[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3341 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  2d Session
                                S. 3341

To amend the Internal Revenue Code of 1986 to restrict the tax benefits 
  of executive deferred compensation and increase disclosure, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 27, 2020

   Mr. Van Hollen (for Mr. Sanders (for himself and Mr. Van Hollen)) 
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 restrict the tax benefits 
  of executive deferred compensation and increase disclosure, 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.

    This Act may be cited as the ``CEO and Worker Pension Fairness 
Act''.

SEC. 2. NONQUALIFIED DEFERRED COMPENSATION.

    (a) In General.--Section 409A of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 409A. NONQUALIFIED DEFERRED COMPENSATION.

    ``(a) In General.--Except as otherwise provided in subsection (c), 
any compensation which is deferred under a nonqualified deferred 
compensation plan shall be includible in the gross income of the person 
who performed the services to which such compensation relates in the 
calendar year when there is no substantial risk of forfeiture of the 
rights of such person to such compensation.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Substantial risk of forfeiture.--The rights of a 
        person to compensation shall be treated as subject to a 
        substantial risk of forfeiture only if such person's rights to 
        such compensation are conditioned upon the future performance 
        of substantial services by any person. Such rights shall not be 
        treated as subject to a substantial risk of forfeiture solely 
        by reason of a covenant not to compete or the occurrence of a 
        condition related to a purpose of the compensation other than 
        the future performance of services.
            ``(2) Nonqualified deferred compensation plan.--The term 
        `nonqualified deferred compensation plan' means any plan which 
        provides for the deferral of compensation, other than--
                    ``(A) a qualified employer plan,
                    ``(B) any bona fide vacation leave, sick leave, 
                compensatory time, disability pay, or death benefit 
                plan, and
                    ``(C) any other plan or arrangement designated by 
                the Secretary consistent with the purposes of this 
                section.
            ``(3) Qualified employer plan.--The term `qualified 
        employer plan' means any plan, contract, pension, account, or 
        trust described in section 408(p)(2)(D)(ii) or a simple 
        retirement account (within the meaning of section 408(p)).
            ``(4) Plan includes arrangements, etc.--The term `plan' 
        includes any agreement or arrangement, including an agreement 
        or arrangement which includes only 1 person.
            ``(5) Exception.--Compensation shall not be treated as 
        deferred if the service provider receives payment of such 
        compensation not later than 2\1/2\ months after the end of the 
        taxable year of the service recipient during which the right to 
        the payment of such compensation is no longer subject to a 
        substantial risk of forfeiture.
            ``(6) Treatment of earnings.--References to deferred 
        compensation shall be treated as including references to income 
        (whether actual or notional) attributable to such compensation 
        or such income.
            ``(7) Treatment of qualified stock.--An arrangement under 
        which an employee may receive qualified stock (as defined in 
        section 83(i)(2)) shall not be treated as a nonqualified 
        deferred compensation plan with respect to such employee solely 
        because of such employee's election, or ability to make an 
        election, to defer recognition of income under section 83(i).
            ``(8) Aggregation rules.--Except as provided by the 
        Secretary, rules similar to the rules of subsections (b) and 
        (c) of section 414 shall apply.
    ``(c) Treatment of Equity-Based Compensation.--
            ``(1) In general.--Except as provided in paragraph (7), 
        subsection (a) shall not apply to any equity-based 
        compensation, and such equity-based compensation shall be 
        includible in income as provided in paragraphs (2) through (6).
            ``(2) Plan failures.--
                    ``(A) Gross income inclusion.--
                            ``(i) In general.--If at any time during a 
                        taxable year a nonqualified deferred 
                        compensation plan--
                                    ``(I) fails to meet the 
                                requirements of paragraphs (3), (4), 
                                and (5), or
                                    ``(II) is not operated in 
                                accordance with such requirements,
                         all equity-based compensation deferred under 
                        the plan for the taxable year and all preceding 
                        taxable years shall be includible in gross 
                        income for the taxable year to the extent not 
                        subject to a substantial risk of forfeiture and 
                        not previously included in gross income.
                            ``(ii) Application only to affected 
                        participants.--Clause (i) shall only apply with 
                        respect to all compensation deferred under the 
                        plan for participants with respect to whom the 
                        failure relates.
                    ``(B) Interest and additional tax payable with 
                respect to previously deferred equity-based 
                compensation.--
                            ``(i) In general.--If equity-based 
                        compensation is required to be included in 
                        gross income under subparagraph (A) for a 
                        taxable year, the tax imposed by this chapter 
                        for the taxable year shall be increased by the 
                        sum of--
                                    ``(I) the amount of interest 
                                determined under clause (ii), and
                                    ``(II) an amount equal to 20 
                                percent of the equity-based 
                                compensation which is required to be 
                                included in gross income.
                            ``(ii) Interest.--For purposes of clause 
                        (i), the interest determined under this clause 
                        for any taxable year is the amount of interest 
                        at the underpayment rate plus 1 percentage 
                        point on the underpayments that would have 
                        occurred had the deferred equity-based 
                        compensation been includible in gross income 
                        for the taxable year in which first deferred 
                        or, if later, the first taxable year in which 
                        such compensation is not subject to a 
                        substantial risk of forfeiture.
            ``(3) Distributions.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the plan provides that equity-
                based compensation deferred under the plan may not be 
                distributed earlier than--
                            ``(i) separation from service as determined 
                        by the Secretary (except as provided in 
                        subparagraph (B)(i)),
                            ``(ii) the date the participant becomes 
                        disabled (within the meaning of subparagraph 
                        (C)),
                            ``(iii) death,
                            ``(iv) a specified time (or pursuant to a 
                        fixed schedule) specified under the plan at the 
                        date of the deferral of such compensation,
                            ``(v) to the extent provided by the 
                        Secretary, a change in the ownership or 
                        effective control of the corporation, or in the 
                        ownership of a substantial portion of the 
                        assets of the corporation, or
                            ``(vi) the occurrence of an unforeseeable 
                        emergency.
                    ``(B) Special rules.--
                            ``(i) Specified employees.--In the case of 
                        any specified employee, the requirement of 
                        subparagraph (A)(i) is met only if 
                        distributions may not be made before the date 
                        which is 6 months after the date of separation 
                        from service (or, if earlier, the date of death 
                        of the employee). For purposes of the preceding 
                        sentence, a specified employee is a key 
                        employee (as defined in section 416(i) without 
                        regard to paragraph (5) thereof) of a 
                        corporation any stock in which is publicly 
                        traded on an established securities market or 
                        otherwise.
                            ``(ii) Unforeseeable emergency.--For 
                        purposes of subparagraph (A)(vi)--
                                    ``(I) In general.--The term 
                                `unforeseeable emergency' means a 
                                severe financial hardship to the 
                                participant resulting from an illness 
                                or accident of the participant, the 
                                participant's spouse, or a dependent 
                                (as defined in section 152(a)) of the 
                                participant, loss of the participant's 
                                property due to casualty, or other 
                                similar extraordinary and unforeseeable 
                                circumstances arising as a result of 
                                events beyond the control of the 
                                participant.
                                    ``(II) Limitation on 
                                distributions.--The requirement of 
                                subparagraph (A)(vi) is met only if, as 
                                determined under regulations of the 
                                Secretary, the amounts distributed with 
                                respect to an emergency do not exceed 
                                the amounts necessary to satisfy such 
                                emergency plus amounts necessary to pay 
                                taxes reasonably anticipated as a 
                                result of the distribution, after 
                                taking into account the extent to which 
                                such hardship is or may be relieved 
                                through reimbursement or compensation 
                                by insurance or otherwise or by 
                                liquidation of the participant's assets 
                                (to the extent the liquidation of such 
                                assets would not itself cause severe 
                                financial hardship).
                    ``(C) Disabled.--For purposes of subparagraph 
                (A)(ii), a participant shall be considered disabled if 
                the participant--
                            ``(i) is unable to engage in any 
                        substantial gainful activity by reason of any 
                        medically determinable physical or mental 
                        impairment which can be expected to result in 
                        death or can be expected to last for a 
                        continuous period of not less than 12 months, 
                        or
                            ``(ii) is, by reason of any medically 
                        determinable physical or mental impairment 
                        which can be expected to result in death or can 
                        be expected to last for a continuous period of 
                        not less than 12 months, receiving income 
                        replacement benefits for a period of not less 
                        than 3 months under an accident and health plan 
                        covering employees of the participant's 
                        employer.
            ``(4) Acceleration of benefits.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the plan does not permit the 
                acceleration of the time or schedule of any payment of 
                equity-based compensation under the plan, except as 
                provided in regulations by the Secretary.
                    ``(B) Exception.--A plan shall not be treated as 
                failing to meet the requirement of subparagraph (A) 
                solely because the plan terms permit the removal of 
                participants who are or become ineligible to 
                participate in the plan, and to distribute the benefits 
                of such participants to another qualified retirement 
                plan (as defined in section 4974(c)) of the 
                participants, if such removal is necessary to maintain 
                the plan's exemption from the provisions of the 
                Employee Retirement Income Security Act of 1974.
            ``(5) Elections.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the requirements of subparagraphs 
                (B) and (C) are met.
                    ``(B) Initial deferral decision.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the plan provides that 
                        equity-based compensation for services 
                        performed during a taxable year may be deferred 
                        at the participant's election only if the 
                        election to defer such compensation is made not 
                        later than the close of the preceding taxable 
                        year or at such other time as provided in 
                        regulations.
                            ``(ii) First year of eligibility.--In the 
                        case of the first year in which a participant 
                        becomes eligible to participate in the plan, 
                        such election may be made with respect to 
                        services to be performed subsequent to the 
                        election within 30 days after the date the 
                        participant becomes eligible to participate in 
                        such plan.
                            ``(iii) Performance-based compensation.--In 
                        the case of any equity-based compensation which 
                        is performance-based and is based on services 
                        performed over a period of at least 12 months, 
                        such election may be made no later than 6 
                        months before the end of the period.
                    ``(C) Changes in time and form of distribution.--
                The requirements of this subparagraph are met if, in 
                the case of a plan which permits under a subsequent 
                election a delay in a payment or a change in the form 
                of payment of equity-based compensation--
                            ``(i) the plan requires that such election 
                        may not take effect until at least 12 months 
                        after the date on which the election is made,
                            ``(ii) in the case of an election related 
                        to a payment not described in clause (ii), 
                        (iii), or (vi) of paragraph (2)(A), the plan 
                        requires that the payment with respect to which 
                        such election is made be deferred for a period 
                        of not less than 5 years from the date such 
                        payment would otherwise have been made, and
                            ``(iii) the plan requires that any election 
                        related to a payment described in paragraph 
                        (2)(A)(iv) may not be made less than 12 months 
                        prior to the date of the first scheduled 
                        payment under such paragraph.
            ``(6) Rules relating to funding.--For purposes of this 
        subsection--
                    ``(A) Offshore property in a trust.--In the case of 
                assets set aside (directly or indirectly) in a trust 
                (or other arrangement determined by the Secretary) for 
                purposes of paying deferred equity-based compensation 
                under a nonqualified deferred compensation plan, for 
                purposes of section 83 such assets shall be treated as 
                property transferred in connection with the performance 
                of services whether or not such assets are available to 
                satisfy claims of general creditors--
                            ``(i) at the time set aside if such assets 
                        (or such trust or other arrangement) are 
                        located outside of the United States, or
                            ``(ii) at the time transferred if such 
                        assets (or such trust or other arrangement) are 
                        subsequently transferred outside of the United 
                        States.
                This subparagraph shall not apply to assets located in 
                a foreign jurisdiction if substantially all of the 
                services to which the nonqualified deferred equity-
                based compensation relates are performed in such 
                jurisdiction.
                    ``(B) Employer's financial health.--In the case of 
                equity-based compensation deferred under a nonqualified 
                deferred compensation plan, there is a transfer of 
                property within the meaning of section 83 with respect 
                to such compensation as of the earlier of--
                            ``(i) the date on which the plan first 
                        provides that assets will become restricted to 
                        the provision of benefits under the plan in 
                        connection with a change in the employer's 
                        financial health, or
                            ``(ii) the date on which assets are so 
                        restricted,
                whether or not such assets are available to satisfy 
                claims of general creditors.
                    ``(C) Treatment of employer's defined benefit plan 
                during restricted period.--
                            ``(i) In general.--If--
                                    ``(I) during any restricted period 
                                with respect to a single-employer 
                                defined benefit plan, assets are set 
                                aside or reserved (directly or 
                                indirectly) in a trust (or other 
                                arrangement as determined by the 
                                Secretary) or transferred to such a 
                                trust or other arrangement for purposes 
                                of paying deferred equity-based 
                                compensation of an applicable covered 
                                employee under a nonqualified deferred 
                                compensation plan of the plan sponsor 
                                or member of a controlled group which 
                                includes the plan sponsor, or
                                    ``(II) a nonqualified deferred 
                                compensation plan of the plan sponsor 
                                or member of a controlled group which 
                                includes the plan sponsor provides that 
                                assets will become restricted to the 
                                provision of benefits under the plan to 
                                an applicable covered employee in 
                                connection with such restricted period 
                                (or other similar financial measure 
                                determined by the Secretary) with 
                                respect to the defined benefit plan, or 
                                assets are so restricted,
                        such assets shall, for purposes of section 83, 
                        be treated as property transferred in 
                        connection with the performance of services 
                        whether or not such assets are available to 
                        satisfy claims of general creditors. Subclause 
                        (I) shall not apply with respect to any assets 
                        which are so set aside before the restricted 
                        period with respect to the defined benefit 
                        plan.
                            ``(ii) Restricted period.--For purposes of 
                        this subsection, the term `restricted period' 
                        means, with respect to any plan described in 
                        clause (i)--
                                    ``(I) any period during which the 
                                plan is in at-risk status (as defined 
                                in section 430(i)),
                                    ``(II) any period the plan sponsor 
                                is a debtor in a case under title 11, 
                                United States Code, or similar Federal 
                                or State law, and
                                    ``(III) the 12-month period 
                                beginning on the date which is 6 months 
                                before the termination date of the plan 
                                if, as of the termination date, the 
                                plan is not sufficient for benefit 
                                liabilities (within the meaning of 
                                section 4041 of the Employee Retirement 
                                Income Security Act of 1974).
                            ``(iii) Special rule for payment of taxes 
                        on deferred equity-based compensation included 
                        in income.--If an employer provides directly or 
                        indirectly for the payment of any Federal, 
                        State, or local income taxes with respect to 
                        any equity-based compensation required to be 
                        included in gross income by reason of this 
                        subparagraph--
                                    ``(I) interest shall be imposed 
                                under paragraph (1)(B)(i)(I) on the 
                                amount of such payment in the same 
                                manner as if such payment was part of 
                                the deferred equity-based compensation 
                                to which it relates,
                                    ``(II) such payment shall be taken 
                                into account in determining the amount 
                                of the additional tax under paragraph 
                                (1)(B)(i)(II) in the same manner as if 
                                such payment was part of the deferred 
                                equity-based compensation to which it 
                                relates, and
                                    ``(III) no deduction shall be 
                                allowed under this title with respect 
                                to such payment.
                            ``(iv) Other definitions.--For purposes of 
                        this subsection--
                                    ``(I) Applicable covered 
                                employee.--The term `applicable covered 
                                employee' means any covered employee of 
                                a plan sponsor or a member of a 
                                controlled group which includes the 
                                plan sponsor, and any former employee 
                                who was a covered employee at the time 
                                of termination of employment with the 
                                plan sponsor or a member of a 
                                controlled group which includes the 
                                plan sponsor.
                                    ``(II) Covered employee.--The term 
                                `covered employee' means an individual 
                                described in section 162(m)(3) or an 
                                individual subject to the requirements 
                                of section 16(a) of the Securities 
                                Exchange Act of 1934.
                            ``(v) Internal revenue service internal 
                        guidance.--The Secretary shall develop 
                        instructions and training materials for 
                        employees of the Internal Revenue Service to 
                        assist such employees in obtaining and 
                        evaluating information and determining whether 
                        there exists a restricted period with respect 
                        to a company with a single-employer defined 
                        benefit plan, and whether such a company has, 
                        during a restricted period, set aside assets 
                        for the purpose of paying deferred compensation 
                        under a nonqualified deferred compensation 
                        plan.
                    ``(D) Income inclusion for offshore trusts and 
                employer's financial health.--For each taxable year 
                that assets treated as transferred under this paragraph 
                remain set aside in a trust or other arrangement 
                subject to subparagraph (A), (B), or (C), any increase 
                in value in, or earnings with respect to, such assets 
                shall be treated as an additional transfer of property 
                under this paragraph (to the extent not previously 
                included in income).
                    ``(E) Interest on tax liability payable with 
                respect to transferred property.--
                            ``(i) In general.--If amounts are required 
                        to be included in gross income by reason of 
                        subparagraph (A), (B), or (C) for a taxable 
                        year, the tax imposed by this chapter for such 
                        taxable year shall be increased by the sum of--
                                    ``(I) the amount of interest 
                                determined under clause (ii), and
                                    ``(II) an amount equal to 20 
                                percent of the amounts required to be 
                                included in gross income.
                            ``(ii) Interest.--For purposes of clause 
                        (i), the interest determined under this clause 
                        for any taxable year is the amount of interest 
                        at the underpayment rate plus 1 percentage 
                        point on the underpayments that would have 
                        occurred had the amounts so required to be 
                        included in gross income by subparagraph (A), 
                        (B), or (C) been includible in gross income for 
                        the taxable year in which first deferred or, if 
                        later, the first taxable year in which such 
                        amounts are not subject to a substantial risk 
                        of forfeiture.
            ``(7) Exception for highly compensated recipients.--In the 
        case of any highly compensated employee (as defined in section 
        414(q)), or any person who would be such a highly compensated 
        employee if such person were an employee of the service 
        recipient (determined as of the date of the grant of the 
        equity-based compensation)--
                    ``(A) paragraphs (1) through (6) shall not apply, 
                and
                    ``(B) equity-based compensation shall be treated 
                under subsection (a) in the same manner as other 
                compensation which is deferred under a nonqualified 
                deferred compensation plan.
            ``(8) Equity-based compensation.--The term `equity-based 
        compensation' means--
                    ``(A) a right to compensation based on the value 
                of, or appreciation in value of, a specified number of 
                equity units of the service recipient, whether paid in 
                cash or equity, or
                    ``(B) stock appreciation rights or stock options.
        Such term shall not include a transfer of property described in 
        section 83 (other than stock options) or compensation provided 
        under that portion of any plan which consists of a trust to 
        which section 402(b) applies.
    ``(d) No Inference on Earlier Income Inclusion or Requirement of 
Later Inclusion.--Nothing in this section shall be construed to prevent 
the inclusion of amounts in gross income under any other provision of 
this chapter or any other rule of law earlier than the time provided in 
this section. Any amount included in gross income under this section 
shall not be treated as required to be included in gross income under 
any other provision of this chapter or any other rule of law later than 
the time provided in this section.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
            ``(1) providing for the determination of amounts of 
        deferral in the case of a nonqualified deferred compensation 
        plan which is a defined benefit plan,
            ``(2) relating to changes in the ownership and control of a 
        corporation or assets of a corporation for purposes of 
        subsection (c)(2)(A)(v),
            ``(3) exempting arrangements from the application of 
        subsection (c)(5) if such arrangements will not result in an 
        improper deferral of United States tax and will not result in 
        assets being effectively beyond the reach of creditors,
            ``(4) defining financial health for purposes of subsection 
        (c)(5)(B), and
            ``(5) disregarding a substantial risk of forfeiture in 
        cases where necessary to carry out the purposes of this 
        section.''.
    (b) Withholding of Tax on Nonresident Aliens.--Section 1441(c)(4) 
of the Internal Revenue Code of 1986 is amended by inserting ``(other 
than under a nonqualified deferred compensation plan (within the 
meaning of section 409A(b)(2))'' after ``compensation for personal 
services''.
    (c) Termination of Certain Other Nonqualified Deferred Compensation 
Rules.--
            (1) 457(b) plans of tax exempt organizations.--Section 457 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new subsection:
    ``(h) Termination of Certain Plans.--
            ``(1) Tax-exempt organization plans.--This section shall 
        not apply to amounts deferred which are attributable to 
        services performed after December 31, 2020, under a plan 
        maintained by an employer described in subsection (e)(1)(B).
            ``(2) Ineligible deferred compensation plans.--Subsection 
        (f) shall not apply to amounts deferred which are attributable 
        to services performed after December 31, 2020.''.
            (2) Nonqualified deferred compensation from certain tax 
        indifferent parties.--
                    (A) In general.--Subpart B of part II of subchapter 
                E of chapter 1 of such Code is amended by striking 
                section 457A (and by striking the item relating to such 
                section in the table of sections for such subpart).
                    (B) Conforming amendment.--Section 26(b)(2) of such 
                Code is amended by striking subparagraph (X).
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        amounts which are attributable to services performed after 
        December 31, 2020.
            (2) Accelerated payments.--No later than 120 days after the 
        date of the enactment of this Act, the Secretary of the 
        Treasury shall issue guidance providing a limited period of 
        time during which a nonqualified deferred compensation 
        arrangement attributable to services performed on or before 
        December 31, 2020, may, without violating the requirements of 
        section 409A of the Internal Revenue Code of 1986, be amended 
        to conform the date of distribution to the date the amounts are 
        required to be included in income.
            (3) Certain back-to-back arrangements.--If the taxpayer is 
        also a service recipient and maintains one or more nonqualified 
        deferred compensation arrangements for its service providers 
        under which any amount is attributable to services performed on 
        or before December 31, 2020, the guidance issued under 
        paragraph (2) shall permit such arrangements to be amended to 
        conform the dates of distribution under such arrangement to the 
        date amounts are required to be included in the income of such 
        taxpayer under this subsection.
            (4) Accelerated payment not treated as material 
        modification.--Any amendment to a nonqualified deferred 
        compensation arrangement made pursuant to paragraph (2) or (3) 
        shall not be treated as a material modification of the 
        arrangement for purposes of section 409A of the Internal 
        Revenue Code of 1986.
            (5) Application to existing deferrals.--In the case of any 
        amount deferred to which this section does not otherwise apply 
        solely by reason of the fact that the amount is attributable to 
        services performed before January 1, 2021, to the extent such 
        amount is not includible in gross income in a taxable year 
        beginning before 2029, such amounts shall be includible in 
        gross income in the later of--
                    (A) the last taxable year beginning before 2029; or
                    (B) the taxable year in which there is no 
                substantial risk of forfeiture of the rights to such 
                compensation.
    (e) Transfer of Amounts Collected.--
            (1) In general.--The Secretary of the Treasury shall 
        transfer annually an amount equal to the increase in revenue 
        attributable to the enactment of subsections (a), (b), and (c) 
        of this section to the first and the second Pension Benefit 
        Guaranty funds described in section 4005(a) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1305(a)), and 
        such amount shall be allocated--
                    (A) to the fund used with respect to basic benefits 
                guaranteed under section 4022A of such Act (29 U.S.C. 
                1322a), until such time that the Pension Benefit 
                Guaranty Corporation's annual projections report 
                indicates that such fund and the fund used with respect 
                to basic benefits guaranteed under section 4022 of such 
                Act (29 U.S.C. 1322) have substantially similar future 
                financial conditions and substantially similar risks of 
                insolvency; and
                    (B) thereafter, to each of the funds described in 
                subparagraph (A) in equal amounts, subject to paragraph 
                (2).
            (2) Adjustments to allocations.--If, after amounts 
        transferred under paragraph (1) have been allocated in 
        accordance with paragraph (1)(B), the Director of the Pension 
        Benefit Guaranty Corporation (referred to in this section as 
        the ``Director'') determines that the future financial 
        conditions or risks of insolvency of the funds used with 
        respect to basic benefits guaranteed under each of sections 
        4022A and 4022 of the Employee Retirement Income Security Act 
        of 1974 are no longer substantially similar as described in 
        paragraph (1)(A), the Director, in consultation with the board 
        of directors of the Pension Benefit Guaranty Corporation, shall 
        determine an appropriate allocation of such amounts between 
        such funds.

SEC. 3. DEPARTMENT OF LABOR OVERSIGHT OF TOP HAT PLANS.

    (a) Guidance.--Not later than December 31, 2020, the Secretary of 
Labor shall issue guidance defining the term ``select group of 
management or highly compensated employees'' for purposes of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
seq.). Such guidance shall address the participation rate and plan 
language with respect to a plan which is unfunded and is maintained by 
an employer primarily for the purpose of providing deferred 
compensation for a select group of management or highly compensated 
employees, and the compensation and description of job duties of 
employees eligible to participate in such plans.
    (b) Regulations.--Not later than December 31, 2020, the Secretary 
of Labor shall issue final regulations requiring the sponsors of plans 
that are unfunded and maintained by employers primarily for the purpose 
of providing deferred compensation for a select group of management or 
highly compensated employees to align eligibility requirements for 
participation in such plans with the guidance issued under subsection 
(a).
    (c) Disclosure Requirement.--Part 1 of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.) is 
amended by adding at the end the following:

``SEC. 112. PLANS FOR A SELECT GROUP OF MANAGEMENT OR HIGHLY 
              COMPENSATED EMPLOYEES.

    ``Beginning January 1, 2021, the plan sponsor of a plan which is 
unfunded and is maintained by an employer primarily for the purpose of 
providing deferred compensation for a select group of management or 
highly compensated employees shall report to the Secretary annually on, 
with respect to the previous plan year--
            ``(1) the job title and salary of each employee 
        participating in the plan;
            ``(2) the percentage of the employer's workforce that is 
        eligible to participate in such plan;
            ``(3) the percentage of employees who actually participated 
        in the plan;
            ``(4) a comparison of the annual compensation of employees 
        eligible to participate in such plan with the annual 
        compensation of employees not eligible to participate in the 
        plan; and
            ``(5) any other information, as the Secretary determines 
        appropriate.''.
    (d) Treasury Regulations and Guidance.--The Secretary of the 
Treasury, in consultation with the Secretary of Labor, shall issue such 
regulations or guidance as are necessary--
            (1) to assist plans in taking appropriate corrective 
        actions when employees that are not part of a select group of 
        management or highly compensated employees (as defined in the 
        guidance issued pursuant to section 3(a)) are found to be 
        participating in such plans; and
            (2) to clarify the treatment of the consequences for 
        purposes of the Internal Revenue Code of 1986 of the Secretary 
        of Labor's guidance on plan corrective actions so that 
        employees who are not part of the select group described in 
        paragraph (1) are not adversely affected, including guidance on 
        actions which plan sponsors should take with respect to 
        participants in such plans who have already made the maximum 
        permissible contributions under qualified plans.

SEC. 4. DISCLOSURE OF NONQUALIFIED DEFERRED COMPENSATION ON FORM W-2.

    Not later than 6 months after the date of the enactment of this Act 
and effective for taxable year 2020, the Secretary of the Treasury (or 
the Secretary's delegate) shall--
            (1) revise the Form W-2 to require reporting of amounts 
        deferred under a nonqualified deferred compensation plan in box 
        12; and
            (2) amend the regulations under sections 6051(a)(13) and 
        6041(g) of the Internal Revenue Code of 1986 to make the 
        reporting of such deferrals under such sections mandatory.
For purposes of the preceding sentence, the term ``nonqualified 
deferred compensation plan'' has the meaning given such term in section 
409A(b)(2) of the Internal Revenue Code of 1986.
                                 <all>