee--
``(A) the transfer shall be treated as an eligible
rollover distribution, and
``(B) section 401(a)(9)(B) (other than clause (iv)
thereof) shall apply to such plan.''.
(b) Conforming Amendments.---
(1) 403(a) plans.--Subparagraph (B) of section 403(a)(4) is
amended by striking ``and (11) and (9)'' and inserting ``, (9),
(11), and (12)''.
(2) 403(b) plans.--Subparagraph (B) of section 403(b)(8) is
amended by striking ``and (11)'' and inserting ``(11), and
(12)''.
(3) 457 plans.--Subparagraph (B) of section 457(e)(16) is
amended by striking ``and (11)'' and inserting ``(11), and
(12)''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made after the date of the enactment of this
Act.
SEC. 305. DEFERRAL AGREEMENTS.
(a) In General.--Paragraph (4) of section 457(b) of the Internal
Revenue Code of 1986 is amended by inserting ``, or, in the case of a
plan of an eligible employer described in subsection (e)(1)(A), before
the date on which the compensation is (but for the deferral)
available'' before the comma at the end.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2019.
SEC. 306. SIMPLIFYING 402(F) NOTICES.
Not later than December 31, 2020, the Secretary of the Treasury (or
the Secretary's delegate), in consultation with the Secretary of Labor
and the Director of the Pension Benefit Guaranty Corporation (or their
delegates), shall simplify the model notices issued under section
402(f) of the Internal Revenue Code of 1986 so as to facilitate better
understanding by recipients of different distribution options and
corresponding tax consequences. Such model notices shall include an
explanation of the effect of elections on spousal rights.
SEC. 307. TREATMENT OF CUSTODIAL ACCOUNTS ON TERMINATION OF SECTION
403(B) PLANS.
(a) In General.--Not later than 6 months after the date of the
enactment of this Act, the Secretary of the Treasury (or the
Secretary's delegate) shall issue guidance to provide that, if an
employer terminates the plan under which amounts are contributed to a
custodial account under subparagraph (A) of section 403(b)(7) of the
Internal Revenue Code of 1986--
(1) the plan administrator or custodian may distribute an
individual custodial account in kind to a participant or
beneficiary of the plan, and
(2) the distributed custodial account shall be maintained
by the custodian on the same basis as a custodial account to
which section 403(b)(7) of such Code applies, similar to the
treatment of fully paid individual annuity contracts under
Revenue Ruling 2011-7, until amounts are actually paid to the
participant or beneficiary.
(b) Treatment of Accounts.--The guidance issued under subsection
(a) shall also provide that--
(1) the status of the distributed custodial account under
section 403(b)(7) of the Internal Revenue Code of 1986 is
generally maintained if the custodial account thereafter
adheres to the requirements of section 403(b) of such Code
which are in effect at the time of the distribution of the
account, and
(2) a custodial account will not be considered distributed
to the participant or beneficiary if the employer has any
material retained rights under the account.
For purposes of paragraph (2), an employer shall not be treated as
retaining material rights over a custodial account solely because the
custodial account was originally opened under a group contract.
(c) Distribution Upon Termination.--
(1) In general.--Paragraph (11) of section 403(b) 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) in the case of a termination of the plan
under which contributions were made, without the
establishment or maintenance of another plan under this
subsection.''.
(2) Custodial accounts.--Section 403(b)(7)(A)(ii) is
amended by striking ``before the employee dies'' and inserting
``before the termination of the plan under which contributions
were made to the custodial account (without the establishment
or maintenance of another plan under this subsection), or
before the employee dies''.
(d) Effective Date.--The guidance issued under subsections (a) and
(b), and the amendments made by subsection (c), shall apply to taxable
years beginning after December 31, 2008.
SEC. 308. PERMIT PLANS TO USE BASE PAY OR RATE OF PAY CALCULATION.
(a) In General.--Not later than December 31, 2020, the Secretary of
the Treasury (or the Secretary's delegate) shall modify Treasury
Regulation section 1.414(s)-1(d)(3) to facilitate the use of the safe
harbors in sections 401(k)(12), 401(k)(13), 401(k)(15), 401(m)(11),
401(m)(12), and 401(m)(13) of the Internal Revenue Code of 1986, and in
Treasury Regulation section 1.401(a)(4)-3(b), by plans which use base
pay or rate of pay in determining contributions or benefits. Such
facilitation shall include increased flexibility in meeting the
definition in section 414(s) of such Code in situations where the
amount of overtime compensation payable in a year can vary
significantly.
(b) Exception.--The Secretary of the Treasury (or the Secretary's
delegate) may make any modification under subsection (a) inapplicable
to plans with respect to which, on a consistent basis, overtime is a
major component of a substantial portion of the employees eligible to
participate in the plan who are not highly compensated employees (as
defined in section 414(q) of the Internal Revenue Code of 1986).
SEC. 309. ROTH SIMPLE IRAS.
(a) In General.--Section 408A(f) is amended--
(1) by striking ``or a simple retirement account'' in
paragraph (1); and
(2) by striking ``or account'' in paragraph (2).
(b) Conforming Amendments.--Section 408A(c)(2) is amended by adding
at the end the following flush sentence:
``In applying this paragraph to an individual on whose behalf
elective employer contributions are made to a simple retirement
account, the amount described in subparagraph (A) shall be
increased by the amount of elective employer contributions made
on behalf of the individual to such account, except to the
extent that such contributions exceed the applicable dollar
amount (as defined in subsection (p)(2)(E)) or cause the
elective deferrals (as defined in section 402(g)(3)) on behalf
of such individual to exceed the limitation under section
402(g)(1) (taking into account subparagraph (C) thereof).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 310. REDUCTION IN EXCISE TAX ON CERTAIN ACCUMULATIONS IN QUALIFIED
RETIREMENT PLANS.
(a) In General.--Subsection (a) of section 4974 is amended by
striking ``50 percent'' and inserting ``25 percent''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2019.
SEC. 311. CLARIFICATION OF CATCH-UP CONTRIBUTIONS WITH RESPECT TO
SEPARATE LINES OF BUSINESS.
(a) In General.--Subparagraph (B) of section 414(v)(4) is amended--
(1) by striking ``except that a plan'' and inserting
``except that--
``(i) a plan'';
(2) by striking the period at the end and inserting ``,
and''; and
(3) by adding at the end the following new clause:
``(ii) for any year in which an employer
complies with section 410(b) on the basis of
separate lines of business pursuant to section
410(b)(5), the employer may apply subparagraph
(A) for such year separately with respect to
employees in each separate line of business.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 312. CLARIFICATION OF SUBSTANTIALLY EQUAL PERIODIC PAYMENT RULE.
(a) In General.--Paragraph (4) of section 72(t) is amended by
inserting at the end the following new subparagraph:
``(C) Rollovers to subsequent plan.--If--
``(i) payments described in paragraph
(2)(A)(iv) are being made from a qualified
retirement plan,
``(ii) a transfer or a rollover from such
qualified retirement plan of all or a portion
of the taxpayer's benefit under the plan is
made to another qualified retirement plan, and
``(iii) distributions from the transferor
and transferee plans would in combination
continue to satisfy the requirements of
paragraph (2)(A)(iv) if they had been made only
from the transferor plan,
such transfer or rollover shall not be treated as a
modification under subparagraph (A)(ii), and compliance
with paragraph (2)(A)(iv) shall be determined on the
basis of the combined distributions described in clause
(iii).''.
(b) Nonqualified Annuity Contracts.--Paragraph (3) of section 72(q)
is amended--
(1) by redesignating clauses (i) and (ii) of subparagraph
(B) as subclauses (I) and (II), and by moving such subclauses 2
ems to the right;
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), by moving such clauses 2 ems to the right, and by
adjusting the flush language at the end accordingly;
(3) by striking ``payments.--If'' and inserting
``payments.--
``(A) In general.--If--''; and
(4) by adding at the end the following new subparagraph:
``(B) Exchanges to subsequent contracts.--If--
``(i) payments described in paragraph
(2)(D) are being made from an annuity contract,
``(ii) an exchange of all or a portion of
such contract for another contract is made
under section 1035, and
``(iii) the aggregate distributions from
the contracts involved in the exchange continue
to satisfy the requirements of paragraph (2)(D)
as if the exchange had not taken place,
such exchange shall not be treated as a modification
under subparagraph (A)(ii), and compliance with
paragraph (2)(D) shall be determined on the basis of
the combined distributions described in clause
(iii).''.
(c) Information Reporting.--Section 6724 is amended by inserting at
the end the following new subsection:
``(g) Special Rule for Reporting Certain Additional Taxes.--No
penalty shall be imposed under section 6721 or 6722 if--
``(1) a person makes a return or report under section
6047(d) or 408(i) with respect to any distribution,
``(2) such distribution is made following a rollover,
transfer, or exchange described in section 72(t)(4)(C) or
section 72(q)(3)(C),
``(3) in making such return or report the person relies
upon a certification provided by the taxpayer that the
distributions satisfy the requirements of section
72(t)(4)(C)(iii) or section 72(q)(3)(B)(iii), as applicable,
and
``(4) such person does not have actual knowledge that the
distributions do not satisfy such requirements.''.
(d) Safe Harbor for Annuity Payments.--
(1) Qualified retirement plans.--Subparagraph (A) of
section 72(t)(2) is amended by adding at the end the following
flush sentence:
``For purposes of clause (iv), periodic payments shall
not fail to be treated as substantially equal merely
because they are amounts received as an annuity, and
such periodic payments shall be deemed to be
substantially equal if they are payable over a period
described in clause (iv) and satisfy the requirements
applicable to annuity payments under section
401(a)(9).''.
(2) Other annuity contracts.--Paragraph (2) of section
72(q) is amended by adding at the end the following flush
sentence:
``For purposes of subparagraph (D), periodic payments shall not
fail to be treated as substantially equal merely because they
are amounts received as an annuity, and such periodic payments
shall be deemed to be substantially equal if they are payable
over a period described in subparagraph (D) and would satisfy
the requirements applicable to annuity payments under section
401(a)(9) if such requirements applied.''.
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall apply to transfers, rollovers, and exchanges
occurring on or after the date of the enactment of this Act.
(2) Annuity payments.--The amendment made by subsection (d)
shall apply to distributions commencing on or after the date of
the enactment of this Act.
(3) No inference.--Nothing in the amendments made by this
section shall be construed to create an inference with respect
to the law in effect prior to the effective date of such
amendments.
SEC. 313. CLARIFICATION OF TREATMENT OF DISTRIBUTIONS OF ANNUITY
CONTRACTS.
(a) In General.--Clause (i) of section 402(e)(4)(D) is amended by
inserting after ``section 401(c)(1).'' at the end of the second
sentence the following: ``A distribution of an annuity contract from a
trust or annuity plan referred to in the first sentence of this clause
may be treated as a part of a lump sum distribution.''.
(b) Effective Date.--The amendment made by this section shall take
effect as if included in section 1401(b)(1) of the Small Business Job
Protection Act of 1996.
SEC. 314. CLARIFICATION REGARDING ELECTIVE DEFERRALS.
(a) In General.--Not later than 6 months after the date of the
enactment of this Act, the Secretary of the Treasury (or the
Secretary's delegate) shall amend Treas. Reg. section 1.415(c)-2(e),
and make any necessary conforming amendments to other Treasury
Regulations, to provide that plans may allow employees who have had a
severance from employment to make deferrals or contributions described
in subsection (b) with respect to payments of severance or back pay.
The Secretary of the Treasury (or delegate) may provide for such other
conditions on such deferrals or contributions as are necessary to carry
out the purposes of this section.
(b) Deferrals and Contributions Described.--The deferrals or
contributions described in this subsection are--
(1) elective deferrals described in subparagraph (A), (B),
or (C) of section 402(g)(3) of the Internal Revenue Code of
1986 (other than elective deferrals under section 401(k)(11) of
such Code);
(2) elective contributions under an eligible deferred
compensation plan described in section 457(b) of such Code; and
(3) to the extent provided by such Secretary (or delegate),
elective deferrals described in section 402(g)(3)(D) or
401(k)(11) of such Code.
(c) Treatment of Deferrals.--Except as otherwise determined by the
Secretary of the Treasury (or the Secretary's delegate) to be necessary
to carry out the purposes of this section, the rules described in
subsection (a) shall provide that the contributions or deferrals shall,
for purposes of section 457 and subchapter D of chapter 1 of subtitle A
of the Internal Revenue Code of 1986, be treated as contributions or
deferrals made on behalf of active employees, not on behalf of former
employees.
SEC. 315. TAX TREATMENT OF CERTAIN NONTRADE OR BUSINESS SEP
CONTRIBUTIONS.
(a) In General.--Subparagraph (B) of section 4972(c)(6) is
amended--
(1) by striking ``408(p)) or'' and inserting ``408(p)),'';
and
(2) by inserting ``, or a simplified employee pension
(within the meaning of section 408(k))'' after ``401(k)(11))''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
SEC. 316. ALLOW CERTAIN PLAN TRANSFERS AND MERGERS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Section 414 is amended by adding at the
end the following new subsection:
``(aa) Certain Plan Transfers and Mergers.--
``(1) In general.--Under rules prescribed by the Secretary,
no amount shall be includible in gross income by reason of--
``(A) a transfer of all or a portion of the account
balance of a participant or beneficiary, whether or not
vested, from a defined contribution plan described in
section 401(a) or section 403(a) of an employer to an
annuity contract described in section 403(b) of the
same employer,
``(B) a transfer of all or a portion of the account
balance of a participant or beneficiary, whether or not
vested, from an annuity contract described in section
403(b) of an employer to a defined contribution plan
described in section 401(a) or section 403(a) of the
same employer, or
``(C) a merger of a defined contribution plan
described in section 401(a) or section 403(a) of an
employer with an annuity contract described in section
403(b) of the same employer,
so long as the transfer or merger does not cause a reduction in
the vested benefit or total benefit (including non-vested
benefit) of any participant or beneficiary. A plan or contract
shall not fail to be considered to be described in section
401(a), 403(a), or 403(b) (as applicable) merely because such
plan or contract engages in a transfer or merger described in
this paragraph.
``(2) Distributions.--Amounts transferred or merged
pursuant to paragraph (1) shall be subject to the requirements
of paragraphs (3) and (4) and to the distribution requirements
under section 401(a), 403(a), or 403(b) applicable to the
transferee or merged plan.
``(3) Spousal consent and anti-cutback protection.--In the
case of a transfer or merger described in paragraph (1),
amounts in the transferee or merged plan that are attributable
to the transferor or predecessor plan shall--
``(A)(i) be subject to section 401(a)(11) and
section 205 of the Employee Retirement Income Security
Act of 1974 to the extent that such sections applied to
such amounts in the transferor or predecessor plan, or
``(ii) be required to satisfy the requirements of
section 401(a)(11)(B)(iii)(I) and section
205(b)(1)(C)(i) of the Employee Retirement Income
Security Act of 1974 to the extent that such sections
applied to such amounts in the transferor or
predecessor plan, and
``(B) be treated as subject to section 411(d)(6)
and section 204(g) of the Employee Retirement Income
Security Act of 1974 to the extent that such amounts
were subject to such sections in the transferor or
predecessor plan.
``(4) Special rules.--Under rules prescribed by the
Secretary, to the extent amounts transferred or merged pursuant
to paragraph (1) were otherwise entitled to grandfather
treatment under the transferor or predecessor plan, such
amounts (and income or loss attributable thereto) shall remain
entitled to such treatment under the transferee or merged plan.
The rules prescribed by the Secretary shall require that such
amounts be separately accounted for by the transferee or merged
plan. For purposes of this paragraph, the term `grandfather
treatment' means any special treatment under this title that is
provided for prior benefits, prior periods of time, or certain
individuals in connection with a change in the applicable law.
``(5) Consent.--In the case of a qualified trust described
in section 401(a) or 403(a) and an annuity contract described
in section 403(b) with respect to which transfers may be made
only with the consent of a participant or beneficiary pursuant
to the terms of such trust or contract or pursuant to
applicable law, such consent requirement shall apply without
regard to this subsection. Nothing in this subsection shall
affect the application of contract or plan terms otherwise
applicable in the case of a withdrawal from the contract or
plan.''.
(2) Aggregation.--Paragraph (2) of section 414(t) is
amended by inserting ``414(aa),'' after ``274(j),''.
(3) Technical amendment.--The heading of subsection (z) of
section 414 is amended by striking ``Plan'' and inserting
``Church Plan''.
(b) Amendment to the Employee Retirement Income Security Act of
1974.--Section 4 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1003) is amended by adding at the end the following new
subsection:
``(d) This title shall apply to any plan or contract described in
section 414(aa) of the Internal Revenue Code of 1986 to the extent
necessary to comply with the requirements of such section.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to transfers or mergers in years beginning after the
Secretary of the Treasury (or the Secretary's delegate)
prescribes rules under section 414(aa) of the Internal Revenue
Code of 1986, as added by this section.
(2) Rules.--The Secretary of the Treasury (or the
Secretary's delegate) shall issue rules under section 414(aa)
of the Internal Code of 1986, as so added, within 1 year after
the date of the enactment of this Act.
SEC. 317. EXCEPTION FROM REQUIRED DISTRIBUTIONS WHERE AGGREGATE
RETIREMENT SAVINGS DO NOT EXCEED $100,000.
(a) In General.--Section 401(a)(9), as amended by this Act, is
further amended by adding at the end the following new subparagraph:
``(K) Exception from required minimum distributions
during life of employee or beneficiary where assets do
not exceed $100,000.--
``(i) In general.--If, as of a measurement
date, the aggregate value of the entire
interest of an employee under all applicable
eligible retirement plans does not exceed
$100,000, then, with respect to any applicable
eligible retirement plan of the employee,
during any succeeding calendar year beginning
before the next measurement date the
requirements of subparagraph (A) shall not
apply to the 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)) and any other plan,
contract, or arrangement to which the
requirements of this paragraph apply, but does
not include any defined benefit plan.
``(iii) Measurement date.--
``(I) Initial measurement dates.--
The initial measurement date for an
employee is the last day of the
calendar year preceding the earlier
of--
``(aa) the calendar year in
which the employee attains the
applicable age, or
``(bb) the calendar year in
which the employee dies.
``(II) Subsequent measurement
dates.--If, in a calendar year, an
employee to whom subparagraph (A) does
not apply by reason of clause (i)
receives contributions, rollovers, or
transfers of amounts which were not
previously taken into account in
applying this subparagraph, then the
last day of that calendar year shall be
a new measurement date and a new
determination shall be made as to
whether clause (i) applies to such
employee.
``(III) Special rule.--In the case
of an employee who receives account
statements at least annually with
respect to a plan, the value of the
employee's interest in such plan as
shown on the last account statement
provided to such employee for such
calendar year may (at the election of
the employee) be treated as the value
of the employee's interest in such plan
on the measurement date. If such last
account statement does not include all
amounts described in subclause (II) for
such calendar year, the last day of the
next calendar year shall be a new
measurement date in accordance with
subclause (II) and a new determination
shall be made as to whether clause (i)
applies to such employee.
``(iv) Determination of value.--For
purposes of this subparagraph, the value of an
employee's interest in a plan is the account
balance of such plan.
``(v) Phase-out of exception.--In the case
of an employee whose aggregate balance
described in clause (i) as of a measurement
date exceeds the dollar amount in effect under
such clause by less than $10,000, the required
distributions under this paragraph for calendar
years beginning after such measurement date and
before the next measurement date shall be equal
to the amount which bears the same ratio to the
required distributions otherwise determined
under this paragraph as--
``(I) the amount by which such
aggregate balance exceeds such dollar
amount so in effect, bears to
``(II) $10,000.
``(vi) Cost-of-living adjustments.--The
Secretary shall adjust annually the $100,000
amount specified in clause (i) for increases in
the cost-of-living at the same time and in the
same manner as adjustments under section
415(d); except that the base period shall be
the calendar quarter beginning July 1, 2019,
and any increase which is not a multiple of
$5,000 shall be rounded to the next lowest
multiple of $5,000.
``(vii) Plan reliance.--The plan
administrator of an applicable eligible
retirement plan shall be entitled to rely on a
certification provided by an employee that such
employee's interest in other applicable
eligible retirement plans does not prevent such
employee from being described in clause (i).
Any such certification shall apply to all
future years in the absence of a contrary
certification from the employee, and shall
apply to the current year if received not later
than March 1 of such current year. If no such
certification is received by the plan
administrator by March 1 of a year for which a
required distribution is to be made under
subparagraph (A), the plan administrator shall
be treated as required to make the distribution
required under subparagraph (A) for such
year.''.
(b) Effective Date.--The amendment made by this section shall apply
to initial measurement dates occurring on or after December 31, 2019.
SEC. 318. HARDSHIP RULES FOR 403(B) PLANS.
(a) In General.--Section 403(b) is amended by adding at the end the
following new paragraph:
``(15) Special rules relating to hardship withdrawals.--For
purposes of paragraphs (7) and (11)--
``(A) Amounts which may be withdrawn.--The
following amounts may be distributed upon hardship of
the employee:
``(i) Contributions made pursuant to a
salary reduction agreement (within the meaning
of section 3121(a)(5)(D)).
``(ii) Qualified nonelective contributions
(as defined in section 401(m)(4)(C)).
``(iii) Qualified matching contributions
described in section 401(k)(3)(D)(ii)(I).
``(iv) Earnings on any contributions
described in clause (i), (ii), or (iii).
``(B) No requirement to take available loan.--A
distribution shall not be treated as failing to be made
upon the hardship of an employee solely because the
employee does not take any available loan under the
plan.''.
(b) Conforming Amendments.--
(1) Section 403(b)(7)(A)(ii) is amended by striking ``in
the case of contributions made pursuant to a salary reduction
agreement (within the meaning of section 3121(a)(5)(D))'' and
inserting ``subject to the provisions of paragraph (15)''.
(2) Paragraph (11) of section 403(b), as amended by this
Act, is further amended--
(A) by striking ``in'' in subparagraph (B) and
inserting ``subject to the provisions of paragraph
(15), in''; and
(B) by striking the last sentence.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2019.
SEC. 319. IRA PRESERVATION.
(a) Information Made Available.--The Secretary of the Treasury (or
the Secretary's delegate) shall make available to the public the
following information:
(1) An overview of the laws and regulations related to
individual retirement plans (as defined in section 7701(a)(37)
of the Internal Revenue Code of 1986), including--
(A) limits on contributions;
(B) limits on deductions for contributions;
(C) rollovers;
(D) minimum required distributions;
(E) non-exempt prohibited transactions; and
(F) tax consequences for early distributions.
(2) Examples of common errors by taxpayers with respect to
the laws and regulations described in paragraph (1) and
instructions on how to avoid such errors.
(b) Reduction in Excise Tax on Excess Contributions.--Section 4973
is amended by adding at the end the following new subsection:
``(i) Reduction of Tax in Certain Cases.--
``(1) Reduction.--In the case of a taxpayer who--
``(A) corrects, during the correction window, an
excess contribution which was made to an individual
retirement plan and which resulted in imposition of a
tax under paragraph (1) or (3) of subsection (a), and
``(B) submits a return, during the correction
window, reflecting such tax (as modified by this
subsection),
the first and second sentences of subsection (a) shall be
applied by substituting `3 percent' for `6 percent' each place
it appears.
``(2) Correction window.--For purposes of this subsection,
the term `correction window' means the period beginning on the
date on which the tax under subsection (a) is imposed with
respect to an excess contribution, and ending on the earlier
of--
``(A) the date on which the Secretary initiates an
audit, or otherwise demands payment, with respect to
the excess contribution, or
``(B) the last day of the second taxable year that
begins after the end of the taxable year in which the
tax under subsection (a) is imposed.''.
(c) Reduction in Excise Tax on Failures To Take Required Minimum
Distributions.--Section 4974, as amended by this Act, is further
amended by adding at the end the following new subsection:
``(e) Reduction of Tax in Certain Cases.--
``(1) Reduction.--In the case of a taxpayer who--
``(A) corrects, during the correction window, a
shortfall of distributions from an individual
retirement plan which resulted in imposition of a tax
under subsection (a), and
``(B) submits a return, during the correction
window, reflecting such tax (as modified by this
subsection),
the first sentence of subsection (a) shall be applied by
substituting `10 percent' for `25 percent'.
``(2) Correction window.--For purposes of this subsection,
the term `correction window' means the period of time beginning
on the date on which the tax under subsection (a) is imposed
with respect to a shortfall of distributions from an individual
retirement plan, and ending on the earlier of--
``(A) the date on which the Secretary initiates an
audit, or otherwise demands payment, with respect to
the shortfall of distributions, or
``(B) the last day of the second taxable year that
begins after the end of the taxable year in which the
tax under subsection (a) is imposed.''.
(d) Repeal of Tax Disqualification Penalty.--
(1) In general.--Paragraph (2) of subsection (e) of section
408 is repealed.
(2) Conforming amendments.--
(A) Section 408(e)(1) is amended by striking ``(2)
or''.
(B) Sections 220(e)(2), 223(e)(2), and 530(e) are
each amended by striking ``paragraphs (2) and (4) of
section 408(e)'' and inserting ``section 408(e)(4)''.
(C) Section 4975(c)(3) is amended by striking ``the
account ceases to be an individual retirement account
by reason of the application of section 408(e)(2)(A) or
if''.
(e) Statute of Limitations.--Subsection (l) of section 6501 of the
Internal Revenue Code of 1986 is amended--
(1) in paragraph (1), by inserting ``(other than with
respect to an individual retirement plan)'' after ``section
4975''; and
(2) by adding at the end the following new paragraph:
``(4) Individual retirement plans.--For purposes of any tax
imposed by section 4973, 4974, or 4975 in connection with an
individual retirement plan, the return referred to in this
section shall be the income tax return filed by the person on
whom the tax under such section is imposed for the year in
which the act (or failure to act) giving rise to the liability
for such tax occurred. In the case of a person who is not
required to file an income tax return for such year--
``(A) the return referred to in this section shall
be the income tax return that such person would have
been required to file but for the fact that such person
was not required to file such return, and
``(B) the 3-year period referred to in subsection
(a) with respect to the return shall be deemed to begin
on the date by which the return would have been
required to be filed (excluding any extension
thereof).''.
(f) Effective Date.--
(1) In general.--Subject to paragraphs (2) and (3), this
section and the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Transition provisions.--
(A) In general.--The amendments made by this
section shall apply to any determination of or
affecting liability for taxes, interest, or penalties
which is made on or after the date of the enactment of
this Act, without regard to whether the conduct upon
which the determination is based occurred before such
date of enactment.
(B) Calculation of correction window in certain
cases.--In the case of an error that would have been
eligible for correction under section 4973(i) or
4974(e) of the Internal Revenue Code of 1986 if tax had
not been imposed under section 4973(a) or 4974(a), as
the case may be, of such Code before the date of the
enactment of this Act, the correction window referred
to in sections 4973(i) and 4974(e) of such Code (as
added by this section) shall be the period beginning on
the date on which such tax was imposed and ending on
the earlier of--
(i) the date on which the Secretary of the
Treasury (or the Secretary's delegate)
initiates an audit or otherwise demands payment
with respect to the conduct described in
section 4973(a) or 4974(a), as the case may be,
of such Code; or
(ii) the last day of the second taxable
year that begins after the taxable year in
which the date of the enactment of this Act
occurs.
(3) Implementation.--Subsection (a) shall be implemented as
soon as reasonably practicable after the enactment of this Act
but in no case later than the date that is 1 year after such
date of enactment.
SEC. 320. ELIMINATION OF ADDITIONAL TAX ON CERTAIN DISTRIBUTIONS.
(a) In General.--Subparagraph (A) of section 72(t)(2), as amended
by this Act, is further amended--
(1) by striking ``or'' at the end of clause (vii);
(2) by striking the period at the end of clause (viii) and
inserting ``, or''; and
(3) by inserting after clause (viii) the following new
clause:
``(ix) attributable to withdrawal of
interest or other income earned on excess
contributions (as defined in section 4973(b)
(without regard to the second to last sentence
thereof)) to an individual retirement plan.''.
(b) Effective Date.--The amendments made by this section shall
apply to any determination of, or affecting, liability for taxes,
interest, or penalties which is made on or after the date of the
enactment of this Act, without regard to whether the act (or failure to
act) upon which the determination is based occurred before such date of
enactment. Notwithstanding the preceding sentence, nothing in the
amendments made by this section shall be construed to create an
inference with respect to the law in effect prior to the effective date
of such amendments.
SEC. 321. DISTRIBUTIONS TO FIREFIGHTERS.
(a) In General.--Subparagraph (A) of section 72(t)(10) is amended
by striking ``414(d))'' and inserting ``414(d)) or a distribution from
a plan described in clause (iii), (iv), or (vi) of section 402(c)(8)(B)
to an employee who provides firefighting services''.
(b) Conforming Amendment.--The heading of paragraph (10) of section
72(t) is amended--
(1) by striking ``public'', and
(2) by striking ``in governmental plans''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made after December 31, 2019.
SEC. 322. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO
UNENROLLED PARTICIPANTS.
(a) Amendment of Employee Retirement Income Security Act of 1974.--
(1) In general.--Part 1 of subtitle B of subchapter I of
the Employee Retirement Income Security Act of 1974 is amended
by redesignating section 111 as section 112 and by inserting
after section 110 the following new section:
``SEC. 111. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO
UNENROLLED PARTICIPANTS.
``(a) In General.--Notwithstanding any other provision of this
title, with respect to any individual account plan, no disclosure,
notice, or other plan document (other than the notices and documents
described in paragraphs (1) and (2)) shall be required to be furnished
under this title to any unenrolled participant if the unenrolled
participant receives--
``(1) in connection with the annual open season election
period with respect to the plan or, if there is no such period,
within a reasonable period prior to the beginning of each plan
year, an annual reminder notice of such participant's
eligibility to participate in such plan and any applicable
election deadlines under the plan; and
``(2) any document requested by such participant which the
participant would be entitled to receive without regard to this
section.
``(b) Unenrolled Participant.--For purposes of this section, the
term `unenrolled participant' means an employee who--
``(1) is eligible to participate in an individual account
plan;
``(2) has received all required notices, disclosures, and
other plan documents, including the summary plan description,
required to be furnished under this title in connection with
such participant's initial eligibility to participate in such
plan;
``(3) is not participating in such plan; and
``(4) does not have a balance in the plan.
For purposes of this section, any eligibility to participate in the
plan following any period for which such employee was not eligible to
participate shall be treated as initial eligibility.
``(c) Annual Reminder Notice.--For purposes of this section, the
term `annual reminder notice' means a notice provided in accordance
with section 2520.104b-1 of title 29, Code of Federal Regulations (or
any successor regulation), which--
``(1) is furnished in connection with the annual open
season election period with respect to the plan or, if there is
no such period, is furnished within a reasonable period prior
to the beginning of each plan year;
``(2) notifies the unenrolled participant of--
``(A) the unenrolled participant's eligibility to
participate in the plan; and
``(B) the key benefits under the plan and the key
rights and features under the plan affecting such
benefits; and
``(3) provides such information in a prominent manner
calculated to be understood by the average participant.''.
(2) Clerical amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 is
amended by striking the item relating to section 111 and by
inserting after the item relating to section 110 the following
new items:
``Sec. 111. Eliminating unnecessary plan requirements related to
unenrolled participants.
``Sec. 112. Repeal and effective date.''.
(b) Amendment of Internal Revenue Code of 1986.--Section 414, as
amended by this Act, is further amended by adding at the end the
following new subsection:
``(bb) Eliminating Unnecessary Plan Requirements Related to
Unenrolled Participants.--
``(1) In general.--Notwithstanding any other provision of
this title, with respect to any defined contribution plan, no
disclosure, notice, or other plan document (other than the
notices and documents described in subparagraphs (A) and (B))
shall be required to be furnished under this title to any
unenrolled participant if the unenrolled participant receives--
``(A) in connection with the annual open season
election period with respect to the plan or, if there
is no such period, within a reasonable period prior to
the beginning of each plan year, an annual reminder
notice of such participant's eligibility to participate
in such plan and any applicable election deadlines
under the plan, and
``(B) any document requested by such participant
which the participant would be entitled to receive
without regard to this subsection.
``(2) Unenrolled participant.--For purposes of this
subsection, the term `unenrolled participant' means an employee
who--
``(A) is eligible to participate in a defined
contribution plan,
``(B) has received all required notices,
disclosures, and other plan documents required to be
furnished under this title and the summary plan
description as provided in section 104(b) of the
Employee Retirement Income Security Act of 1974 in
connection with such participant's initial eligibility
to participate in such plan,
``(C) is not participating in such plan, and
``(D) does not have a balance in the plan.
For purposes of this subsection, any eligibility to participate
in the plan following any period for which such employee was
not eligible to participate shall be treated as initial
eligibility.
``(3) Annual reminder notice.--For purposes of this
subsection, the term `annual reminder notice' means the notice
described in section 111(c) of the Employee Retirement Income
Security Act of 1974.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2019.
TITLE IV--DEFINED BENEFIT PLAN REFORMS
SEC. 401. CASH BALANCE.
(a) In General.--Section 414, as amended by this Act, is further
amended by adding at the end the following new subsection:
``(cc) Projected Interest Crediting Rate.--For purposes of this
part, in the case of an applicable defined benefit plan which provides
variable interest crediting rates, the interest crediting rate which is
treated as in effect and as the projected interest crediting rate shall
be a reasonable projection of such variable interest crediting rate,
not to exceed 6 percent.''.
(b) Amendment of Employee Retirement Income Security Act of 1974.--
Section 210 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1060) is amended by adding at the end the following new
subsection:
``(g) Projected Interest Crediting Rate.--For purposes of this
title, in the case of an applicable defined benefit plan (within the
meaning of section 203(f)(3)) which provides variable interest
crediting rates, the interest crediting rate which is treated as in
effect and as the projected interest crediting rate shall be a
reasonable projection of such variable interest crediting rate, not to
exceed 6 percent.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to years beginning after the date of the enactment
of this Act.
SEC. 402. ALIGNING USE OF LOOKBACK MONTHS TO DETERMINE INTEREST RATES.
(a) In General.--The Secretary of the Treasury (or the Secretary's
delegate) shall modify Treasury Regulation section 1.417(e)-
1(d)(10)(ii) (or any successor provision) to provide that the same rule
applicable to modifications of the time for determining the applicable
interest rate shall apply to modifications of the time for determining
any interest rate used by a plan to the extent that the use of such
interest rate is permissible under section 417(e)(3) of the Internal
Revenue Code of 1986. Such modified regulations shall require that
after any such modification of such time under a plan pursuant to this
section, no further modifications of such time are to be permitted for
5 years with respect to such plan without the consent of the Secretary
of the Treasury (or delegate).
(b) Effective Date.--The modifications and amendments required
under subsection (a) shall be deemed to have been made as of the date
of the enactment of this Act, and as of such date all applicable laws
shall be applied in all respects as though the actions which the
Secretary of the Treasury (or the Secretary's delegate) is required to
take under such subsection had been taken.
SEC. 403. CORRECTIONS OF MORTALITY TABLES.
(a) In General.--Not later than 6 months after the date of the
enactment of this Act, the Secretary of the Treasury (or the
Secretary's delegate) shall amend the regulation relating to
``Mortality Tables for Determining Present Value Under Defined Benefit
Pension Plans'' (82 Fed. Reg. 46388 (October 5, 2017)). Under such
amendment--
(1) except as provided in paragraphs (2) and (3), the
mortality improvement rates for valuation dates occurring
during 2018 shall be based on the mortality improvement rates
in the Mortality Improvement Scale MP-2017 Report issued by the
Retirement Plans Experience Committee of the Society of
Actuaries;
(2) for valuation dates occurring during or after 2018,
such mortality improvement rates shall not assume future
mortality improvements at any age which are greater than .78
percent; and
(3) plan sponsors shall be permitted to elect for the
modifications under paragraphs (1) and (2) not to apply to a
plan for valuation dates occurring during 2018.
The Secretary of the Treasury (or delegate) shall by regulation modify
the .78 percent figure in paragraph (2) as necessary to reflect
material changes in the overall rate of improvement projected by the
Social Security Administration.
(b) Preservation of Current Law Option.--Notwithstanding the
modifications made under subsection (a), with respect to a plan for
which substitute mortality tables are not used pursuant to Treas. Reg.
section 1.430(h)(3)-2 for a plan year beginning during 2018, mortality
tables determined in accordance with Treas. Reg. section 1.430(h)(3)-1
as in effect on December 31, 2017, may be used for purposes of applying
the rules of section 430 of the Internal Revenue Code of 1986 for a
valuation date occurring during 2018 if the plan sponsor--
(1) concludes that the use of mortality tables determined
in accordance with Treas. Reg. section 1.430(h)(3)-1 (without
regard to any modification under this section) for the plan
year would be administratively impracticable or would result in
an adverse business impact that is greater than de minimis; and
(2) informs the plan actuary of the intent to apply the
option under this subsection.
(c) Effective Date.--The modifications and amendments required
under subsections (a) and (b) shall be deemed to have been made as of
the date of the enactment of this Act, and as of such date all
applicable laws shall be applied in all respects as though the actions
which the Secretary of the Treasury (or the Secretary's delegate) is
required to take under such subsections had been taken.
SEC. 404. CEASE DOUBLE-INDEXING THE VARIABLE RATE PREMIUM.
(a) In General.--Clause (ii) of section 4006(a)(3)(E) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)(ii)) is amended by striking ``the applicable dollar
amount under paragraph (8)'' and inserting ``$38''.
(b) Conforming Amendment.--Subsection (a) of section 4006 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is
amended by striking paragraph (8).
(c) Technical Amendment.--Clause (i) of section 4006(a)(3)(E) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by striking ``subparagraph (H)'' and
inserting ``subparagraph (I)''.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2019.
SEC. 405. ENHANCING RETIREE HEALTH BENEFITS IN PENSION PLANS.
(a) Extension of Transfers of Excess Pension Assets to Retiree
Health Accounts.--Paragraph (4) of section 420(b) is amended by
striking ``December 31, 2025'' and inserting ``December 31, 2029''.
(b) De Minimis Transfer Rule.--
(1) In general.--Subsection (e) of section 420 is amended
by adding at the end the following new paragraph:
``(7) Special rule for de minimis transfers.--
``(A) In general.--In the case of a transfer of an
amount which is not more than 1.75 percent of the
amount determined under paragraph (2)(A) by a plan
which meets the requirements of subparagraph (B),
paragraph (2)(B) shall be applied by substituting `110
percent' for `125 percent'.
``(B) Two-year lookback requirement.--A plan is
described in this subparagraph if, as of any valuation
date in each of the 2 plan years immediately preceding
the plan year in which the transfer occurs, the amount
determined under paragraph (2)(A) with respect to such
plan exceeded 110 percent of the sum of the funding
target and the target normal cost determined under
section 430 for such plan year.''.
(2) Cost maintenance period.--Subparagraph (D) of section
420(c)(3) is amended by striking ``5 taxable years'' and
inserting ``5 taxable years (7 taxable years in the case of a
transfer to which subsection (e)(7) applies)''.
(3) Conforming amendments.--
(A) Excess pension assets.--Clause (i) of section
420(f)(2)(B) is amended--
(i) by striking ``In general.--In'' and
inserting ``In general.--
``(I) Determination.--In'',
(ii) by striking ``subsection (e)(2)'' and
inserting ``subsection (e)(2)(B)'', and
(iii) by adding at the end the following
new subclause:
``(II) Special rule for
collectively bargained transfers.--In
determining excess pension assets for
purposes of a collectively bargained
transfer, subsection (e)(7) shall not
apply.''.
(B) Minimum cost.--Subclause (I) of section
420(f)(2)(D)(i) is amended by striking ``4th year'' and
inserting ``4th year (the 6th year in the case of a
transfer to which subsection (e)(7) applies)''.
(c) Amendment of Employee Retirement Income Security Act of 1974.--
(1) Definitions.--Section 101(e)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021(e)(3))
is amended by striking ``(as in effect on the date of the
enactment of the Surface Transportation and Veterans Health
Care Choice Improvement Act of 2015)'' and inserting ``(as in
effect on the date of the enactment of the Retirement Security
and Savings Act of 2019)''.
(2) Use of assets.--Section 403(c)(1) of such Act (29
U.S.C. 1103(c)(1)) is amended by striking ``(as in effect on
the date of the enactment of the Surface Transportation and
Veterans Health Care Choice Improvement Act of 2015)'' and
inserting ``(as in effect on the date of the enactment of the
Retirement Security and Savings Act of 2019)''.
(3) Exemption.--Section 408(b)(13) of such Act (29 U.S.C.
1108(b)(13)) is amended--
(A) by striking ``January 1, 2026'' and inserting
``January 1, 2030''; and
(B) by striking ``(as in effect on the date of the
enactment of the Surface Transportation and Veterans
Health Care Choice Improvement Act of 2015)'' and
inserting ``(as in effect on the date of the enactment
of the Retirement Security and Savings Act of 2019)''.
(d) Effective Date.--The amendments made by this section shall
apply to transfers made after the date of the enactment of this Act.
TITLE V--REFORMING PLAN RULES TO HARMONIZE WITH IRA RULES
SEC. 501. ROTH PLAN DISTRIBUTION RULES.
(a) In General.--Subsection (d) of section 402A is amended by
adding at the end the following new paragraph:
``(5) Mandatory distribution rules not to apply before
death.--Notwithstanding sections 403(b)(10) and 457(d)(2), the
following provisions shall not apply to any designated Roth
account:
``(A) Section 401(a)(9)(A).
``(B) The incidental death benefit requirements of
section 401(a).''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply to taxable years
beginning after December 31, 2019.
(2) Special rule.--The amendment made by this section shall
not apply to distributions which are required with respect to
years beginning before January 1, 2020, but are permitted to be
paid on or after such date.
SEC. 502. DISTRIBUTIONS FOR CHARITABLE PURPOSES.
(a) In General.--Section 402 is amended by adding at the end the
following new subsection:
``(m) Distributions for Charitable Purposes.--
``(1) In general.--Gross income for any taxable year shall
not include so much of the aggregate amount of qualified
charitable distributions made with respect to a taxpayer during
such taxable year which does not exceed the applicable amount.
``(2) Qualified charitable distribution.--For purposes of
this subsection, the term `qualified charitable distribution'
means any distribution from an eligible retirement plan
described in clause (iii), (iv), (v), or (vi) of section
402(c)(8)(B)--
``(A) which is made directly by the plan to an
organization described in section 170(b)(1)(A) (other
than any organization described in section 509(a)(3) or
any fund or account described in section 4966(d)(2)),
and
``(B) which is made on or after the date that the
individual on whose behalf the distribution is made has
attained age 70\1/2\.
A distribution shall be treated as a qualified charitable
distribution only to the extent that the distribution would be
includible in gross income without regard to paragraph (1).
``(3) Special rules.--
``(A) In general.--Rules similar to the rules of
subparagraphs (C) and (E) of section 408(d)(8) shall
apply for purposes of this subsection.
``(B) Application of 72.--Rules similar to the
rules of section 408(d)(8)(D) shall apply for purposes
of this subsection, by taking into account all amounts
in the eligible retirement plan to which the taxpayer
has a nonforfeitable right in lieu of all amounts in
all individual retirement plans of the individual.
``(4) Applicable amount.--For purposes of this subsection,
the term `applicable amount' means the excess of--
``(A) $100,000, over
``(B) the total amount of any distributions not
includible in gross income of the taxpayer for the
taxable year by reason of sections 403(b)(16),
408(d)(8), and 457(e)(19).''.
(b) SEPs and SIMPLEs.--Subparagraph (B) of section 408(d)(8) is
amended by striking ``(other than a plan described in subsection (k) or
(p))''.
(c) 403(b) Plans.--Section 403(b), as amended by this Act, is
further amended by adding at the end the following new paragraph:
``(16) Distributions for charitable purposes.--The rules of
section 402(m) shall apply to distributions under an annuity
contract described in this subsection.''.
(d) 457(b) Plans.--Subsection (e) of section 457 is amended by
adding at the end the following new paragraph:
``(19) Distributions for charitable purposes.--The rules of
section 402(m) shall apply to distributions under an eligible
deferred compensation plan established and maintained by an
employer described in subsection (e)(1)(A).''.
(e) Effective Date.--The amendments made by this section shall
apply to distributions made after December 31, 2019.
SEC. 503. SURVIVING SPOUSE ELECTION TO BE TREATED AS EMPLOYEE.
(a) In General.--Clause (iv) of section 401(a)(9)(B) is amended--
(1) by inserting ``or at the election of the surviving
spouse,'' after ``begin,'' in subclause (II); and
(2) by adding at the end the following flush sentence:
``An election described in subclause (II) shall
be made at such time and in such manner as
prescribed by the Secretary, shall include a
timely notice to the plan administrator, and
once made may not be revoked except with the
consent of the Secretary.''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions with respect to employees who die after December 31,
2019.
SEC. 504. ROLLOVERS FROM ROTH IRAS TO PLANS.
(a) In General.--Subparagraph (B) of section 402A(c)(3) is amended
by striking ``shall not'' and inserting ``or, in the case of a rollover
from a Roth IRA, under section 408 shall not''.
(b) Regulations.--The Secretary of the Treasury (or the Secretary's
delegate) shall amend the regulations with respect to rollovers from
Roth IRAs to permit such rollovers to be made to an applicable
retirement plan (as defined in section 402A(e)(1) of the Internal
Revenue Code of 1986) in accordance with the amendment made by
subsection (a).
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
apply to distributions made after December 31, 2019.
(2) Effective date.--The modifications and amendments
required under subsection (b) shall be deemed to have been made
as of January 1, 2020, and as of such date all applicable laws
shall be applied in all respects as though the actions which
the Secretary of the Treasury (or the Secretary's delegate) is
required to take under such subsection had been taken.
TITLE VI--ADMINISTRATIVE PROVISIONS
SEC. 601. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any retirement plan or
contract amendment--
(1) such retirement plan or contract shall be treated as
being operated in accordance with the terms of the plan during
the period described in subsection (b)(2)(A); and
(2) except as provided by the Secretary of the Treasury (or
the Secretary's delegate), such retirement plan shall not fail
to meet the requirements of section 411(d)(6) of the Internal
Revenue Code of 1986 and section 204(g) of the Employee
Retirement Income Security Act of 1974 by reason of such
amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any retirement plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act or
pursuant to any regulation issued by the Secretary of
the Treasury or the Secretary of Labor (or a delegate
of either such Secretary) under this Act; and
(B) on or before the last day of the first plan
year beginning on or after January 1, 2022.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2024'' for ``2022''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative
or regulatory amendment described in paragraph
(1)(A) takes effect (or in the case of a plan
or contract amendment not required by such
legislative or regulatory amendment, the
effective date specified by the plan); and
(ii) ending on the date described in
paragraph (1)(B) (as modified by the second
sentence of paragraph (1)) (or, if earlier, the
date the plan or contract amendment is
adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect; and
(B) such plan or contract amendment applies
retroactively for such period.
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