[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8125 Introduced in House (IH)]
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117th CONGRESS
2d Session
H. R. 8125
To amend the Internal Revenue Code of 1986 to provide for starter
401(k)s for employers with no retirement plans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 16, 2022
Ms. Sanchez (for herself and Mr. LaHood) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addition
to the Committee on Education and Labor, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for starter
401(k)s for employers with no retirement plans, 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 ``Starter-K Act of 2022''.
SEC. 2. STARTER 401(K) PLANS FOR EMPLOYERS WITH NO RETIREMENT PLAN.
(a) In General.--Section 401(k) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(16) Starter 401(k) deferral-only plans for employers
with no retirement plan.--
``(A) In general.--A starter 401(k) deferral-only
arrangement maintained by an eligible employer shall be
treated as meeting the requirements of paragraph
(3)(A)(ii).
``(B) Starter 401(k) deferral-only arrangement.--
For purposes of this paragraph, the term `starter
401(k) deferral-only arrangement' means any cash or
deferred arrangement which meets--
``(i) the automatic deferral requirements
of subparagraph (C),
``(ii) the contribution limitations of
subparagraph (D), and
``(iii) the requirements of subparagraph
(E) of paragraph (13).
``(C) Automatic deferral.--
``(i) In general.--The requirements of this
subparagraph are met if, under the arrangement,
each employee eligible to participate in the
arrangement is treated as having elected to
have the employer make elective contributions
in an amount equal to a qualified percentage of
compensation.
``(ii) Election out.--The election treated
as having been made under clause (i) shall
cease to apply with respect to any employee if
such employee makes an affirmative election--
``(I) to not have such
contributions made, or
``(II) to make elective
contributions at a level specified in
such affirmative election.
``(iii) Qualified percentage.--For purposes
of this subparagraph, the term `qualified
percentage' means, with respect to any
employee, any percentage determined under the
arrangement if such percentage is applied
uniformly and is not less than 3 or more than
15 percent.
``(D) Contribution limitations.--
``(i) In general.--The requirements of this
subparagraph are met if, under the
arrangement--
``(I) the only contributions which
may be made are elective contributions
of employees described in subparagraph
(C), and
``(II) the aggregate amount of such
elective contributions which may be
made with respect to any employee for
any calendar year shall not exceed
$6,000.
``(ii) Cost-of-living adjustment.--In the
case of any calendar year beginning after
December 31, 2023, the $6,000 amount under
clause (i) shall be adjusted in the same manner
as under section 402(g)(4), except that `2022'
shall be substituted for `2005'.
``(iii) Cross reference.--For catch-up
contributions for individuals age 50 or over,
see section 414(v)(2)(B)(ii).
``(E) Eligible employer.--For purposes of this
paragraph--
``(i) In general.--The term `eligible
employer' means any employer which, during the
first plan year of the cash or deferred
arrangement described in subparagraph (B), does
not maintain any other qualified plan. An
employer treated as an eligible employer under
the preceding sentence shall be treated as an
eligible employer with respect to the
arrangement for any subsequent plan year
without regard to whether it maintains another
qualified plan.
``(ii) Qualified plan.--The term `qualified
plan' means a plan, contract, pension, account,
or trust described in subparagraph (A) or (B)
of paragraph (5) of section 219(g) (determined
without regard to the last sentence of such
paragraph (5)).''.
(b) Certain Annuity Contracts.--Subsection (b) of section 403 of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(15) Safe harbor deferral-only plans for employers with
no retirement plan.--
``(A) In general.--A safe harbor deferral-only plan
maintained by an eligible employer shall be treated as
meeting the requirements of paragraph (12).
``(B) Safe harbor deferral-only plan.--For purposes
of this paragraph, the term `safe harbor deferral-only
plan' means any plan which meets--
``(i) the automatic deferral requirements
of subparagraph (C),
``(ii) the contribution limitations of
subparagraph (D), and
``(iii) the requirements of subparagraph
(E) of section 401(k)(13).
``(C) Automatic deferral.--
``(i) In general.--The requirements of this
subparagraph are met if, under the plan, each
eligible employee is treated as having elected
to have the employer make elective
contributions in an amount equal to a qualified
percentage of compensation.
``(ii) Election out.--The election treated
as having been made under clause (i) shall
cease to apply with respect to any eligible
employee if such eligible employee makes an
affirmative election--
``(I) to not have such
contributions made, or
``(II) to make elective
contributions at a level specified in
such affirmative election.
``(iii) Qualified percentage.--For purposes
of this subparagraph, the term `qualified
percentage' means, with respect to any
employee, any percentage determined under the
plan if such percentage is applied uniformly
and is not less than 3 or more than 15 percent.
``(D) Contribution limitations.--
``(i) In general.--The requirements of this
subparagraph are met if, under the plan--
``(I) the only contributions which
may be made are elective contributions
of eligible employees, and
``(II) the aggregate amount of such
elective contributions which may be
made with respect to any employee for
any calendar year shall not exceed
$6,000.
``(ii) Cost-of-living adjustment.--In the
case of any calendar year beginning after
December 31, 2023, the $6,000 amount under
clause (i) shall be adjusted in the same manner
as under section 402(g)(4), except that `2022'
shall be substituted for `2005'.
``(iii) Cross reference.--For catch-up
contributions for individuals age 50 or over,
see section 414(v)(2)(B)(ii).
``(E) Eligible employer.--For purposes of this
paragraph--
``(i) In general.--The term `eligible
employer' means any employer which, during the
first plan year of the plan described in
subparagraph (B), does not maintain any other
qualified plan. An employer treated as an
eligible employer under the preceding sentence
shall be treated as an eligible employer with
respect to the plan for any subsequent plan
year without regard to whether it maintains
another qualified plan.
``(ii) Qualified plan.--The term `qualified
plan' means a plan, contract, pension, account,
or trust described in subparagraph (A) or (B)
of paragraph (5) of section 219(g) (determined
without regard to the last sentence of such
paragraph (5)).
``(F) Eligible employee.--For purposes of this
paragraph, the term `eligible employee' means any
employee of the employer other than an employee who is
permitted to be excluded under paragraph (12)(A).''.
(c) Catch-Up Contributions for Individuals Age 50 and Over.--
(1) Section 414(v)(2)(B) of the Internal Revenue Code of
1986 is amended by inserting ``, 401(k)(16), 403(b)(15),''
after ``401(k)(11)'' each place it appears.
(2) Section 414(v)(3)(B) of such Code is amended--
(A) by inserting ``, 401(k)(16)'' after
``401(k)(11)'', and
(B) by inserting ``, 403(b)(15)'' after
``403(b)(12)''.
(d) Simplified Reporting.--Section 104(a)(2)(A) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(a)(2)) is
amended by striking ``or'' at the end of clause (i), by redesignating
clause (ii) as clause (iii), and by inserting after clause (i) the
following new clause:
``(ii) is a starter 401(k) deferral-only
arrangement described in section 401(k)(16)(B)
of the Internal Revenue Code of 1986 or a safe
harbor deferral-only plan described in section
403(b)(15) of such Code; or''.
(e) Starter and Safe Harbor Plans Not Treated as Top-Heavy Plans.--
Subparagraph (H) of section 416(g)(4) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``arrangements'' in the heading and
inserting ``arrangements or plans'',
(2) by striking ``, and'' at the end of clause (i) and
inserting ``and matching contributions with respect to which
the requirements of section 401(m)(11) or 401(m)(12) are met,
or'', and
(3) by striking clause (ii) and inserting after clause (i)
the following new clause:
``(ii) a starter 401(k) deferral-only
arrangement described in section 401(k)(16)(B)
or a safe harbor deferral-only plan described
in section 403(b)(15).''.
(f) Plans Not Subject to Employee Retirement Income Security Act of
1974.--Applicable to plan years beginning after December 31, 2022, the
Secretary of Labor shall update Field Assistance Bulletin No. 2010-01
to specify that the hiring of a new plan administrator or third-party
administrator by a plan which is not previously subject to title I of
the Employee Retirement Income Security Act of 1974 shall not cause
such plan to be subject to such title.
(g) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2022.
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